All-Time Highest Revenue and Profit New Accounting Standards
Adopted CUPERTINO, Calif., Jan. 25 /PRNewswire-FirstCall/ -- Apple®
today announced financial results for its fiscal 2010 first quarter
ended December 26, 2009. The Company posted revenue of $15.68
billion and a net quarterly profit of $3.38 billion, or $3.67 per
diluted share. These results compare to revenue of $11.88 billion
and net quarterly profit of $2.26 billion, or $2.50 per diluted
share, in the year-ago quarter. Gross margin was 40.9 percent, up
from 37.9 percent in the year-ago quarter. International sales
accounted for 58 percent of the quarter's revenue. Apple sold 3.36
million Macintosh® computers during the quarter, representing a 33
percent unit increase over the year-ago quarter. The Company sold
8.7 million iPhones in the quarter, representing 100 percent unit
growth over the year-ago quarter. Apple sold 21 million iPods
during the quarter, representing an eight percent unit decline from
the year-ago quarter. During the quarter Apple elected
retrospective adoption of the Financial Accounting Standards
Board's amended accounting standards* related to certain revenue
recognition. Adoption of the new accounting standards significantly
changes how the Company accounts for certain items, particularly
sales of iPhone® and Apple TV®. "If you annualize our quarterly
revenue, it's surprising that Apple is now a $50+ billion company,"
said Steve Jobs, Apple's CEO. "The new products we are planning to
release this year are very strong, starting this week with a major
new product that we're really excited about." "We are very pleased
to have generated $5.8 billion in cash during the quarter," said
Peter Oppenheimer, Apple's CFO. "Looking ahead to the second fiscal
quarter of 2010, we expect revenue in the range of about $11.0
billion to $11.4 billion and we expect diluted earnings per share
in the range of about $2.06 to $2.18." Apple will provide live
streaming of its Q1 2010 financial results conference call
utilizing QuickTime®, Apple's standards-based technology for live
and on-demand audio and video streaming. The live webcast will
begin at 2:00 p.m. PST on January 25, 2010 at
http://www.apple.com/quicktime/qtv/earningsq110/ and will also be
available for replay for approximately two weeks thereafter.
*Retrospective Adoption of Amended Accounting Standards On
September 23, 2009, the Financial Accounting Standards Board
ratified Emerging Issues Task Force (EITF) Issue 08-1 and EITF
Issue 09-3, resulting in the issuance of accounting standard
updates ASU 2009-13 and ASU 2009-14. Apple was required to adopt
the new accounting standards no later than the first quarter of
fiscal 2011. Apple elected to adopt the new standards during the
first quarter of fiscal 2010, as reflected in its Quarterly Report
on Form 10-Q for the quarter ended December 26, 2009, which was
filed with the SEC on January 25, 2010. The Company also filed a
Form 10-K/A to amend its Form 10-K for the year ended September 26,
2009 solely to reflect the retrospective adoption of the new
accounting standards to the periods presented in that report.
Additionally, Apple filed a Form 8-K that included selected
quarterly financial schedules reflecting the impact of
retrospective adoption of the new accounting standards and
reconciling the application of old and new accounting principles to
historical income statements, balance sheets, cash flow from
operations, deferred revenue and summary data information. These
financial schedules will also be available on the Company's website
at http://www.apple.com/investor. The new accounting principles
result in the Company's recognition of substantially all of the
revenue and product cost for iPhone and Apple TV when those
products are delivered to customers. Under historical accounting
principles, the Company was required to account for sales of both
iPhone and Apple TV using subscription accounting because the
Company indicated it might from time to time provide future
unspecified software upgrades and features for those products free
of charge. Under subscription accounting, revenue and associated
product cost of sales for iPhone and Apple TV were deferred at the
time of sale and recognized on a straight-line basis over each
product's estimated economic life. This resulted in the deferral of
significant amounts of revenue and cost of sales related to iPhone
and Apple TV. Because Apple began selling both iPhone and Apple TV
in fiscal 2007, the Company retrospectively adopted the new
accounting principles as if the new accounting principles had been
applied in all prior periods. Consequently, the financial results
of each quarter from fiscal 2007 through fiscal 2009 have been
revised. The Company believes retrospective adoption provides
analysts and investors the most comparable and useful financial
information and better reflects the underlying performance of the
Company's business. For additional information refer to the
"Explanatory Note" in Apple's Amendment No. 1 to its Annual Report
on Form 10-K for the year ended September 26, 2009. 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 for the fiscal year ended September 26,
2009 and its Form 10-Q for the quarter ended December 26, 2009. 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 in the 1970s
with the Apple II and reinvented the personal computer in the 1980s
with the Macintosh. Today, Apple continues to lead the industry in
innovation with its award-winning computers, OS X operating system
and iLife and professional applications. Apple is also spearheading
the digital media revolution with its iPod portable music and video
players and iTunes online store, and has entered the mobile phone
market with its revolutionary iPhone. © 2010 Apple Inc. All rights
reserved. Apple, the Apple logo, Mac, Mac OS, Macintosh, iPhone,
Apple TV and QuickTime 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 ------------------ December
26, December 27, ------------ ------------ 2009 (2) 2008 (2)
