Apple Reports Fourth Quarter Results

iPhone Sales Grow 26% to Establish New September Quarter Record

CUPERTINO, Calif.--()--Apple® today announced financial results for its fiscal 2013 fourth quarter ended September 28, 2013. The Company posted quarterly revenue of $37.5 billion and quarterly net profit of $7.5 billion, or $8.26 per diluted share. These results compare to revenue of $36 billion and net profit of $8.2 billion, or $8.67 per diluted share, in the year-ago quarter. Gross margin was 37 percent compared to 40 percent in the year-ago quarter. International sales accounted for 60 percent of the quarter’s revenue.

The Company sold 33.8 million iPhones, a record for the September quarter, compared to 26.9 million in the year-ago quarter. Apple also sold 14.1 million iPads during the quarter, compared to 14 million in the year-ago quarter. The Company sold 4.6 million Macs, compared to 4.9 million in the year-ago quarter.

Apple’s Board of Directors has declared a cash dividend of $3.05 per share of the Company’s common stock. The dividend is payable on November 14, 2013, to shareholders of record as of the close of business on November 11, 2013.

“We’re pleased to report a strong finish to an amazing year with record fourth quarter revenue, including sales of almost 34 million iPhones,” said Tim Cook, Apple’s CEO. "We’re excited to go into the holidays with our new iPhone 5c and iPhone 5s, iOS 7, the new iPad mini with Retina Display and the incredibly thin and light iPad Air, new MacBook Pros, the radical new Mac Pro, OS X Mavericks and the next generation iWork and iLife apps for OS X and iOS.”

“We generated $9.9 billion in cash flow from operations and returned an additional $7.8 billion in cash to shareholders through dividends and share repurchases during the September quarter, bringing cumulative payments under our capital return program to $36 billion,” said Peter Oppenheimer, Apple’s CFO.

Apple is providing the following guidance for its fiscal 2014 first quarter:

• revenue between $55 billion and $58 billion

• gross margin between 36.5 percent and 37.5 percent

• operating expenses between $4.4 billion and $4.5 billion

• other income/(expense) of $200 million

• tax rate of 26.25 percent

Apple will provide live streaming of its Q4 2013 financial results conference call beginning at 2:00 p.m. PDT on October 28, 2013 at www.apple.com/quicktime/qtv/earningsq413. 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, gross margin, operating expenses, other income/(expense), and tax rate. 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 “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 29, 2012, its Form 10-Q for the quarter ended December 29, 2012, its Form 10-Q for the quarter ended March 30, 2013, its Form 10-Q for the quarter ended June 29, 2013, and its Form 10-K for the year ended September 28, 2013 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 has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.

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.

© 2013 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 number of shares which are reflected in thousands and per share amounts)

   
Three Months Ended

Twelve Months Ended

September 28,
2013

 

September 29,
2012

September 28,
2013

 

September 29,
2012

 
Net sales $ 37,472 $ 35,966 $ 170,910 $ 156,508
Cost of sales (1)   23,601   21,565   106,606   87,846
Gross margin   13,871   14,401   64,304   68,662
 
Operating expenses:
Research and development (1) 1,168 906 4,475 3,381
Selling, general and administrative (1)   2,673   2,551   10,830   10,040
Total operating expenses   3,841   3,457   15,305   13,421
Operating income 10,030 10,944 48,999 55,241
Other income/(expense), net   113   (51)   1,156   522
Income before provision for income taxes 10,143 10,893 50,155 55,763
Provision for income taxes   2,631   2,670   13,118   14,030
Net income $ 7,512 $ 8,223 $ 37,037 $ 41,733
 
Earnings per share:
Basic $ 8.31 $ 8.76 $ 40.03 $ 44.64
Diluted $ 8.26 $ 8.67 $ 39.75 $ 44.15
 
Shares used in computing earnings per share:
Basic 904,163 938,343 925,331 934,818
Diluted 909,131 948,186 931,662 945,355
 
Cash dividends declared per common share $ 3.05 $ 2.65 $ 11.40 $ 2.65
 
(1) Includes share-based compensation expense as follows:
Cost of sales $ 88 $ 69 $ 350 $ 265
Research and development $ 209 $ 168 $ 917 $ 668
Selling, general and administrative $ 258 $ 211 $ 986 $ 807
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except number of shares which are reflected in thousands)

   

September 28,
2013

September 29,
2012

 
ASSETS:
 
Current assets:
Cash and cash equivalents $ 14,259 $ 10,746
Short-term marketable securities 26,287 18,383
Accounts receivable, less allowances of $99 and $98, respectively 13,102 10,930
Inventories 1,764 791
Deferred tax assets 3,453 2,583
Vendor non-trade receivables 7,539 7,762
Other current assets   6,882   6,458
Total current assets 73,286 57,653
 
