Apple Inc.
APPLE INC (Form: 8-K, Received: 07/22/2014 16:31:52)

 

 

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

July 22, 2014

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)

 

(IRS Employer

Identification No.)

1 Infinite Loop

Cupertino, California 95014

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (408) 996-1010

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 July 22, 2014, Apple Inc. (“Apple”) issued a press release regarding Apple’s financial results for its third fiscal quarter ended June 28, 2014 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.

 

Exhibit

Number

  

Description

99.1    Text of press release issued by Apple Inc. on July 22, 2014.
99.2    Data sheet issued by Apple Inc. on July 22, 2014.


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: July 22, 2014     By:   /s/ Luca Maestri
      Luca Maestri
     

Senior Vice President,

Chief Financial Officer


Exhibit Index

 

Exhibit

Number

  

Description

99.1    Text of press release issued by Apple Inc. on July 22, 2014.
99.2    Data sheet issued by Apple Inc. on July 22, 2014.

Exhibit 99.1

Apple Reports Third Quarter Results

iPhone, Mac & Services Growth Drive Record June Quarter Revenue & 20% EPS Growth

CUPERTINO, California—July 22, 2014—Apple ® today announced financial results for its fiscal 2014 third quarter ended June 28, 2014. The Company posted quarterly revenue of $37.4 billion and quarterly net profit of $7.7 billion, or $1.28 per diluted share. These results compare to revenue of $35.3 billion and net profit of $6.9 billion, or $1.07 per diluted share, in the year-ago quarter. Gross margin was 39.4 percent compared to 36.9 percent in the year-ago quarter. International sales accounted for 59 percent of the quarter’s revenue.

Apple’s board of directors has declared a cash dividend of $.47 per share of the Company’s common stock. The dividend is payable on August 14, 2014, to shareholders of record as of the close of business on August 11, 2014.

“Our record June quarter revenue was fueled by strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem, driving our highest EPS growth rate in seven quarters,” said Tim Cook, Apple’s CEO. “We are incredibly excited about the upcoming releases of iOS 8 and OS X Yosemite, as well as other new products and services that we can’t wait to introduce.”

“We generated $10.3 billion in cash flow from operations and returned over $8 billion in cash to shareholders through dividends and share repurchases during the June quarter,” said Luca Maestri, Apple’s CFO. “We have now taken action on over $74 billion of our $130 billion capital return program with six quarters remaining to its completion.”

Apple is providing the following guidance for its fiscal 2014 fourth quarter:

 

 

revenue between $37 billion and $40 billion

 

gross margin between 37 percent and 38 percent

 

operating expenses between $4.75 billion and $4.85 billion

 

other income/(expense) of $250 million

 

tax rate of 26.1 percent

Apple will provide live streaming of its Q3 2014 financial results conference call beginning at 2:00 p.m. PDT on July 22, 2014 at www.apple.com/quicktime/qtv/earningsq314. This webcast will also be available for replay for approximately two weeks thereafter.


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 other 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 28, 2013, its Form 10-Q for the quarter ended December 28, 2013, its Form 10-Q for the quarter ended March 29, 2014, and its Form 10-Q for the quarter ended June 28, 2014 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 designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.

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.

© 2014 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS and Macintosh are trademarks of Apple. Other company and product names may be trademarks of their respective owners.


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      Nine Months Ended  
     June 28,
2014
     June 29,
2013
     June 28,
2014
     June 29,
2013
 

Net sales

   $ 37,432       $ 35,323       $ 140,672       $ 133,438   

Cost of sales (1)

     22,697         22,299         86,144         83,005   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross margin

     14,735         13,024         54,528         50,433   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating expenses:

           

Research and development (1)

     1,603         1,178         4,355         3,307   

Selling, general and administrative (1)

     2,850         2,645         8,835         8,157   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     4,453         3,823         13,190         11,464   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     10,282         9,201         41,338         38,969   

Other income/(expense), net

     202         234         673         1,043   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before provision for income taxes

     10,484         9,435         42,011         40,012   

Provision for income taxes

     2,736         2,535         10,968         10,487   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 7,748       $ 6,900       $ 31,043       $ 29,525   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per share:

           

Basic

   $ 1.29       $ 1.07       $ 5.06       $ 4.52   

Diluted

   $ 1.28       $ 1.07       $ 5.03       $ 4.49   

Shares used in computing earnings per share:

           

Basic

     6,012,635         6,430,323         6,136,147         6,526,714   

Diluted

     6,051,711         6,469,854         6,172,857         6,574,205   

Cash dividends declared per common share

   $ 0.47       $ 0.44       $ 1.35       $ 1.20   

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

  

     

Cost of sales

   $ 115       $ 90       $ 334       $ 262   

Research and development

   $ 313       $ 245       $ 902       $ 708   

Selling, general and administrative

   $ 296       $ 243       $ 865       $ 728   


Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

                                                 
     June 28,
2014
     September 28,
2013
 
ASSETS:   

Current assets:

     

Cash and cash equivalents

   $ 12,977       $ 14,259   

Short-term marketable securities

     24,828         26,287   

Accounts receivable, less allowances of $86 and $99, respectively

     10,788         13,102   

Inventories

     1,594         1,764   

Deferred tax assets

     3,884         3,453   

Vendor non-trade receivables

     6,053         7,539   

Other current assets

     7,825         6,882   
  

 

 

    

 

 

 

Total current assets

     67,949         73,286   

Long-term marketable securities

     126,685         106,215   

Property, plant and equipment, net

     17,585         16,597   

Goodwill

     2,374         1,577   

Acquired intangible assets, net

     3,767         4,179   

Other assets

     4,160         5,146   
  

 

 

    

 

 

 

Total assets

   $ 222,520       $ 207,000   
  

 

