Apple Reports First Quarter Results
Best Quarterly Revenue & Earnings in Apple History Mac, iPod & iPhone Sales Break Previous Records
CUPERTINO, Calif., Jan. 22 2008 -- Apple® today announced financial results for its fiscal 2008 first quarter ended December 29, 2007. The Company posted revenue of $9.6 billion and net quarterly profit of $1.58 billion, or $1.76 per diluted share. These results compare to revenue of $7.1 billion and net quarterly profit of $1 billion, or $1.14 per diluted share, in the year-ago quarter. Gross margin was 34.7 percent, up from 31.2 percent in the year-ago quarter. International sales accounted for 45 percent of the quarter's revenue. Apple shipped 2,319,000 Macintosh® computers, representing 44 percent unit growth and 47 percent revenue growth over the year-ago quarter. The Company sold 22,121,000 iPods during the quarter, representing five percent unit growth and 17 percent revenue growth over the year-ago quarter. Quarterly iPhone(TM) sales were 2,315,000.
"We're thrilled to report our best quarter ever, with the highest revenue and earnings in Apple's history," said Steve Jobs, Apple's CEO. "We have an incredibly strong new product pipeline for 2008, starting with MacBook Air, Mac Pro and iTunes Movie Rentals in the first two weeks."
"Apple's revenue grew 35 percent year-over-year to $9.6 billion, an increase of almost $2.5 billion over the previous December quarter's record-breaking results," said Peter Oppenheimer, Apple's CFO. "Our strong results produced cash flow from operations of over $2.7 billion during the quarter, yielding an ending cash balance of over $18.4 billion. Looking ahead to the second quarter of fiscal 2008, we expect revenue of about $6.8 billion and earnings per diluted share of about $.94."
Apple will provide live streaming of its Q1 2008 financial results conference call utilizing QuickTime®, Apple's standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PST on Tuesday, January 22, 2008 at
http://www.apple.com/quicktime/qtv/earningsq108/ and will also be available for replay.
This press release contains forward-looking statements about the Company's estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include potential litigation and government enforcement actions that may result from the matters investigated by the special committee of the board of directors and the restatement of the Company's consolidated financial statements; unfavorable results of legal proceedings; the effect of competitive and economic factors, and the Company's reaction to those factors, on consumer and business buying decisions with respect to the Company's products; war, terrorism, public health issues, and other circumstances that could disrupt supply, delivery, or demand of products; continued competitive pressures in the marketplace; the Company's reliance on sole service providers for iPhone in the US, UK, Germany and France; the continued availability on acceptable terms of certain components and services essential to the Company's business currently obtained by the Company from sole or limited sources; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company's gross margin; the effect that product quality problems could have on the Company's sales and operating profits; the inventory risk associated with the Company's need to order or commit to order product components in advance of customer orders; the effect that the Company's dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; the Company's dependency on the performance of distributors and other resellers of the Company's products; the Company's reliance on the availability of third-party digital content; and the potential impact of a finding that the Company has infringed on the intellectual property rights of others. More information on potential factors that could affect the Company's financial results is included from time to time in the Company's public reports filed with the SEC, including the Company's Form 10-K for the fiscal year ended September 29, 2007 and its Form 10-Q for the quarter ended December 29, 2007 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone.
© 2008 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS, Macintosh, iPhone and QuickTime are trademarks of Apple. Other company and product names may be trademarks of their respective owners.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except share and per share amounts)
Three Months Ended December 29, 2007 December 30, 2006
Net sales $9,608 $7,115 Cost of sales (1) 6,276 4,895 Gross margin 3,332 2,220 Operating expenses: Research and development (1) 246 184 Selling, general and administrative (1) 960 714
Total operating expenses 1,206 898
Operating income 2,126 1,322
Other income and expense 200 126
Income before provision for income taxes 2,326 1,448
Provision for income taxes 745 444
Net income $1,581 $1,004
Earnings per common share: Basic $1.81 $1.17 Diluted $1.76 $1.14
Shares used in computing earnings per share (in thousands): Basic 875,860 857,691 Diluted 900,054 883,297
(1) Includes stock-based compensation expense as follows: Cost of sales $18 $6 Research and development $39 $16 Selling, general and administrative $53 $24
