Exhibit 99.1
Apple Reports Third Quarter Results
CUPERTINO, California—July 16, 2003—Apple® today announced financial results for its fiscal 2003 third quarter ended June 28, 2003. For the quarter, the Company posted a net profit of $19 million, or $.05 per diluted share. These results compare to a net profit of $32 million, or $.09 per diluted share, in the year-ago quarter. Revenues for the quarter were $1.545 billion, up 8 percent from the year-ago quarter and up 5 percent sequentially, and gross margins were 27.7 percent, up from 27.4 percent in the year-ago quarter. International sales accounted for 39 percent of the quarter’s revenues.
Apple shipped 771 thousand Macintosh® units during the quarter.
“This was a great new product quarter for Apple, starting with the iTunes Music Store and the new third-generation iPods, and ending with the announcement of the Power Mac G5 and the developer preview of Panther, the fourth major release of Mac OS X,” said Steve Jobs, Apple’s CEO. “Customer response to our new products has been very strong, and this quarter we are focused on delivering Power Mac G5s beginning in August and finishing Panther for release later this year.”
“We are very proud to have exceeded our revenue target for the third quarter despite the difficult economic backdrop,” said Fred Anderson, Apple’s CFO. “We continue to be pleased with our working capital management and our ability to increase cash which totals over $4.5 billion. Looking ahead to the fourth quarter of 2003, we expect an increase in revenues and a slight increase in earnings relative to the June quarter.”
Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.
Apple will provide live streaming of its Q3 2003 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 2:30 p.m. PT on Wednesday, July 16, 2003 at http://www.apple.com/quicktime/qtv/earningsq303/ 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 future revenues, profit, and products. These statements involve risks and uncertainties and actual results may differ. Potential risks and uncertainties include continued competitive pressures in the marketplace; the effect competitive and economic factors and the Company’s reaction to them may have on consumer and business buying decisions with respect to the Company’s products; the ability of the Company to make timely delivery of new programs, products and successful technological innovations to the marketplace; the continued availability of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; possible disruption in commercial activities caused by terrorist activity and armed conflict, such as changes in logistics and security arrangements, and reduced end-user purchases relative to expectations; possible disruption in commercial activity as a result of Severe Acute Respiratory Syndrome (SARS); risks associated with the Company’s retail initiative including significant investment cost, uncertain consumer acceptance and potential impact on existing reseller relationships; the effect that the Company’s dependency on manufacturing and logistics services provided by third-parties may have on the quality or quantity of products manufactured; and the ability of the Company to successfully evolve its operating system and attract sufficient Macintosh developers. 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 2002 and the Company’s Form 10-Q for the quarter ended June 28, 2003 to be filed with the SEC.
Press Contact:
Lynn Fox
(408) 974-6209
lfox@apple.com
Investor Relations Contacts:
Nancy Paxton
(408) 974-5420
paxton1@apple.com
Joan Hoover
(408) 974-4570
hoover1@apple.com
NOTE TO EDITORS: For additional information visit Apple’s PR web site (www.apple.com/pr/) or call Apple’s Media Helpline at (408) 974-2042.
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CONDENSED STATEMENTS OF OPERATIONS
(in millions, except share and per share amounts)
| | Three Months Ended | | Nine Months Ended | |
| | June 28, 2003 | | June 29, 2002 | | June 28, 2003 | | June 29, 2002 | |
| | | | | | | | | |
Net sales | | $ | 1,545 | | $ | 1,429 | | $ | 4,492 | | $ | 4,299 | |
Cost of sales | | 1,117 | | 1,038 | | 3,240 | | 3,077 | |
Gross margin | | 428 | | 391 | | 1,252 | | 1,222 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Research and development | | 120 | | 106 | | 360 | | 330 | |
Selling, general, and administrative | | 299 | | 272 | | 898 | | 831 | |
Restructuring costs | | — | | — | | 26 | | 24 | |
Total operating expenses | | 419 | | 378 | | 1,284 | | 1,185 | |
Operating income (loss) | | 9 | | 13 | | (32 | ) | 37 | |
Gains on non-current investments, net | | 2 | | — | | 2 | | 23 | |
Interest and other income, net | | 15 | | 26 | | 67 | | 87 | |
Total interest and other income, net | | 17 | | 26 | | 69 | | 110 | |
Income before provision for income taxes | | 26 | | 39 | | 37 | | 147 | |
Provision for income taxes | | 7 | | 7 | | 10 | | 37 | |
Income before accounting change | | 19 | | 32 | | 27 | | 110 | |
Cumulative effect of accounting change, net of income taxes of $1 | | — | | — | | (2 | ) | — | |
Net income | | $ | 19 | | $ | 32 | | $ | 25 | | $ | 110 | |
| | | | | | | | | |
Earnings per common share before accounting change: | | | | | | | | | |
Basic | | $ | 0.05 | | $ | 0.09 | | $ | 0.07 | | $ | 0.31 | |
Diluted | | $ | 0.05 | | $ | 0.09 | | $ | 0.07 | | $ | 0.30 | |
Earnings per common share after accounting change: | | | | | | | | | |
Basic | | $ | 0.05 | | $ | 0.09 | | $ | 0.07 | | $ | 0.31 | |
Diluted | | $ | 0.05 | | $ | 0.09 | | $ | 0.07 | | $ | 0.30 | |
Shares used in computing earnings per share (in thousands): | | | | | | | | | |
Basic | | 360,793 | | 356,370 | | 360,113 | | 353,800 | |
Diluted | | 363,777 | | 366,882 | | 362,421 | | 363,438 | |
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CONSOLIDATED BALANCE SHEETS
(in millions, except share amounts)
| | June 28, 2003 | | September 28, 2002 | |
| | | | | |
ASSETS: | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 3,507 | | $ | 2,252 | |
Short-term investments | | 1,038 | | 2,085 | |
Accounts receivable, less allowances of $49 and $51, respectively | | 568 | | 565 | |
Inventories | | 38 | | 45 | |
Deferred tax assets | | 176 | | 166 | |
Other current assets | | 219 | | 275 | |
Total current assets | | 5,546 | | 5,388 | |
Property, plant and equipment, net | | 639 | | 621 | |
Goodwill | | 85 | | 85 | |
Acquired intangible assets | | 27 | | 34 | |
Other assets | | 144 | | 170 | |
Total assets | | $ | 6,441 | | $ | 6,298 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY: | | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 880 | | $ | 911 | |
Accrued expenses | | 838 | | 747 | |
Current debt | | 307 | | — | |
Total current liabilities | | 2,025 | | 1,658 | |
Long-term debt | | — | | 316 | |
Deferred tax liabilities and other non-current liabilities | | 218 | | 229 | |
Total liabilities | | 2,243 | | 2,203 | |
Commitments and contingencies | | | | | |
Shareholders’ equity: | | | | | |
Common stock, no par value; 900,000,000 shares authorized; 366,992,631 and 358,958,989 shares issued and outstanding, respectively | | 1,935 | | 1,826 | |
Deferred stock compensation | | (68 | ) | (7 | ) |
Retained earnings | | 2,350 | | 2,325 | |
Accumulated other comprehensive income (loss) | | (19 | ) | (49 | ) |
Total shareholders’ equity | | 4,198 | | 4,095 | |
Total liabilities and shareholders’ equity | | $ | 6,441 | | $ | 6,298 | |
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