AAPL Apple Inc

Capital Return Program Expanding to $250 Billion

Apple® today announced financial results for its fiscal 2016 second quarter ended March 26, 2016. The Company posted quarterly revenue of $50.6 billion and quarterly net income of $10.5 billion, or $1.90 per diluted share. These results compare to revenue of $58 billion and net income of $13.6 billion, or $2.33 per diluted share, in the year-ago quarter. Gross margin was 39.4 percent compared to 40.8 percent in the year-ago quarter. International sales accounted for 67 percent of the quarter’s revenue.

“Our team executed extremely well in the face of strong macroeconomic headwinds,” said Tim Cook, Apple’s CEO. “We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices.”

The Company also announced that its Board of Directors has authorized an increase of $50 billion to the Company’s program to return capital to shareholders. Under the expanded program, Apple plans to spend a cumulative total of $250 billion of cash by the end of March 2018.

“We generated strong operating cash flow of $11.6 billion and returned $10 billion to shareholders through our capital return program during the March quarter,” said Luca Maestri, Apple’s CFO. “Thanks to the strength of our business results, we are happy to be announcing today a further increase of the program to $250 billion.”

As part of the updated program, the Board has increased its share repurchase authorization to $175 billion from the $140 billion level announced last year. The Company also expects to continue to net-share-settle vesting restricted stock units.

The Board has approved an increase of 10 percent to the Company’s quarterly dividend, and has declared a dividend of $.57 per share, payable on May 12, 2016 to shareholders of record as of the close of business on May 9, 2016.

From the inception of its capital return program in August 2012 through March 2016, Apple has returned over $163 billion to shareholders, including $117 billion in share repurchases.

The Company plans to continue to access the domestic and international debt markets to assist in funding the program. The management team and the Board will continue to review each element of the capital return program regularly and plan to provide an update on the program on an annual basis.

Apple is providing the following guidance for its fiscal 2016 third quarter:• revenue between $41 billion and $43 billion• gross margin between 37.5 percent and 38 percent• operating expenses between $6 billion and $6.1 billion• other income/(expense) of $300 million• tax rate of 25.5 percent

Apple will provide live streaming of its Q2 2016 financial results conference call beginning at 2:00 p.m. PDT on April 26, 2016 at www.apple.com/investor/earnings-call/. 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), tax rate, and plans for dividends, share repurchases and public debt issuance. 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 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 26, 2015, its Form 10-Q for the fiscal quarter ended December 26, 2015, and its Form 10-Q for the fiscal quarter ended March 26, 2016 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 revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, OS X, watchOS and tvOS — provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay and iCloud. Apple’s 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.

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.

© 2016 Apple Inc. All rights reserved. Apple and the Apple logo 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 26,2016

 

March 28,2015

March 26,2016

 

March 28,2015

  Net sales $ 50,557 $ 58,010 $ 126,429 $ 132,609 Cost of sales (1)   30,636   34,354   76,085   79,212 Gross margin   19,921   23,656   50,344   53,397   Operating expenses: Research and development (1) 2,511 1,918 4,915 3,813 Selling, general and administrative (1)   3,423   3,460   7,271   7,060 Total operating expenses   5,934   5,378   12,186   10,873 Operating income 13,987 18,278 38,158 42,524 Other income/(expense), net   155   286   557   456 Income before provision for income taxes 14,142 18,564 38,715 42,980 Provision for income taxes   3,626   4,995   9,838   11,387 Net income $ 10,516 $ 13,569 $ 28,877 $ 31,593   Earnings per share: Basic $ 1.91 $ 2.34 $ 5.22 $ 5.43 Diluted $ 1.90 $ 2.33 $ 5.19 $ 5.39   Shares used in computing earnings per share: Basic 5,514,381 5,793,799 5,536,656 5,818,441 Diluted 5,540,886 5,834,858 5,567,506 5,858,330   Cash dividends declared per share $ 0.52 $ 0.47 $ 1.04 $ 0.94   (1) Includes share-based compensation expense as follows: Cost of sales $ 191 $ 142 $ 395 $ 282 Research and development $ 468 $ 384 $ 934 $ 758 Selling, general and administrative $ 389 $ 401 $ 797 $ 775  

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

   

