Apple
APPLE INC (Form: 8-K, Received: 01/25/2010 16:28:17)

 

 

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

January 25, 2010

Date of Report (date of earliest event reported)

 

 

APPLE INC.

(Exact name of Registrant as specified in its charter)

 

California   000-10030   94-2404110

(State or other jurisdiction of

incorporation)

 

(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)

(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:

 

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

 

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

 

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

 

¨ 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 January 25, 2010, Apple Inc. (“Apple”) issued a press release regarding Apple’s financial results for its first fiscal quarter ended December 26, 2009 and a related data sheet. A copy of Apple’s press release is attached hereto as Exhibit 99.1. A copy of the related data sheet is attached hereto as Exhibit 99.2. A copy of the selected quarterly financial schedules is attached hereto as Exhibit 99.3.

On September 23, 2009, the Financial Accounting Standards Board ratified Emerging Issues Task Force (“EITF”) Issue 08-1 and EITF Issue 09-3, resulting in the issuance of accounting standard updates ASU 2009-13 and ASU 2009-14. Apple was required to adopt the new accounting standards no later than the first quarter of fiscal 2011. Apple elected to adopt the new standards during the first quarter of fiscal 2010, as reflected in its Quarterly Report on Form 10-Q for the quarter ended December 26, 2009, which was filed with the SEC on January 25, 2010. The Company also filed a Form 10-K/A to amend its Form 10-K for the year ended September 26, 2009 solely to reflect the retrospective adoption of the new accounting standards to the periods presented in that report.

Additionally included in this Form 8-K are selected quarterly financial schedules reflecting the impact of retrospective adoption of the new accounting standards and reconciling the application of old and new accounting principles to historical income statements, balance sheets, cash flow from operations, deferred revenue and summary data information. These financial schedules are attached hereto as Exhibit 99.3 and will also be available on the Company’s website at www.apple.com/investor .

The new accounting principles result in the Company’s recognition of substantially all of the revenue and product cost for iPhone and Apple TV when those products are delivered to customers. Under historical accounting principles, the Company was required to account for sales of both iPhone and Apple TV using subscription accounting because the Company indicated it might from time-to-time provide future unspecified software upgrades and features for those products free of charge. Under subscription accounting, revenue and associated product cost of sales for iPhone and Apple TV were deferred at the time of sale and recognized on a straight-line basis over each product’s estimated economic life. This resulted in the deferral of significant amounts of revenue and cost of sales related to iPhone and Apple TV.

Because Apple began selling both iPhone and Apple TV in fiscal 2007, the Company retrospectively adopted the new accounting principles as if the new accounting principles had been applied in all prior periods. Consequently, the financial results of each quarter from fiscal 2007 through fiscal 2009 have been revised. The Company believes retrospective adoption provides analysts and investors the most comparable and useful financial information and better reflects the underlying performance of the Company’s business.

For additional information refer to the “Explanatory Note” in Apple’s Amendment No. 1 to its Annual Report on Form 10-K for the year ended September 26, 2009.

 


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 Inc. dated January 25, 2010.
99.2    Data sheet issued by Apple Inc. dated January 25, 2010.
99.3    Selected quarterly financial schedules issued by Apple Inc. dated January 25, 2010.


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 INC.

Date: January 25, 2010

   
  By:   /s/ Peter Oppenheimer
   

Peter Oppenheimer

Senior Vice President,

Chief Financial Officer


EXHIBIT INDEX

 

Exhibit

Number

  

Description

99.1    Text of press release issued by Apple Inc. dated January 25, 2010.
99.2    Data sheet issued by Apple Inc. dated January 25, 2010.
99.3    Selected quarterly financial schedules issued by Apple Inc. dated January 25, 2010.

Exhibit 99.1

Apple Reports First Quarter Results

All-Time Highest Revenue and Profit

New Accounting Standards Adopted

CUPERTINO, California—January 25, 2010—Apple ® today announced financial results for its fiscal 2010 first quarter ended December 26, 2009. The Company posted revenue of $15.68 billion and a net quarterly profit of $3.38 billion, or $3.67 per diluted share. These results compare to revenue of $11.88 billion and net quarterly profit of $2.26 billion, or $2.50 per diluted share, in the year-ago quarter. Gross margin was 40.9 percent, up from 37.9 percent in the year-ago quarter. International sales accounted for 58 percent of the quarter’s revenue.

Apple sold 3.36 million Macintosh ® computers during the quarter, representing a 33 percent unit increase over the year-ago quarter. The Company sold 8.7 million iPhones in the quarter, representing 100 percent unit growth over the year-ago quarter. Apple sold 21 million iPods during the quarter, representing an eight percent unit decline from the year-ago quarter.

During the quarter Apple elected retrospective adoption of the Financial Accounting Standards Board’s amended accounting standards * related to certain revenue recognition. Adoption of the new accounting standards significantly changes how the Company accounts for certain items, particularly sales of iPhone ® and Apple TV ® .

“If you annualize our quarterly revenue, it’s surprising that Apple is now a $50+ billion company,” said Steve Jobs, Apple’s CEO. “The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.”

“We are very pleased to have generated $5.8 billion in cash during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the second fiscal quarter of 2010, we expect revenue in the range of about $11.0 billion to $11.4 billion and we expect diluted earnings per share in the range of about $2.06 to $2.18.”

Apple will provide live streaming of its Q1 2010 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. PST on January 25, 2010 at www.apple.com/quicktime/qtv/earningsq110/ and will also be available for replay for approximately two weeks thereafter.


