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Press release from Business Wire

Apple Reports Second Quarter Results

<p> <b>37.4 Million iPhones Sold; 19.5 Million iPads Sold</b> </p>

Tuesday, April 23, 2013

Apple Reports Second Quarter Results

16:30 EDT Tuesday, April 23, 2013

CUPERTINO, Calif. (Business Wire) -- Apple® today announced financial results for its fiscal 2013 second quarter ended March 30, 2013. The Company posted quarterly revenue of $43.6 billion and quarterly net profit of $9.5 billion, or $10.09 per diluted share. These results compare to revenue of $39.2 billion and net profit of $11.6 billion, or $12.30 per diluted share, in the year-ago quarter. Gross margin was 37.5 percent compared to 47.4 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter's revenue.

The Company sold 37.4 million iPhones in the quarter, compared to 35.1 million in the year-ago quarter. Apple also sold 19.5 million iPads during the quarter, compared to 11.8 million in the year-ago quarter. The Company sold just under 4 million Macs, compared to 4 million in the year-ago quarter.

“We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad,” said Tim Cook, Apple's CEO. “Our teams are hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline.”

“Our cash generation remains very strong, with $12.5 billion in cash flow from operations during the quarter and an ending cash balance of $145 billion,” said Peter Oppenheimer, Apple's CFO.

Apple is providing the following guidance for its fiscal 2013 third quarter:

• revenue between $33.5 billion and $35.5 billion

• gross margin between 36 percent and 37 percent

• operating expenses between $3.85 billion and $3.95 billion

• other income/(expense) of $300 million

• tax rate of 26%

Apple will provide live streaming of its Q2 2013 financial results conference call beginning at 2:00 p.m. PDT on April 23, 2013 at www.apple.com/quicktime/qtv/earningsq213. 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, and its Form 10-Q for the quarter ended March 30, 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

Six Months Ended

March 30,
2013

 

March 31,
2012

March 30,
2013

 

March 31,
2012

 
Net sales $ 43,603 $ 39,186 $ 98,115 $ 85,519
Cost of sales (1)   27,254   20,622   60,706   46,252

 

 

Gross margin   16,349   18,564   37,409   39,267
 
Operating expenses:
Research and development (1) 1,119 841 2,129 1,599
Selling, general and administrative (1)   2,672   2,339   5,512   4,944
 
Total operating expenses   3,791   3,180   7,641   6,543
 
Operating income 12,558 15,384 29,768 32,724
 
Other income/(expense), net   347   148   809   285
 
Income before provision for income taxes 12,905 15,532 30,577 33,009
 
Provision for income taxes   3,358   3,910   7,952   8,323
 
Net income $ 9,547 $ 11,622 $ 22,625 $ 24,686
 
Earnings per share:
Basic $ 10.16 $ 12.45 $ 24.09 $ 26.48
Diluted $ 10.09 $ 12.30 $ 23.90 $ 26.17
 
Shares used in computing earnings per share:
Basic 939,629 933,582 939,273 932,265
Diluted 946,035 944,893 946,626 943,185
 
Cash dividends declared per common share $ 2.65 $ 0 $ 5.30 $ 0
 
(1) Includes share-based compensation expense as follows:
Cost of sales $ 87 $ 63 $ 172 $ 126
Research and development $ 239 $ 168 $ 463 $ 328
Selling, general and administrative $ 249 $ 193 $ 485 $ 390
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

   

March 30,
2013

September 29,
2012

 
ASSETS:
 
Current assets:
Cash and cash equivalents $ 12,053 $ 10,746
Short-term marketable securities 27,084 18,383
Accounts receivable, less allowances of $99 and $98, respectively 7,084 10,930
Inventories 1,245 791
Deferred tax assets 3,242 2,583
Vendor non-trade receivables 6,252 7,762
Other current assets   6,377   6,458
Total current assets 63,337 57,653
 
Long-term marketable securities 105,550 92,122
Property, plant and equipment, net 15,026 15,452
Goodwill 1,400 1,135
Acquired intangible assets, net 4,136 4,224
Other assets   5,294   5,478
Total assets $ 194,743 $ 176,064
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
 
