Apple Reports Second Quarter Results

Record March Quarter Revenue and Profit

iPhone Sales More Than Double

News provided by

Apple

Apr 20, 2010, 04:34 ET

CUPERTINO, Calif., April 20, /PRNewswire-FirstCall/ -- Apple® today announced financial results for its fiscal 2010 second quarter ended March 27, 2010. The Company posted revenue of $13.50 billion and net quarterly profit of $3.07 billion, or $3.33 per diluted share. These results compare to revenue of $9.08 billion and net quarterly profit of $1.62 billion, or $1.79 per diluted share, in the year-ago quarter. Gross margin was 41.7 percent, up from 39.9 percent in the year-ago quarter. International sales accounted for 58 percent of the quarter's revenue.

Apple sold 2.94 million Macintosh® computers during the quarter, representing a 33 percent unit increase over the year-ago quarter. The Company sold 8.75 million iPhones in the quarter, representing 131 percent unit growth over the year-ago quarter. Apple sold 10.89 million iPods during the quarter, representing a one percent unit decline from the year-ago quarter.

"We're thrilled to report our best non-holiday quarter ever, with revenues up 49 percent and profits up 90 percent," said Steve Jobs, Apple's CEO. "We've launched our revolutionary new iPad and users are loving it, and we have several more extraordinary products in the pipeline for this year."

"Looking ahead to the third fiscal quarter of 2010, we expect revenue in the range of about $13.0 billion to $13.4 billion and we expect diluted earnings per share in the range of about $2.28 to $2.39," said Peter Oppenheimer, Apple's CFO.

Apple will provide live streaming of its Q2 2010 financial results conference call beginning at 2:00 p.m. PDT on April 20, 2010 at www.apple.com/quicktime/qtv/earningsq210/. 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 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 and applications; 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 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, 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 Form 10-Q for the quarter ended December 26, 2009, and its Form 10-Q for the quarter ended March 27, 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 ignited the personal computer revolution with the Apple II, then reinvented the personal computer with the Macintosh. Apple continues to lead the industry with its award-winning computers, OS X operating system, and iLife, iWork and professional applications. Apple leads the digital music revolution with its iPods and iTunes online store, has reinvented 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.

-© 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.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three Months Ended

Six Months Ended

March 27, 2010

March 28, 2009

March 27, 2010

March 28, 2009












Net sales

$

13,499

$

9,084

$

29,182

$

20,964

Cost of sales (1)


7,874

5,457

17,146

12,830












 Gross margin

5,625

3,627

12,036

8,134












Operating expenses:










Research and development (1)

426

319

824

634

Selling, general and administrative (1)

1,220

985

2,508

2,076












              Total operating expenses

1,646

1,304

3,332

2,710












Operating income

3,979

2,323

8,704

5,424












Other income and expense

50

63

83

221












Income before provision for income taxes

4,029

2,386

8,787

5,645












Provision for income taxes

955

766

2,335

1,770












Net income

$

3,074

$

1,620

$

6,452

$

3,875












Earnings per common share:










Basic

$

3.39

$

1.82

$

7.12

$

4.35

Diluted

$

3.33

$

1.79

$

7.00

$

4.29












Shares used in computing earnings per share:










Basic

907,548

891,180

905,545

890,161

Diluted

922,878

902,993

921,331

902,243












(1) Includes stock-based compensation expense as follows:










Cost of sales

$

37

$

29

$

74

$

57

Research and development

$

86

$

67

$

160

$

127

Selling, general and administrative

$

108

$

85

$

202

$

167

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)

March 27, 2010

September 26, 2009






ASSETS:






Current assets:




 Cash and cash equivalents

$

10,018

$

5,263

 Shortterm marketable securities

13,137

18,201

 Accounts receivable, less allowances of $57 and $52, respectively

2,886

3,361

 Inventories

638

455

 Deferred tax assets

1,142

1,135

 Other current assets

4,515

3,140

     Total current assets

32,336

31,555






Longterm marketable securities

18,549

10,528

Property, plant and equipment, net

3,504

2,954

Goodwill

480

206

Acquired intangible assets, net

263

247

Other assets

1,925

2,011

     Total assets

$

57,057

$

47,501












LIABILITIES AND SHAREHOLDERS' EQUITY:






Current liabilities:




