AAPL
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Apple
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Earnings Details
1st Quarter December 2016
Tuesday, January 31, 2017 4:30:01 PM
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Summary

Apple Beats

Apple (AAPL) reported 1st Quarter December 2016 earnings of $3.36 per share on revenue of $78.4 billion. The consensus earnings estimate was $3.22 per share on revenue of $77.0 billion. The Earnings Whisper number was $3.23 per share. Revenue grew 3.3% on a year-over-year basis.

The company said it expects second quarter revenue of $51.50 billion to $53.50 billion with gross margins of 38% to 39%, which calculates to earnings of $1.86 to $2.05 per share. The current consensus earnings estimate is $2.04 per share on revenue of $52.83 billion for the quarter ending March 31, 2017.

Apple Inc designs, manufactures, & markets mobile communication & media devices, personal computers, & portable digital music players, & sells a variety of related software, services, accessories, networking solutions, & third-party digital content.

Results
Reported Earnings
$3.36
Earnings Whisper
$3.23
Consensus Estimate
$3.22
Reported Revenue
$78.35 Bil
Revenue Estimate
$77.04 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Apple Reports Record First Quarter Results

Apple(R) today announced financial results for its fiscal 2017 first quarter ended December 31, 2016. The Company posted all-time record quarterly revenue of $78.4 billion and all-time record quarterly earnings per diluted share of $3.36. These results compare to revenue of $75.9 billion and earnings per diluted share of $3.28 in the year-ago quarter. International sales accounted for 64 percent of the quarter’s revenue.

"We’re thrilled to report that our holiday quarter results generated Apple’s highest quarterly revenue ever, and broke multiple records along the way. We sold more iPhones than ever before and set all-time revenue records for iPhone, Services, Mac and Apple Watch," said Tim Cook, Apple’s CEO. "Revenue from Services grew strongly over last year, led by record customer activity on the App Store, and we are very excited about the products in our pipeline."

"Our outstanding business performance resulted in a new all-time record for earnings per share, and over $27 billion in operating cash flow," said Luca Maestri, Apple’s CFO. "We returned nearly $15 billion to investors through share repurchases and dividends during the quarter, bringing cumulative payments through our capital return program to over $200 billion."

Apple is providing the following guidance for its fiscal 2017 second quarter: ? revenue between $51.5 billion and $53.5 billion ? gross margin between 38 percent and 39 percent ? operating expenses between $6.5 billion and $6.6 billion ? other income/(expense) of $400 million ? tax rate of 26 percent

Apple’s board of directors has declared a cash dividend of $0.57 per share of the Company’s common stock. The dividend is payable on February 16, 2017 to shareholders of record as of the close of business on February 13, 2017.

Apple will provide live streaming of its Q1 2017 financial results conference call beginning at 2:00 p.m. PST on January 31, 2017 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 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 24, 2016 and its Form 10-Q for the fiscal quarter ended December 31, 2016 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, 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.

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.

