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Press release from Business Wire

Apple Reports Fourth Quarter Results

<p> 26.9 Million iPhones Sold; Record Fourth Quarter Revenue and Profit </p> <p> Board Declares Quarterly Dividend of $2.65 per Common Share </p>

Thursday, October 25, 2012

Apple Reports Fourth Quarter Results16:30 EDT Thursday, October 25, 2012 CUPERTINO, Calif. (Business Wire) -- Apple® today announced financial results for its fiscal 2012 fourth quarter ended September 29, 2012. The Company posted quarterly revenue of $36.0 billion and quarterly net profit of $8.2 billion, or $8.67 per diluted share. These results compare to revenue of $28.3 billion and net profit of $6.6 billion, or $7.05 per diluted share, in the year-ago quarter. Gross margin was 40.0 percent compared to 40.3 percent in the year-ago quarter. International sales accounted for 60 percent of the quarter's revenue. The Company sold 26.9 million iPhones in the quarter, representing 58 percent unit growth over the year-ago quarter. Apple sold 14.0 million iPads during the quarter, a 26 percent unit increase over the year-ago quarter. The Company sold 4.9 million Macs during the quarter, a 1 percent unit increase over the year-ago quarter. Apple sold 5.3 million iPods, a 19 percent unit decline from the year-ago quarter. Apple's Board of Directors has declared a cash dividend of $2.65 per share of the Company's common stock. The dividend is payable on November 15, 2012, to shareholders of record as of the close of business on November 12, 2012. “We're very proud to end a fantastic fiscal year with record September quarter results,” said Tim Cook, Apple's CEO. “We're entering this holiday season with the best iPhone, iPad, Mac and iPod products ever, and we remain very confident in our new product pipeline.” “We're pleased to have generated over $41 billion in net income and over $50 billion in operating cash flow in fiscal 2012,” said Peter Oppenheimer, Apple's CFO. “Looking ahead to the first fiscal quarter of 2013, we expect revenue of about $52 billion and diluted earnings per share of about $11.75.” Apple will provide live streaming of its Q4 2012 financial results conference call beginning at 2:00 p.m. PDT on October 25, 2012 at www.apple.com/quicktime/qtv/earningsq412. 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 diluted 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 “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 24, 2011, its Forms 10-Q for the fiscal quarters ended December 31, 2011; March 31, 2012; and June 30, 2012; and its Form 10-K for the year ended September 29, 2012 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. © 2012 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 EndedTwelve Months EndedSeptember 29,2012   September 24,2011September 29,2012   September 24,2011   Net sales $ 35,966 $ 28,270 $ 156,508 $ 108,249 Cost of sales (1)   21,565   16,890   87,846   64,431   Gross margin   14,401   11,380   68,662   43,818   Operating expenses: Research and development (1) 906 645 3,381 2,429 Selling, general and administrative (1)   2,551   2,025   10,040   7,599   Total operating expenses   3,457   2,670   13,421   10,028   Operating income 10,944 8,710 55,241 33,790   Other income/(expense), net   (51)   81   522   415   Income before provision for income taxes 10,893 8,791 55,763 34,205   Provision for income taxes   2,670   2,168   14,030   8,283   Net income $ 8,223 $ 6,623 $ 41,733 $ 25,922   Earnings per share: Basic $ 8.76 $ 7.13 $ 44.64 $ 28.05 Diluted $ 8.67 $ 7.05 $ 44.15 $ 27.68   Shares used in computing earnings per share: Basic 938,343 928,280 934,818 924,258 Diluted 948,186 939,517 945,355 936,645   Cash dividends declared per common share $ 2.65 $ 0.00 $ 2.65 $ 0.00   (1) Includes share-based compensation expense as follows: Cost of sales $ 69 $ 45 $ 265 $ 200 Research and development $ 168 $ 114 $ 668 $ 450 Selling, general and administrative $ 211 $ 139 $ 807 $ 518   Apple Inc.UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands)     September 29,2012September 24,2011   ASSETS:   Current assets: Cash and cash equivalents $ 10,746 $ 9,815 Short-term marketable securities 18,383 16,137 Accounts receivable, less allowances of $98 and $53, respectively 10,930 5,369 Inventories 791 776 Deferred tax assets 2,583 2,014 Vendor non-trade receivables 7,762 6,348 Other current assets   6,458   4,529 Total current assets 57,653 44,988   Long-term marketable securities 92,122 55,618 Property, plant and equipment, net 15,452 7,777 Goodwill 1,135 896 Acquired intangible assets, net 4,224 3,536 Other assets   5,478   3,556 Total assets $ 176,064 $ 116,371     LIABILITIES AND SHAREHOLDERS' EQUITY:   Current liabilities: Accounts payable $ 21,175 $ 14,632 Accrued expenses 11,414 9,247 Deferred revenue   5,953   4,091 Total current liabilities 38,542 27,970   Deferred revenue – non-current 2,648 1,686 Other non-current liabilities   16,664   10,100 Total liabilities   57,854   39,756   Commitments and contingencies   Shareholders' equity: Common stock, no par value; 1,800,000 shares authorized; 939,208 and 929,277 shares issued and outstanding, respectively 16,422 13,331 Retained earnings 101,289 62,841 Accumulated other comprehensive income   499   443 Total shareholders' equity   118,210   76,615   Total liabilities and shareholders' equity $ 176,064 $ 116,371   Apple Inc.