CUPERTINO, Calif., July 21 /PRNewswire-FirstCall/ -- Apple(R) today announced financial results for its fiscal 2008 third quarter ended June 28, 2008. The Company posted revenue of $7.46 billion and net quarterly profit of $1.07 billion, or $1.19 per diluted share. These results compare to revenue of $5.41 billion and net quarterly profit of $818 million, or $.92 per diluted share, in the year-ago quarter. Gross margin was 34.8 percent, down from 36.9 percent in the year-ago quarter. International sales accounted for 42 percent of the quarter's revenue.
Apple shipped 2,496,000 Macintosh(R) computers during the quarter, representing 41 percent unit growth and 43 percent revenue growth over the year-ago quarter. The Company sold 11,011,000 iPods during the quarter, representing 12 percent unit growth and seven percent revenue growth over the year-ago quarter. Quarterly iPhone(TM) units sold were 717,000 compared to 270,000 in the year-ago-quarter.
"We're proud to report the best June quarter for both revenue and earnings in Apple's history," said Steve Jobs, Apple's CEO. "We set a new record for Mac sales, we think we have a real winner with our new iPhone 3G, and we're busy finishing several more wonderful new products to launch in the coming months."
"We're extremely pleased with the growth of our business and the generation of almost $5.4 billion in cash in the first three quarters of fiscal 2008," said Peter Oppenheimer, Apple's CFO. "Looking ahead to the fourth quarter of fiscal 2008, we expect revenue of about $7.8 billion and earnings per diluted share of about $1.00."
Apple will provide live streaming of its Q3 2008 financial results conference call utilizing QuickTime(R), Apple's standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PDT on Monday, July 21, 2008 at http://www.apple.com/quicktime/qtv/earningsq308/ and will also be available for replay.
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 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; unfavorable results of other legal proceedings; 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; war, terrorism, public health issues, and other circumstances that could disrupt supply, delivery, or demand of products; continued competitive pressures in the marketplace; the Company's reliance on sole service providers for iPhone in certain countries; the continued availability on acceptable terms of certain components and services essential to the Company's business currently obtained by the Company from sole or limited sources; 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 effect that product quality problems could have on the Company's sales and operating profits; the inventory risk associated with the Company's need to order or commit to order product components in advance of customer orders; 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 dependency on the performance of distributors and other resellers of the Company's products; the Company's reliance on the availability of third-party digital content; and the potential impact of a finding that the Company has infringed on the intellectual property rights of others. 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 29, 2007; its Forms 10-Q for the quarters ended December 29, 2007 and March 29, 2008; and its Form 10-Q for the quarter ended June 28, 2008, 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 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.
(C) 2008 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS, Macintosh, iPhone 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 and per share amounts)
Three Months Ended Nine Months Ended
June 28, June 30, June 28, June 30,
2008 2007 2008 2007
Net sales $7,464 $5,410 $24,584 $17,789
Cost of sales (1) 4,864 3,415 16,178 11,725
Gross margin 2,600 1,995 8,406 6,064
Operating expenses:
Research and development (1) 292 208 811 575
Selling, general,
and administrative (1) 916 746 2,762 2,140
Total operating expenses 1,208 954 3,573 2,715
Operating income 1,392 1,041 4,833 3,349
Other income and expense 118 155 480 429
Income before provision
for income taxes 1,510 1,196 5,313 3,778
Provision for income taxes 438 378 1,615 1,186
Net income $1,072 $818 $3,698 $2,592
Earnings per common share:
Basic $1.21 $0.94 $4.20 $3.01
Diluted $1.19 $0.92 $4.10 $2.92
Shares used in computing
earnings per share
(in thousands):
Basic 883,738 866,806 879,753 862,500
Diluted 903,167 890,671 901,028 887,095
(1) Includes stock-based
compensation expense
as follows:
Cost of sales $21 $10 $59 $25
Research and development $47 $20 $133 $56
Selling, general, and
administrative $65 $35 $183 $93
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
June 28, September 29,
2008 2007
ASSETS:
Current assets:
Cash and cash equivalents $9,373 $9,352
Short-term investments 11,401 6,034