------- ------- Net sales $15,683 $11,880 Cost of sales (1) 9,272
7,373 ----- ----- Gross margin 6,411 4,507 ----- ----- Operating
expenses: Research and development (1) 398 315 Selling, general and
administrative (1) 1,288 1,091 ----- ----- Total operating expenses
1,686 1,406 ----- ----- Operating income 4,725 3,101 Other income
and expense 33 158 --- --- Income before provision for income taxes
4,758 3,259 Provision for income taxes 1,380 1,004 ----- ----- Net
income $3,378 $2,255 ====== ====== Earnings per common share: Basic
$3.74 $2.54 Diluted $3.67 $2.50 Shares used in computing earnings
per share: Basic 903,542 889,142 Diluted 919,783 901,494 (1)
Includes stock-based compensation expense as follows: Cost of sales
$37 $28 Research and development $74 $60 Selling, general and
administrative $94 $82 (2) In September 2009, the Financial
Accounting Standards Board amended the accounting principles
related to revenue recognition for arrangements with multiple
deliverables and arrangements that include software elements. Apple
adopted the new accounting principles on a retrospective basis
during the first quarter of 2010. The new accounting principles
significantly change how Apple accounts for certain revenue
arrangements that include both hardware and software elements. The
impact of the new accounting principles is reflected for all
periods included above. For additional information refer to the
"Explanatory Note" in Apple's Amendment No. 1 to the Annual Report
on Form 10-K for the year ended September 26, 2009. UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except share
amounts) December 26, September 26, 2009 (1) 2009 (1) ------------
-------------- ASSETS: Current assets: Cash and cash equivalents
$7,609 $5,263 Short- term marketable securities 17,187 18,201
Accounts receivable, less allowances of $54 and $52, respectively
3,090 3,361 Inventories 576 455 Deferred tax assets 1,180 1,135
Other current assets 3,690 3,140 ----- ----- Total current assets
33,332 31,555 Long-term marketable securities 15,024 10,528
Property, plant and equipment, net 3,115 2,954 Goodwill 253 206
Acquired intangible assets, net 241 247 Other assets 1,961 2,011
----- ----- Total assets $53,926 $47,501 ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts
payable $6,511 $5,601 Accrued expenses 3,996 3,852 Deferred revenue
2,590 2,053 ----- ----- Total current liabilities 13,097 11,506
Deferred revenue - non- current 922 853 Other non- current
liabilities 4,139 3,502 ----- ----- Total liabilities 18,158 15,861
------ ------ Commitments and contingencies Shareholders' equity:
Common stock, no par value; 1,800,000,000 shares authorized;
906,282,182 and 899,805,500 shares issued and outstanding,
respectively 8,962 8,210 Retained earnings 26,695 23,353
Accumulated other comprehensive income 111 77 --- --- Total
shareholders' equity 35,768 31,640 ------ ------ Total liabilities
and shareholders' equity $53,926 $47,501 ======= ======= (1) In
September 2009, the Financial Accounting Standards Board amended
the accounting principles related to revenue recognition for
arrangements with multiple deliverables and arrangements that
include software elements. Apple adopted the new accounting
principles on a retrospective basis during the first quarter of
2010. The new accounting principles significantly change how Apple
accounts for certain revenue arrangements that include both
hardware and software elements. The impact of the new accounting
principles is reflected for all periods included above. For
additional information refer to the "Explanatory Note" in Apple's
Amendment No. 1 to the Annual Report on Form 10-K for the year
ended September 26, 2009. UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In millions) Three Months Ended
------------------ December December 26, 27, --------- ---------
2009 (1) 2008 (1) ------- ------- Cash and cash equivalents,
beginning of the period $5,263 $11,875 ------ ------- Operating
activities: Net income 3,378 2,255 Adjustments to reconcile net
income to cash generated by operating activities: Depreciation,
amortization and accretion 209 168 Stock-based compensation expense
205 170 Deferred income tax expense 425 276 Loss on disposition of
property, plant and equipment 6 7 Changes in operating assets and
liabilities: Accounts receivable, net 271 226 Inventories (121) 113
Other current assets (517) 1,097 Other assets 47 7 Accounts payable
956 (767) Deferred revenue 606 200 Other liabilities 316 186 Cash
generated by operating activities 5,781 3,938 ----- ----- Investing
activities: Purchases of marketable securities (12,922) (13,082)
Proceeds from maturities of marketable securities 6,216 2,226
Proceeds from sales of marketable securities 3,199 2,668 Purchases
of other long-term investments (6) (38) Payment for acquisition of
property, plant and equipment (376) (339) Payment for acquisition
of intangible assets (5) (14) Other (64) (60) --- --- Cash used in
investing activities (3,958) (8,639) ------ ------ Financing
activities: Proceeds from issuance of common stock 374 77 Excess
tax benefits from stock- based compensation 252 19 Cash used to net
share settle equity awards (103) (34) ---- --- Cash generated by
financing activities 523 62 --- --- Increase/(decrease) in cash and
cash equivalents 2,346 (4,639) ----- ------ Cash and cash
equivalents, end of the period $7,609 $7,236 ====== ======
Supplemental cash flow disclosure: Cash paid for income taxes, net
$980 $550 (1) In September 2009, the Financial Accounting Standards
Board amended the accounting principles related to revenue
recognition for arrangements with multiple deliverables and
arrangements that include software elements. Apple adopted the new
accounting principles on a retrospective basis during the first
quarter of 2010. The new accounting principles significantly change
how Apple accounts for certain revenue arrangements that include
both hardware and software elements. The impact of the new
accounting principles is reflected for all periods included above.
