Apple
APPLE COMPUTER INC (Form: 8-K, Received: 04/13/2005 16:31:03)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

April 13, 2005

Date of Report (date of earliest event reported)

 

APPLE COMPUTER, INC.

(Exact name of Registrant as specified in its charter)

 

California

 

0-10030

 

94-2404110

(State or other jurisdiction of

incorporation or organization)

 

(Commission File Number)

 

(I.R.S. Employer

Identification Number)

 

1 Infinite Loop, Cupertino, CA 95014

(Address of principal executive offices)

 

(408) 996-1010

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed
since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 



 

Item 2.02               Results of Operations and Financial Condition

 

On April 13, 2005, Apple Computer, Inc. (Apple) issued a press release regarding Apple’s financial results for its second fiscal quarter ended March 26, 2005 and a related data sheet. A copy of Apple’s press release is attached hereto as Exhibit 99.1 and a copy of the related data sheet is attached hereto as Exhibit 99.2.

 

The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

 Item 9.01              Financial Statements and Exhibits

 

(c) Exhibits

 

The following exhibits are furnished herewith:

 

Exhibit
Number

 

Description

 

 

 

99.1

 

Text of press release issued by Apple Computer, Inc. dated April 13, 2005.

 

 

 

99.2

 

Data sheet issued by Apple Computer, Inc. dated April 13, 2005.

 

2



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

APPLE COMPUTER, INC.

Date: April 13, 2005

 

 

 

By:

/s/ Peter Oppenheimer

 

 

 

Peter Oppenheimer
Senior Vice President and
Chief Financial Officer

 

3



 

EXHIBIT INDEX

 

Exhibit
Number

 

Description

 

 

 

99.1

 

Text of press release issued by Apple Computer, Inc. dated April 13, 2005.

 

 

 

99.2

 

Data sheet issued by Apple Computer, Inc. dated April 13, 2005.

 

4


Exhibit 99.1

 

Apple Reports Second Quarter Results

 

Revenue Increases 70 Percent and Net Income Increases Over 500 Percent Year-Over-Year

 

CUPERTINO, California–April 13, 2005–Apple® today announced financial results for its fiscal 2005 second quarter ended March 26, 2005. For the quarter, the Company posted a net profit of $290 million, or $.34 per diluted share. These results compare to a net profit of $46 million, or $.06 per diluted share, in the year-ago quarter. Revenue for the quarter was $3.24 billion, up 70 percent from the year-ago quarter. Gross margin was 29.8 percent, up from 27.8 percent in the year-ago quarter. International sales accounted for 40 percent of the quarter’s revenue.

 

Apple shipped 1,070,000 Macintosh® units and 5,311,000 iPods during the quarter, representing a 43 percent increase in CPU units and a 558 percent increase in iPods over the year-ago quarter.

 

“We are delighted to report a record second quarter for Apple in both revenue and earnings,” said Steve Jobs, Apple’s CEO. “Apple is firing on all cylinders and we have some incredible new products in the pipeline for the coming year, starting with Mac OS X Tiger later this month.”

 

“We’re very pleased to report 70 percent revenue growth and a 530 percent increase in net income,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the third quarter of fiscal 2005, we expect revenue of about $3.25 billion and earnings per diluted share of about $.28.”

 

Apple will provide live streaming of its Q2 2005 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 2:00 p.m. PDT on Wednesday, April 13, 2005 at http://www.apple.com/quicktime/qtv/earningsq205/ 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 products and the Company’s estimated revenue and earnings for the third quarter of fiscal 2005. 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, including the timely resolution of manufacturing issues associated with the G5 microprocessors used in many of the Company’s Macintosh systems; 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 natural disasters or major health concerns including epidemics; 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, quantity or cost of products manufactured or services rendered; the Company’s reliance on the availability of third-party music content, 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 ended September 25, 2004, the Company’s Form 10-Q for the quarter ended December 25, 2004 and the Company’s Form 10-Q for the quarter ended March 26, 2005 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 desktop and notebook computers, OS X operating system, and iLife and professional applications. Apple is also spearheading the digital music revolution with its iPod portable music players and iTunes online music store.

