Apple
APPLE COMPUTER INC (Form: 8-K, Received: 10/18/2006 16:29:39)

 

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

October 18, 2006

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

 

(Commission File
Number)

 

(I.R.S. Employer
Identification Number)

incorporation)

 

 

 

 

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 October 18, 2006, Apple Computer, Inc. (Apple) issued a press release regarding Apple’s preliminary financial results for its fourth fiscal quarter ended September 30, 2006 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

(d) Exhibits

The following exhibits are furnished herewith:

Exhibit
Number

 

Description

 

 

 

99.1

 

Text of press release issued by Apple Computer, Inc. dated October 18, 2006.

 

 

 

99.2

 

Data sheet issued by Apple Computer, Inc. dated October 18, 2006.

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: October 18, 2006

 

 

 

 

 

 

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 October 18, 2006.

 

 

 

99.2

 

Data sheet issued by Apple Computer, Inc. dated October 18, 2006.

 

4



Exhibit 99.1

Apple Reports Preliminary Fourth Quarter Results

Ships Record 1.61 Million Macs

CUPERTINO, California—October 18, 2006—Apple® today announced preliminary financial results for its fiscal 2006 fourth quarter ended September 30, 2006. These preliminary results may be subject to significant adjustment as a result of a likely restatement of historical results.

The Company posted revenue of $4.84 billion and net quarterly profit of $546 million, or  $.62 per diluted share. These results compare to revenue of $3.68 billion and net profit of $430 million, or $.50 per diluted share, in the year-ago quarter. Gross margin was 29.2 percent, up from 28.1 percent in the year-ago quarter. International sales accounted for 40 percent of the quarter’s revenue.

Apple shipped 1,610,000 Macintosh® computers and 8,729,000 iPods during the quarter, representing 30 percent growth in Macs and 35 percent growth in iPods over the year-ago quarter.

“This strong quarter caps an extraordinary year for Apple. Selling more than 39 million iPods and 5.3 million Macs while performing an incredibly complex architecture transition is something we are all very proud of,” said Steve Jobs, Apple’s CEO. “Looking forward, 2007 is likely to be one of the most exciting new product years in Apple’s history.”

“We are pleased to have finished the year with over $10 billion in cash and to have increased annual revenue by $11 billion in the last two years,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the first fiscal quarter of 2007, we expect revenue of $6.0 to $6.2 billion and earnings per diluted share of $.70 to $.73.”

-more-




Results Subject to Significant Adjustment

As previously announced on October 4, 2006, an independent committee investigating Apple’s stock option practices has reported its findings, which are under review by the Company and its independent auditors. The investigation determined, among other things, that stock option grants made on 15 dates between 1997 and 2002 appear to have grant dates that precede the approval of those grants for accounting purposes. As a result, management continues to believe, and the audit committee agrees, that Apple will likely need to restate its historical financial statements to record non-cash charges for compensation expense and related cash and non-cash tax adjustments relating to past stock option grants. The Company and its independent auditors are reviewing accounting guidance regarding stock option grants recently published by the SEC, and have not yet determined the amount of such charges, the resulting tax and accounting impact, or which periods may require restatement. Under applicable accounting standards, such compensation expense generally reflects the difference between an option’s exercise price and the market price of the Company’s stock at the measurement date, the point at which the terms of the option grant were actually finalized. According to the recent SEC guidance, companies must evaluate stock option grants in light of all relevant facts, circumstances and patterns of conduct to determine whether grants were actually finalized on the stated grant dates. Evidence of a practice that certain grants were not finalized on the stated grant date may require a conclusion that the grant date is not the measurement date for other grants as well. Therefore, it is possible that the Company and its independent auditors could conclude that a larger number of grant dates than previously identified could have a measurement date that differs from the grant date, which could result in significant additional non-cash stock-based compensation expense. Such charges may result in material changes to the Company’s financial statements, including those covering the periods presented in this release.

This press release contains forward-looking statements about the Company’s estimated revenue and earnings per share and the potential for significant adjustments to the financial results included in this release. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include the outcome of the pending reviews described above and the likely restatement of the Company’s financial statements or results; 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; 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; continued competitive pressures in the marketplace; the ability of the Company to successfully evolve its operating system; the potential negative ramifications of the transition of all Macs to Intel microprocessors; the ability of the Company to make timely delivery of new products with Intel microprocessors and related hardware and software technological changes and innovations to support Intel microprocessors; the development and availability on acceptable terms of components and services essential to enable the Company to deliver products based on Intel microprocessors in a timely manner; 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

-more-




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 Company’s dependency on third-party software developers to timely develop future applications that support Intel microprocessors and Power PC microprocessors; 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 24, 2005, the Company’s Form 10-Q for the quarters ended December 31, 2005 and April 1, 2006 and the Company’s Form 10-Q for the quarter ended July 1, 2006 and Form 10-K for the year ended September 30, 2006 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 website (www.apple.com/pr/), or call Apple’s Media Helpline at (408) 974-2042.

© 2006 Apple Computer, 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.