*Retrospective Adoption of Amended Accounting Standards

On September 23, 2009, the Financial Accounting Standards Board ratified Emerging Issues Task Force (EITF) Issue 08-1 and EITF Issue 09-3, resulting in the issuance of accounting standard updates ASU 2009-13 and ASU 2009-14. Apple was required to adopt the new accounting standards no later than the first quarter of fiscal 2011. Apple elected to adopt the new standards during the first quarter of fiscal 2010, as reflected in its Quarterly Report on Form 10-Q for the quarter ended December 26, 2009, which was filed with the SEC on January 25, 2010. The Company also filed a Form 10-K/A to amend its Form 10-K for the year ended September 26, 2009 solely to reflect the retrospective adoption of the new accounting standards to the periods presented in that report. Additionally, Apple filed a Form 8-K that included selected quarterly financial schedules reflecting the impact of retrospective adoption of the new accounting standards and reconciling the application of old and new accounting principles to historical income statements, balance sheets, cash flow from operations, deferred revenue and summary data information. These financial schedules will also be available on the Company’s website at www.apple.com/investor.

The new accounting principles result in the Company’s recognition of substantially all of the revenue and product cost for iPhone and Apple TV when those products are delivered to customers. Under historical accounting principles, the Company was required to account for sales of both iPhone and Apple TV using subscription accounting because the Company indicated it might from time to time provide future unspecified software upgrades and features for those products free of charge. Under subscription accounting, revenue and associated product cost of sales for iPhone and Apple TV were deferred at the time of sale and recognized on a straight-line basis over each product’s estimated economic life. This resulted in the deferral of significant amounts of revenue and cost of sales related to iPhone and Apple TV.

Because Apple began selling both iPhone and Apple TV in fiscal 2007, the Company retrospectively adopted the new accounting principles as if the new accounting principles had been applied in all prior periods. Consequently, the financial results of each quarter from fiscal 2007 through fiscal 2009 have been revised. The Company believes retrospective adoption provides analysts and investors the most comparable and useful financial information and better reflects the underlying performance of the Company’s business.

For additional information refer to the “Explanatory Note” in Apple’s Amendment No. 1 to its Annual Report on Form 10-K for the year ended September 26, 2009.


This press release contains forward-looking statements including without limitation those 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 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 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; the Company’s reliance on the availability of third-party digital content and applications; 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 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 Company’s reliance on sole service providers for iPhone in certain countries; the continued service and availability of key executives and employees; war, terrorism, public health issues, and other circumstances that could disrupt supply, delivery, or demand of products; potential litigation from the matters investigated by the special committee of the board of directors and the restatement of the Company’s consolidated financial statements; 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 Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 26, 2009 and its Form 10-Q for the quarter ended December 26, 2009. 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 has entered the mobile phone market with its revolutionary iPhone.

Press Contact:

Steve Dowling

Apple

dowling@apple.com

(408) 974-1896

Investor Relations Contacts:

Nancy Paxton

Apple

paxton1@apple.com

(408) 974-5420

Joan Hoover

Apple

hoover1@apple.com

(408) 974-4570

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.

© 2010 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS, Macintosh, iPhone, Apple TV and QuickTime are trademarks of Apple. Other company and product names may be trademarks of their respective owners.


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share amounts which are reflected in thousands and per share amounts)

 

     Three Months Ended
     December 26,
2009 (2)
   December 27,
2008 (2)

Net sales

   $ 15,683    $ 11,880

Cost of sales (1)

     9,272      7,373
             

Gross margin

     6,411      4,507
             

Operating expenses:

     

Research and development (1)

     398      315

Selling, general and administrative (1)

     1,288      1,091
             

Total operating expenses

     1,686      1,406
             

Operating income

     4,725      3,101

Other income and expense

     33      158
             

Income before provision for income taxes

     4,758      3,259

Provision for income taxes

     1,380      1,004
             

Net income

   $ 3,378    $ 2,255
             

Earnings per common share:

     

Basic

   $ 3.74    $ 2.54

Diluted

   $ 3.67    $ 2.50

Shares used in computing earnings per share:

     

Basic

     903,542      889,142

Diluted

     919,783      901,494

(1)     Includes stock-based compensation expense as follows:

     

Cost of sales

   $ 37    $ 28

Research and development

   $ 74    $ 60

Selling, general and administrative

   $ 94    $ 82
     

 

(2)

In September 2009, the Financial Accounting Standards Board amended the accounting principles related to revenue recognition for arrangements with multiple deliverables and arrangements that include software elements. Apple adopted the new accounting principles on a retrospective basis during the first quarter of 2010. The new accounting principles significantly change how Apple accounts for certain revenue arrangements that include both hardware and software elements. The impact of the new accounting principles is reflected for all periods included above. For additional information refer to the “Explanatory Note” in Apple’s Amendment No. 1 to the Annual Report on Form 10-K for the year ended September 26, 2009.


UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)

 

      December 26, 
2009 (1)
   September 26,
2009 (1)
ASSETS:      

Current assets:

     

Cash and cash equivalents

   $ 7,609    $ 5,263

Short-term marketable securities

     17,187      18,201

Accounts receivable, less allowances of $54 and $52, respectively

     3,090      3,361

Inventories

     576      455

Deferred tax assets

     1,180      1,135

Other current assets

     3,690      3,140
             

Total current assets

     33,332      31,555

Long-term marketable securities

     15,024      10,528

Property, plant and equipment, net

     3,115      2,954

Goodwill

     253      206

Acquired intangible assets, net

     241      247

Other assets

     1,961      2,011
             

Total assets

   $ 53,926    $ 47,501
             
LIABILITIES AND SHAREHOLDERS’ EQUITY:      

Current liabilities:

     

