Apple Reports Third Quarter Results

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Apple Reports Third Quarter Results

Sales of 31 Million iPhones Set New June Quarter Record

CUPERTINO, Calif.--(BUSINESS WIRE)-- Apple® today announced financial results for its fiscal 2013 third quarter ended June 29, 2013. The Company posted quarterly revenue of $35.3 billion and quarterly net profit of $6.9 billion, or $7.47 per diluted share. These results compare to revenue of $35 billion and net profit of $8.8 billion, or $9.32 per diluted share, in the year-ago quarter. Gross margin was 36.9 percent compared to 42.8 percent in the year-ago quarter. International sales accounted for 57 percent of the quarter's revenue.


The Company sold 31.2 million iPhones, a record for the June quarter, compared to 26 million in the year-ago quarter. Apple also sold 14.6 million iPads during the quarter, compared to 17 million in the year-ago quarter. The Company sold 3.8 million Macs, compared to 4 million in the year-ago quarter.

Apple's Board of Directors has declared a cash dividend of $3.05 per share of the Company's common stock. The dividend is payable on August 15, 2013, to shareholders of record as of the close of business on August 12, 2013.

"We are especially proud of our record June quarter iPhone sales of over 31 million and the strong growth in revenue from iTunes, Software and Services," said Tim Cook, Apple's CEO. "We are really excited about the upcoming releases of iOS 7 and OS X Mavericks, and we are laser-focused and working hard on some amazing new products that we will introduce in the fall and across 2014."

"We generated $7.8 billion in cash flow from operations during the quarter and are pleased to have returned $18.8 billion in cash to shareholders through dividends and share repurchases," said Peter Oppenheimer, Apple's CFO.

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

• revenue between $34 billion and $37 billion

• gross margin between 36 percent and 37 percent

• operating expenses between $3.9 billion and $3.95 billion

• other income/(expense) of $200 million

• tax rate of 26.5%

Apple will provide live streaming of its Q3 2013 financial results conference call beginning at 2:00 p.m. PDT on July 23, 2013 at www.apple.com/quicktime/qtv/earningsq313. 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, its Form 10-Q for the quarter ended March 30, 2013, and its Form 10-Q for the quarter ended June 29, 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

Nine Months Ended

June 29,
2013

 

June 30,
2012

June 29,
2013

 

June 30,
2012

 
Net sales$35,323$35,023$133,438$120,542
Cost of sales (1) 22,299 20,029 83,005 66,281
 
Gross margin 13,024 14,994 50,433 54,261
 
Operating expenses:
Research and development (1)1,1788763,3072,475
Selling, general and administrative (1) 2,645 2,545 8,157 7,489
 
Total operating expenses 3,823 3,421 11,464 9,964
 
Operating income9,20111,57338,96944,297
 
Other income/(expense), net 234 288 1,043 573
 
Income before provision for income taxes9,43511,86140,01244,870
 
Provision for income taxes 2,535 3,037 10,487 11,360
 
Net income$6,900$8,824$29,525$33,510
 
Earnings per share:
Basic$7.51$9.42$31.67$35.89
Diluted$7.47$9.32$31.44$35.48
 
Shares used in computing earnings per share:
Basic918,618936,596932,388933,672
Diluted924,265947,059939,172944,440
 
Cash dividends declared per common share$3.05$0$8.35$0
 
(1) Includes share-based compensation expense as follows:
Cost of sales$90$70$262$196
Research and development$245$172$708$500
Selling, general and administrative$243$206$728$596
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

  

June 29,
2013

September 29,
2012

 
ASSETS:
 
Current assets:
Cash and cash equivalents$11,248$10,746
Short-term marketable securities31,35818,383
Accounts receivable, less allowances of $104 and $98, respectively8,83910,930
Inventories1,697791
Deferred tax assets3,1932,583
Vendor non-trade receivables4,6147,762
Other current assets 7,270 6,458
Total current assets68,21957,653
 
Long-term marketable securities104,01492,122
Property, plant and equipment, net16,32715,452
Goodwill1,5221,135
Acquired intangible assets, net4,3534,224
Other assets 5,421 5,478
Total assets$199,856$176,064
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
 
Current liabilities:
Accounts payable$15,516$21,175
Accrued expenses13,47011,414
Deferred revenue 7,333 5,953
Total current liabilities36,31938,542
 
Deferred revenue - non-current2,6722,648
Long-term debt16,9580
Other non-current liabilities 20,553 16,664
Total liabilities 76,502 57,854
 
Commitments and contingencies
 
Shareholders' equity:
Common stock, no par value; 1,800,000 shares authorized; 908,442 and 939,208 shares issued and outstanding, respectively19,02416,422
Retained earnings104,564101,289
Accumulated other comprehensive (loss)/income (234) 499
Total shareholders' equity 123,354 118,210
Total liabilities and shareholders' equity$199,856$176,064
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 
Nine Months Ended
June 29, 2013 June 30, 2012
 
Cash and cash equivalents, beginning of the period$10,746$9,815
 
Operating activities:
Net income29,52533,510
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization4,9742,296
Share-based compensation expense1,6981,292
Deferred income tax expense2,5244,066
Changes in operating assets and liabilities:
Accounts receivable, net2,091(2,278)
Inventories(906)(346)
Vendor non-trade receivables3,148(293)
Other current and non-current assets484(3,238)
Accounts payable(4,740)2,450
Deferred revenue1,4042,575
Other current and non-current liabilities3,556 1,686
 
Cash generated by operating activities43,758 41,720
 
Investing activities:
Purchases of marketable securities(122,681)(121,091)
Proceeds from maturities of marketable securities13,96310,344
Proceeds from sales of marketable securities81,73473,140
Payments made in connection with business acquisitions, net(443)(350)
Payments for acquisition of property, plant and equipment(6,210)(4,834)
Payments for acquisition of intangible assets(560)(1,067)
Other(188) (56)

 

Cash used in investing activities(34,385) (43,914)
 
Financing activities:
Proceeds from issuance of common stock335433
Excess tax benefits from equity awards6441,036
Taxes paid related to net share settlement of equity awards(1,001)(1,145)
Dividends and dividend equivalent rights paid(7,795)0
Repurchase of common stock(17,950)0
Proceeds from issuance of long-term debt, net16,896 0
 
Cash (used in)/generated by financing activities(8,871) 324
Increase/(decrease) in cash and cash equivalents502 (1,870)
 
Cash and cash equivalents, end of the period$11,248$7,945
Supplemental cash flow disclosure:
Cash paid for income taxes, net$7,188$5,901
 
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Q3 2013 Unaudited Summary Data
(Units in thousands, Revenue in millions)
           
   
Q3'13Q2'13Q3'12Sequential ChangeYear/Year Change
 
Operating SegmentsRevenueRevenueRevenueRevenueRevenue