Apple
APPLE INC (Form: 8-K, Received: 02/01/2018 16:32:04)


 
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
February 1, 2018
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))
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 





Item 2.02    Results of Operations and Financial Condition.
On February 1, 2018 , Apple Inc. (“Apple”) issued a press release regarding Apple’s financial results for its first fiscal quarter ended December 30, 2017 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.






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:
February 1, 2018
 
Apple Inc.
 
 
 
 
 
 
 
 
 
By:
 
/s/ Luca Maestri
 
 
 
 
 
Luca Maestri
 
 
 
 
 
Senior Vice President,
Chief Financial Officer




Exhibit 99.1


Apple Reports First Quarter Results

Revenue and EPS Hit New All-Time Records

Active Installed Base of Devices Reaches 1.3 Billion in January

CUPERTINO, California — February 1, 2018 — Apple ® today announced financial results for its fiscal 2018 first quarter ended December 30, 2017. The Company posted quarterly revenue of $88.3 billion, an increase of 13 percent from the year-ago quarter and an all-time record, and quarterly earnings per diluted share of $3.89, up 16 percent, also an all-time record. International sales accounted for 65 percent of the quarter’s revenue.

“We’re thrilled to report the biggest quarter in Apple’s history, with broad-based growth that included the highest revenue ever from a new iPhone lineup. iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November,” said Tim Cook, Apple’s CEO. “We’ve also achieved a significant milestone with our active installed base of devices reaching 1.3 billion in January. That’s an increase of 30 percent in just two years, which is a testament to the popularity of our products and the loyalty and satisfaction of our customers.”

“Thanks to great operational and business performance, we achieved all-time record profitability during the quarter, with EPS up 16 percent,” said Luca Maestri, Apple’s CFO. “Cash flow from operations was very strong at $28.3 billion, and we returned $14.5 billion to investors through our capital return program.”

Apple is providing the following guidance for its fiscal 2018 second quarter:

revenue between $60 billion and $62 billion
gross margin between 38 percent and 38.5 percent
operating expenses between $7.6 billion and $7.7 billion
other income/(expense) of $300 million
tax rate of approximately 15 percent

Apple’s board of directors has declared a cash dividend of $0.63 per share of the Company’s common stock. The dividend is payable on February 15, 2018 to shareholders of record as of the close of business on February 12, 2018.

Apple will provide live streaming of its Q1 2018 financial results conference call beginning at 2:00 p.m. PST on February 1, 2018 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.





This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include without limitation those about the Company’s estimated revenue, gross margin, operating expenses, other income/(expense), tax rate, and plans for return of capital. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation: the effect of global and regional economic conditions on the Company's business, including effects on purchasing decisions by consumers and businesses; the ability of the Company to compete in markets that are highly competitive and subject to rapid technological change; the ability of the Company to manage frequent product introductions and transitions, including delivering to the marketplace, and stimulating customer demand for, new products, services and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing and product mix, and increases in component and other costs could have on the Company’s gross margin; the dependency of the Company on the performance of distributors of the Company's products, including cellular network carriers and other resellers; the inventory and other asset risks 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, services and new technologies essential to the Company's business, including components and technologies that may only be available from sole or limited sources; the dependency of the Company on manufacturing and logistics services provided by third parties, many of which are located outside of the U.S. and which may affect the quality, quantity or cost of products manufactured or services rendered to the Company; the effect of product and service quality problems on the Company’s financial performance and reputation; the dependency of the Company on third-party intellectual property and digital content, which may not be available to the Company on commercially reasonable terms or at all; the dependency of the Company on support from third-party software developers to develop and maintain software applications and services for the Company’s products; the impact of unfavorable legal proceedings, such as a potential finding that the Company has infringed on the intellectual property rights of others; the impact of changes to laws and regulations that affect the Company’s activities, including the Company’s ability to offer products or services to customers in different regions; the ability of the Company to manage risks associated with its international activities, including complying with laws and regulations affecting the Company’s international operations; the ability of the Company to manage risks associated with the Company’s retail stores; the ability of the Company to manage risks associated with the Company’s investments in new business strategies and acquisitions; the impact on the Company's business and reputation from information technology system failures, network disruptions or losses or unauthorized access to, or release of, confidential information; the ability of the Company to comply with laws and regulations regarding data protection; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other business interruptions that could disrupt supply or delivery of, or demand for, the Company’s products; financial risks, including risks relating to currency fluctuations, credit risks and fluctuations in the market value of the Company’s investment portfolio; and changes in tax rates and exposure to additional tax liabilities. More information on these risks and other potential factors that could affect the Company’s financial results is included in the Company’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. 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, macOS, 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 more than 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

Matt Blake
Apple
mattblake@apple.com
(408) 974-7406

NOTE TO EDITORS: For additional information visit Apple Newsroom (www.apple.com/newsroom), or call Apple’s Media Helpline at (408) 974-2042.