Accounts payable

   $ 6,511    $ 5,601

Accrued expenses

     3,996      3,852

Deferred revenue

     2,590      2,053
             

Total current liabilities

     13,097      11,506

Deferred revenue – non-current

     922      853

Other non-current liabilities

     4,139      3,502
             

Total liabilities

     18,158      15,861
             

Commitments and contingencies

     

Shareholders’ equity:

     

Common stock, no par value; 1,800,000,000 shares authorized; 906,282,182 and 899,805,500 shares issued and outstanding, respectively

     8,962      8,210

Retained earnings

     26,695      23,353

Accumulated other comprehensive income

     111      77
             

Total shareholders’ equity

     35,768      31,640
             

Total liabilities and shareholders’ equity

   $ 53,926    $ 47,501
             

 

(1)

In September 2009, the Financial Accounting Standards Board amended the accounting principles related to revenue recognition for arrangements with multiple deliverables and arrangements that include software elements. Apple adopted the new accounting principles on a retrospective basis during the first quarter of 2010. The new accounting principles significantly change how Apple accounts for certain revenue arrangements that include both hardware and software elements. The impact of the new accounting principles is reflected for all periods included above. For additional information refer to the “Explanatory Note” in Apple’s Amendment No. 1 to the Annual Report on Form 10-K for the year ended September 26, 2009.


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 

     Three Months Ended  
     December 26,
2009 (1)
    December 27,
2008 (1)
 

Cash and cash equivalents, beginning of the period

   $ 5,263      $ 11,875   
                

Operating activities:

    

Net income

     3,378        2,255   

Adjustments to reconcile net income to cash generated by operating activities:

    

Depreciation, amortization and accretion

     209        168   

Stock-based compensation expense

     205        170   

Deferred income tax expense

     425        276   

Loss on disposition of property, plant and equipment

     6        7   

Changes in operating assets and liabilities:

    

Accounts receivable, net

     271        226   

Inventories

     (121     113   

Other current assets

     (517     1,097   

Other assets

     47        7   

Accounts payable

     956        (767

Deferred revenue

     606        200   

Other liabilities

     316        186   
                

Cash generated by operating activities

     5,781        3,938   
                

Investing activities:

    

Purchases of marketable securities

     (12,922     (13,082

Proceeds from maturities of marketable securities

     6,216        2,226   

Proceeds from sales of marketable securities

     3,199        2,668   

Purchases of other long-term investments

     (6     (38

Payment for acquisition of property, plant and equipment

     (376     (339

Payment for acquisition of intangible assets

     (5     (14

Other

     (64     (60
                

Cash used in investing activities

     (3,958     (8,639
                

Financing activities:

    

Proceeds from issuance of common stock

     374        77   

Excess tax benefits from stock-based compensation

     252        19   

Cash used to net share settle equity awards

     (103     (34
                

Cash generated by financing activities

     523        62   
                

Increase/(decrease) in cash and cash equivalents

     2,346        (4,639
                

Cash and cash equivalents, end of the period

   $ 7,609      $ 7,236   
                

Supplemental cash flow disclosure:

    

Cash paid for income taxes, net

   $ 980      $ 550   

 

(1)

In September 2009, the Financial Accounting Standards Board amended the accounting principles related to revenue recognition for arrangements with multiple deliverables and arrangements that include software elements. Apple adopted the new accounting principles on a retrospective basis during the first quarter of 2010. The new accounting principles significantly change how Apple accounts for certain revenue arrangements that include both hardware and software elements. The impact of the new accounting principles is reflected for all periods included above. For additional information refer to the “Explanatory Note” in Apple’s Amendment No. 1 to the Annual Report on Form 10-K for the year ended September 26, 2009.

Exhibit 99.2

Apple Inc.

Q1 2010 Unaudited Summary Data (1)

 

    Q4 2009     Q1 2009     Q1 2010     Sequential Change     Year/Year Change  
    CPU
Units K
  Revenue
$M
    CPU
Units K
  Revenue
$M
    CPU
Units K
  Revenue
$M
    CPU Units     Revenue     CPU Units     Revenue  

Operating Segments

                   

Americas

  1,252   $ 5,236       912   $ 5,301       1,187   $ 6,092       - 5   16   30   15

Europe

  761     3,235      795     3,585      1,068     5,024      40   55   34   40

Japan

  79     634      99     498      105     783      33   24   6   57

Asia Pacific

  291     1,061      203     750      313     1,813      8   71   54   142

Retail

  670     2,041      515     1,746      689     1,971      3   - 3   34   13
                                           

Total Operating Segments

  3,053   $ 12,207      2,524   $ 11,880      3,362   $ 15,683      10   28   33   32
                                           
    Units K   Revenue
$M
    Units K   Revenue
$M
    Units K   Revenue
$M
    Sequential Change     Year/Year Change  
                Units     Revenue     Units     Revenue  

Product Summary

                   

Desktops (2)

  787   $ 1,089      728   $ 1,045      1,234   $ 1,692      57   55   70   62

Portables (3)

  2,266     2,891      1,796     2,520      2,128     2,758      - 6   - 5   18   9
                                           

Subtotal CPUs

  3,053     3,980      2,524     3,565      3,362     4,450      10   12   33   25

iPod

  10,177     1,563      22,727     3,371      20,970     3,391      106   117   - 8   1

Other Music Related Products and Services (4)

      1,018          1,011          1,164        14     15

iPhone and Related Products and Services (5)

  7,367     4,606      4,363     2,940      8,737     5,578      19   21   100   90

Peripherals and Other Hardware

      391          387          469        20     21

Software, Service and Other Sales

      649          606          631        - 3     4
                                     

Total Apple

    $ 12,207        $ 11,880        $ 15,683        28     32
                                     

 

(1)

In September 2009, the Financial Accounting Standards Board amended the accounting principles related to revenue recognition for arrangements with multiple deliverables and arrangements that include software elements. Apple adopted the new accounting principles on a retrospective basis during the first quarter of 2010. The new accounting principles significantly change how Apple accounts for certain revenue arrangements that include both hardware and software elements. The impact of the new accounting principles is reflected for all periods above. For additional information refer to the “Explanatory Note” in Apple’s Amendment No. 1 to the Annual Report on Form 10-K for the year ended September 26, 2009.