March 26,2016

September 26,2015

  ASSETS:   Current assets: Cash and cash equivalents $ 21,514 $ 21,120 Short-term marketable securities 33,769 20,481 Accounts receivable, less allowances of $60 and $63, respectively 12,229 16,849 Inventories 2,281 2,349 Vendor non-trade receivables 7,595 13,494 Other current assets   10,204   15,085 Total current assets 87,592 89,378   Long-term marketable securities 177,645 164,065 Property, plant and equipment, net 23,203 22,471 Goodwill 5,249 5,116 Acquired intangible assets, net 3,843 3,893 Other non-current assets   7,745   5,556 Total assets $ 305,277 $ 290,479     LIABILITIES AND SHAREHOLDERS’ EQUITY:   Current liabilities: Accounts payable $ 25,098 $ 35,490 Accrued expenses 23,208 25,181 Deferred revenue 9,461 8,940 Commercial paper 7,998 8,499 Current portion of long-term debt   2,500   2,500 Total current liabilities 68,265 80,610   Deferred revenue, non-current 3,322 3,624 Long-term debt 69,374 53,463 Other non-current liabilities   33,859   33,427 Total liabilities   174,820   171,124   Commitments and contingencies   Shareholders' equity: Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,478,446 and 5,578,753 shares issued and outstanding, respectively 29,484 27,416 Retained earnings 102,021 92,284 Accumulated other comprehensive income/(loss)   (1,048)   (345) Total shareholders' equity   130,457   119,355 Total liabilities and shareholders' equity $ 305,277 $ 290,479  

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

  Six Months Ended

March 26,2016

 

March 28,2015

  Cash and cash equivalents, beginning of the period $ 21,120 $ 13,844   Operating activities: Net income 28,877 31,593 Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization 5,431 5,054 Share-based compensation expense 2,126 1,815 Deferred income tax expense 3,092 1,879 Changes in operating assets and liabilities: Accounts receivable, net 4,620 6,555 Inventories 68 (285) Vendor non-trade receivables 5,899 2,500 Other current and non-current assets 300 2,448 Accounts payable (9,475) (5,428) Deferred revenue 219 993 Other current and non-current liabilities (2,093)   5,679 Cash generated by operating activities 39,064   52,803   Investing activities: Purchases of marketable securities (86,242) (92,523) Proceeds from maturities of marketable securities 9,148 5,871 Proceeds from sales of marketable securities 50,051 48,924 Payments made in connection with business acquisitions, net (140) (115) Payments for acquisition of property, plant and equipment (5,948) (5,586) Payments for acquisition of intangible assets (657) (155) Other (322)   88 Cash used in investing activities (34,110)   (43,496)   Financing activities: Proceeds from issuance of common stock 247 309 Excess tax benefits from equity awards 264 357 Payments for taxes related to net share settlement of equity awards (751) (608) Payments for dividends and dividend equivalents (5,871) (5,544) Repurchase of common stock (13,530) (12,000) Proceeds from issuance of term debt, net 15,584 11,332 Change in commercial paper, net (503)   (2,508) Cash used in financing activities (4,560)   (8,662)   Increase in cash and cash equivalents 394   645 Cash and cash equivalents, end of the period $ 21,514 $ 14,489   Supplemental cash flow disclosure: Cash paid for income taxes, net $ 6,630 $ 7,058 Cash paid for interest $ 565 $ 220   Apple Inc. Q2 2016 Unaudited Summary Data (Units in thousands, Revenue in millions)                             Q2 2016 Q1 2016 Q2 2015 Sequential Change Year/Year Change   Operating Segments Revenue Revenue Revenue Revenue Revenue Americas $19,096 $29,325 $21,316 - 35% - 10% Europe 11,535 17,932 12,204 - 36% - 5% Greater China 12,486 18,373 16,823 - 32% - 26% Japan 4,281 4,794 3,457 - 11% 24% Rest of Asia Pacific 3,159 5,448 4,210 - 42% - 25% Total Apple     $50,557 $75,872 $58,010 - 33% - 13%         Q2 2016 Q1 2016 Q2 2015 Sequential Change Year/Year Change   Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue iPhone (1) 51,193 $32,857 74,779 $51,635 61,170 $40,282 - 32% - 36% - 16% - 18% iPad (1) 10,251 4,413 16,122 7,084 12,623 5,428 - 36% - 38% - 19% - 19% Mac (1) 4,034 5,107 5,312 6,746 4,563 5,615

- 24%

- 24% - 12% - 9% Services (2) 5,991 6,056 4,996 - 1% 20% Other Products (1)(3) 2,189 4,351 1,689 - 50% 30% Total Apple     $50,557 $75,872 $58,010 - 33% - 13%  

(1)

 

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

(2)

Includes revenue from Internet Services, AppleCare, Apple Pay, licensing and other services.

(3)

Includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160426006807/en/

ApplePress:Kristin Huguet, 408-974-2414khuguet@apple.comorInvestor Relations:Nancy Paxton, 408-974-5420paxton1@apple.comJoan Hoover, 408-974-4570hoover1@apple.com