Apple
APPLE INC (Form: 8-K, Received: 01/26/2016 16:32:43)

 

 

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 26, 2016

Date of Report (Date of earliest event reported)

 

 

 

 

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Apple Inc.

(Exact name of Registrant as specified in its charter)

 

California   001-36743   94-2404110

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS. Employer

Identification No.)

1 Infinite Loop

Cupertino, California 95014

(Address of principal executive offices) (Zip Code)

(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:

 

¨ 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 26, 2016, Apple Inc. (“Apple”) issued a press release regarding Apple’s financial results for its first fiscal quarter ended December 26, 2015, a related data sheet and supplemental materials. 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 and a copy of the supplemental materials is attached hereto as Exhibit 99.3.

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.

 

Exhibit

Number

  

Exhibit Description

99.1    Press release issued by Apple Inc. on January 26, 2016.
99.2    Data sheet issued by Apple Inc. on January 26, 2016.
99.3    Supplement materials issued by Apple Inc. on January 26, 2016.


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.

 

Date: January 26, 2016     Apple Inc.
    By:   /s/ Luca Maestri
      Luca Maestri
      Senior Vice President,
      Chief Financial Officer


Exhibit Index

 

Exhibit

Number

  

Exhibit Description

99.1    Press release issued by Apple Inc. on January 26, 2016.
99.2    Data sheet issued by Apple Inc. on January 26, 2016.
99.3    Supplemental materials issued by Apple Inc. on January 26, 2016.

Exhibit 99.1

Apple Reports Record First Quarter Results

iPhone, Apple Watch, Services & Apple TV Drive All-time Record Revenue

Results Produce Record Quarterly Profit of $18.4 Billion

CUPERTINO, California — January 26, 2016 — Apple ® today announced financial results for its fiscal 2016 first quarter ended December 26, 2015. The Company posted record quarterly revenue of $75.9 billion and record quarterly net income of $18.4 billion, or $3.28 per diluted share. These results compare to revenue of $74.6 billion and net income of $18 billion, or $3.06 per diluted share, in the year-ago quarter. Gross margin was 40.1 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter’s revenue.

“Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV,” said Tim Cook, Apple’s CEO. “The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices.”

“Our record sales and strong margins drove all-time records for net income and EPS in spite of a very difficult macroeconomic environment,” said Luca Maestri, Apple’s CFO. “We generated operating cash flow of $27.5 billion during the quarter, and returned over $9 billion to investors through share repurchases and dividends. We have now completed $153 billion of our $200 billion capital return program.”

Apple is providing the following guidance for its fiscal 2016 second quarter:

 

 

revenue between $50 billion and $53 billion

 

 

gross margin between 39 percent and 39.5 percent

 

 

operating expenses between $6 billion and $6.1 billion

 

 

other income/(expense) of $325 million

 

 

tax rate of 25.5 percent

Apple’s board of directors has declared a cash dividend of $.52 per share of the Company’s common stock. The dividend is payable on February 11, 2016, to shareholders of record as of the close of business on February 8, 2016.

Apple will provide live streaming of its Q1 2016 financial results conference call beginning at 2:00 p.m. PST on January 26, 2016 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.

Q1’16 Earnings Supplemental Material


This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue, gross margin, operating expenses, other income/(expense), and tax rate. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 26, 2015, and its Form 10-Q for the fiscal quarter ended December 26, 2015 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 revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, OS X, watchOS and tvOS — provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay and iCloud. Apple’s 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.

Press Contact:

Kristin Huguet

Apple

khuguet@apple.com

(408) 974-2414

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.

© 2016 Apple Inc. All rights reserved. Apple and the Apple logo are trademarks of Apple. Other company and product names may be trademarks of their respective owners.


Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

                                                 
     Three Months Ended  
     December 26,
2015
     December 27,
2014
 

Net sales

   $ 75,872       $ 74,599   

Cost of sales (1)

     45,449         44,858   
  

 

 

    

 

 

 

Gross margin

     30,423         29,741   
  

 

 

    

 

 

 

Operating expenses:

     

Research and development (1)

     2,404         1,895   

Selling, general and administrative (1)

     3,848         3,600   
  

 

 

    

 

 

 

Total operating expenses

     6,252         5,495   
  

 

 

    

 

 

 

Operating income

     24,171         24,246   

Other income/(expense), net

     402         170   
  

 

 

    

 

 

 

Income before provision for income taxes

     24,573         24,416   

Provision for income taxes

     6,212         6,392   
  

 

 

    

 

 

 

Net income

   $ 18,361       $ 18,024   
  

 

 

    

 

 

 

Earnings per share:

     

Basic

   $ 3.30       $ 3.08   

Diluted

   $ 3.28       $ 3.06   

Shares used in computing earnings per share:

     

Basic

     5,558,930         5,843,082   

Diluted

     5,594,127         5,881,803   

Cash dividends declared per share

   $ 0.52       $ 0.47   

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

     

Cost of sales

   $ 204       $ 140   

Research and development

   $ 466       $ 374   

Selling, general and administrative

   $ 408       $ 374   


Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

                                                 
     December 26,
2015
    September 26,
2015
 
ASSETS:   

Current assets:

    

Cash and cash equivalents

   $ 16,689      $ 21,120   

Short-term marketable securities

     21,385        20,481   

Accounts receivable, less allowances of $63 in each period

     12,953        16,849   

Inventories

     2,451        2,349   

Vendor non-trade receivables

     11,668        13,494   

Other current assets

     11,073        15,085   
  

 

 

   

 

 

 

Total current assets

     76,219        89,378   

Long-term marketable securities

     177,665        164,065   

Property, plant and equipment, net

     22,300        22,471   

Goodwill

     5,202        5,116   

Acquired intangible assets, net

     3,924        3,893   

Other non-current assets

     7,974        5,556   
  

 

 

   

 

 

 

Total assets

   $ 293,284      $ 290,479   
  

 

 

   

 

 

 
LIABILITIES AND SHAREHOLDERS’ EQUITY:   

Current liabilities:

    

Accounts payable

   $ 33,312      $ 35,490   

Accrued expenses

     24,032        25,181   

Deferred revenue

     8,989        8,940   

Commercial paper

     7,259        8,499   

Current portion of long-term debt

     2,500        2,500   
  

 

 

   

 

 

 

Total current liabilities

     76,092        80,610   

Deferred revenue, non-current

     3,546        3,624   

Long-term debt

     53,204        53,463   

Other non-current liabilities

     32,175        33,427   
  

 

 

   

 

 

 

Total liabilities

     165,017        171,124   
  

 

 

   

 

 

 

Commitments and contingencies

    

Shareholders’ equity:

    

Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,544,487 and 5,578,753 shares issued and outstanding, respectively

     28,253        27,416   

Retained earnings

     101,494        92,284   

Accumulated other comprehensive income/(loss)

     (1,480     (345
  

 

 

   

 

 

 

Total shareholders’ equity

     128,267        119,355   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 293,284      $ 290,479   
  

 

 

   

 

 

 


Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 

                                                 
     Three Months Ended  
     December 26,
2015
    December 27,
2014
 

Cash and cash equivalents, beginning of the period

   $ 21,120      $ 13,844   
  

 

 

   

 

 

 

Operating activities:

  

Net income

     18,361        18,024   

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

  

Depreciation and amortization

     2,954        2,575   

Share-based compensation expense

     1,078        888   

Deferred income tax expense

     1,592        2,197   

Changes in operating assets and liabilities:

  

Accounts receivable, net

     3,896        751   

Inventories

     (102     (172

Vendor non-trade receivables

     1,826        (3,508

Other current and non-current assets

     (893     (1,648

Accounts payable

     (852     9,003   

Deferred revenue

     (29     945   

Other current and non-current liabilities

     (368     4,667   
  

 