 

(2)

Includes iMac, Mac mini, Mac Pro and Xserve product lines.

 

(3)

Includes MacBook, MacBook Air and MacBook Pro product lines.

 

(4)

Consists of iTunes Store sales, iPod services, and Apple-branded and third-party iPod accessories.

 

(5)

Units consist of iPhone handset sales; Revenue is derived from handset sales, carrier agreements, and Apple-branded and third-party iPhone accessories.

K = Units in thousands

$M = Amounts in millions

Exhibit 99.3

Apple Inc.

Revised Quarterly Income Statement Information

($ in millions, units in thousands, except per share amounts)

 

    Q1 2007     Q2 2007     Q3 2007     Q4 2007     FY 2007  

iPhone Unit Sales

    -            -              270        1,119        1,389   

New Accounting (a)

         

Net Sales

  $      7,123       $     5,286       $     5,563       $      6,606       $      24,578    

Cost of Sales

    4,900        3,435        3,530        4,561        16,426   
                                       

Gross Margin

    2,223        1,851        2,033        2,045        8,152   
                                       

Operating Expenses:

         

Research and Development

    184        183        208        207        782   

Selling, General and Administrative

    714        680        746        823        2,963   
                                       

Total Operating Expenses

    898        863        954        1,030        3,745   
                                       

Operating Income

    1,325        988        1,079        1,015        4,407   

Other Income and Expense

    126        148        155        170        599   
                                       

Income Before Provision for Income Taxes

    1,451        1,136        1,234        1,185        5,006   

Provision for Income Taxes

    440        362        394        315        1,511   
                                       

Net Income

  $ 1,011      $ 774      $ 840      $ 870      $ 3,495   
                                       

Earnings Per Common Share:

         

Basic

  $ 1.18      $ 0.90      $ 0.97      $ 1.00      $ 4.04   

Diluted

  $ 1.14      $ 0.87      $ 0.94      $ 0.97      $ 3.93   

Old Accounting

         

Net Sales

  $ 7,115      $ 5,264      $ 5,410      $ 6,217      $ 24,006   

Cost of Sales

    4,895        3,415        3,415        4,127        15,852   
                                       

Gross Margin

    2,220        1,849        1,995        2,090        8,154   
                                       

Operating Expenses:

         

Research and Development

    184        183        208        207        782   

Selling, General and Administrative

    714        680        746        823        2,963   
                                       

Total Operating Expenses

    898        863        954        1,030        3,745   
                                       

Operating Income

    1,322        986        1,041        1,060        4,409   

Other Income and Expense

    126        148        155        170        599   
                                       

Income Before Provision for Income Taxes

    1,448        1,134        1,196        1,230        5,008   

Provision for Income Taxes

    444        364        378        326        1,512   
                                       

Net Income

  $ 1,004      $ 770      $ 818      $ 904      $ 3,496   
                                       

Earnings Per Common Share:

         

Basic

  $ 1.17      $ 0.89      $ 0.94      $ 1.04      $ 4.04   

Diluted

  $ 1.14      $ 0.87      $ 0.92      $ 1.01      $ 3.93   

Adjustments (a)

         

Net Sales

  $ 8      $ 22      $ 153      $ 389      $ 572   

Cost of Sales

    5        20        115        434        574   
                                       

Gross Margin

    3        2        38        (45     (2
                                       

Operating Expenses:

         

Research and Development

    -            -            -            -            -       

Selling, General and Administrative

    -            -            -            -            -       
                                       

Total Operating Expenses

    -            -            -            -            -       
                                       

Operating Income

    3        2        38        (45     (2

Other Income and Expense

    -            -            -            -            -       
                                       

Income Before Provision for Income Taxes

    3        2        38        (45     (2

Provision for Income Taxes

    (4     (2     16        (11     (1
                                       

Net Income

  $ 7      $ 4      $ 22      $ (34   $ (1
                                       

Earnings Per Common Share:

         

Basic

  $ 0.01      $ 0.01      $ 0.03      $ (0.04   $ -       

Diluted

  $ -          $ -          $ 0.02      $ (0.04   $ -       

 

(a)

In September 2009, the Financial Accounting Standards Board amended the accounting principles related to revenue recognition for arrangements with multiple deliverables and arrangements that include software elements. Apple adopted the new accounting principles on a retrospective basis during the first quarter of 2010. The new accounting principles significantly change how Apple accounts for certain revenue arrangements that include both hardware and software elements. The impact of the new accounting principles is reflected for all periods included in the above schedule. For additional information refer to the “Explanatory Note” in Apple’s Amendment No. 1 to its Annual Report on Form 10-K for the year ended September 26, 2009.


Apple Inc.