Accounts receivable, less
allowances of $44 and $47, respectively 1,603 1,637
Inventories 545 346
Deferred tax assets 1,131 782
Other current assets 3,945 3,805
Total current assets 27,998 21,956
Property, plant and equipment, net 2,177 1,832
Goodwill 38 38
Acquired intangible assets, net 291 299
Other assets 1,205 1,222
Total assets $31,709 $25,347
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $3,683 $4,970
Accrued expenses 5,535 4,310
Total current liabilities 9,218 9,280
Non-current liabilities 2,869 1,535
Total liabilities 12,087 10,815
Commitments and contingencies
Shareholders' equity:
Common stock, no par value;
1,800,000,000 shares authorized;
885,746,656 and 872,328,972 shares
issued and outstanding, respectively 6,831 5,368
Retained earnings 12,714 9,101
Accumulated other comprehensive income 77 63
Total shareholders' equity 19,622 14,532
Total liabilities and
shareholders' equity $31,709 $25,347
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Nine Months Ended
June 28, June 30,
2008 2007
Cash and cash equivalents,
beginning of the period $9,352 $6,392
Operating Activities:
Net income 3,698 2,592
Adjustments to reconcile net income
to cash generated by operating activities:
Depreciation, amortization, and accretion 339 224
Stock-based compensation expense 375 174
Provision for deferred income taxes 41 206
Loss on disposition of property, plant,
and equipment 15 7
Changes in operating assets and liabilities:
Accounts receivable, net 34 (158)
Inventories (199) 19
Other current assets (100) (363)
Other assets 101 254
Accounts payable (1,226) 270
Deferred revenue 1,823 523
Other liabilities 400 26
Cash generated by operating activities 5,301 3,774
Investing Activities:
Purchases of short-term investments (17,153) (9,587)
Proceeds from maturities of short-term
investments 9,378 4,246
Proceeds from sales of short-term investments 2,367 2,420
Purchases of long-term investments (31) (6)
Payment for acquisition of property,
plant, and equipment (688) (530)
Payment for acquisition of intangible assets (89) (222)
Other 20 34
Cash used in investing activities (6,196) (3,645)
Financing Activities:
Proceeds from issuance of common stock 411 294
Excess tax benefits from stock-based compensation 621 303
Cash used to net share settle equity awards (116) -
Cash generated by financing activities 916 597
Increase in cash and cash equivalents 21 726
Cash and cash equivalents, end of the period $9,373 $7,118
Supplemental cash flow disclosure:
Cash paid for income taxes, net $1,022 $688
UNAUDITED CONSOLIDATED SCHEDULE OF DEFERRED REVENUE
(In millions)
June 28, March 29, September 29,
2008 2008 2007
Deferred revenue-current:
iPhone and Apple TV $1,389 $1,170 $346
AppleCare 547 504 430
Other 791 742 615
Total deferred
revenue-current 2,727 2,416 1,391
Deferred revenue-non-current:
iPhone and Apple TV 632 763 290
AppleCare 597 559 495
Other 107 87 64
Total deferred
revenue-non-current 1,336 1,409 849
Total deferred revenue $4,063 $3,825 $2,240
Apple Inc.
Q3 2008 Unaudited Summary Data
Q2 2008 Q3 2007 Q3 2008
CPU Rev CPU Rev CPU Rev
Operating Segments Units $M Units $M Units $M
Americas 884 $3,268 824 $2,680 1,134 $3,435
Europe 627 1,780 393 1,160 576 1,648
Japan 118 424 81 258 102 365
Retail 458 1,451 330 915 476 1,445
Other Segments (1) 202 589 136 397 208 571
Total Operating Segments 2,289 $7,512 1,764 $5,410 2,496 $7,464
Units Rev Units Rev Units Rev
Product Summary K $M K $M K $M
Desktops (2) 856 $1,352 634 $956 943 $1,373
Portables (3) 1,433 2,142 1,130 1,577 1,553 2,237
Subtotal CPUs 2,289 3,494 1,764 2,533 2,496 3,610
iPod 10,644 1,818 9,815 1,570 11,011 1,678
Other Music Related
Products and Services(4) 881 608 819
iPhone and Related
Products & Services (5) 1,703 378 270 5 717 419
Peripherals and Other
Hardware 412 308 437
Software, Service and
Other Sales 529 386 501
Total Apple $7,512 $5,410 $7,464
Sequential Year/Year
Change Change
CPU CPU
Operating Segments Units Revenue Units Revenue
Americas 28% 5% 38% 28%
Europe -8% -7% 47% 42%
Japan -14% -14% 26% 41%
Retail 4% 0% 44% 58%
Other Segments (1) 3% -3% 53% 44%
Total Operating Segments 9% -1% 41% 38%
Sequential Year/Year
Change Change
Product Summary Units Revenue Units Revenue
Desktops (2) 10% 2% 49% 44%
Portables (3) 8% 4% 37% 42%
Subtotal CPUs 9% 3% 41% 43%
iPod 3% -8% 12% 7%
Other Music Related Products and
Services (4) -7% 35%
iPhone and Related Products &
Services (5) -58% 11% 166% N/M
Peripherals and Other Hardware 6% 42%
Software, Service and Other Sales -5% 30%
Total Apple -1% 38%
(1) Other Segments include Asia Pacific and FileMaker.
(2) Includes iMac, Mac mini, Mac Pro, PowerMac and Xserve product lines.
(3) Includes MacBook, iBook, MacBook Air, MacBook Pro and PowerBook
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.
N/M: Not Meaningful
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