Apple Reports Fourth Quarter Results

Record Mac, iPhone and iPad Sales

Highest Revenue and Earnings Ever

CUPERTINO, Calif.--()--Apple® today announced financial results for its fiscal 2010 fourth quarter ended September 25, 2010. The Company posted record revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share. These results compare to revenue of $12.21 billion and net quarterly profit of $2.53 billion, or $2.77 per diluted share, in the year-ago quarter. Gross margin was 36.9 percent compared to 41.8 percent in the year-ago quarter. International sales accounted for 57 percent of the quarter’s revenue.

Apple sold 3.89 million Macs during the quarter, a 27 percent unit increase over the year-ago quarter. The Company sold 14.1 million iPhones in the quarter, representing 91 percent unit growth over the year-ago quarter. Apple sold 9.05 million iPods during the quarter, representing an 11 percent unit decline from the year-ago quarter. The Company also sold 4.19 million iPads during the quarter.

“We are blown away to report over $20 billion in revenue and over $4 billion in after-tax earnings—both all-time records for Apple,” said Steve Jobs, Apple’s CEO. “iPhone sales of 14.1 million were up 91 percent year-over-year, handily beating the 12.1 million phones RIM sold in their most recent quarter. We still have a few surprises left for the remainder of this calendar year.”

“We’re thrilled with the performance and strength of our business, generating almost $5.7 billion in cash flow from operations during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the first fiscal quarter of 2011, we expect revenue of about $23 billion and we expect diluted earnings per share of about $4.80.”

Apple will provide live streaming of its Q4 2010 financial results conference call beginning at 2:00 p.m. PDT on October 18, 2010 at www.apple.com/quicktime/qtv/earningsq410/. This webcast will also be available for replay for approximately two weeks thereafter.

This press release contains forward-looking statements including without limitation those 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 without limitation 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; continued competitive pressures in the marketplace; 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 introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; 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 reliance on the availability of third-party digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the Company’s reliance on sole service providers for iPhone® in certain countries; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; potential litigation from the matters investigated by the special committee of the board of directors and the restatement of the Company’s consolidated financial statements; and unfavorable results of other legal proceedings. 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, as amended, for the fiscal year ended September 26, 2009, its Forms 10-Q for the quarters ended December 26, 2009; March 27, 2010; and June 26, 2010; and its Form 10-K for the fiscal year ended September 25, 2010 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 designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple is reinventing the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.

NOTE TO EDITORS: For additional information visit Apple’s PR website (www.apple.com/pr), or call Apple’s Media Helpline at (408) 974-2042.

© 2010 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS, Macintosh and iPhone are trademarks of Apple. Other company and product names may be trademarks of their respective owners.

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share amounts which are reflected in thousands and per share amounts)

   
Three Months Ended Twelve Months Ended
September 25, 2010   September 26, 2009 September 25, 2010   September 26, 2009
 
Net sales $ 20,343 $ 12,207 $ 65,225 $ 42,905
Cost of sales (1) 12,831 7,102 39,541 25,683
 
Gross margin 7,512 5,105 25,684 17,222
 
Operating expenses:
Research and development (1) 494 358 1,782 1,333
Selling, general and administrative (1) 1,571 1,063 5,517 4,149
 
Total operating expenses 2,065 1,421 7,299 5,482
 
Operating income 5,447 3,684 18,385 11,740
 
Other income and expense 14 45 155 326
 
Income before provision for income taxes 5,461 3,729 18,540 12,066
 
Provision for income taxes 1,153 1,197 4,527 3,831
 
Net income $ 4,308 $ 2,532 $ 14,013 $ 8,235
 
Earnings per common share:
Basic $ 4.71 $ 2.82 $ 15.41 $ 9.22
Diluted $ 4.64 $ 2.77 $ 15.15 $ 9.08
 
Shares used in computing earnings per share:
Basic 914,555 898,032 909,461 893,016
Diluted 928,825 914,374 924,712 907,005
 
(1) Includes stock-based compensation expense as follows:
Cost of sales $ 39 $ 29 $ 151 $ 114
Research and development $ 83 $ 66 $ 323 $ 258
Selling, general and administrative $ 102 $ 85 $ 405 $ 338
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)

 

September 25, 2010

September 26, 2009

 
ASSETS:
 
Current assets:
Cash and cash equivalents $ 11,261 $ 5,263
Short-term marketable securities 14,359 18,201
Accounts receivable, less allowances of $55 and $52, respectively 5,510 3,361
Inventories 1,051 455
Deferred tax assets 1,636 1,135
Vendor non-trade receivables 4,414 1,696
Other current assets 3,447   1,444
Total current assets 41,678 31,555
 
Long-term marketable securities 25,391 10,528
Property, plant and equipment, net 4,768 2,954
Goodwill 741 206
Acquired intangible assets, net 342 247
Other assets 2,263   2,011
Total assets $ 75,183   $ 47,501
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
 
Current liabilities:
Accounts payable $ 12,015 $ 5,601
Accrued expenses 5,723 3,852
Deferred revenue 2,984   2,053
Total current liabilities 20,722 11,506
 
Deferred revenue – non-current 1,139 853
Other non-current liabilities 5,531   3,502
Total liabilities 27,392   15,861
 