 

   

 

 

 

Cash generated by operating activities

     27,463        33,722   
  

 

 

   

 

 

 

Investing activities:

  

Purchases of marketable securities

     (47,836     (44,915

Proceeds from maturities of marketable securities

     3,514        2,807   

Proceeds from sales of marketable securities

     28,262        24,166   

Payments made in connection with business acquisitions, net

     (86     (23

Payments for acquisition of property, plant and equipment

     (3,612     (3,217

Payments for acquisition of intangible assets

     (394     (48

Other

     (298     65   
  

 

 

   

 

 

 

Cash used in investing activities

     (20,450     (21,165
  

 

 

   

 

 

 

Financing activities:

  

Proceeds from issuance of common stock

     1        80   

Excess tax benefits from equity awards

     224        264   

Payments for taxes related to net share settlement of equity awards

     (597     (512

Payments for dividends and dividend equivalents

     (2,969     (2,801

Repurchase of common stock

     (6,863     (5,030

Proceeds from issuance of term debt, net

     0        3,485   

Change in commercial paper, net

     (1,240     (2,409
  

 

 

   

 

 

 

Cash used in financing activities

     (11,444     (6,923
  

 

 

   

 

 

 

Increase/(decrease) in cash and cash equivalents

     (4,431     5,634   
  

 

 

   

 

 

 

Cash and cash equivalents, end of the period

   $ 16,689      $ 19,478   
  

 

 

   

 

 

 

Supplemental cash flow disclosure:

  

Cash paid for income taxes, net

   $ 3,398      $ 3,869   

Cash paid for interest

   $ 396      $ 202   

Exhibit 99.2

Apple Inc.

Q1 2016 Unaudited Summary Data

(Units in thousands, Revenue in millions)

 

                                                                                                                                                                                             
    Q1 2016     Q4 2015     Q1 2015     Sequential Change     Year/Year Change  
          Revenue           Revenue           Revenue           Revenue           Revenue  
Operating Segments                      

Americas

    $ 29,325        $ 21,773        $ 30,566          35%          - 4%   

Europe

      17,932          10,577          17,214          70%          4%   

Greater China

      18,373          12,518          16,144          47%          14%   

Japan

      4,794          3,929          5,448          22%          - 12%   

Rest of Asia Pacific

      5,448          2,704          5,227          101%          4%   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Apple

    $ 75,872        $ 51,501        $ 74,599          47%          2%   
   

 

 

     

 

 

     

 

 

         
                               
                        
    Q1 2016     Q4 2015     Q1 2015     Sequential Change     Year/Year Change  
    Units     Revenue     Units     Revenue     Units     Revenue     Units     Revenue     Units     Revenue  
Product Summary                      

iPhone (1)

    74,779      $ 51,635        48,046      $ 32,209        74,468      $ 51,182        56%        60%        0%        1%   

iPad (1)

    16,122        7,084        9,883        4,276        21,419        8,985        63%        66%        - 25%        - 21%   

Mac (1)

    5,312        6,746        5,709        6,882        5,519        6,944        - 7%        - 2%        - 4%        - 3%   

Services (2)

      6,056          5,086          4,799          19%          26%   

Other Products (1)(3)

      4,351          3,048          2,689          43%          62%   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Apple

    $ 75,872        $ 51,501        $ 74,599          47%          2%   
   

 

 

     

 

 

     

 

 

         
                               

 

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

 

(2) Includes revenue from Internet Services, AppleCare, Apple Pay, licensing and other services.

 

(3) Includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories.