 

    

 

 

 
LIABILITIES AND SHAREHOLDERS’ EQUITY:   

Current liabilities:

     

Accounts payable

   $ 20,535       $ 22,367   

Accrued expenses

     15,264         13,856   

Deferred revenue

     8,396         7,435   

Commercial paper

     2,010         0   
  

 

 

    

 

 

 

Total current liabilities

     46,205         43,658   

Deferred revenue – non-current

     3,058         2,625   

Long-term debt

     29,030         16,960   

Other non-current liabilities

     23,287         20,208   
  

 

 

    

 

 

 

Total liabilities

     101,580         83,451   
  

 

 

    

 

 

 

Commitments and contingencies

     

Shareholders’ equity:

     

Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,989,171 and 6,294,494 shares issued and outstanding, respectively

     22,139         19,764   

Retained earnings

     98,715         104,256   

Accumulated other comprehensive income/(loss)

     86         (471
  

 

 

    

 

 

 

Total shareholders’ equity

     120,940         123,549   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 222,520       $ 207,000   
  

 

 

    

 

 

 


Apple Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 

                                                 
     Nine Months Ended  
     June 28,
2014
    June 29,
2013
 

Cash and cash equivalents, beginning of the period

   $ 14,259      $ 10,746   
  

 

 

   

 

 

 

Operating activities:

    

Net income

     31,043        29,525   

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

    

Depreciation and amortization

     5,977        4,974   

Share-based compensation expense

     2,101        1,698   

Deferred income tax expense

     3,154        2,524   

Changes in operating assets and liabilities:

    

Accounts receivable, net

     2,314        2,091   

Inventories

     170        (906

Vendor non-trade receivables

     1,486        3,148   

Other current and non-current assets

     931        484   

Accounts payable

     (2,531     (4,740

Deferred revenue

     1,394        1,404   

Other current and non-current liabilities

     424        3,556   
  

 

 

   

 

 

 

Cash generated by operating activities

     46,463        43,758   
  

 

 

   

 

 

 

Investing activities:

    

Purchases of marketable securities

     (160,662     (122,681

Proceeds from maturities of marketable securities

     15,111        13,963   

Proceeds from sales of marketable securities

     126,827        81,734   

Payments made in connection with business acquisitions, net

     (898     (443

Payments for acquisition of property, plant and equipment

     (5,745     (6,210

Payments for acquisition of intangible assets

     (216     (560

Other

     7        (188
  

 

 

   

 

 

 

Cash used in investing activities

     (25,576     (34,385
  

 

 

   

 

 

 

Financing activities:

    

Proceeds from issuance of common stock

     435        335   

Excess tax benefits from equity awards

     562        644   

Taxes paid related to net share settlement of equity awards

     (839     (1,001

Dividends and dividend equivalents paid

     (8,297     (7,795

Repurchase of common stock

     (28,000     (17,950

Proceeds from issuance of long-term debt

     11,960        16,896   

Proceeds from issuance of commercial paper, net

     2,010        0   
  

 

 

   

 

 

 

Cash used in financing activities

     (22,169     (8,871
  

 

 

   

 

 

 

Increase/(decrease) in cash and cash equivalents

     (1,282     502   
  

 

 

   

 

 

 

Cash and cash equivalents, end of the period

   $ 12,977      $ 11,248   
  

 

 

   

 

 

 

Supplemental cash flow disclosure:

    

Cash paid for income taxes, net

   $ 8,013      $ 7,188   

Cash paid for interest

   $ 322      $ 0   

Exhibit 99.2

Apple Inc.

Q3 2014 Unaudited Summary Data

(Units in thousands, Revenue in millions)

 

                                                                                                                                                                                             
    Q3’14     Q2’14     Q3’13     Sequential Change     Year/Year Change  
          Revenue           Revenue           Revenue           Revenue           Revenue  

Operating Segments

                     

Americas

    $ 14,577        $ 14,310        $ 14,405          2%          1%   

Europe

      8,091          10,230          7,614          - 21%          6%   

Greater China (a)

      5,935          9,289          4,641          - 36%          28%   

Japan

      2,564          3,963          2,543          - 35%          1%   

Rest of Asia Pacific

      2,161          2,627          2,046          - 18%          6%   

Retail

      4,104          5,227          4,074          - 21%          1%   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Apple

    $ 37,432        $ 45,646        $ 35,323          - 18%          6%   
                               
    Q3’14     Q2’14     Q3’13     Sequential Change     Year/Year Change  
    Units     Revenue     Units     Revenue     Units     Revenue     Units     Revenue     Units     Revenue  

Product Summary

                     

iPhone (b)

    35,203      $ 19,751        43,719      $ 26,064        31,241      $ 18,154        - 19%        - 24%        13%        9%   

iPad (b)

    13,276        5,889        16,350        7,610        14,617        6,374        - 19%        - 23%        - 9%        - 8%   

Mac (b)

    4,413        5,540        4,136        5,519        3,754        4,893        7%        0%        18%        13%   

iPod (b)

    2,926        442        2,761        461        4,569        733        6%        - 4%        - 36%        - 40%   

iTunes/Software/Services (c)

      4,485          4,573          3,990          - 2%          12%   

Accessories (d)

      1,325          1,419          1,179          - 7%          12%   
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Apple

          $ 37,432        $ 45,646        $ 35,323          - 18%          6%   

 

(a) Greater China includes China, Hong Kong and Taiwan.

 

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

 

(c) Includes revenue from sales on the iTunes Store, the App Store, the Mac App Store, and the iBooks Store, and revenue from sales of AppleCare, licensing and other services.

 

(d) Includes sales of hardware peripherals and Apple-branded and third-party accessories for iPhone, iPad, Mac and iPod.