(C) 2017 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 31,
December 26,
2016
2015
Net sales
$
78,351
$
75,872
Cost of sales (1)
48,175
45,449
Gross margin
30,176
30,423
Operating expenses:
Research and development (1)
2,871
2,404
Selling, general and administrative (1)
3,946
3,848
Total operating expenses
6,817
6,252
Operating income
23,359
24,171
Other income/(expense), net
821
402
Income before provision for income taxes
24,180
24,573
Provision for income taxes
6,289
6,212
Net income
$
17,891
$
18,361
Earnings per share:
Basic
$
3.38
$
3.30
Diluted
$
3.36
$
3.28
Shares used in computing earnings per share:
Basic
5,298,661
5,558,930
Diluted
5,327,995
5,594,127
Cash dividends declared per share
$
0.57
$
0.52
(1) Includes share-based compensation expense as follows:
Cost of sales
$
229
$
204
Research and development
$
589
$
466
Selling, general and administrative
$
438
$
408
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except number of shares which are reflected in
thousands and par value)
December 31,
September 24,
2016
2016
ASSETS:
Current assets:
Cash and cash equivalents
$
16,371
$
20,484
Short-term marketable securities
44,081
46,671
Accounts receivable, less an allowance of $53 in each period
14,057
15,754
Inventories
2,712
2,132
Vendor non-trade receivables
13,920
13,545
Other current assets
12,191
8,283
Total current assets
103,332
106,869
Long-term marketable securities
185,638
170,430
Property, plant and equipment, net
26,510
27,010
Goodwill
5,423
5,414
Acquired intangible assets, net
2,848
3,206
Other non-current assets
7,390
8,757
Total assets
$
331,141
$
321,686
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable
$
38,510
$
37,294
Accrued expenses
23,739
22,027
Deferred revenue
7,889
8,080
Commercial paper
10,493
8,105
Current portion of long-term debt
3,499
3,500
Total current liabilities
84,130
79,006
Deferred revenue, non-current
3,163
2,930
Long-term debt
73,557
75,427
Other non-current liabilities
37,901
36,074
Total liabilities
198,751
193,437
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value:
32,144
31,251
12,600,000 shares authorized; 5,255,423 and 5,336,166 shares issued
and outstanding, respectively
Retained earnings
100,001
96,364
Accumulated other comprehensive income/(loss)
245
634
Total shareholders’ equity
132,390
128,249
Total liabilities and shareholders’ equity
$
331,141
$
321,686
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Three Months Ended
December 31,
December 26,
2016
2015
Cash and cash equivalents, beginning of the period
$
20,484
$ 21,120
Operating activities:
Net income
17,891
18,361
Adjustments to reconcile net income to cash generated by operating
activities:
Depreciation and amortization
2,987
2,954
Share-based compensation expense
1,256
1,078
Deferred income tax expense
1,452
1,592
Other
(274 )
110
Changes in operating assets and liabilities:
Accounts receivable, net
1,697
3,896
Inventories
(580 )
(102 )
Vendor non-trade receivables
(375 )
1,826
Other current and non-current assets
(1,446 )
(1,058 )
Accounts payable
2,460
(852 )
Deferred revenue
42
(29 )
Other current and non-current liabilities
1,946
(313 )
Cash generated by operating activities
27,056
27,463
Investing activities:
Purchases of marketable securities
(54,272 )
(47,836 )
Proceeds from maturities of marketable securities
6,525
3,514
Proceeds from sales of marketable securities
32,166
28,262
Payments made in connection with business acquisitions, net
(17 )
(86 )
Payments for acquisition of property, plant and equipment
(3,334 )
(3,612 )
Payments for acquisition of intangible assets
(86 )
(394 )
Payments for strategic investments
--
(126 )
Other
(104 )
(172 )
Cash used in investing activities
(19,122 )
(20,450 )
Financing activities:
Proceeds from issuance of common stock
--
1
Excess tax benefits from equity awards
178
224
Payments for taxes related to net share settlement of equity awards
(629 )
(597 )
Payments for dividends and dividend equivalents
(3,130 )
(2,969 )
Repurchases of common stock
(10,851 )
(6,863 )
Change in commercial paper, net
2,385
(1,240 )
Cash used in financing activities
(12,047 )
(11,444 )
Increase/(Decrease) in cash and cash equivalents
(4,113 )
(4,431 )
Cash and cash equivalents, end of the period
$
16,371
$ 16,689
Supplemental cash flow disclosure:
Cash paid for income taxes, net
$
3,510
$
3,398
Cash paid for interest
$
497
$
396
Apple Inc.
Q1 2017 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Q1 2017
Q4 2016
Q1 2016
Sequential Change
Year/Year Change
Operating Segments
Revenue
Revenue
Revenue
Revenue
Revenue
Americas
$31,968
$20,229
$29,325
58%
9%
Europe
18,521
10,842
17,932
71%
3%
Greater China
16,233
8,785
18,373
85%
- 12%
Japan
5,766
4,324
4,794
33%
20%
Rest of Asia Pacific
5,863
2,672
5,448
119%
8%
Total Apple
$78,351
$46,852
$75,872
67%
3%
Q1 2017
Q4 2016
Q1 2016
Sequential Change
Year/Year Change
Product Summary
Units
Revenue
Units
Revenue
Units
Revenue
Units
Revenue
Units
Revenue
iPhone (1)
78,290
$54,378
45,513
$28,160
74,779
$51,635
72%
93%
5%
5%
iPad (1)
13,081
5,533
9,267
4,255
16,122
7,084
41%
30%
- 19%
- 22%
Mac (1)
5,374
7,244
4,886
5,739
5,312
6,746
10%
26%
1%
7%
Services (2)
7,172
6,325
6,056
13%
18%
Other Products (1)(3)
4,024
2,373
4,351
70%
- 8%
Total Apple
$78,351
$46,852
$75,872
67%
3%
(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.
(3)
Includes sales of Apple TV, Apple Watch, Beats products, iPod and
Apple-branded and third-party accessories.

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SOURCE: Apple Inc.

Apple
Press:
Kristin Huguet, 408-974-2414
khuguet@apple.com
or
Investor Relations:
Nancy Paxton, 408-974-5420
paxton1@apple.com
Joan Hoover, 408-974-4570
hoover1@apple.com