 

Press Contact:

Steve Dowling

(408) 974-1896

dowling@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 (http://www.apple.com/pr/) or call Apple’s Media Helpline at (408) 974-2042

 

© 2005 Apple. All rights reserved. Apple, the Apple logo, Macintosh, Mac, Mac OS, iPod and QuickTime are either registered trademarks or 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 26,

 

September 25,

 

 

 

2005

 

2004

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

2,254

 

$

2,969

 

Short-term investments

 

4,803

 

2,495

 

Accounts receivable, less allowances of $51 and $47, respectively

 

888

 

774

 

Inventories

 

164

 

101

 

Deferred tax assets

 

297

 

231

 

Other current assets

 

601

 

485

 

Total current assets

 

9,007

 

7,055

 

Property, plant, and equipment, net

 

742

 

707

 

Goodwill

 

80

 

80

 

Acquired intangible assets

 

33

 

17

 

Other assets

 

249

 

191

 

Total assets

 

$

10,111

 

$

8,050

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

1,773

 

$

1,451

 

Accrued expenses

 

1,579

 

1,200

 

Total current liabilities

 

3,352

 

2,651

 

Non-current liabilities

 

373

 

323

 

Total liabilities

 

3,725

 

2,974

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common stock, no par value; 1,800,000,000 shares authorized; 823,136,748 and 782,887,234 shares issued and outstanding, respectively

 

3,195

 

2,514

 

Deferred stock compensation

 

(70

)

(93

)

Retained earnings

 

3,255

 

2,670

 

Accumulated other comprehensive income (loss)

 

6

 

(15

)

Total shareholders’ equity

 

6,386

 

5,076

 

Total liabilities and shareholders’ equity

 

$

10,111

 

$

8,050

 

 



 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(In millions, except share and per share amounts)

 

 

 

THREE MONTHS ENDED

 

SIX MONTHS ENDED

 

 

 

March 26,

 

March 27,

 

March 26,

 

March 27,

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

3,243

 

$

1,909

 

$

6,733

 

$

3,915

 

Cost of sales

 

2,275

 

1,379

 

4,769

 

2,849

 

Gross margin

 

968

 

530

 

1,964

 

1,066

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

119

 

123

 

242

 

242

 

Selling, general, and administrative

 

447

 

345

 

917

 

688

 

Restructuring costs

 

 

10

 

 

10

 

Total operating expenses

 

566

 

478

 

1,159

 

940

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

402

 

52

 

805

 

126

 

 

 

 

 

 

 

 

 

 

 

Other income and expense:

 

 

 

 

 

 

 

 

 

Gains on non-current investments

 

 

 

 

4

 

Interest and other income, net

 

33

 

12

 

59

 

21

 

Total other income and expense

 

33

 

12

 

59

 

25

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

435

 

64

 

864

 

151

 

Provision for income taxes

 

145

 

18

 

279

 

42

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

290

 

$

46

 

$

585

 

$

109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.36

 

$

0.06

 

$

0.73

 

$

0.15

 

Diluted

 

$

0.34

 

$

0.06

 

$

0.69

 

$

0.15

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings per share (in thousands):

 

 

 

 

 

 

 

 

 

Basic

 

808,172

 

730,694

 

798,602

 

727,796

 

Diluted

 

857,011

 

756,460

 

848,553

 

750,336

 

 



 

RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS

 

(In millions, except share and per share amounts)

 

 

 

Three Months Ended March 26, 2005

 

Three Months Ended March 27, 2004

 

 

 

As
Reported

 

Non-GAAP
Adjustments

(a)

Non-
GAAP

 

As
Reported

 

Non-GAAP
Adjustments)

(a)

Non-
GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

402

 

10

(b)

412

 

52

 

16

(c)

68

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other income and expense

 

33

 

 

33

 

12

 

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

145

 

1

(d)

146

 

18

 

4

(d)

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

290

 

$

9

 

$

299

 

$

46

 

$

12

 

$

58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.36

 

 

 

$

0.37

 

$

0.06

 

 

 

$

0.08

 

Diluted

 

$

0.34

 

