EX-99.1 2 a8-kexhibit991q420189292018.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1


Apple Reports Fourth Quarter Results

Revenue Up 20 Percent and EPS Up 41 Percent to New September Quarter Records

Services Revenue of $10 Billion Reaches New All-Time High

CUPERTINO, California — November 1, 2018 — Apple® today announced financial results for its fiscal 2018 fourth quarter ended September 29, 2018. The Company posted quarterly revenue of $62.9 billion, an increase of 20 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.91, up 41 percent. International sales accounted for 61 percent of the quarter’s revenue.

Services revenue reached an all-time high of $10 billion. Excluding a one-time favorable adjustment of $640 million recognized in the fourth quarter of fiscal 2017, Services revenue grew from $7.9 billion in the fourth quarter of fiscal 2017 to $10 billion in the fourth quarter of fiscal 2018, an increase of 27 percent.

“We’re thrilled to report another record-breaking quarter that caps a tremendous fiscal 2018, the year in which we shipped our 2 billionth iOS device, celebrated the 10th anniversary of the App Store and achieved the strongest revenue and earnings in Apple’s history,” said Tim Cook, Apple’s CEO. “Over the past two months, we’ve delivered huge advancements for our customers through new versions of iPhone, Apple Watch, iPad and Mac as well as our four operating systems, and we enter the holiday season with our strongest lineup of products and services ever.”

“We concluded a record year with our best September quarter ever, growing double digits in every geographic segment. We set September quarter revenue records for iPhone and Wearables and all-time quarterly records for Services and Mac,” said Luca Maestri, Apple’s CFO. “We generated $19.5 billion in operating cash flow and returned over $23 billion to shareholders in dividends and share repurchases in the September quarter, bringing total capital returned in fiscal 2018 to almost $90 billion.”

Apple is providing the following guidance for its fiscal 2019 first quarter:

•
revenue between $89 billion and $93 billion
•
gross margin between 38 percent and 38.5 percent
•
operating expenses between $8.7 billion and $8.8 billion
•
other income/(expense) of $300 million
•
tax rate of approximately 16.5 percent before discrete items

Apple’s board of directors has declared a cash dividend of $0.73 per share of the Company’s common stock. The dividend is payable on November 15, 2018 to shareholders of record as of the close of business on November 12, 2018.

Apple will provide live streaming of its Q4 2018 financial results conference call beginning at 2:00 p.m. PDT on November 1, 2018 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.

Apple periodically provides information for investors on its corporate website, apple.com, and its investors relations website, investor.apple.com. This includes press releases and other information about financial performance, reports filed or furnished with the SEC, information on corporate governance and details related to its annual meeting of shareholders.




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 introductions and transitions of products and services, including delivering to the marketplace, and stimulating customer demand for, new products, services and technological innovations on a timely basis; the effect that shifts in the mix of products and services and in the geographic, currency or channel mix, component cost increases, price competition, or the introduction of new products, including new products with higher cost structures, 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 single 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 US and which may affect the quality, quantity or cost of products manufactured or services rendered to the Company; the effect of product and services design and manufacturing defects 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; political events, international trade disputes, war, terrorism, natural disasters, public health issues, 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 Inc. 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
 
Twelve Months Ended
 
September 29,
2018
 
September 30,
2017
 
September 29,
2018
 
September 30,
2017
Net sales
$
62,900

 
$
52,579

 
$
265,595

 
$
229,234

Cost of sales (1)
38,816

 
32,648

 
163,756

 
141,048

Gross margin
24,084

 
19,931

 
101,839

 
88,186

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Research and development (1)
3,750

 
2,997

 
14,236

 
11,581

Selling, general and administrative (1)
4,216

 
3,814

 
16,705

 
15,261

Total operating expenses
7,966

 
6,811

 
30,941

 
26,842

 
 
 
 
 
 
 
 
Operating income
16,118

 
13,120

 
70,898

 
61,344

Other income/(expense), net
303

 
797

 
2,005

 
2,745

Income before provision for income taxes
16,421

 
13,917

 
72,903

 
64,089

Provision for income taxes
2,296

 
3,203

 
13,372

 
15,738

Net income
$
14,125

 
$
10,714

 
$
59,531

 
$
48,351

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
2.94

 
$
2.08

 
$
12.01

 
$
9.27

Diluted
$
2.91

 
$
2.07

 
$
11.91

 
$
9.21

 
 
 
 
 
 
 
 
Shares used in computing earnings per share:
 
 
 
 
 
 
 
Basic
4,801,589

 
5,149,428

 
4,955,377

 
5,217,242

Diluted
4,847,547

 
5,183,585

 
5,000,109

 
5,251,692

 
 
