Apple Reports First Quarter Results

iPhone and iPad Sales Drive Record Revenue and Operating Profit

Business Wire

CUPERTINO, Calif.--(BUSINESS WIRE)--

Apple® today announced financial results for its fiscal 2014 first quarter ended December 28, 2013. The Company posted record quarterly revenue of $57.6 billion and quarterly net profit of $13.1 billion, or $14.50 per diluted share. These results compare to revenue of $54.5 billion and net profit of $13.1 billion, or $13.81 per diluted share, in the year-ago quarter. Gross margin was 37.9 percent compared to 38.6 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter’s revenue.

The Company sold 51 million iPhones, an all-time quarterly record, compared to 47.8 million in the year-ago quarter. Apple also sold 26 million iPads during the quarter, also an all-time quarterly record, compared to 22.9 million in the year-ago quarter. The Company sold 4.8 million Macs, compared to 4.1 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 February 13, 2014, to shareholders of record as of the close of business on February 10, 2014.

“We are really happy with our record iPhone and iPad sales, the strong performance of our Mac products and the continued growth of iTunes, Software and Services,” said Tim Cook, Apple’s CEO. “We love having the most satisfied, loyal and engaged customers, and are continuing to invest heavily in our future to make their experiences with our products and services even better.”

“We generated $22.7 billion in cash flow from operations and returned an additional $7.7 billion in cash to shareholders through dividends and share repurchases during the December quarter, bringing cumulative payments under our capital return program to over $43 billion,” said Peter Oppenheimer, Apple’s CFO.

Apple is providing the following guidance for its fiscal 2014 second quarter:

• revenue between $42 billion and $44 billion

• gross margin between 37 percent and 38 percent

• operating expenses between $4.3 billion and $4.4 billion

• other income/(expense) of $200 million

• tax rate of 26.2 percent

Apple will provide live streaming of its Q1 2014 financial results conference call beginning at 2:00 p.m. PST on January 27, 2014 at www.apple.com/quicktime/qtv/earningsq114. 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 28, 2013 and its Form 10-Q for the quarter ended December 28, 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.

© 2014 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

December 28,
2013

 

December 29,
2012

 
Net sales $ 57,594 $ 54,512
Cost of sales (1)   35,748   33,452
Gross margin   21,846   21,060
 
Operating expenses:

 

Research and development (1) 1,330 1,010
Selling, general and administrative (1)   3,053   2,840
Total operating expenses   4,383   3,850
Operating income 17,463 17,210
Other income/(expense), net   246   462
Income before provision for income taxes 17,709 17,672
Provision for income taxes   4,637   4,594
Net income $ 13,072 $ 13,078
 
Earnings per share:
Basic $ 14.59 $ 13.93
Diluted $ 14.50 $ 13.81
 
Shares used in computing earnings per share:
Basic 896,072 938,916
Diluted 901,452 947,217
 
Cash dividends declared per common share $ 3.05 $ 2.65
 
(1) Includes share-based compensation expense as follows:
Cost of sales $ 109 $ 85
Research and development $ 289 $ 224
Selling, general and administrative $ 283 $ 236
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

   

December 28,
2013

September 28,
2013

 
ASSETS:
 
Current assets:
Cash and cash equivalents $ 14,077 $ 14,259
Short-term marketable securities 26,634 26,287
Accounts receivable, less allowances of $94 and $99, respectively 14,200 13,102
Inventories 2,122 1,764
Deferred tax assets 3,742 3,453
Vendor non-trade receivables 10,998 7,539
Other current assets   8,574   6,882
Total current assets 80,347 73,286
 
Long-term marketable securities 118,131 106,215
Property, plant and equipment, net 15,488 16,597
Goodwill 2,022 1,577
Acquired intangible assets, net 4,105 4,179
Other assets   5,091   5,146
Total assets $ 225,184 $ 207,000
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
 
Current liabilities:
Accounts payable $ 29,588 $ 22,367
Accrued expenses 15,824 13,856
Deferred revenue   8,357   7,435
Total current liabilities 53,769 43,658
 
Deferred revenue – non-current 3,071 2,625
Long-term debt 16,961 16,960
Other non-current liabilities   21,699   20,208
Total liabilities   95,500   83,451
 