 

 

$

0.35

 

$

0.06

 

 

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings per share (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

808,172

 

 

 

808,172

 

730,694

 

 

 

730,694

 

Diluted

 

857,011

 

 

 

857,011

 

756,460

 

 

 

756,460

 

 


(a)           These adjustments reconcile the Company’s GAAP results of operations to its pro forma or non-GAAP results of operations. The Company believes that presentation of results excluding items such as non-cash share-based compensation, restructuring costs, and investment gains provides meaningful supplemental information to both management and investors that is indicative of the Company’s core operating results and facilitates comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes.  These non-GAAP measures should not be viewed as a substitute for the Company’s GAAP results. Neither the Company’s GAAP nor non-GAAP results of operations include the accounting impact had the Company chosen to apply the fair-value recognition provisions of SFAS No. 123 or SFAS No. 123 revised (123R) to expense share-based compensation, the impact of which is disclosed in the Company’s Forms 10-Q and 10-K as filed with the SEC. The Company expects to adopt SFAS No. 123R in its fourth fiscal quarter ending September 24, 2005.

 

(b)          This adjustment reflects the non-cash compensation expense related primarily to restricted stock awarded to the Company’s CEO in fiscal 2003 and restricted stock units awarded to selected members of the Company’s senior management team in fiscal 2004.  Of the total non-cash compensation expense of $10 million, $1 million is included in cost of sales; $1 million is included in research and development expense; and $8 million is included in selling, general and administrative expense. Note that neither the Company’s GAAP nor non-GAAP results of operations includes the accounting impact had

 



 

the Company chosen to apply the fair-value recognition provisions of SFAS No. 123R.

 

(c)           This adjustment includes $6 million related to the non-cash compensation expense primarily attributable to restricted stock awarded to the Company’s CEO in fiscal 2003, which is included in selling, general and administrative expense, as well as $10 million related to restructuring actions initiated during the second quarter of fiscal 2004.

 

(d)          Amount reflects the expected tax impact on the above noted non-GAAP adjustments.

 



 

RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS

 

(In millions, except share and per share amounts)

 

 

 

Six Months Ended March 26, 2005

 

Six Months Ended March 27, 2004

 

 

 

As Reported

 

Non-GAAP Adjustments

(a)

Non-
GAAP

 

As Reported

 

Non-GAAP Adjustments

(a)

Non-
GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

805

 

20

(b)

825

 

126

 

22

(c)

148

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other income and expense

 

59

 

 

59

 

25

 

(4

) (d)

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

279

 

2

(e)

281

 

42

 

2

(e)

44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

585

 

$

18

 

$

603

 

$

109

 

$

16

 

$

125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.73

 

 

 

$

0.76

 

$

0.15

 

 

 

$

0.17

 

Diluted

 

$

0.69

 

 

 

$

0.71

 

$

0.15

 

 

 

$

0.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing earnings per share (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

798,602

 

 

 

798,602

 

727,796

 

 

 

727,796

 

Diluted

 

848,553

 

 

 

848,553

 

750,336

 

 

 

750,336

 

 


(a)           These adjustments reconcile the Company’s GAAP results of operations to its pro forma or non-GAAP results of operations. The Company believes that presentation of results excluding items such as non-cash share-based compensation, restructuring costs, and investment gains provides meaningful supplemental information to both management and investors that is indicative of the Company’s core operating results and facilitates comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes.  These non-GAAP measures should not be viewed as a substitute for the Company’s GAAP results. Neither the Company’s GAAP nor non-GAAP results of operations include the accounting impact had the Company chosen to apply the fair-value recognition provisions of SFAS No. 123 or SFAS No. 123 revised (123R) to expense share-based compensation, the impact of which is disclosed in the Company’s Forms 10-Q and 10-K as filed with the SEC. The Company expects to adopt SFAS No. 123R in its fourth fiscal quarter ending September 24, 2005.