 
 
 
 
 
 
Cash dividends declared per share
$
0.73

 
$
0.63

 
$
2.72

 
$
2.40

 
 
 
 
 
 
 
 
(1) Includes share-based compensation expense as follows:
Cost of sales
$
251

 
$
215

 
$
1,010

 
$
877

Research and development
$
681

 
$
569

 
$
2,668

 
$
2,299

Selling, general and administrative
$
413

 
$
390

 
$
1,662

 
$
1,664






Apple Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except number of shares which are reflected in thousands and par value)

 
September 29,
2018
 
September 30,
2017
ASSETS:
Current assets:
 
 
 
Cash and cash equivalents
$
25,913

 
$
20,289

Marketable securities
40,388

 
53,892

Accounts receivable, net
23,186

 
17,874

Inventories
3,956

 
4,855

Vendor non-trade receivables
25,809

 
17,799

Other current assets
12,087

 
13,936

Total current assets
131,339

 
128,645

 
 
 
 
Non-current assets:
 
 
 
Marketable securities
170,799

 
194,714

Property, plant and equipment, net
41,304

 
33,783

Other non-current assets
22,283

 
18,177

Total non-current assets
234,386

 
246,674

Total assets
$
365,725

 
$
375,319

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
 
 
 
Accounts payable
$
55,888

 
$
44,242

Other current liabilities
32,687

 
30,551

Deferred revenue
7,543

 
7,548

Commercial paper
11,964

 
11,977

Term debt
8,784

 
6,496

Total current liabilities
116,866

 
100,814

 
 
 
 
Non-current liabilities:
 
 
 
Deferred revenue
2,797

 
2,836

Term debt
93,735

 
97,207

Other non-current liabilities
45,180

 
40,415

Total non-current liabilities
141,712

 
140,458

Total liabilities
258,578

 
241,272

 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
Shareholders’ equity:
 
 
 
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,754,986 and 5,126,201 shares issued and outstanding, respectively
40,201

 
35,867

Retained earnings
70,400

 
98,330

Accumulated other comprehensive income/(loss)
(3,454
)
 
(150
)
Total shareholders’ equity
107,147

 
134,047

Total liabilities and shareholders’ equity
$
365,725

 
$
375,319






Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
 
Twelve Months Ended
 
September 29,
2018
 
September 30,
2017
Cash and cash equivalents, beginning of the period
$
20,289

 
$
20,484

Operating activities:
 
 
 
Net income
59,531

 
48,351

Adjustments to reconcile net income to cash generated by operating activities:
 
 
 
Depreciation and amortization
10,903

 
10,157

Share-based compensation expense
5,340

 
4,840

Deferred income tax expense/(benefit)
(32,590
)
 
5,966

Other
(444
)
 
(166
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
(5,322
)
 
(2,093
)
Inventories
828

 
(2,723
)
Vendor non-trade receivables
(8,010
)
 
(4,254
)
Other current and non-current assets
(423
)
 
(5,318
)
Accounts payable
9,175

 
8,966

Deferred revenue
(44
)
 
(626
)
Other current and non-current liabilities
38,490

 
1,125

Cash generated by operating activities
77,434

 
64,225

Investing activities:
 
 
 
Purchases of marketable securities
(71,356
)
 
(159,486
)
Proceeds from maturities of marketable securities
55,881

 
31,775

Proceeds from sales of marketable securities
47,838

 
94,564

Payments for acquisition of property, plant and equipment
(13,313
)
 
(12,451
)
Payments made in connection with business acquisitions, net
(721
)
 
(329
)
Purchases of non-marketable securities
(1,871
)
 
(521
)
Proceeds from non-marketable securities
353

 
126

Other
(745
)
 
(124
)
Cash generated by/(used in) investing activities
16,066

 
(46,446
)
Financing activities:
 
 
 
Proceeds from issuance of common stock
669

 
555

Payments for taxes related to net share settlement of equity awards
(2,527
)
 
(1,874
)
Payments for dividends and dividend equivalents
(13,712
)
 
(12,769
)
Repurchases of common stock
(72,738
)
 
(32,900
)
Proceeds from issuance of term debt, net
6,969

 
28,662

Repayments of term debt
(6,500
)
 
(3,500
)
Change in commercial paper, net
(37
)
 
3,852

Cash used in financing activities
(87,876
)
 
(17,974
)
Increase/(Decrease) in cash and cash equivalents
5,624

 
(195
)
Cash and cash equivalents, end of the period
$
25,913

 
$
20,289

Supplemental cash flow disclosure:
 
 
 
Cash paid for income taxes, net
$
10,417

 
$
11,591

Cash paid for interest
$
3,022

 
$
2,092