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share amounts)
December 29, 2007 September 29, 2007
ASSETS:
Current assets: Cash and cash equivalents $9,162 $9,352 Short-term investments 9,286 6,034 Accounts receivable, less allowances of $45 and $47, respectively 1,939 1,637 Inventories 459 346 Deferred tax assets 993 782 Other current assets 4,350 3,805 Total current assets 26,189 21,956
Property, plant and equipment, net 1,870 1,832 Goodwill 38 38 Acquired intangible assets, net 311 299 Other assets 1,631 1,222
Total assets $30,039 $25,347
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities: Accounts payable $5,366 $4,970 Accrued expenses 5,169 4,329 Total current liabilities 10,535 9,299 Non-current liabilities 2,700 1,516 Total liabilities 13,235 10,815
Commitments and contingencies
Shareholders' equity: Common stock, no par value; 1,800,000,000 shares authorized; 878,628,867 and 872,328,972 shares issued and outstanding, respectively 6,046 5,368 Retained earnings 10,684 9,101 Accumulated other comprehensive income 74 63
Total shareholders' equity 16,804 14,532
Total liabilities and shareholders' equity $30,039 $25,347
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Three Months Ended December 29, 2007 December 30, 2006
Cash and cash equivalents, beginning of the period $9,352 $6,392 Operating Activities: Net income 1,581 1,004 Adjustments to reconcile net income to cash generated by operating activities: Depreciation, amortization, and accretion 106 74 Stock-based compensation expense 110 46 Provision for deferred income taxes 22 73 Loss on disposition of property, plant, and equipment 14 5 Changes in operating assets and liabilities: Accounts receivable, net (302) (369) Inventories (113) (33) Other current assets (550) 36 Other assets (253) 28 Accounts payable 484 495 Deferred revenue 1,048 199 Other liabilities 640 255
Cash generated by operating activities 2,787 1,813
Investing Activities: Purchases of short-term investments (6,127) (2,581) Proceeds from maturities of short-term investments 2,129 934 Proceeds from sales of investments 758 655 Purchases of long-term investments (9) - Payment for acquisition of property, plant, and equipment (224) (142) Payment for acquisition of intangible assets (8) (115) Other 19 15
Cash used in investing activities (3,462) (1,234)
Financing Activities: Proceeds from issuance of common stock 179 101 Excess tax benefits from stock-based compensation 315 87 Cash used to net share settle equity awards (9) -
Cash generated by financing activities 485 188
(Decrease) increase in cash and cash equivalents (190) 767
Cash and cash equivalents, end of the period $9,162 $7,159
Supplemental cash flow disclosure: Cash paid for income taxes, net $251 $114
UNAUDITED CONSOLIDATED SCHEDULE OF DEFERRED REVENUE
(in millions)
December 29, 2007 September 29, 2007
Deferred revenue-current: iPhone and Apple TV $816 $346 AppleCare 467 430 Other 812 634 Total deferred revenue-current 2,095 1,410
Deferred revenue-non-current: iPhone and Apple TV 624 290 AppleCare 529 495 Other 40 45 Total deferred revenue-non-current 1,193 830
Total deferred revenue $3,288 $2,240
Apple Inc. Q1 2008 Unaudited Summary Data
Q4 2007 Q1 2007 Q1 2008 CPU Rev CPU Rev CPU Rev Operating Segments Units K $M Units K $M Units K $M Americas 965 $2,928 625 $3,521 841 $4,298 Europe 499 1,339 491 1,712 705 2,471 Japan 72 255 70 285 91 400 Retail 473 1,251 308 1,115 504 1,701 Other Segments (1) 155 444 112 482 178 738
Total Operating Segments 2,164 $6,217 1,606 $7,115 2,319 $9,608
Rev Rev Rev Units K $M Units K $M Units K $M Product Summary Desktops (2) 817 $1,195 637 $955 977 $1,515 Portables (3) 1,347 1,908 969 1,455 1,342 2,037 Subtotal CPUs 2,164 3,103 1,606 2,410 2,319 3,552 iPod 10,200 1,619 21,066 3,427 22,121 3,997 Other Music Related Products and Services (4) 601 634 808 iPhone and Related Products & Services (5) 1,119 118 - - 2,315 241 Peripherals and Other Hardware 346 297 382 Software, Service and Other Sales 430 347 628 Total Apple $6,217 $7,115 $9,608
Sequential Change Year/Year Change CPU CPU Operating Segments Units Revenue Units Revenue Americas -13% 47% 35% 22% Europe 41% 85% 44% 44% Japan 26% 57% 30% 40% Retail 7% 36% 64% 53% Other Segments (1) 15% 66% 59% 53% Total Operating Segments 7% 55% 44% 35%
Sequential Change Year/Year Change Units Revenue Units Revenue
Product Summary Desktops (2) 20% 27% 53% 59% Portables (3) - 0% 7% 38% 40% Subtotal CPUs 7% 14% 44% 47% iPod 117% 147% 5% 17% Other Music Related Products and Services (4) 34% 27% iPhone and Related Products & Services (5) 107% 104% NM NM Peripherals and Other Hardware 10% 29% Software, Service and Other Sales 46% 81% Total Apple 55% 35%
(1) Other Segments include Asia Pacific and FileMaker. (2) Includes iMac, eMac, Mac mini, Mac Pro, PowerMac and Xserve product lines. (3) Includes MacBook, iBook, MacBook Pro and PowerBook product lines. (4) Consists of iTunes Store sales, iPod services, and Apple-branded and third-party iPod accessories. (5) Units consist of iPhone handset sales; Revenue is derived from handset sales, carrier agreements, and Apple-branded and third-party iPhone accessories.
NM: Not Meaningful
--Source: Apple
