Apple Reports First Quarter Results

Record Mac, iPhone, iPad Sales Drive Highest Revenue and Earnings Ever

Revenue Grows 71 Percent; Earnings Grow 78 Percent

CUPERTINO, Calif.--()--Apple® today announced financial results for its fiscal 2011 first quarter ended December 25, 2010. The Company posted record revenue of $26.74 billion and record net quarterly profit of $6 billion, or $6.43 per diluted share. These results compare to revenue of $15.68 billion and net quarterly profit of $3.38 billion, or $3.67 per diluted share, in the year-ago quarter. Gross margin was 38.5 percent compared to 40.9 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter’s revenue.

Apple sold 4.13 million Macs during the quarter, a 23 percent unit increase over the year-ago quarter. The Company sold 16.24 million iPhones in the quarter, representing 86 percent unit growth over the year-ago quarter. Apple sold 19.45 million iPods during the quarter, representing a seven percent unit decline from the year-ago quarter. The Company also sold 7.33 million iPads during the quarter.

“We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales,” said Steve Jobs, Apple’s CEO. “We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can’t wait to get their hands on.”

“We couldn’t be happier with the performance of our business, generating $9.8 billion in cash flow from operations during the December quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2011, we expect revenue of about $22 billion and we expect diluted earnings per share of about $4.90.”

Apple will provide live streaming of its Q1 2011 financial results conference call beginning at 2:00 p.m. PST on January 18, 2011 at www.apple.com/quicktime/qtv/earningsq111. 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; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and 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 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; 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 for the fiscal year ended September 25, 2010 and its Form 10-Q for the quarter ended December 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.

© 2011 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS and Macintosh 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

December 25, 2010

 

December 26, 2009

 
Net sales $ 26,741 $ 15,683
Cost of sales (1) 16,443 9,272
 
Gross margin 10,298 6,411
 
Operating expenses:
Research and development (1) 575 398
Selling, general and administrative (1) 1,896 1,288
 
Total operating expenses 2,471 1,686
 
Operating income 7,827 4,725
 
Other income and expense 136 33
 
Income before provision for income taxes 7,963 4,758
 
Provision for income taxes 1,959 1,380
 
Net income $ 6,004 $ 3,378
 
Earnings per common share:
Basic $ 6.53 $ 3.74
Diluted $ 6.43 $ 3.67
 
Shares used in computing earnings per share:
Basic 919,294 903,542
Diluted 933,154 919,783
 
(1) Includes stock-based compensation expense as follows:
Cost of sales $ 52 $ 37
Research and development $ 113 $ 74
Selling, general and administrative $ 134 $ 94
 
Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share amounts)

 
December 25, 2010   September 25, 2010
 
ASSETS:
 
Current assets:
Cash and cash equivalents $ 10,734 $ 11,261
Short-term marketable securities 16,243 14,359
Accounts receivable, less allowances of $62 and $55, respectively 6,027 5,510
Inventories 885 1,051
Deferred tax assets 1,724 1,636
Vendor non-trade receivables 4,847 4,414
Other current assets 3,467 3,447  
Total current assets 43,927 41,678
 
Long-term marketable securities 32,730 25,391
Property, plant and equipment, net 5,868 4,768
Goodwill 741 741
Acquired intangible assets, net 522 342
Other assets 2,954 2,263  
Total assets $ 86,742 $ 75,183  
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
 
Current liabilities:
Accounts payable $ 14,301 $ 12,015
Accrued expenses 5,953 5,723
Deferred revenue 3,541 2,984  
Total current liabilities 23,795 20,722
 
Deferred revenue – non-current 1,216 1,139
Other non-current liabilities 7,065 5,531  
Total liabilities 32,076 27,392  
 
Commitments and contingencies
 
Shareholders' equity:

Common stock, no par value; 1,800,000,000 shares authorized;
921,035,475 and 915,970,050 shares issued and outstanding, respectively