Exhibit 99.3

 

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Q1’16 Earnings
Supplemental Material
January 26, 2016


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Currency Index
$100 of Apple’s non-U.S. dollar revenue in Q4’14 translates into only $85 U.S. dollars today
Q4’14 = 100
100 100
95 95
90 90
85 85
Q4’14 Q1’16
The currency index is based on the average exchange rate per quarter weighted by Apple’s non-U.S. dollar revenue for each quarter. 1


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Q1’16 Constant Currency Revenue Growth
In constant currency, Q1’16 revenue would have been $5 billion higher, reflecting an 8% Y/Y increase
$ in Billions
As Reported In Constant Currency (1)
Operating Segments Q1’16 Revenue Q1’15 Revenue (Non-GAAP) Y/Y Q1’16 Revenue Y/Y (Non-GAAP)
Americas $29.3 $30.6 -4% $30.2 -1%
Europe 17.9 17.2 4% 20.2 18%
Greater China 18.4 16.1 14% 19.0 17%
Japan 4.8 5.4 -12% 5.3 -4%
Rest of Asia Pacific 5.4 5.2 4% 6.2 19%
Total Apple $75.9 $74.6 2% $80.8 8%
Reconciliation from GAAP Revenue to Non-GAAP Constant Currency Revenue (1)
Americas Europe Greater China Japan Rest of Asia Pacific Total Apple
Q1’16 Revenue (GAAP) $29.3 $17.9 $18.4 $4.8 $5.4 $75.9
Foreign exchange effect on revenue 0.8 2.3 0.6 0.5 0.8 5.0
Q1’16 Constant Currency Revenue (Non-GAAP) $30.2 $20.2 $19.0 $5.3 $6.2 $80.8
Q1’15 Revenue (GAAP) $30.6 $17.2 $16.1 $5.4 $5.2 $74.6
Constant Currency Revenue Growth (Non-GAAP) -1% 18% 17% -4% 19% 8%
(1) Apple calculates non-GAAP constant currency revenue by translating current quarter local currency revenue to U.S. dollars based on prior period average exchange rates. That amount is compared to prior period GAAP revenue to derive non-GAAP constant currency revenue growth (expressed as a percentage). Apple considers non-GAAP constant currency revenue and revenue growth to be useful metrics to investors and management as they facilitate a more useful comparison of current performance to historical performance.
Note: Numbers may not add precisely due to rounding. 2


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Services Revenue
Apple’s installed base drove over $31 billion in related purchases in FY15, up 23% Y/Y, and almost $9 billion in Q1’16, up 24% Y/Y
$ in Billions FY14 FY15 Q1’16 (1)
Services Revenue $18.1 $19.9 $5.5
Y/Y Change 10% 15%
Services Revenue Driven by Installed Base:
iTunes Purchased Content
Apple Music
App Store
Licensing
Service PartsiCloud
Apple Pay
Installed Base Related Revenue $14.9 $16.8 $4.7
Adjustment to Reflect Certain Unrecognized Services Purchases (2) $10.5 $14.3 $4.2
Installed Base Related Purchases $25.3 $31.2 $8.9
Y/Y Change 23% 24%
(1) Amounts exclude $548 million received from a patent infringement lawsuit.
(2) For third-party applications sold through the App Store and certain digital content sold through the iTunes Store, Apple accounts for such purchases on a net basis by recognizing in Services revenue only the commission it retains from each purchase. This non-GAAP adjustment reflects the portion of the gross amounts billed to customers that Apple remits to third-party app developers and certain digital content owners. Apple considers non-GAAP installed base related purchases to be a useful metric for investors and management as it provides a more complete picture of the transactions generated by the installed base.
Note: Numbers may not add precisely due to rounding.
3


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Active Installed Base
1 Billion
iPhone, iPad, Mac, iPod touch, Apple TV, and Apple Watch devices
that have been engaged with our services within the past 90 days.
4


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Non-GAAP Measures
The presentation of non-GAAP financial measures in this supplemental material is not intended to be considered in isolation or as a substitute for, or superior to, Apple’s GAAP financial information, and investors are cautioned that the non-GAAP financial measures are limited in their usefulness, may be unique to Apple, should be considered only as a supplement to Apple’s GAAP financial measures and do not reflect any positive or negative trend in the Company’s performance.
5