2014

Apple Reports Third Quarter Results All-Time Record Revenue

Earnings Increase 78 Percent

CUPERTINO, Calif., July 20 /PRNewswire-FirstCall/ -- Apple® today announced financial results for its fiscal 2010 third quarter ended June 26, 2010. The Company posted record revenue of $15.7 billion and net quarterly profit of $3.25 billion, or $3.51 per diluted share. These results compare to revenue of $9.73 billion and net quarterly profit of $1.83 billion, or $2.01 per diluted share, in the year-ago quarter. Gross margin was 39.1 percent compared to 40.9 percent in the year-ago quarter. International sales accounted for 52 percent of the quarter's revenue.

Apple sold 3.47 million Macs during the quarter, representing a new quarterly record and a 33 percent unit increase over the year-ago quarter. The Company sold 8.4 million iPhones in the quarter, representing 61 percent unit growth over the year-ago quarter. Apple sold 9.41 million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter.  The Company began selling iPads during the quarter, with total sales of 3.27 million.

"It was a phenomenal quarter that exceeded our expectations all around, including the most successful product launch in Apple's history with iPhone 4," said Steve Jobs, Apple's CEO. "iPad is off to a terrific start, more people are buying Macs than ever before, and we have amazing new products still to come this year."

"We're really pleased to have generated over $4 billion of cash during the quarter," said Peter Oppenheimer, Apple's CFO.  "Looking ahead to the fourth fiscal quarter of 2010, we expect revenue of about $18 billion and we expect diluted earnings per share of about $3.44"  

Apple will provide live streaming of its Q3 2010 financial results conference call beginning at 2:00 p.m. PDT on July 20, 2010 at www.apple.com/quicktime/qtv/earningsq310/. 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 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, as amended, for the fiscal year ended September 26, 2009, its Forms 10-Q for the quarters ended December 26, 2009 and March 27, 2010, and its Form 10-Q for the quarter ended June 26, 2010 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 reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.

© 2010 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS, Macintosh and iPhone 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 share amounts which are reflected in thousands and per share amounts)



Three Months Ended


Nine Months Ended


June 26, 2010


June 27, 2009


June 26, 2010


June 27, 2009













Net sales

$

15,700


$

9,734


$

44,882


$

30,698

Cost of sales (1)


9,564



5,751



26,710



18,581













 Gross margin


6,136



3,983



18,172



12,117













Operating expenses:












Research and development (1)


464



341



1,288



975

Selling, general and administrative (1)


1,438



1,010



3,946



3,086













Total operating expenses


1,902



1,351



5,234



4,061













Operating income


4,234



2,632



12,938



8,056













Other income and expense


58



60



141



281













Income before provision for income taxes


4,292



2,692



13,079



8,337













Provision for income taxes


1,039



864



3,374



2,634













Net income

$

3,253


$

1,828


$

9,705


$

5,703













Earnings per common share:












Basic

$

3.57


$

2.05


$

10.69


$

6.40

Diluted

$

3.51


$

2.01


$

10.51


$

6.30













Shares used in computing earnings per share:












Basic


912,197



893,712



907,762



891,345

Diluted


927,361



909,160



923,341



904,549













(1) Includes stock-based compensation expense as follows:












Cost of sales

$

38


$

28


$

112


$

85

Research and development

$

80


$

65


$

240


$

192

Selling, general and administrative

$

101


$

86


$

303


$

253




Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)



June 26, 2010


September 26, 2009







ASSETS:












Current assets:






 Cash and cash equivalents

$

9,705


$

5,263

 Shortterm marketable securities


14,583



18,201

 Accounts receivable, less allowances of $52 in each period


3,447



3,361

 Inventories


942



455

 Deferred tax assets


1,216



1,135

 Vendor non-trade receivables


2,952



1,696

 Other current assets


3,188



1,444

   Total current assets


36,033



31,555







Longterm marketable securities


21,551



10,528

Property, plant and equipment, net


3,990



2,954

Goodwill


714



206

Acquired intangible assets, net


318



247

Other assets


2,119



2,011

   Total assets

$

64,725


$

47,501













LIABILITIES AND SHAREHOLDERS' EQUITY












Current liabilities:






 Accounts payable

$

8,469


$

5,601

 Accrued expenses


4,452



3,852

 Deferred revenue


2,691



2,053

   Total current liabilities


15,612



11,506







Deferred revenue – non-current


1,021



853

Other non-current liabilities


4,981



3,502

   Total liabilities


21,614



15,861







Commitments and contingencies












Shareholders' equity:






Common stock, no par value; 1,800,000,000 shares
authorized; 913,482,347 and 899,805,500 shares issued
and outstanding, respectively