PRELIMINARY UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)

 

 

September 30,

 

September 24,

 

 

 

2006

 

2005

 

 

 

 

 

 

 

ASSETS:

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

6,392

 

$

3,491

 

Short-term investments

 

3,718

 

4,770

 

Accounts receivable, less allowances of $52 and $46, respectively

 

1,252

 

895

 

Inventories

 

270

 

165

 

Other current assets

 

2,877

 

979

 

Total current assets

 

14,509

 

10,300

 

Property, plant, and equipment, net

 

1,281

 

817

 

Other assets

 

1,454

 

434

 

Total assets

 

$

17,244

 

$

11,551

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

3,390

 

$

1,779

 

Accrued expenses

 

3,066

 

1,705

 

Total current liabilities

 

6,456

 

3,484

 

Non-current liabilities

 

750

 

601

 

Total liabilities

 

7,206

 

4,085

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Total shareholders’ equity

 

10,038

 

7,466

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

17,244

 

$

11,551

 

The information contained in these preliminary unaudited condensed consolidated financial statements may be subject to significant adjustment. For additional information, please refer to the accompanying press release dated October 18, 2006.




PRELIMINARY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share amounts)

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

September 30,

 

September 24,

 

September 30,

 

September 24,

 

 

 

2006

 

2005

 

2006

 

2005

 

Net sales

 

$

4,837

 

$

3,678

 

$

19,315

 

$

13,931

 

Cost of sales (1)

 

3,425

 

2,643

 

13,717

 

9,888

 

Gross margin

 

1,412

 

1,035

 

5,598

 

4,043

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development (1)

 

179

 

147

 

712

 

534

 

Selling, general, and administrative (1)

 

624

 

470

 

2,432

 

1,859

 

Total operating expenses

 

803

 

617

 

3,144

 

2,393

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

609

 

418

 

2,454

 

1,650

 

 

 

 

 

 

 

 

 

 

 

Other income and expense

 

113

 

60

 

365

 

165

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

722

 

478

 

2,819

 

1,815

 

Provision for income taxes

 

176

 

48

 

826

 

480

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

546

 

$

430

 

$

1,993

 

$

1,335

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.64

 

$

0.52

 

$

2.36

 

$

1.65

 

Diluted

 

$

0.62

 

$

0.50

 

$

2.27

 

$

1.56

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

854,187

 

821,420

 

844,058

 

808,439

 

Diluted

 

878,757

 

866,404

 

877,526

 

856,780

 

 


(1)   Stock-based compensation expense was allocated as follows:

 

Cost of sales

 

$

5

 

$

1

 

$

21

 

$

2

 

Research and development

 

$

13

 

$

2

 

$

53

 

$

6

 

Selling, general, and administrative

 

$

21

 

$

8

 

$

88

 

$

34

 

 

The information contained in these preliminary unaudited condensed consolidated financial statements may be subject to significant adjustment. For additional information, please refer to the accompanying press release dated October 18, 2006.



Exhibit 99.2

 

Apple Computer, Inc.

Q4 2006 Unaudited Summary Data

 

 

 

Q3’06 Actual

 

Q4’05 Actual

 

Q4’06 Actual

 

Sequential Change

 

Year/Year 
Change

 

Operating Segments

 

CPU Units K

 

Rev M$ 

 

CPU Units K

 

Rev M$

 

CPU Units K

 

Rev M$ 

 

CPU Units

 

Rev.

 

CPU Units

 

Rev.

 

Americas

 

642

 

$

2,188

 

636

 

$

1,771

 

781

 

$

2,297

 

22

%

5

%

23

%

30

%

Europe

 

301

 

899

 

259

 

779

 

342

 

987

 

14

%

10

%

32

%

27

%

Japan

 

79

 

258

 

71

 

224

 

62

 

286

 

- 22

%

11

%

- 13

%

28

%

Retail

 

216

 

715

 

202

 

663

 

323

 

936

 

50

%

31

%

60

%

41

%

Other Segments (1)

 

89

 

310

 

68

 

241

 

102

 

331

 

15

%

7

%

50

%

37

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Segments

 

1,327

 

$

4,370

 

1,236

 

$

3,678

 

1,610

 

$

4,837

 

21

%

11

%

30

%

32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sequential Change

 

Year/Year
Change

 

 

 

Units K

 

Rev M$

 

Units K

 

Rev M$

 

Units K

 

Rev M$

 

Units

 

Rev.

 

Units

 

Rev.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Desktops (2)

 

529

 

$

705

 

602

 

$

787

 

624

 

$

869

 

18

%

23

%

4

%

10

%

Portables (3)

 

798

 

1,161

 

634

 

824

 

986

 

1,344

 

24

%

16

%

56

%

63

%

Subtotal CPUs

 

1,327

 

1,866

 

1,236

 

1,611

 

1,610

 

2,213

 

21

%

19

%

30

%

37

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

iPod

 

8,111

 

1,497

 

6,451

 

1,212

 

8,729

 

1,559

 

8

%

4

%

35

%

29

%

Other Music Related Products and Services (4)

 

NM

 

457

 

NM

 

265

 

NM

 

452

 

NM

 

- 1

%

NM

 

71

%

Peripherals and Other Hardware

 

NM

 

236

 

NM

 

296

 

NM

 

297

 

NM

 

26

%

NM

 

0

%

Software, Service and Other Sales

 

NM

 

314

 

NM

 

294

 

NM

 

316

 

NM

 

1

%

NM

 

7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Apple

 

 

 

$

4,370

 

 

 

$

3,678

 

 

 

$

4,837

 

 

 

11

%

 

 

32

%

 


(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 Music Store sales, iPod services, and Apple-branded and third-party iPod accessories.

 

NM:  Not Meaningful