Revised Quarterly Income Statement Information

($ in millions, units in thousands, except per share amounts)

 

     Q1 2008     Q2 2008     Q3 2008     Q4 2008     FY 2008  

iPhone Unit Sales

     2,315        1,703        717        6,892        11,627   

New Accounting (a)

          

Net Sales

   $     10,430       $     7,980       $     7,561       $     11,520       $     37,491    

Cost of Sales

     7,026        5,373        4,818        7,077        24,294   
                                        

Gross Margin

     3,404        2,607        2,743        4,443        13,197   
                                        

Operating Expenses:

          

Research and Development

     246        273        292        298        1,109   

Selling, General and Administrative

     960        886        916        999        3,761   
                                        

Total Operating Expenses

     1,206        1,159        1,208        1,297        4,870   
                                        

Operating Income

     2,198        1,448        1,535        3,146        8,327   

Other Income and Expense

     200        162        118        140        620   
                                        

Income Before Provision for Income Taxes

     2,398        1,610        1,653        3,286        8,947   

Provision for Income Taxes

     758        509        522        1,039        2,828   
                                        

Net Income

   $ 1,640      $ 1,101      $ 1,131      $ 2,247      $ 6,119   
                                        

Earnings Per Common Share:

          

Basic

   $ 1.87      $ 1.25      $ 1.28      $ 2.53      $ 6.94   

Diluted

   $ 1.82      $ 1.22      $ 1.25      $ 2.48      $ 6.78   

Old Accounting

          

Net Sales

   $ 9,608      $ 7,512      $ 7,464      $ 7,895      $ 32,479   

Cost of Sales

     6,276        5,038        4,864        5,156        21,334   
                                        

Gross Margin

     3,332        2,474        2,600        2,739        11,145   
                                        

Operating Expenses:

          

Research and Development

     246        273        292        298        1,109   

Selling, General and Administrative

     960        886        916        999        3,761   
                                        

Total Operating Expenses

     1,206        1,159        1,208        1,297        4,870   
                                        

Operating Income

     2,126        1,315        1,392        1,442        6,275   

Other Income and Expense

     200        162        118        140        620   
                                        

Income Before Provision for Income Taxes

     2,326        1,477        1,510        1,582        6,895   

Provision for Income Taxes

     745        432        438        446        2,061   
                                        

Net Income

   $ 1,581      $ 1,045      $ 1,072      $ 1,136      $ 4,834   
                                        

Earnings Per Common Share:

          

Basic

   $ 1.81      $ 1.19      $ 1.21      $ 1.28      $ 5.48   

Diluted

   $ 1.76      $ 1.16      $ 1.19      $ 1.26      $ 5.36   

Adjustments (a)

          

Net Sales

   $ 822      $ 468      $ 97      $ 3,625      $ 5,012   

Cost of Sales

     750        335        (46     1,921        2,960   
                                        

Gross Margin

     72        133        143        1,704        2,052   
                                        

Operating Expenses:

          

Research and Development

     -            -            -            -            -       

Selling, General and Administrative

     -            -            -            -            -       
                                        

Total Operating Expenses

     -            -            -            -            -       
                                        

Operating Income

     72        133        143        1,704        2,052   

Other Income and Expense

     -            -            -            -            -       
                                        

Income Before Provision for Income Taxes

     72        133        143        1,704        2,052   

Provision for Income Taxes

     13        77        84        593        767   
                                        

Net Income

   $ 59      $ 56      $ 59      $ 1,111      $ 1,285   
                                        

Earnings Per Common Share:

          

Basic

   $ 0.06      $ 0.06      $ 0.07      $ 1.25      $ 1.46   

Diluted

   $ 0.06      $ 0.06      $ 0.06      $ 1.22      $ 1.42   

 

(a)

In September 2009, the Financial Accounting Standards Board amended the accounting principles related to revenue recognition for arrangements with multiple deliverables and arrangements that include software elements. Apple adopted the new accounting principles on a retrospective basis during the first quarter of 2010. The new accounting principles significantly change how Apple accounts for certain revenue arrangements that include both hardware and software elements. The impact of the new accounting principles is reflected for all periods included in the above schedule. For additional information refer to the “Explanatory Note” in Apple’s Amendment No. 1 to its Annual Report on Form 10-K for the year ended September 26, 2009.


Apple Inc.

Revised Quarterly Income Statement Information

($ in millions, units in thousands, except per share amounts)

 

     Q1 2009     Q2 2009     Q3 2009     Q4 2009     FY 2009  

iPhone Unit Sales

     4,363         3,793         5,208         7,367         20,731    

New Accounting (a)

          

Net Sales

   $     11,880      $     9,084      $     9,734      $     12,207      $     42,905   

Cost of Sales

     7,373        5,457        5,751        7,102        25,683   
                                        

Gross Margin

     4,507        3,627        3,983        5,105        17,222   
                                        

Operating Expenses:

          

Research and Development

     315        319        341        358        1,333   

Selling, General and Administrative

     1,091        985        1,010        1,063        4,149   
                                        

Total Operating Expenses

     1,406        1,304        1,351        1,421        5,482   
                                        

Operating Income

     3,101        2,323        2,632        3,684        11,740   

Other Income and Expense

     158        63        60        45        326   
                                        

Income Before Provision for Income Taxes

     3,259        2,386        2,692        3,729        12,066   

Provision for Income Taxes

     1,004        766        864        1,197        3,831   
                                        

Net Income

   $ 2,255      $ 1,620      $ 1,828      $ 2,532      $ 8,235   
                                        

Earnings Per Common Share:

          

Basic

   $ 2.54      $ 1.82      $ 2.05      $ 2.82      $ 9.22   

Diluted

   $ 2.50      $ 1.79      $ 2.01      $ 2.77      $ 9.08   

Old Accounting

          

Net Sales

   $ 10,167      $ 8,163      $ 8,337      $ 9,870      $ 36,537   

Cost of Sales

     6,635        5,192        5,314        6,256        23,397   
                                        

Gross Margin

     3,532        2,971        3,023        3,614        13,140   
                                        

Operating Expenses:

          