Long-term marketable securities 106,215 92,122
Property, plant and equipment, net 16,597 15,452
Goodwill 1,577 1,135
Acquired intangible assets, net 4,179 4,224
Other assets   5,146   5,478
Total assets $ 207,000 $ 176,064
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
 
Current liabilities:
Accounts payable $ 22,367 $ 21,175
Accrued expenses 13,856 11,414
Deferred revenue   7,435   5,953
Total current liabilities 43,658 38,542
 
Deferred revenue – non-current 2,625 2,648
Long-term debt 16,960 0
Other non-current liabilities   20,208   16,664
Total liabilities   83,451   57,854
 
Commitments and contingencies
 
Shareholders' equity:
Common stock, no par value; 1,800,000 shares authorized; 899,213 and 939,208 shares issued and outstanding, respectively 19,764 16,422
Retained earnings 104,256 101,289
Accumulated other comprehensive income/(loss)   (471)   499
Total shareholders' equity   123,549   118,210
Total liabilities and shareholders' equity $ 207,000 $ 176,064
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 
Twelve Months Ended
September 28, 2013   September 29, 2012
 
Cash and cash equivalents, beginning of the year $ 10,746 $ 9,815
 
Operating activities:
Net income 37,037 41,733
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization 6,757 3,277
Share-based compensation expense 2,253 1,740
Deferred income tax expense 1,141 4,405
Changes in operating assets and liabilities:
Accounts receivable, net (2,172) (5,551)
Inventories (973) (15)
Vendor non-trade receivables 223 (1,414)
Other current and non-current assets 1,080 (3,162)
Accounts payable 2,340 4,467
Deferred revenue 1,459 2,824
Other current and non-current liabilities 4,521   2,552
Cash generated by operating activities 53,666   50,856
 
Investing activities:
Purchases of marketable securities (148,489) (151,232)
Proceeds from maturities of marketable securities 20,317 13,035
Proceeds from sales of marketable securities 104,130 99,770
Payments made in connection with business acquisitions, net (496) (350)
Payments for acquisition of property, plant and equipment (8,165) (8,295)
Payments for acquisition of intangible assets (911) (1,107)
Other (160)   (48)
Cash used in investing activities (33,774)   (48,227)
 
Financing activities:
Proceeds from issuance of common stock 530 665
Excess tax benefits from equity awards 701 1,351

Taxes paid related to net share settlement of equity awards

(1,082) (1,226)
Dividends and dividend equivalent rights paid (10,564) (2,488)
Repurchase of common stock (22,860) 0
Proceeds from issuance of long-term debt, net 16,896   0
Cash used in financing activities (16,379)   (1,698)
Increase in cash and cash equivalents 3,513   931
Cash and cash equivalents, end of the year $ 14,259 $ 10,746
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 9,128 $ 7,682
 
Apple Inc.
Q4 2013 Unaudited Summary Data
(Units in thousands, Revenue in millions)
                     
     
Q4'13 Q3'13 Q4'12

Sequential
Change

Year/Year Change
 
Operating Segments Revenue Revenue Revenue Revenue Revenue
Americas $13,941 $14,405 $13,810 - 3% 1%
Europe 8,005 7,614 8,023 5% 0%
Greater China (a) 5,733 4,641 5,427 24% 6%
Japan 3,341 2,543 2,367 31% 41%
Rest of Asia Pacific 1,980 2,046 2,110 - 3% - 6%
Retail 4,472 4,074 4,229 10% 6%
Total Apple     $37,472 $35,323 $35,966 6% 4%
 
     
Q4'13 Q3'13 Q4'12

Sequential
Change

Year/Year Change
 
Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
iPhone (b) 33,797 $19,510 31,241 $18,154 26,910 $16,645 8% 7% 26% 17%
iPad (b) 14,079 6,186 14,617 6,374 14,036 7,133 - 4% - 3% 0% - 13%
Mac (b) 4,574 5,624 3,754 4,893 4,923 6,617 22% 15% - 7% - 15%
iPod (b) 3,498 573 4,569 733 5,344 820 - 23% - 22% - 35% - 30%
iTunes/Software/Services (c) 4,260 3,990 3,496 7% 22%
Accessories (d) 1,319 1,179 1,255 12% 5%
Total Apple     $37,472 $35,323 $35,966 6% 4%

(a)

 

Greater China includes China, Hong Kong and Taiwan.

(b)

Includes deferrals and amortization of related non-software services and software upgrade rights.

(c)

Includes revenue from sales on the iTunes Store, the App Store, the Mac App Store, and the iBooks Store, and revenue from sales of AppleCare, licensing and other services.

(d)

Includes sales of hardware peripherals and Apple-branded and third-party accessories for iPhone, iPad, Mac and iPod.

Contacts

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

Sharing

Contacts

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