Apple 2nd Quarter Results – Apple Reports 88% Growth

Apple numbers are through the roof! The full press release is listed below so you can take it all in.

Earnings Grow 88 Percent Year-over-Year

CUPERTINO, Calif., April 25 /PRNewswire-FirstCall/ — Apple(R) today
announced financial results for its fiscal 2007 second quarter ended March 31,
2007. The Company posted revenue of $5.26 billion and net quarterly profit of
$770 million, or $.87 per diluted share. These results compare to revenue of
$4.36 billion and net quarterly profit of $410 million, or $.47 per diluted
share, in the year-ago quarter. Gross margin was 35.1 percent, up from
29.8 percent in the year-ago quarter. International sales accounted for
43 percent of the quarter’s revenue.
Apple shipped 1,517,000 Macintosh(R) computers and 10,549,000 iPods during
the quarter, representing 36 percent growth in Macs and 24 percent growth in
iPods over the year-ago quarter.
“The Mac is clearly gaining market share, with sales growing 36 percent
— more than three times the industry growth rate,” said Steve Jobs, Apple’s
CEO. “We’re very excited about the upcoming launch of iPhone in late June, and
are also hard at work on some other amazing new products in our pipeline.”
“We are very pleased to report the most profitable March quarter in
Apple’s history,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the
third fiscal quarter of 2007, we expect revenue of about $5.1 billion and
earnings per diluted share of about $.66.”
Apple will provide live streaming of its Q2 2007 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 Wednesday, April 25, 2007 at
www.apple.com/quicktime/qtv/earningsq207/ and will also be available for
replay. The QuickTime player is available free for Macintosh and Windows users
at www.apple.com/quicktime .

This press release contains forward-looking statements 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
potential litigation and government enforcement actions that may result 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 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 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
make timely delivery of new programs, products and successful technological
innovations to the marketplace; 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; the potential impact of a finding
that the Company has infringed on the intellectual property rights of others;
and risks associated with the Company’s retail initiative, including
significant investment cost, uncertain consumer acceptance and potential
impact on existing reseller relationships. 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 30, 2006, its Form 10-
Q for the quarter ended December 30, 2006 and its Form 10-Q for the quarter
ended March 31, 2007 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 will enter
the mobile phone market this year with its revolutionary iPhone.
NOTE: Apple, the Apple logo, Mac, Mac OS, Macintosh and QuickTime are
trademarks of Apple. Other company and product names may be trademarks of
their respective owners.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)

ASSETS:

March 31, September 30,
2007 2006
Current assets:
Cash and cash equivalents $7,095 $6,392
Short-term investments 5,482 3,718
Accounts receivable, less allowances
of $48 and $52, respectively 928 1,252
Inventories 208 270
Deferred tax assets 640 607
Other current assets 1,676 2,270
Total current assets 16,029 14,509
Property, plant, and equipment, net 1,409 1,281
Goodwill 38 38
Acquired intangible assets, net 240 139
Other assets 995 1,238
Total assets $18,711 $17,205

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $2,403 $3,390
Accrued expenses 3,082 3,081
Total current liabilities 5,485 6,471
Non-current liabilities 965 750
Total liabilities 6,450 7,221

Commitments and contingencies

Shareholders’ equity:
Common stock, no par value;
1,800,000,000 shares authorized;
864,693,091 and 855,262,568 shares
issued and outstanding, respectively 4,848 4,355
Retained earnings 7,381 5,607
Accumulated other comprehensive income 32 22
Total shareholders’ equity 12,261 9,984
Total liabilities
and shareholders’ equity $18,711 $17,205

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share amounts)

Three Months Ended Six Months Ended

March 31, April 1, March 31, April 1,
2007 2006 2007 2006

Net sales $5,264 $4,359 $12,379 $10,108
Cost of sales (1) 3,415 3,062 8,310 7,247
Gross margin 1,849 1,297 4,069 2,861

Operating expenses:
Research and development (1) 183 176 367 358
Selling, general,
and administrative (1) 680 592 1,394 1,224
Total operating expenses 863 768 1,761 1,582

Operating income 986 529 2,308 1,279

Other income and expense 148 76 274 157

Income before
provision for income taxes 1,134 605 2,582 1,436

Provision for income taxes 364 195 808 461

Net income $770 $410 $1,774 $975

Earnings per common share:
Basic $0.89 $0.49 $2.06 $1.17
Diluted $0.87 $0.47 $2.00 $1.11

Shares used in computing earnings per share (in thousands):
Basic 863,003 840,910 860,347 835,658
Diluted 886,653 878,537 884,896 875,725

(1)Includes stock-based compensation expense, which was allocated as
follows:
Cost of sales $19 $15 $15 $10
Research and development $20 $13 $36 $28
Selling, general,
and administrative $34 $24 $58 $48

Apple Inc.
Q2 2007 Unaudited Summary Data

Q1 2007 Q2 2006 Q2 2007

Rev Rev Rev
Units K $M Units K $M Units K $M

Operating Segments
Americas 625 $3,498 494 $2,122 605 $2,447
Europe 491 1,711 316 966 433 1,249
Japan 70 285 82 309 79 283
Retail 308 1,139 154 636 275 855
Other Segments (1) 112 482 66 326 125 430

Total Operating Segments 1,606 $7,115 1,112 $4,359 1,517 $5,264

Sequential Change Year/Year Change

Operating Segments Units Revenue Units Revenue
Americas – 3% – 30% 22% 15%
Europe – 12% – 27% 37% 29%
Japan 13% – 1% – 4% – 8%
Retail – 11% – 25% 79% 34%
Other Segments (1) 12% – 11% 89% 32%

Total Operating Segments – 6% – 26% 36% 21%

Q1 2007 Q2 2006 Q2 2007

Rev Rev Rev
Units K $M Units K $M Units K $M

Product Summary
Desktops (2) 637 $955 614 $833 626 $914
Portables (3) 969 1,455 498 739 891 1,354

Subtotal CPUs 1,606 2,410 1,112 1,572 1,517 2,268
iPod 21,066 3,427 8,526 1,714 10,549 1,689
Other Music
Related Products
and Services (4) NM 634 NM 485 NM 653
Peripherals and
Other Hardware NM 297 NM 264 NM 309
Software, Service
and Other Sales NM 347 NM 324 NM 345
Total Apple $7,115 $4,359 $5,264

Sequential Change Year/Year Change

Units Revenue Units Revenue

Product Summary
Desktops (2) – 2% – 4% 2% 10%
Portables (3) – 8% – 7% 79% 83%
Subtotal CPUs – 6% – 6% 36% 44%
iPod – 50% – 51% 24% – 1%
Other Music Related Products and
Services (4) NM 3% NM 35%
Peripherals and Other Hardware NM 4% NM 17%
Software, Service and Other Sales NM – 1% NM 6%
Total Apple – 26% 21%

(1) Other Segments include Asia Pacific and FileMaker.
(2) Includes iMac, eMac, Mac mini, Mac Pro, PowerMac and Xserve product
lines.
(3) Includes MacBook, iBook, MacBook Pro and PowerBook product lines.
(4) Consists of iTunes Store sales, iPod services, and Apple-branded and
third-party iPod accessories.

NM: Not Meaningful

SOURCE Apple Inc.

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