 Accounts payable

$

5,666

$

5,601

 Accrued expenses

4,021

3,852

 Deferred revenue

2,542

2,053

     Total current liabilities

12,229

11,506






Deferred revenue – non-current


941

853

Other non-current liabilities

4,539

3,502

     Total liabilities

17,709

15,861






Commitments and contingencies










Shareholders' equity:




Common stock, no par value; 1,800,000,000 shares authorized; 909,635,811 and 899,805,500 shares issued and outstanding, respectively

9,553


8,210

 Retained earnings

29,670

23,353

 Accumulated other comprehensive income

125

77

     Total shareholders' equity

39,348

31,640






     Total liabilities and shareholders' equity

$

57,057

$

47,501

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Six Months Ended

March 27, 2010

March 28, 2009






Cash and cash equivalents, beginning of the period

$

5,263

$

11,875






Operating activities:




  Net income

6,452

3,875

 Adjustments to reconcile net income to cash generated by operating activities:




    Depreciation, amortization and accretion

425

349

    Stock-based compensation expense

436

351

    Deferred income tax expense

893

570

    Loss on disposition of property, plant and equipment

9

8

 Changes in operating assets and liabilities:




    Accounts receivable, net

482

490

    Inventories

(183)

197

    Other current assets

(824)

1,234

    Other assets

149

(361)

    Accounts payable

(18)

(1,527)

    Deferred revenue

577

128

    Other liabilities

(287)

(535)






    Cash generated by operating activities

8,111

4,779






Investing activities:




 Purchases of marketable securities

(25,061)

(23,483)

 Proceeds from maturities of marketable securities

13,331

6,280

 Proceeds from sales of marketable securities

8,686

5,457

 Purchases of other long-term investments

(9)

(54)

 Payments made in connection with business acquisitions, net of cash acquired

(325)

-

 Payment for acquisition of property, plant and equipment

(650)

(439)

 Payment for acquisition of intangible assets

(32)

(30)

 Other

19

(55)






    Cash used in investing activities

(4,041)

(12,324)






Financing activities:




 Proceeds from issuance of common stock

534

122

 Excess tax benefits from stock-based compensation

413

47

 Cash used to net share settle equity awards

(262)

(33)






    Cash generated by financing activities

685

136






Increase/(decrease) in cash and cash equivalents

4,755

(7,409)






Cash and cash equivalents, end of the period

$

10,018

$

4,466






Supplemental cash flow disclosure:




 Cash paid for income taxes, net

$

2,144

$

1,828

Apple Inc.

Q2 2010 Unaudited Summary Data



































Q1 2010

Q2 2009

Q2 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

1,187

$6,092

809

$3,970

971

$4,993

- 18%

- 18%

20%

26%

Europe

1,068

5,024

658

2,485

899

4,050

- 16%

- 19%

37%

63%

Japan

105

783

109

587

129

887

23%

13%

18%

51%

Asia Pacific

313

1,813

202

665

338

1,886

8%

4%

67%

184%

Retail

689

1,971

438

1,377

606

1,683

- 12%

- 15%

38%

22%
















Total Operating Segments

3,362

$15,683

2,216

$9,084

2,943

$13,499

- 12%

- 14%

33%

49%



























































































































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)

1,234

$1,692

818

$1,056

1,147

$1,532

- 7%

- 9%

40%

45%

Portables (2)

2,128

2,758

1,398

1,904

1,796

2,228

- 16%

- 19%

28%

17%

Subtotal CPUs

3,362

4,450

2,216

2,960

2,943

3,760

- 12%

- 16%

33%

27%

iPod

20,970

3,391

11,013

1,665

10,885

1,861

- 48%

- 45%

- 1%

12%

Other Music Related Products and Services (3)

1,164

1,049

1,327

14%

27%

iPhone and Related Products and Services (4)

8,737

5,578

3,793

2,427

8,752

5,445

0%

- 2%

131%

124%

Peripherals and Other Hardware

469

357

472

1%

32%

Software, Service and Other Sales

631

626

634

0%

1%

Total Apple

$15,683

$9,084

$13,499

- 14%

49%
















































(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)  Units consist of iPhone handset sales; Revenue is derived from handset sales, carrier agreements, and Apple-branded and third-party iPhone accessories.  


K = Units in thousands               $M = Amounts in millions

SOURCE Apple

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