Commitments and contingencies
 
Shareholders' equity:
Common stock, no par value; 1,800,000 shares authorized; 892,447 and 899,213 shares issued and outstanding, respectively 20,559 19,764
Retained earnings 109,431 104,256
Accumulated other comprehensive income/(loss)   (306)   (471)
Total shareholders' equity   129,684   123,549
Total liabilities and shareholders' equity $ 225,184 $ 207,000
 

Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 
Three Months Ended
December 28, 2013   December 29, 2012
 
Cash and cash equivalents, beginning of the period $ 14,259 $ 10,746
 
Operating activities:
Net income 13,072 13,078
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization 2,144 1,588
Share-based compensation expense 681 545
Deferred income tax expense 1,253 1,179
Changes in operating assets and liabilities:
Accounts receivable, net (1,098) (668)
Inventories (358) (664)
Vendor non-trade receivables (3,459) (2,174)
Other current and non-current assets (319) 413
Accounts payable 8,191 6,145
Deferred revenue 1,368 1,611
Other current and non-current liabilities 1,195   2,373
Cash generated by operating activities 22,670   23,426
 
Investing activities:
Purchases of marketable securities (48,397) (37,192)
Proceeds from maturities of marketable securities 5,556 3,460
Proceeds from sales of marketable securities 30,302 23,002
Payments made in connection with business acquisitions, net (525) (284)
Payments for acquisition of property, plant and equipment (1,985) (2,317)
Payments for acquisition of intangible assets (59) (138)
Other 5   (52)
Cash used in investing activities (15,103)   (13,521)
 
Financing activities:
Proceeds from issuance of common stock 134 76
Excess tax benefits from equity awards 280 404
Taxes paid related to net share settlement of equity awards (365) (534)
Dividends and dividend equivalents paid (2,769) (2,493)
Repurchase of common stock (5,029)   (1,950)
Cash used in financing activities (7,749)   (4,497)
 
Increase/(decrease) in cash and cash equivalents (182)   5,408
Cash and cash equivalents, end of the period $ 14,077 $ 16,154
 
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 3,387 $ 1,890
Cash paid for interest $ 161 $ 0
 
Apple Inc.
Q1 2014 Unaudited Summary Data
(Units in thousands, Revenue in millions)
                         
Q1'14 Q4'13 Q1'13

Sequential
Change

Year/Year Change

 
Operating Segments Revenue Revenue Revenue Revenue Revenue
Americas $20,098 $13,941 $20,341 44% - 1%
Europe 13,073 8,005 12,464 63% 5%
Greater China (a) 8,844 5,733 6,830 54% 29%
Japan 4,948 3,341 4,443 48% 11%
Rest of Asia Pacific 3,633 1,980 3,993 83% - 9%
Retail 6,998 4,472 6,441 56% 9%
Total Apple     $57,594 $37,472 $54,512 54% 6%
 
     
Q1'14 Q4'13 Q1'13

Sequential
Change

Year/Year Change
 
Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
iPhone (b) 51,025 $32,498 33,797 $19,510 47,789 $30,660 51% 67% 7% 6%
iPad (b) 26,035 11,468 14,079 6,186 22,860 10,674 85% 85% 14% 7%
Mac (b) 4,837 6,395 4,574 5,624 4,061 5,519 6% 14% 19% 16%
iPod (b) 6,049 973 3,498 573 12,679 2,143 73% 70% - 52% - 55%
iTunes/Software/Services (c) 4,397 4,260 3,687 3% 19%
Accessories (d) 1,863 1,319 1,829 41% 2%
Total Apple     $57,594 $37,472 $54,512 54% 6%
 

(a)

 

Greater China includes China, Hong Kong and Taiwan.

(b)

Includes deferrals and amortization of related non-software services and software upgrade rights.

(c)

Includes revenue from sales on the iTunes Store, the App Store, the Mac App Store, and the iBooks Store, and revenue from sales of AppleCare, licensing and other services.

(d)

Includes sales of hardware peripherals and Apple-branded and third-party accessories for iPhone, iPad, Mac and iPod.

Contact:
Apple
Press:
Steve Dowling, 408-974-1896
dowling@apple.com
or
Investor Relations:
Nancy Paxton, 408-974-5420
paxton1@apple.com
Joan Hoover, 408-974-4570
hoover1@apple.com

View Comments