Strong iPhone Sales Drive Record March Quarter Revenue and 15
Percent EPS Growth
Apple® today announced financial results for its fiscal 2014
second quarter ended March 29, 2014. The Company posted quarterly
revenue of $45.6 billion and quarterly net profit of $10.2 billion,
or $11.62 per diluted share. These results compare to revenue of
$43.6 billion and net profit of $9.5 billion, or $10.09 per diluted
share, in the year-ago quarter. Gross margin was 39.3 percent
compared to 37.5 percent in the year-ago quarter. International
sales accounted for 66 percent of the quarter’s revenue.
“We’re very proud of our quarterly results, especially our
strong iPhone sales and record revenue from services,” said Tim
Cook, Apple’s CEO. “We’re eagerly looking forward to introducing
more new products and services that only Apple could bring to
market.”
“We generated $13.5 billion in cash flow from operations and
returned almost $21 billion in cash to shareholders through
dividends and share repurchases during the March quarter,” said
Peter Oppenheimer, Apple’s CFO. “That brings cumulative payments
under our capital return program to $66 billion.”
Apple is providing the following guidance for its fiscal 2014
third quarter:
• revenue between $36 billion and $38 billion
• gross margin between 37 percent and 38 percent
• operating expenses between $4.4 billion and $4.5 billion
• other income/(expense) of $200 million
• tax rate of 26.1 percent
Apple will provide live streaming of its Q2 2014 financial
results conference call beginning at 2:00 p.m. PDT on April 23,
2014 at www.apple.com/quicktime/qtv/earningsq214. 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 28, 2013, its Form 10-Q for the quarter ended December
28, 2013, and its Form 10-Q for the quarter ended March 29, 2014 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.
© 2014 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 29,2014
March 30,2013
March 29,2014
March 30,2013
Net sales $ 45,646 $ 43,603 $ 103,240 $ 98,115 Cost of sales
(1) 27,699 27,254 63,447 60,706 Gross
margin 17,947 16,349 39,793 37,409
Operating expenses: Research and development (1) 1,422 1,119
2,752 2,129 Selling, general and administrative (1) 2,932
2,672 5,985 5,512 Total operating expenses
4,354 3,791 8,737 7,641 Operating
income 13,593 12,558 31,056 29,768 Other income/(expense), net
225 347 471 809 Income before provision
for income taxes 13,818 12,905 31,527 30,577 Provision for income
taxes 3,595 3,358 8,232 7,952 Net
income $ 10,223 $ 9,547 $ 23,295 $ 22,625 Earnings per
share: Basic $ 11.69 $ 10.16 $ 26.31 $ 24.09 Diluted $ 11.62 $
10.09 $ 26.16 $ 23.90 Shares used in computing earnings per
share: Basic 874,757 939,629 885,415 939,273 Diluted 879,528
946,035 890,490 946,626 Cash dividends declared per common
share $ 3.05 $ 2.65 $ 6.10 $ 5.30 (1) Includes share-based
compensation expense as follows: Cost of sales $ 110 $ 87 $ 219 $
172 Research and development $ 300 $ 239 $ 589 $ 463 Selling,
general and administrative $ 286 $ 249 $ 569 $ 485
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
(In millions, except number of shares
which are reflected in thousands)
March 29,2014
September 28,2013
ASSETS: Current assets: Cash and cash equivalents $
18,949 $ 14,259 Short-term marketable securities 22,401 26,287
Accounts receivable, less allowances of $88 and $99, respectively
9,700 13,102 Inventories 1,829 1,764 Deferred tax assets 4,014
3,453 Vendor non-trade receivables 6,120 7,539 Other current assets
7,528 6,882 Total current assets 70,541 73,286
Long-term marketable securities 109,239 106,215 Property, plant and
equipment, net 15,120 16,597 Goodwill 2,055 1,577 Acquired
intangible assets, net 3,928 4,179 Other assets 5,106
5,146 Total assets $ 205,989 $ 207,000 LIABILITIES
AND SHAREHOLDERS’ EQUITY: Current liabilities: Accounts