Research and Development

     315        319        341        358        1,333   

Selling, General and Administrative

     1,091        985        1,010        1,063        4,149   
                                        

Total Operating Expenses

     1,406        1,304        1,351        1,421        5,482   
                                        

Operating Income

     2,126        1,667        1,672        2,193        7,658   

Other Income and Expense

     158        63        60        45        326   
                                        

Income Before Provision for Income Taxes

     2,284        1,730        1,732        2,238        7,984   

Provision for Income Taxes

     679        525        503        573        2,280   
                                        

Net Income

   $ 1,605      $ 1,205      $ 1,229      $ 1,665      $ 5,704   
                                        

Earnings Per Common Share:

          

Basic

   $ 1.81      $ 1.35      $ 1.38      $ 1.85      $ 6.39   

Diluted

   $ 1.78      $ 1.33      $ 1.35      $ 1.82      $ 6.29   

Adjustments (a)

          

Net Sales

   $ 1,713      $ 921      $ 1,397      $ 2,337      $ 6,368   

Cost of Sales

     738        265        437        846        2,286   
                                        

Gross Margin

     975        656        960        1,491        4,082   
                                        

Operating Expenses:

          

Research and Development

     -            -            -            -            -       

Selling, General and Administrative

     -            -            -            -            -       
                                        

Total Operating Expenses

     -            -            -            -            -       
                                        

Operating Income

     975        656        960        1,491        4,082   

Other Income and Expense

     -            -            -            -            -       
                                        

Income Before Provision for Income Taxes

     975        656        960        1,491        4,082   

Provision for Income Taxes

     325        241        361        624        1,551   
                                        

Net Income

   $ 650      $ 415      $ 599      $ 867      $ 2,531   
                                        

Earnings Per Common Share:

          

Basic

   $ 0.73      $ 0.47      $ 0.67      $ 0.97      $ 2.83   

Diluted

   $ 0.72      $ 0.46      $ 0.66      $ 0.95      $ 2.79   

 

(a)

In September 2009, the Financial Accounting Standards Board amended the accounting principles related to revenue recognition for arrangements with multiple deliverables and arrangements that include software elements. Apple adopted the new accounting principles on a retrospective basis during the first quarter of 2010. The new accounting principles significantly change how Apple accounts for certain revenue arrangements that include both hardware and software elements. The impact of the new accounting principles is reflected for all periods included in the above schedule. For additional information refer to the “Explanatory Note” in Apple’s Amendment No. 1 to its Annual Report on Form 10-K for the year ended September 26, 2009.


Apple Inc.

Revised Quarterly Balance Sheet Information

($ in millions)

 

     Q1 2007     Q2 2007     Q3 2007     Q4 2007     Q1 2008     Q2 2008     Q3 2008     Q4 2008     Q1 2009     Q2 2009     Q3 2009     Q4 2009

New Accounting (a)

                        

Current Assets:

                        

Cash and Cash Equivalents

   $ 7,159      $ 7,095      $ 7,118      $ 9,352      $ 9,162      $ 9,070      $ 9,373      $ 11,875      $ 7,236      $ 4,466      $ 5,605      $ 5,263

Short-Term Marketable Securities

     4,710        5,482        6,649        6,034        9,286        10,378        11,401        10,236        18,411        20,547        18,617        18,201

Accounts Receivable, Net

     1,621        928        1,410        1,637        1,939        1,593        1,603        2,422        2,196        1,932        2,686        3,361

Inventories

     303        208        251        346        459        364        545        509        396        312        380        455

Deferred Tax Assets

     647        635        671        788        976        992        1,005        1,044        1,097        1,065        1,095        1,135

Other Current Assets

     2,218        1,650        2,558        3,544        3,704        3,376        2,916        3,920        2,890        2,676        3,015        3,140
                                                                                              

Total Current Assets

     16,658        15,998        18,657        21,701        25,526        25,773        26,843        30,006        32,226        30,998        31,398        31,555

Long-Term Marketable Securities

     -            -            -            -            -            -            -            2,379        2,498        3,865        6,899        10,528

Property, Plant and Equipment, Net

     1,362        1,409        1,626        1,832        1,870        1,962        2,177        2,455        2,580        2,546        2,653        2,954

Goodwill

     38        38        38        38        38        38        38        207        207        207        207        206

Acquired Intangible Assets, Net

     146        240        237        299        311        300        291        285        277        268        259        247

Other Assets

     1,251        1,001        945        1,008        1,161        876        774        839        832        1,264        1,585        2,011
                                                                                              

Total Assets

   $ 19,455      $ 18,686      $ 21,503      $ 24,878      $ 28,906      $ 28,949      $ 30,123      $ 36,171      $ 38,620      $ 39,148      $ 43,001      $ 47,501
                                                                                              

Current Liabilities:

                        

Accounts Payable

   $ 3,885      $ 2,403      $ 3,660      $ 4,970      $ 5,366      $ 4,154      $ 3,683      $ 5,520      $ 4,715      $ 3,976      $ 4,854      $ 5,601

Accrued Expenses

     2,523        2,116        2,237        3,023        3,274        3,283        2,999        4,224        4,391        3,661        3,805        3,852

Deferred Revenue

     916        892        969        1,113        1,290        1,326        1,438        1,617        1,771        1,742        1,920        2,053
                                                                                              

Total Current Liabilities

     7,324        5,411        6,866        9,106        9,930        8,763        8,120        11,361        10,877        9,379        10,579        11,506

Deferred Revenue - Non-Current

     376        414        472        554        603        635        665        768        814        771        788        853

Other Non-Current Liabilities

     520        589        728        687        1,511        1,384        1,543        1,745        2,179        2,444        2,870        3,502
                                                                                              