10,133



8,210

 Retained earnings


32,870



23,353

 Accumulated other comprehensive income


108



77

   Total shareholders' equity


43,111



31,640







   Total liabilities and shareholders' equity


$

64,725


$

47,501




Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)



Nine Months Ended


June 26, 2010


June 27, 2009







Cash and cash equivalents, beginning of the period

$

5,263


$

11,875







Operating activities:






  Net income


9,705



5,703

 Adjustments to reconcile net income to cash generated by operating activities:






    Depreciation, amortization and accretion


698



531

    Stock-based compensation expense


655



530

    Deferred income tax expense


1,298



772

    Loss on disposition of property, plant and equipment


14



18

 Changes in operating assets and liabilities:






    Accounts receivable, net


(79)



(264)

    Inventories


(487)



129

    Vendor non-trade receivables


(1,256)



788

    Other current assets


(944)



62

    Other assets


(71)



(602)

    Accounts payable


2,812



(648)

    Deferred revenue


806



323

    Other liabilities


(239)



(293)







    Cash generated by operating activities


12,912



7,049







Investing activities:






 Purchases of marketable securities


(41,318)



(34,696)

 Proceeds from maturities of marketable securities


19,758



12,780

 Proceeds from sales of marketable securities


14,048



9,117

 Purchases of other long-term investments


(10)



(61)

 Payments made in connection with business acquisitions, net of cash acquired


(615)



-

 Payments for acquisition of property, plant and equipment


(1,245)



(685)

 Payments for acquisition of intangible assets


(63)



(56)

 Other


(26)



(62)







    Cash used in investing activities


(9,471)



(13,663)







Financing activities:






 Proceeds from issuance of common stock


733



288

 Excess tax benefits from stock-based compensation


652



124

 Taxes paid related to net share settlement of equity awards


(384)



(68)







    Cash generated by financing activities


1,001



344







Increase/(decrease) in cash and cash equivalents


4,442



(6,270)







Cash and cash equivalents, end of the period

$

9,705


$

5,605







Supplemental cash flow disclosure:






 Cash paid for income taxes, net

$

2,657


$

2,490




Apple Inc.

Q3 2010 Unaudited Summary Data



































Q2 2010


Q3 2009


Q3 2010


















Sequential Change


Year/Year Change

Operating Segments

CPU  
Units K

Revenue
$M


CPU  
Units K

Revenue
$M


CPU  
Units K

Revenue
$M


CPU
Units

Revenue


CPU
Units

Revenue


Americas

971

$4,993


1,147

$4,474


1,358

$6,227


40%

25%


18%

39%


Europe

899

4,050


626

2,505


914

4,160


2%

3%


46%

66%


Japan

129

887


108

560


129

910


0%

3%


19%

63%


Asia Pacific

338

1,886


230

703


394

1,825


17%

- 3%


71%

160%


Retail

606

1,683


492

1,492


677

2,578


12%

53%


38%

73%

















Total Operating Segments

2,943

$13,499


2,603

$9,734


3,472

$15,700


18%

16%


33%

61%




























































































































Sequential Change


Year/Year Change

Product Summary

Units K

Revenue
$M


Units K

Revenue
$M


Units K

Revenue
$M


Units  

Revenue


Units  

Revenue


Desktops (1)

1,147

$1,532


849

$1,134


1,004

$1,301


- 12%

- 15%


18%

15%


Portables (2)

1,796

2,228


1,754

2,220


2,468

3,098


37%

39%


41%

40%

Subtotal CPUs

2,943

3,760


2,603

3,354


3,472

4,399


18%

17%


33%

31%


iPod

10,885

1,861


10,215

1,492


9,406

1,545


- 14%

- 17%


- 8%

4%


Other Music Related Products and Services (3)


1,327



958



1,214



- 9%



27%


iPhone and Related Products and Services (4)

8,752

5,445


5,208

3,060


8,398

5,334


- 4%

- 2%


61%

74%


iPad and Related Products and Services (5)

0

0


0

0


3,270

2,166


N/M

N/M


N/M

N/M


Peripherals and Other Hardware


472



340



396



- 16%



16%


Software, Service and Other Sales


634



530



646



2%



22%

Total Apple


$13,499



$9,734



$15,700



16%



61%

















































(1)  Includes iMac, Mac mini, Mac Pro and Xserve product lines.  

(2)  Includes MacBook, MacBook Air and MacBook Pro product lines.  

(3)  Consists of iTunes Store sales, iPod services, and Apple-branded and third-party iPod accessories.  

(4)  Units consist of iPhone handset sales; Revenue is derived from handset sales, carrier agreements, and Apple-branded and third-party iPhone accessories.  

(5)  Includes iPad sales, services, and Apple-branded and third-party iPad accessories.  


N/M:  Not Meaningful               K = Units in thousands               $M = Amounts in millions



SOURCE Apple



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