Commitments and contingencies
 
Shareholders' equity:
Common stock, no par value; 1,800,000,000 shares authorized; 915,970,050 and 899,805,500 shares issued and outstanding, respectively 10,668

8,210

Retained earnings 37,169 23,353
Accumulated other comprehensive (loss)/income (46 ) 77
Total shareholders' equity 47,791   31,640
 

Total liabilities and shareholders' equity

$ 75,183   $ 47,501
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 
Twelve Months Ended
September 25, 2010   September 26, 2009
 
Cash and cash equivalents, beginning of the year $ 5,263   $ 11,875  
 
Operating activities:
Net income 14,013 8,235
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation, amortization and accretion 1,027 734
Stock-based compensation expense 879 710
Deferred income tax expense 1,440 1,040
Loss on disposition of property, plant and equipment 24 26
Changes in operating assets and liabilities:
Accounts receivable, net (2,142 ) (939 )
Inventories (596 ) 54
Vendor non-trade receivables (2,718 ) 586
Other current assets (1,514 ) 163
Other assets (120 ) (902 )
Accounts payable 6,307 92
Deferred revenue 1,217 521
Other liabilities 778   (161 )
 
Cash generated by operating activities 18,595   10,159  
 
Investing activities:
Purchases of marketable securities (57,793 ) (46,724 )
Proceeds from maturities of marketable securities 24,930 19,790
Proceeds from sales of marketable securities 21,788 10,888
Purchases of other long-term investments (18 ) (101 )
Payments made in connection with business acquisitions, net of cash acquired (638 ) 0
Payments for acquisition of property, plant and equipment (2,005 ) (1,144 )
Payments for acquisition of intangible assets (116 ) (69 )
Other (2 ) (74 )
 
Cash used in investing activities (13,854 ) (17,434 )
 
Financing activities:
Proceeds from issuance of common stock 912 475
Excess tax benefits from stock-based compensation 751 270
Taxes paid related to net share settlement of equity awards (406 ) (82 )
 
Cash generated by financing activities 1,257   663  
 
Increase/(decrease) in cash and cash equivalents 5,998   (6,612 )
 
Cash and cash equivalents, end of the year $ 11,261   $ 5,263  
 
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 2,697 $ 2,997
 

Apple Inc.

Q4 2010 Unaudited Summary Data

                     
     
Q3 2010 Q4 2009 Q4 2010
Sequential Change Year/Year Change
Operating Segments CPU

Units K

Revenue

$M

CPU

Units K

Revenue

$M

CPU

Units K

Revenue

$M

CPU Units Revenue CPU Units Revenue
Americas 1,358 $6,227 1,252 $5,236 1,460 $7,186 8% 15% 17% 37%
Europe 914 4,160 761 3,235 978 5,458 7% 31% 29% 69%
Japan 129 910 79 634 118 1,401 - 9% 54% 49% 121%
Asia Pacific 394 1,825 291 1,061 455 2,732 15% 50% 56% 157%
Retail 677 2,578 670 2,041 874   3,566 29% 38% 30% 75%
Total Operating Segments 3,472 $15,700 3,053 $12,207 3,885   $20,343 12% 30% 27% 67%
 
     
Sequential Change Year/Year Change
Product Summary

Units K

Revenue

$M

Units K Revenue

$M

Units K Revenue

$M

Units Revenue Units Revenue
Desktops (1) 1,004 $1,301 787 $1,089 1,242 $1,676 24% 29% 58% 54%
Portables (2) 2,468   3,098 2,266   2,891 2,643   3,194 7% 3% 17% 10%

 

 

 

Subtotal CPUs 3,472 4,399 3,053 3,980 3,885 4,870 12% 11% 27% 22%
iPod 9,406 1,545 10,177 1,563 9,051 1,477 - 4% - 4% - 11% - 6%
Other Music Related Products and Services (3) 1,214 1,018 1,243 2% 22%
iPhone and Related Products and Services (4) 8,398 5,334 7,367 4,606 14,102 8,822 68% 65% 91% 92%
iPad and Related Products and Services (5) 3,270 2,166 0 0 4,188 2,792 28% 29% N/M N/M
Peripherals and Other Hardware 396 391 477 20% 22%
Software, Service and Other Sales     646     649     662 2% 2%
Total Apple $15,700 $12,207     $20,343 30% 67%
 
(1) Includes iMac, Mac mini, Mac Pro and Xserve product lines.
(2) Includes MacBook, MacBook Air and MacBook Pro product lines.
(3) Consists of iTunes Store sales, iPod services, and Apple-branded and third-party iPod accessories.
(4) Includes recognized revenue from iPhone sales, carrier agreements, services, and Apple-branded and third-party iPhone accessories.
(5) Includes recognized revenue from iPad sales, services, and Apple-branded and third-party iPad accessories.
 
N/M: Not Meaningful K = Units in thousands $M = Amounts in millions

Contacts

Apple
Steve Dowling, 408-974-1896 (Press)
dowling@apple.com
Nancy Paxton, 408-974-5420 (Investor Relations)
paxton1@apple.com
Joan Hoover, 408-974-4570 (Investor Relations)
hoover1@apple.com

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Contacts

Apple
Steve Dowling, 408-974-1896 (Press)
dowling@apple.com
Nancy Paxton, 408-974-5420 (Investor Relations)
paxton1@apple.com
Joan Hoover, 408-974-4570 (Investor Relations)
hoover1@apple.com