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions)   Twelve Months EndedSeptember 29,2012   September 24,2011   Cash and cash equivalents, beginning of the year $ 9,815 $ 11,261   Operating activities: Net income 41,733 25,922 Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization 3,277 1,814 Share-based compensation expense 1,740 1,168 Deferred income tax expense 4,405 2,868 Changes in operating assets and liabilities: Accounts receivable, net (5,551) 143 Inventories (15) 275 Vendor non-trade receivables (1,414) (1,934) Other current and non-current assets (3,162) (1,391) Accounts payable 4,467 2,515 Deferred revenue 2,824 1,654 Other current and non-current liabilities 2,552   4,495   Cash generated by operating activities 50,856   37,529   Investing activities: Purchases of marketable securities (151,232) (102,317) Proceeds from maturities of marketable securities 13,035 20,437 Proceeds from sales of marketable securities 99,770 49,416 Payments made in connection with business acquisitions, net of cash acquired (350) (244) Payments for acquisition of property, plant and equipment (8,295) (4,260) Payments for acquisition of intangible assets (1,107) (3,192) Other (48)   (259)   Cash used in investing activities (48,227)   (40,419)   Financing activities: Proceeds from issuance of common stock 665 831 Excess tax benefits from equity awards 1,351 1,133 Dividends and dividend equivalent rights paid (2,488) 0 Taxes paid related to net share settlement of equity awards (1,226)   (520)   Cash (used in)/generated by financing activities (1,698)   1,444   Increase/(decrease) in cash and cash equivalents 931   (1,446)   Cash and cash equivalents, end of the year $ 10,746 $ 9,815   Supplemental cash flow disclosure: Cash paid for income taxes, net $ 7,682 $ 3,338                         Apple Inc.Q4 2012 Unaudited Summary Data (Units in thousands, Revenue in millions)         Q3 2012Q4 2011Q4 2012Sequential ChangeYear/Year ChangeOperating SegmentsMac UnitsRevenueMac UnitsRevenueMac UnitsRevenueMac UnitsRevenueMac UnitsRevenue Americas 1,522 $ 12,806 1,716 $ 9,648 1,651 $ 13,810 8% 8% - 4% 43% Europe 941 8,237 1,176 7,397 1,135 8,023 21% - 3% - 3% 8% Japan 173 2,009 175 1,111 151 2,367 - 13% 18% - 14% 113% Asia Pacific 593 7,887 731 6,530 877 7,537 48% - 4% 20% 15% Retail 791     4,084 1,096     3,584 1,109     4,229 40% 4% 1% 18% Total Operating Segments4,020$35,0234,894$28,2704,923   $35,966 22% 3% 1% 27%             Sequential ChangeYear/Year ChangeProduct SummaryUnitsRevenueUnitsRevenueUnitsRevenueUnitsRevenueUnitsRevenue Mac Desktops (1)(9) 1,010 $ 1,287 1,278 $ 1,687 968 $ 1,254 - 4% - 3% - 24% - 26% Mac Portables (2)(9) 3,010     3,646 3,616     4,585 3,955     5,363 31% 47% 9% 17% Subtotal Mac 4,020 4,933 4,894 6,272 4,923 6,617 22% 34% 1% 6% iPod (3)(9) 6,751 1,060 6,622 1,103 5,344 820 - 21% - 23% - 19% - 26% Other Music Related Products and Services (4) 2,060 1,678 2,296 11% 37% iPhone and Related Products and Services (5)(9) 26,028 16,245 17,073 10,980 26,910 17,125 3% 5% 58% 56% iPad and Related Products and Services (6)(9) 17,042 9,171 11,123 6,868 14,036 7,510 - 18% - 18% 26% 9% Peripherals and Other Hardware (7) 663 640 706 6% 10% Software, Service and Other Sales (8)       891       729       892 0% 22% Total Apple$35,023$28,270     $35,966 3% 27%       (1) Includes revenue from iMac, Mac mini and Mac Pro sales. (2) Includes revenue from MacBook, MacBook Air and MacBook Pro sales. (3) Includes revenue from iPod sales. (4) Includes revenue from sales from the iTunes Store, App Store and iBookstore in addition to sales of iPod services and Apple-branded and third-party iPod accessories. (5) Includes revenue from sales of iPhone, iPhone services, and Apple-branded and third-party iPhone accessories. (6) Includes revenue from sales of iPad, iPad services, and Apple-branded and third-party iPad accessories. (7) Includes revenue from sales of displays, networking products, and other hardware. (8) Includes revenue from sales of Apple-branded and third-party Mac software, and services. (9) Includes amortization of related revenue deferred for non-software services and embedded software upgrade rights. ApplePress Contact:Steve Dowling, 408-974-1896dowling@apple.comInvestor Relations Contacts:Nancy Paxton, 408-974-5420paxton1@apple.comJoan Hoover, 408-974-4570hoover1@apple.com