Total Liabilities

     8,220        6,414        8,066        10,347        12,044        10,782        10,328        13,874        13,870        12,594        14,237        15,861
                                                                                              

Shareholders’ Equity:

                        

Common Stock

     4,594        4,848        5,149        5,368        6,046        6,342        6,831        7,177        7,392        7,643        7,957        8,210

Retained Earnings

     6,618        7,392        8,232        9,100        10,742        11,756        12,887        15,129        17,382        19,002        20,826        23,353

Accumulated Other Comprehensive Income/(Loss)

     23        32        56        63        74        69        77        (9     (24     (91     (19     77
                                                                                              

Total Shareholders’ Equity

     11,235        12,272        13,437        14,531        16,862        18,167        19,795        22,297        24,750        26,554        28,764        31,640
                                                                                              

Total Liabilities and Shareholders’ Equity

   $ 19,455      $ 18,686      $ 21,503      $ 24,878      $ 28,906      $ 28,949      $ 30,123      $ 36,171      $ 38,620      $ 39,148      $ 43,001      $ 47,501
                                                                                              

 

(a)

In September 2009, the Financial Accounting Standards Board amended the accounting principles related to revenue recognition for arrangements with multiple deliverables and arrangements that include software elements. Apple adopted the new accounting principles on a retrospective basis during the first quarter of 2010. The new accounting principles significantly change how Apple accounts for certain revenue arrangements that include both hardware and software elements. The impact of the new accounting principles is reflected for all periods included in the above schedule. For additional information refer to the “Explanatory Note” in Apple’s Amendment No. 1 to its Annual Report on Form 10-K for the year ended September 26, 2009.


Apple Inc.

Revised Quarterly Balance Sheet Information

($ in millions)

 

     Q1 2007     Q2 2007     Q3 2007     Q4 2007     Q1 2008     Q2 2008     Q3 2008     Q4 2008     Q1 2009     Q2 2009     Q3 2009     Q4 2009

Old Accounting

                        

Current Assets:

                        

Cash and Cash Equivalents

   $ 7,159      $ 7,095      $ 7,118      $ 9,352      $ 9,162      $ 9,070      $ 9,373      $ 11,875      $ 7,236      $ 4,466      $ 5,605      $ 5,263

Short-Term Marketable Securities

     4,710        5,482        6,649        6,034        9,286        10,378        11,401        10,236        18,411        20,547        18,617        18,201

Accounts Receivable, Net

     1,621        928        1,410        1,637        1,939        1,593        1,603        2,422        2,196        1,932        2,686        3,361

Inventories

     303        208        251        346        459        364        545        509        396        312        380        455

Deferred Tax Assets

     648        640        687        782        993        1,060        1,131        1,447        1,613        1,539        1,731        2,101

Other Current Assets

     2,223        1,676        2,630        3,805        4,350        4,271        3,945        5,822        5,311        5,057        6,151        6,884
                                                                                              

Total Current Assets

     16,664        16,029        18,745        21,956        26,189        26,736        27,998        32,311        35,163        33,853        35,170        36,265

Long-Term Marketable Securities

     -            -            -            -            -            -            -            2,379        2,498        3,865        6,899        10,528

Property, Plant and Equipment, Net

     1,362        1,409        1,626        1,832        1,870        1,962        2,177        2,455        2,580        2,546        2,653        2,954

Goodwill

     38        38        38        38        38        38        38        207        207        207        207        206

Acquired Intangible Assets, Net

     146        240        237        299        311        300        291        285        277        268        259        247

Other Assets

     1,251        995        1,001        1,222        1,631        1,435        1,205        1,935        2,062        2,498        2,952        3,651
                                                                                              

Total Assets

   $ 19,461      $ 18,711      $ 21,647      $ 25,347      $ 30,039      $ 30,471      $ 31,709      $ 39,572      $ 42,787      $ 43,237      $ 48,140      $ 53,851
                                                                                              

Current Liabilities:

                        

Accounts Payable

   $ 3,885      $ 2,403      $ 3,660      $ 4,970      $ 5,366      $ 4,154      $ 3,683      $ 5,520      $ 4,715      $ 3,976      $ 4,854      $ 5,601

Accrued Expenses

     2,528        2,160        2,269        2,919        3,074        3,064        2,808        3,719        3,807        2,761        3,338        3,376

Deferred Revenue

     924        922        1,063        1,391        2,059        2,416        2,727        4,853        6,235        7,014        8,469        10,305
                                                                                              

Total Current Liabilities

     7,337        5,485        6,992        9,280        10,499        9,634        9,218        14,092        14,757        13,751        16,661        19,282

Deferred Revenue - Non-Current

     376        414        561        849        1,229        1,409        1,336        3,029        3,440        3,460        3,667        4,485

Other Non-Current Liabilities

     520        551        690        686        1,507        1,375        1,533        1,421        1,681        1,715        1,924        2,252
                                                                                              

Total Liabilities

     8,233        6,450        8,243        10,815        13,235        12,418        12,087        18,542        19,878        18,926        22,252        26,019
                                                                                              

Shareholders’ Equity:

                        

Common Stock

     4,594        4,848        5,149        5,368        6,046        6,342        6,831        7,177        7,392        7,643        7,957        8,210

Retained Earnings

     6,611        7,381        8,199        9,101        10,684        11,642        12,714        13,845        15,448        16,653        17,878        19,538

Accumulated Other Comprehensive Income/(Loss)

     23        32        56        63        74        69        77        8        69        15        53        84
                                                                                              

Total Shareholders’ Equity

     11,228        12,261        13,404        14,532        16,804        18,053        19,622        21,030        22,909        24,311        25,888        27,832
                                                                                              

Total Liabilities and Shareholders’ Equity

   $ 19,461      $ 18,711      $ 21,647      $ 25,347      $ 30,039      $ 30,471      $ 31,709      $ 39,572      $ 42,787      $ 43,237      $ 48,140      $ 53,851
                                                                                              


Apple Inc.