 

(b)          This adjustment reflects the non-cash compensation expense related primarily to restricted stock awarded to the Company’s CEO in fiscal 2003 and restricted stock units awarded to selected members of the Company’s senior management team in fiscal 2004.  Of the total non-cash compensation expense of $20 million, $1 million is included in cost of sales; $2 million is included in research and development

 



 

expense; and $17 million is included in selling, general and administrative expense. Note that neither the Company’s GAAP nor non-GAAP results of operations includes the accounting impact had the Company chosen to apply the fair-value recognition provisions of SFAS No. 123R.

 

(c)           This adjustment includes $12 million related to the non-cash compensation expense primarily attributable to restricted stock awarded to the Company’s CEO in fiscal 2003, which is included in selling, general and administrative expense, as well as $10 million related to restructuring actions initiated during the second quarter of fiscal 2004.

 

(d)          This adjustment represents gain on sales of non-current investments.

 

(e)           Amount reflects the expected tax impact on the above noted non-GAAP adjustments.

 


Exhibit 99.2

 

Apple Computer, Inc.

Q2 2005 Unaudited Summary Data

 

 

 

Q1 2005 Actual

 

Q2 2004 Actual

 

Q2 2005 Actual

 

Sequential Change

 

Year/Year Change

 

Operating Segments

 

CPU Units k

 

Rev $m

 

CPU Units k

 

Rev $m

 

CPU Units k

 

Rev $m

 

Units

 

Revenue

 

Units

 

Revenue

 

Americas

 

476

 

$

1,637

 

361

 

$

881

 

477

 

$

1,443

 

0%

 

-12%

 

32%

 

64%

 

Europe

 

320

 

847

 

187

 

449

 

276

 

705

 

-14%

 

-17%

 

48%

 

57%

 

Japan

 

64

 

185

 

76

 

173

 

102

 

284

 

59%

 

54%

 

34%

 

64%

 

Retail

 

119

 

561

 

70

 

266

 

144

 

571

 

21%

 

2%

 

106%

 

115%

 

Other Segments (1)

 

67

 

260

 

55

 

140

 

71

 

240

 

6%

 

-8%

 

29%

 

71%

 

Total Operating Segments

 

1,046

 

$

3,490

 

749

 

$

1,909

 

1,070

 

$

3,243

 

2%

 

-7%

 

43%

 

70%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sequential Change

 

Year/Year Change

 

 

 

Units k

 

Rev $m

 

Units k

 

Rev $m

 

Units k

 

Rev $m

 

Units

 

Revenue

 

Units

 

Revenue

 

Product Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iMac (2)

 

456

 

$

620

 

217

 

$

252

 

467

 

$

483

 

2%

 

-22%

 

115%

 

92%

 

iBook

 

271

 

297

 

201

 

223

 

251

 

278

 

-7%

 

-6%

 

25%

 

25%

 

Power Mac (3)

 

167

 

381

 

174

 

349

 

141

 

320

 

-16%

 

-16%

 

-19%

 

-8%

 

PowerBook

 

152

 

307

 

157

 

336

 

211

 

413

 

39%

 

35%

 

34%

 

23%

 

Subtotal CPUs

 

1,046

 

1,605

 

749

 

1,160

 

1,070

 

1,494

 

2%

 

-7%

 

43%

 

29%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iPod

 

4,580

 

1,211

 

807

 

264

 

5,311

 

1,014

 

16%

 

-16%

 

558%

 

284%

 

Other Music Products (4)

 

NM

 

177

 

NM

 

60

 

NM

 

216

 

NM

 

22%

 

NM

 

260%

 

Peripherals & Other HW

 

NM

 

284

 

NM

 

238

 

NM

 

280

 

NM

 

-1%

 

NM

 

18%

 

Software & Other

 

NM

 

213

 

NM

 

187

 

NM

 

239

 

NM

 

12%

 

NM

 

28%

 

Total Apple

 

 

 

$

3,490

 

 

 

$

1,909

 

 

 

$

3,243

 

 

 

-7%

 

 

 

70%

 

 


(1)           Other Segments include Asia Pacific and FileMaker.

(2)           Includes eMac and Mac mini product lines.

(3)           Includes Xserve product line.`

(4)           Other Music Products consists of iTunes Music Store sales and iPod related services and accessories.

 

NM: Not Meaningful