© 2018 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except number of shares which are reflected in thousands and per share amounts)
 
 
Three Months Ended
 
December 30,
2017
 
December 31,
2016
Net sales
$
88,293

 
$
78,351

Cost of sales (1)
54,381

 
48,175

Gross margin
33,912

 
30,176

 
 
 
 
Operating expenses:
 
 
 
Research and development (1)
3,407

 
2,871

Selling, general and administrative (1)
4,231

 
3,946

Total operating expenses
7,638

 
6,817

 
 
 
 
Operating income
26,274

 
23,359

Other income/(expense), net
756

 
821

Income before provision for income taxes
27,030

 
24,180

Provision for income taxes
6,965

 
6,289

Net income
$
20,065

 
$
17,891

 
 
 
 
Earnings per share:
 
 
 
Basic
$
3.92

 
$
3.38

Diluted
$
3.89

 
$
3.36

 
 
 
 
Shares used in computing earnings per share:
 
 
 
Basic
5,112,877

 
5,298,661

Diluted
5,157,787

 
5,327,995

 
 
 
 
Cash dividends declared per share
$
0.63

 
$
0.57

 
 
 
 
(1)  Includes share-based compensation expense as follows:
Cost of sales
$
252

 
$
229

Research and development
$
646

 
$
589

Selling, general and administrative
$
398

 
$
438







Apple Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except number of shares which are reflected in thousands and par value)
 
 
December 30,
2017
 
September 30,
2017
ASSETS:
Current assets:
 
 
 
Cash and cash equivalents
$
27,491

 
$
20,289

Short-term marketable securities
49,662

 
53,892

Accounts receivable, less allowances of $59 and $58, respectively
23,440

 
17,874

Inventories
4,421

 
4,855

Vendor non-trade receivables
27,459

 
17,799

Other current assets
11,337

 
13,936

Total current assets
143,810

 
128,645

 
 
 
 
Long-term marketable securities
207,944

 
194,714

Property, plant and equipment, net
33,679

 
33,783

Goodwill
5,889

 
5,717

Acquired intangible assets, net
2,149

 
2,298

Other non-current assets
13,323

 
10,162

Total assets
$
406,794

 
$
375,319

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
 
 
 
Accounts payable
$
62,985

 
$
49,049

Accrued expenses
26,281

 
25,744

Deferred revenue
8,044

 
7,548

Commercial paper
11,980

 
11,977

Current portion of long-term debt
6,498

 
6,496

Total current liabilities
115,788

 
100,814

 
 
 
 
Deferred revenue, non-current
3,131

 
2,836

Long-term debt
103,922

 
97,207

Other non-current liabilities
43,754

 
40,415

Total liabilities
266,595

 
241,272

 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
Shareholders’ equity:
 
 
 
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,081,651 and 5,126,201 shares issued and outstanding, respectively
36,447

 
35,867

Retained earnings
104,593

 
98,330

Accumulated other comprehensive income/(loss)
(841
)
 
(150
)
Total shareholders’ equity
140,199

 
134,047

Total liabilities and shareholders’ equity
$
406,794

 
$
375,319







Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
 
Three Months Ended
 
December 30,
2017
 
December 31,
2016
Cash and cash equivalents, beginning of the period
$
20,289

 
$
20,484

Operating activities:
 
 
 
Net income
20,065

 
17,891

Adjustments to reconcile net income to cash generated by operating activities:
 
 
 
Depreciation and amortization
2,745

 
2,987

Share-based compensation expense
1,296

 
1,256

Deferred income tax expense/(benefit)
(33,737
)
 
1,452

Other
(11
)
 
(274
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
(5,570
)
 
1,697

Inventories
434

 
(580
)
Vendor non-trade receivables
(9,660
)
 
(375
)
Other current and non-current assets
(197
)
 
(1,446
)
Accounts payable
14,588

 
2,460

Deferred revenue
791

 
42

Other current and non-current liabilities
37,549

 
2,124

Cash generated by operating activities
28,293

 
27,234

Investing activities:
 