Revised Quarterly Balance Sheet Information

($ in millions)

 

     Q1 2007     Q2 2007     Q3 2007     Q4 2007     Q1 2008     Q2 2008     Q3 2008     Q4 2008     Q1 2009     Q2 2009     Q3 2009     Q4 2009  

Adjustments (a)

                        

Current Assets:

                        

Cash and Cash Equivalents

   $ -          $ -          $ -          $ -          $ -          $ -          $ -          $ -          $ -          $ -          $ -          $ -       

Short-Term Marketable Securities

     -            -            -            -            -            -            -            -            -            -            -            -       

Accounts Receivable, Net

     -            -            -            -            -            -            -            -            -            -            -            -       

Inventories

     -            -            -            -            -            -            -            -            -            -            -            -       

Deferred Tax Assets

     (1     (5     (16     6        (17     (68     (126     (403     (516     (474     (636     (966

Other Current Assets

     (5     (26     (72     (261     (646     (895     (1,029     (1,902     (2,421     (2,381     (3,136     (3,744
                                                                                                

Total Current Assets

     (6     (31     (88     (255     (663     (963     (1,155     (2,305     (2,937     (2,855     (3,772     (4,710

Long-Term Marketable Securities

     -            -            -            -            -            -            -            -            -            -            -            -       

Property, Plant and Equipment, Net

     -            -            -            -            -            -            -            -            -            -            -            -       

Goodwill

     -            -            -            -            -            -            -            -            -            -            -            -       

Acquired Intangible Assets, Net

     -            -            -            -            -            -            -            -            -            -            -            -       

Other Assets

     -            6        (56     (214     (470     (559     (431     (1,096     (1,230     (1,234     (1,367     (1,640
                                                                                                

Total Assets

   $ (6   $ (25   $ (144   $ (469   $ (1,133   $ (1,522   $ (1,586   $ (3,401   $ (4,167   $ (4,089   $ (5,139   $ (6,350
                                                                                                

Current Liabilities:

                        

Accounts Payable

   $ -          $ -          $ -          $ -          $ -          $ -          $ -          $ -          $ -          $ -          $ -          $ -       

Accrued Expenses

     (5     (44     (32     104        200        219        191        505        584        900        467        476   

Deferred Revenue

     (8     (30     (94     (278     (769     (1,090     (1,289     (3,236     (4,464     (5,272     (6,549     (8,252
                                                                                                

Total Current Liabilities

     (13     (74     (126     (174     (569     (871     (1,098     (2,731     (3,880     (4,372     (6,082     (7,776

Deferred Revenue - Non-Current

     -            -            (89     (295     (626     (774     (671     (2,261     (2,626     (2,689     (2,879     (3,632

Other Non-Current Liabilities

     -            38        38        1        4        9        10        324        498        729        946        1,250   
                                                                                                

Total Liabilities

     (13     (36     (177     (468     (1,191     (1,636     (1,759     (4,668     (6,008     (6,332     (8,015     (10,158
                                                                                                

Shareholders’ Equity:

                        

Common Stock

     -            -            -            -            -            -            -            -            -            -            -            -       

Retained Earnings

     7        11        33        (1     58        114        173        1,284        1,934        2,349        2,948        3,815   

Accumulated Other Comprehensive Income/(Loss)

     -            -            -            -            -            -            -            (17     (93     (106     (72     (7
                                                                                                

Total Shareholders’ Equity

     7        11        33        (1     58        114        173        1,267        1,841        2,243        2,876        3,808   
                                                                                                

Total Liabilities and Shareholders’ Equity

   $ (6   $ (25   $ (144   $ (469   $ (1,133   $ (1,522   $ (1,586   $ (3,401   $ (4,167   $ (4,089   $ (5,139   $ (6,350
                                                                                                

 

(a)

In September 2009, the Financial Accounting Standards Board amended the accounting principles related to revenue recognition for arrangements with multiple deliverables and arrangements that include software elements. Apple adopted the new accounting principles on a retrospective basis during the first quarter of 2010. The new accounting principles significantly change how Apple accounts for certain revenue arrangements that include both hardware and software elements. The impact of the new accounting principles is reflected for all periods included in the above schedule. For additional information refer to the “Explanatory Note” in Apple’s Amendment No. 1 to its Annual Report on Form 10-K for the year ended September 26, 2009.


Apple Inc.

Revised Quarterly Cash Flow from Operations

($ in millions)

 

     Q1 2007     Q2 2007     Q3 2007     Q4 2007     FY 2007  

New Accounting (a)

          

Cash Flow from Operations:

          

Net Income

   $ 1,011      $ 774      $ 840      $ 870      $ 3,495   

Adjustments to Reconcile Net Income to Cash Generated by Operating Activities:

          

Depreciation, Amortization and Accretion

     74        69        81        103        327   

Stock-Based Compensation Expense

     46        63        65        68        242   

Deferred Income Tax Expense/(Benefit)

     73        90        95        (185     73   

Loss on Disposition of Property, Plant and Equipment

     5        1        1        5        12   

Changes in Operating Assets and Liabilities:

          

Accounts Receivable, Net

     (369     693        (482     (227     (385

Inventories

     (33     95        (43     (95     (76

Other Current Assets

     41        574        (902     (992     (1,279

Other Assets

     28        233        50        (26     285   

Accounts Payable

     495        (1,482     1,257        1,224        1,494   

Deferred Revenue