For additional information refer to the "Explanatory Note" in
Apple's Amendment No. 1 to the Annual Report on Form 10-K for the
year ended September 26, 2009. Apple Inc. Q1 2010 Unaudited Summary
Data (1) Q4 2009 Q1 2009 Q1 2010 ------- ------- ------- Operating
Segments CPU Revenue CPU Revenue CPU Revenue Units K $M Units K $M
Units K $M ------- --- ------- --- ------- --- Americas 1,252
$5,236 912 $5,301 1,187 $6,092 Europe 761 3,235 795 3,585 1,068
5,024 Japan 79 634 99 498 105 783 Asia Pacific 291 1,061 203 750
313 1,813 Retail 670 2,041 515 1,746 689 1,971 Total Operating
Segments 3,053 $12,207 2,524 $11,880 3,362 $15,683 ===== =======
===== ======= ===== ======= Product Summary Units K Revenue Units K
Revenue Units K Revenue ------- $M ------- $M ------- $M --- ---
--- Desktops (2) 787 $1,089 728 $1,045 1,234 $1,692 Portables (3)
2,266 2,891 1,796 2,520 2,128 2,758 Subtotal CPUs 3,053 3,980 2,524
3,565 3,362 4,450 iPod 10,177 1,563 22,727 3,371 20,970 3,391 Other
Music Related Products and Services (4) 1,018 1,011 1,164 iPhone
and Related Products and Services (5) 7,367 4,606 4,363 2,940 8,737
5,578 Peripherals and Other Hardware 391 387 469 Software, Service
and Other Sales 649 606 631 --- --- --- Total Apple $12,207 $11,880
$15,683 ======= ======= ======= Sequential Year/Year Change Change
---------- --------- CPU CPU Operating Segments Units Revenue Units
Revenue ------ ------- ------ ------- Americas - 5% 16% 30% 15%
Europe 40% 55% 34% 40% Japan 33% 24% 6% 57% Asia Pacific 8% 71% 54%
142% Retail 3% - 3% 34% 13% Total Operating Segments 10% 28% 33%
32% Sequential Year/Year Change Change ------------ ---------
Product Summary Units Revenue Units Revenue ----- ------- -----
------- Desktops (2) 57% 55% 70% 62% Portables (3) - 6% - 5% 18% 9%
Subtotal CPUs 10% 12% 33% 25% iPod 106% 117% - 8% 1% Other Music
Related Products and Services (4) 14% 15% iPhone and Related
Products and Services (5) 19% 21% 100% 90% Peripherals and Other
Hardware 20% 21% Software, Service and Other Sales - 3% 4% Total
Apple 28% 32% (1) In September 2009, the Financial Accounting
Standards Board amended the accounting principles related to
revenue recognition for arrangements with multiple deliverables and
arrangements that include software elements. Apple adopted the new
accounting principles on a retrospective basis during the first
quarter of 2010. The new accounting principles significantly change
how Apple accounts for certain revenue arrangements that include
both hardware and software elements. The impact of the new
accounting principles is reflected for all periods above. For
additional information refer to the "Explanatory Note" in Apple's
Amendment No. 1 to the Annual Report on Form 10-K for the year
ended September 26, 2009. (2) Includes iMac, Mac mini, Mac Pro and
Xserve product lines. (3) Includes MacBook, MacBook Air and MacBook
Pro product lines. (4) Consists of iTunes Store sales, iPod
services, and Apple- branded and third-party iPod accessories. (5)
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 DATASOURCE: Apple CONTACT: Press, Steve Dowling,
+1-408-974-1896, ; or Investor Relations, Nancy Paxton,
+1-408-974-5420, , or Joan Hoover, +1-408-974-4570, , all of Apple
Web Site: http://www.apple.com/
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