 
 
Purchases of marketable securities
(41,272
)
 
(54,272
)
Proceeds from maturities of marketable securities
14,048

 
6,525

Proceeds from sales of marketable securities
16,801

 
32,166

Payments made in connection with business acquisitions, net
(173
)
 
(17
)
Payments for acquisition of property, plant and equipment
(2,810
)
 
(3,334
)
Payments for acquisition of intangible assets
(154
)
 
(86
)
Payments for strategic investments, net
(94
)
 

Other
64

 
(104
)
Cash used in investing activities
(13,590
)
 
(19,122
)
Financing activities:
 
 
 
Payments for taxes related to net share settlement of equity awards
(1,038
)
 
(629
)
Payments for dividends and dividend equivalents
(3,339
)
 
(3,130
)
Repurchases of common stock
(10,095
)
 
(10,851
)
Proceeds from issuance of term debt, net
6,969

 

Change in commercial paper, net
2

 
2,385

Cash used in financing activities
(7,501
)
 
(12,225
)
Increase/(Decrease) in cash and cash equivalents
7,202

 
(4,113
)
Cash and cash equivalents, end of the period
$
27,491

 
$
16,371

Supplemental cash flow disclosure:
 
 
 
Cash paid for income taxes, net
$
3,551

 
$
3,510

Cash paid for interest
$
623

 
$
497







 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 99.2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Apple Inc.
Q1 2018 Unaudited Summary Data
(Units in thousands, Revenue in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2018
 
Q4 2017
 
Q1 2017
 
Sequential Change
 
Year/Year Change
 
 
 
 
Revenue
 
 
 
Revenue
 
 
 
Revenue
 
 
 
Revenue
 
 
 
Revenue
Reportable Segments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Americas
 
 
$
35,193

 
 
 
$
23,099

 
 
 
$
31,968

 
 
 
52
 %
 
 
 
10
 %
 
Europe
 
 
21,054

 
 
 
13,009

 
 
 
18,521

 
 
 
62
 %
 
 
 
14
 %
 
Greater China
 
 
17,956

 
 
 
9,801

 
 
 
16,233

 
 
 
83
 %
 
 
 
11
 %
 
Japan
 
 
7,237

 
 
 
3,858

 
 
 
5,766

 
 
 
88
 %
 
 
 
26
 %
 
Rest of Asia Pacific
 
 
6,853

 
 
 
2,812

 
 
 
5,863

 
 
 
144
 %
 
 
 
17
 %
Total Apple
 
 
$
88,293

 
 
 
$
52,579

 
 
 
$
78,351

 
 
 
68
 %
 
 
 
13
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2018
 
Q4 2017
 
Q1 2017
 
Sequential Change
 
Year/Year Change
 
 
Units
 
Revenue
 
Units
 
Revenue
 
Units
 
Revenue
 
Units
 
Revenue
 
Units
 
Revenue
Product Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
iPhone (1)
77,316

 
$
61,576

 
46,677

 
$
28,846

 
78,290

 
$
54,378

 
66
 %
 
113
 %
 
-1
 %
 
13
 %
 
iPad (1)
13,170

 
5,862

 
10,326

 
4,831

 
13,081

 
5,533

 
28
 %
 
21
 %
 
1
 %
 
6
 %
 
Mac (1)
5,112

 
6,895

 
5,386

 
7,170

 
5,374

 
7,244

 
-5
 %
 
-4
 %
 
-5
 %
 
-5
 %
 
Services (2)
 
 
8,471

 
 
 
8,501

 
 
 
7,172

 
 
 
0
 %
 
 
 
18
 %
 
Other Products (1)(3)
 
 
5,489

 
 
 
3,231

 
 
 
4,024

 
 
 
70
 %
 
 
 
36
 %
Total Apple
 
 
$
88,293

 
 
 
$
52,579

 
 
 
$
78,351

 
 
 
68
 %
 
 
 
13
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Includes deferrals and amortization of related software upgrade rights and non-software services.
 
 
 
 
 
 
 
 
(2)
Includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services. Services
revenue in the fourth quarter of 2017 included a favorable one-time adjustment of $640 million due to a change
in estimate based on the availability of additional supporting information.
 
 
 
 
 
 
 
 
(3)
Includes sales of Apple TV, Apple Watch, Beats products, iPod touch and Apple-branded and third-party accessories.