 

11,502

10,668
Retained earnings 43,050 37,169
Accumulated other comprehensive income/(loss) 114 (46 )
Total shareholders' equity 54,666 47,791  
 
Total liabilities and shareholders' equity $ 86,742 $ 75,183  
 
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

 
Three Months Ended

December 25, 2010

 

December 26, 2009

 
Cash and cash equivalents, beginning of the period $ 11,261   $ 5,263  
 
Operating activities:
Net income 6,004 3,378
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation, amortization and accretion 356 209
Stock-based compensation expense 299 205
Deferred income tax expense 823 425
 
Changes in operating assets and liabilities:
Accounts receivable, net (517 ) 271
Inventories 166 (121 )
Vendor non-trade receivables (433 ) (95 )
Other current and non-current assets (558 ) (369 )
Accounts payable 2,346 956
Deferred revenue 634 606
Other current and non-current liabilities 653   316  
 
Cash generated by operating activities 9,773   5,781  
 
Investing activities:
Purchases of marketable securities (19,575 ) (12,922 )
Proceeds from maturities of marketable securities 3,279 6,216
Proceeds from sales of marketable securities 6,853 3,199
Payments for acquisition of property, plant and equipment (1,214 ) (376 )
Payments for acquisition of intangible assets (49 ) (5 )
Other (23 ) (70 )
 
Cash used in investing activities (10,729 ) (3,958 )
 
Financing activities:
Proceeds from issuance of common stock 208 374
Excess tax benefits from stock-based compensation 454 252
Taxes paid related to net share settlement of equity awards (233 ) (103 )
 
Cash generated by financing activities 429   523  
 
(Decrease)/increase in cash and cash equivalents (527 ) 2,346  
 
Cash and cash equivalents, end of the period $ 10,734   $ 7,609  
 
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 826 $ 980
 
Apple Inc.
Q1 2011 Unaudited Summary Data
 
                       
Q4 2010 Q1 2010 Q1 2011
  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 1,460 $ 7,186 1,187 $ 6,092 1,360 $ 9,218 - 7 % 28 % 15 % 51 %
Europe 978 5,458 1,068 5,024 1,245 7,256 27 % 33 % 17 % 44 %
Japan 118 1,401 105 783 162 1,433 37 % 2 % 54 % 83 %
Asia Pacific 455 2,732 313 1,813 516 4,987 13 % 83 % 65 % 175 %
Retail 874     3,566 689     1,971 851     3,847 - 3 % 8 % 24 % 95 %
Total Operating Segments 3,885 $ 20,343 3,362 $ 15,683 4,134   $ 26,741 6 % 31 % 23 % 71 %
 
     
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) 1,242 $ 1,676 1,234 $ 1,692 1,227 $ 1,731 - 1 % 3 % - 1 % 2 %
Portables (2) 2,643     3,194 2,128     2,758 2,907     3,699 10 % 16 % 37 % 34 %
Subtotal CPUs 3,885 4,870 3,362 4,450 4,134 5,430 6 % 11 % 23 % 22 %
iPod 9,051 1,477 20,970 3,391 19,446 3,425 115 % 132 % - 7 % 1 %
Other Music Related Products and Services (3) 1,243 1,164 1,431 15 % 23 %
iPhone and Related Products and Services (4) 14,102 8,822 8,737 5,578 16,235 10,468 15 % 19 % 86 % 88 %
iPad and Related Products and Services (5) 4,188 2,792 0 0 7,331 4,608 75 % 65 % N/M N/M
Peripherals and Other Hardware 477 469 593 24 % 26 %
Software, Service and Other Sales       662       631       786 19 % 25 %
Total Apple $ 20,343 $ 15,683     $ 26,741 31 % 71 %
 
(1) Includes iMac, Mac mini, Mac Pro and Xserve product lines.
(2) Includes MacBook, MacBook Air and MacBook Pro product lines.
(3) Includes 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