Current liabilities:
Accounts payable $ 14,912 $ 21,175
Accrued expenses 13,331 11,414
Deferred revenue   7,265   5,953
Total current liabilities 35,508 38,542
 
Deferred revenue – non-current 2,877 2,648
Other non-current liabilities   20,868   16,664
Total liabilities   59,253   57,854
 
Commitments and contingencies
 
Shareholders' equity:
Common stock, no par value; 1,800,000 shares authorized; 940,094 and 939,208 shares issued and outstanding, respectively 17,954 16,422
Retained earnings 116,572 101,289
Accumulated other comprehensive income   964   499
Total shareholders' equity   135,490   118,210
 
Total liabilities and shareholders' equity $ 194,743 $ 176,064
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 
Six Months Ended
March 30, 2013   March 31, 2012
 
Cash and cash equivalents, beginning of the period $ 10,746 $ 9,815
 
Operating activities:
Net income 22,625 24,686
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization 3,280 1,461
Share-based compensation expense 1,120 844
Deferred income tax expense 1,957 2,915
Changes in operating assets and liabilities:
Accounts receivable, net 3,846 (1,663)
Inventories (454) (326)
Vendor non-trade receivables 1,510 (379)
Other current and non-current assets 1,269 (1,510)
Accounts payable (4,422) 2,809
Deferred revenue 1,541 1,916
Other current and non-current liabilities 3,658   778
 
Cash generated by operating activities 35,930   31,531
 
Investing activities:
Purchases of marketable securities (81,163) (85,022)
Proceeds from maturities of marketable securities 9,243 7,702
Proceeds from sales of marketable securities 49,188 49,052
Payments made in connection with business acquisitions, net (299) (350)
Payments for acquisition of property, plant and equipment (4,325) (2,778)
Payments for acquisition of intangible assets (429) (160)
Other (93)   (48)
 
Cash used in investing activities (27,878)   (31,604)
 
Financing activities:
Proceeds from issuance of common stock 275 377
Excess tax benefits from equity awards 502 636
Dividends and dividend equivalent rights paid (4,984) 0
Repurchase of common stock (1,950) 0
Taxes paid related to net share settlement of equity awards (588)   (634)
 
Cash (used in)/generated by financing activities (6,745)   379
Increase in cash and cash equivalents 1,307   306
 
Cash and cash equivalents, end of the period $ 12,053 $ 10,121
 
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 4,258 $ 4,835
 
Apple Inc.
Q2 2013 Unaudited Summary Data
(Units in thousands, Revenue in millions)
 
                         
Q2'13 Q1'13 Q2'12 Sequential Change Year/Year Change
 
Operating Segments Revenue Revenue Revenue Revenue Revenue
Americas $ 14,052 $ 20,341 $ 13,182 - 31 % 7 %
Europe 9,800 12,464 8,807 - 21 % 11 %
Greater China (a) 8,213 6,830 7,637 20 % 8 %
Japan 3,135 4,443 2,645 - 29 % 19 %
Rest of Asia Pacific 3,162 3,993 2,516 - 21 % 26 %
Retail   5,241   6,441   4,399 - 19 % 19 %
Total Apple     $ 43,603 $ 54,512 $ 39,186 - 20 % 11 %
 
     
Q2'13 Q1'13 Q2'12 Sequential Change

Year/Year Change

 
Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
iPhone (b) 37,430 $ 22,955 47,789 $ 30,660 35,064 $ 22,276 - 22 % - 25 % 7 % 3 %
iPad (b) 19,477 8,746 22,860 10,674 11,798 6,264 - 15 % - 18 % 65 % 40 %
Mac (b) 3,952 5,447 4,061 5,519 4,017 5,073 - 3 % - 1 % - 2 % 7 %
iPod (b) 5,633 962 12,679 2,143 7,673 1,207 - 56 % - 55 % - 27 % - 20 %
iTunes/Software/Services (c) 4,114 3,687 3,171 12 % 30 %
Accessories (d)   1,379   1,829   1,195 - 25 % 15 %
Total Apple     $ 43,603 $ 54,512 $ 39,186 - 20 % 11 %
 

(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 iBookstore, 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.

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

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