payable $ 18,914 $ 22,367 Accrued expenses 15,984 13,856 Deferred
revenue 8,310 7,435 Total current liabilities 43,208
43,658 Deferred revenue – non-current 3,164 2,625 Long-term
debt 16,962 16,960 Other non-current liabilities 22,476
20,208 Total liabilities 85,810 83,451
Commitments and contingencies Shareholders' equity: Common
stock and additional paid-in capital, $0.00001 par value: 1,800,000
shares authorized; 861,745 and 899,213 shares issued and
outstanding, respectively 21,496 19,764 Retained earnings 98,934
104,256 Accumulated other comprehensive income/(loss) (251)
(471) Total shareholders' equity 120,179
123,549 Total liabilities and shareholders' equity $ 205,989 $
207,000
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In millions)
Six Months Ended March 29, 2014
March 30, 2013 Cash and cash equivalents, beginning
of the period $ 14,259 $ 10,746 Operating activities: Net
income 23,295 22,625 Adjustments to reconcile net income to cash
generated by operating activities: Depreciation and amortization
4,031 3,280 Share-based compensation expense 1,377 1,120 Deferred
income tax expense 2,059 1,957 Changes in operating assets and
liabilities: Accounts receivable, net 3,401 3,846 Inventories (65)
(454) Vendor non-trade receivables 1,419 1,510 Other current and
non-current assets 14 1,269 Accounts payable (2,375) (4,422)
Deferred revenue 1,414 1,541 Other current and non-current
liabilities 1,638 3,658 Cash generated by operating
activities 36,208 35,930 Investing activities:
Purchases of marketable securities (90,360) (81,163) Proceeds from
maturities of marketable securities 10,869 9,243 Proceeds from
sales of marketable securities 80,241 49,188 Payments made in
connection with business acquisitions, net (559) (299) Payments for
acquisition of property, plant and equipment (3,367) (4,325)
Payments for acquisition of intangible assets (163) (429) Other
(23) (93) Cash used in investing activities (3,362)
(27,878) Financing activities: Proceeds from issuance of
common stock 341 275 Excess tax benefits from equity awards 363 502
Taxes paid related to net share settlement of equity awards (430)
(588) Dividends and dividend equivalents paid (5,430) (4,984)
Repurchase of common stock (23,000) (1,950) Cash used in
financing activities (28,156) (6,745) Increase in
cash and cash equivalents 4,690 1,307 Cash and cash
equivalents, end of the period $ 18,949 $ 12,053
Supplemental cash flow disclosure: Cash paid for income taxes, net
$ 5,369 $ 4,258 Cash paid for interest $ 161 $ 0
Apple
Inc. Q2 2014 Unaudited Summary Data (Units in thousands,
Revenue in millions)
Q2'14 Q1'14 Q2'13 Sequential Change
Year/Year Change Operating Segments
Revenue Revenue
Revenue Revenue
Revenue Americas $14,310 $20,098 $14,052 - 29%
2% Europe 10,230 13,073 9,800 - 22% 4% Greater China (a) 9,289
8,844 8,213 5% 13% Japan 3,963 4,948 3,135 - 20% 26% Rest of Asia
Pacific 2,627 3,633 3,162 - 28% - 17% Retail 5,227 6,998 5,241 -
25% 0%
Total Apple $45,646
$57,594 $43,603 - 21% 5%
Q2'14 Q1'14 Q2'13 Sequential
Change Year/Year Change Product Summary
Units Revenue
Units Revenue
Units Revenue
Units Revenue
Units Revenue iPhone (b)
43,719 $26,064 51,025 $32,498 37,430 $22,955 - 14% - 20% 17% 14%
iPad (b) 16,350 7,610 26,035 11,468 19,477 8,746 - 37% - 34% - 16%
- 13% Mac (b) 4,136 5,519 4,837 6,395 3,952 5,447 - 14% - 14% 5% 1%
iPod (b) 2,761 461 6,049 973 5,633 962 - 54% - 53% - 51% - 52%
iTunes/Software/Services (c) 4,573 4,397 4,114 4% 11% Accessories
(d) 1,419 1,863 1,379 - 24% 3%
Total Apple
$45,646 $57,594 $43,603 - 21% 5%
(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.
ApplePress:Steve Dowling,
408-974-1896dowling@apple.comorInvestor Relations:Nancy Paxton,
408-974-5420paxton1@apple.comJoan Hoover,
408-974-4570hoover1@apple.com
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