AAPL
$112.71
Apple
($1.91)
(1.67%)
Earnings Details
3rd Quarter June 2016
Tuesday, July 26, 2016 4:30:00 PM
Tweet Share Watch
Summary

Apple Misses

Apple (AAPL) reported 3rd Quarter June 2016 earnings of $1.42 per share on revenue of $42.4 billion. The consensus earnings estimate was $1.39 per share on revenue of $42.0 billion. The Earnings Whisper number was $1.43 per share. Revenue fell 14.6% compared to the same quarter a year ago.

The company said it expects fourth quarter revenue of $45.5 billion to $47.5 billion and gross margins of 37.5% to 38.0%, which brings earnings to a range of $1.53 to $1.68 per share. The current consensus earnings estimate is $1.61 per share on revenue of $46.07 billion for the quarter ending September 30, 2016.

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
$1.42
Earnings Whisper
$1.43
Consensus Estimate
$1.39
Reported Revenue
$42.36 Bil
Revenue Estimate
$42.02 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Apple Reports Third Quarter Results

Apple(R) today announced financial results for its fiscal 2016 third quarter ended June 25, 2016. The Company posted quarterly revenue of $42.4 billion and quarterly net income of $7.8 billion, or $1.42 per diluted share. These results compare to revenue of $49.6 billion and net income of $10.7 billion, or $1.85 per diluted share, in the year-ago quarter. Gross margin was 38 percent compared to 39.7 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter’s revenue.

"We are pleased to report third quarter results that reflect stronger customer demand and business performance than we anticipated at the start of the quarter," said Tim Cook, Apple’s CEO. "We had a very successful launch of iPhone SE and we’re thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June."

"Our Services business grew 19 percent year-over-year and App Store revenue was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record," said Luca Maestri, Apple’s CFO. "We returned over $13 billion to investors through share repurchases and dividends, and we have now completed almost $177 billion of our $250 billion capital return program."

Apple is providing the following guidance for its fiscal 2016 fourth quarter: ? revenue between $45.5 billion and $47.5 billion ? gross margin between 37.5 percent and 38 percent ? operating expenses between $6.05 billion and $6.15 billion ? other income/(expense) of $350 million ? tax rate of 25.5 percent

Apple’s board of directors has declared a cash dividend of $.57 per share of the Company’s common stock. The dividend is payable on August 11, 2016 to shareholders of record as of the close of business on August 8, 2016.

Apple will provide live streaming of its Q3 2016 financial results conference call beginning at 2:00 p.m. PDT on July 26, 2016 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 26, 2015, its Form 10-Q for the fiscal quarter ended December 26, 2015, its Form 10-Q for the fiscal quarter ended March 26, 2016, and its Form 10-Q for the fiscal quarter ended June 25, 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 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) 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
Nine Months Ended
June 25,
June 27,
June 25,
June 27,
2016
2015
2016
2015
Net sales
$ 42,358
$ 49,605
$ 168,787
$
182,214
Cost of sales (1)
26,252
29,924
102,337
109,136
Gross margin
16,106
19,681
66,450
73,078
Operating expenses:
Research and development (1)
2,560
2,034
7,475
5,847
Selling, general and administrative (1)
3,441
3,564
10,712
10,624
Total operating expenses
6,001
5,598
18,187
16,471
Operating income
10,105
14,083
48,263
56,607
Other income/(expense), net
364
390
921
846
Income before provision for income taxes
10,469
14,473
49,184
57,453
Provision for income taxes
2,673
3,796
12,511
15,183
Net income
$
7,796
$ 10,677
$
36,673
$
42,270
Earnings per share:
Basic
$
1.43
$
1.86
$
6.66
$
7.30
Diluted
$
1.42
$
1.85
$
6.62
$
7.25
Shares used in computing earnings per share:
Basic
5,443,058
5,729,886
5,505,456
5,788,922
Diluted
5,472,781
5,773,099
5,535,931
5,829,920
Cash dividends declared per share
$
0.57
$
0.52
$
1.61
$
1.46
(1) Includes share-based compensation expense as
follows:
Cost of sales
$
188
$
148
$
583
$
430
Research and development
$
479
$
388
$
1,413
$
1,146
Selling, general and administrative
$
387
$
320
$
1,184
$
1,095
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except number of shares which are reflected in
thousands and par value)
June 25,
September 26,
2016
2015
ASSETS:
Current assets:
Cash and cash equivalents
$
18,237
$
21,120
Short-term marketable securities
43,519
20,481
Accounts receivable, less allowances of $55 and $63, respectively
11,714
16,849
Inventories
1,831
2,349
Vendor non-trade receivables
7,328
13,494
Other current assets
11,132
15,085
Total current assets
93,761
89,378
Long-term marketable securities
169,764
164,065
Property, plant and equipment, net
25,448
22,471
Goodwill
5,261
5,116
Acquired intangible assets, net
3,506
3,893
Other non-current assets
7,862
5,556
Total assets
$ 305,602
$ 290,479
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable
$
26,318
$
35,490
Accrued expenses
20,820
25,181
Deferred revenue
8,352
8,940
Commercial paper
12,496
8,499
Current portion of long-term debt
3,500
2,500
Total current liabilities
71,486
80,610
Deferred revenue, non-current
3,064
3,624
Long-term debt
68,939
53,463
Other non-current liabilities
35,572
33,427
Total liabilities
179,061
171,124
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value:
30,106
27,416
12,600,000 shares authorized; 5,393,165 and 5,578,753 shares issued
and outstanding, respectively
Retained earnings
96,542
92,284
Accumulated other comprehensive income/(loss)
(107 )
(345 )
Total shareholders’ equity
126,541
119,355
Total liabilities and shareholders’ equity
$ 305,602
$ 290,479
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Nine Months Ended
June 25,
June 27,
2016
2015
Cash and cash equivalents, beginning of the period
$ 21,120
$
13,844
Operating activities:
Net income
36,673
42,270
Adjustments to reconcile net income to cash generated by operating
activities:
Depreciation and amortization
7,957
8,138
Share-based compensation expense
3,180
2,671
Deferred income tax expense
5,191
2,820
Changes in operating assets and liabilities:
Accounts receivable, net
5,135
7,090
Inventories
518
69
Vendor non-trade receivables
6,166
222
Other current and non-current assets
1,143
2,286
Accounts payable
(9,622 )
(3,263 )
Deferred revenue
(1,148 )
1,040
Other current and non-current liabilities
(5,495 )
4,448
Cash generated by operating activities
49,698
67,791
Investing activities:
Purchases of marketable securities
(112,068 )
(137,524 )
Proceeds from maturities of marketable securities
14,915
9,916
Proceeds from sales of marketable securities
69,926
80,635
Payments made in connection with business acquisitions, net
(146 )
(230 )
Payments for acquisition of property, plant and equipment
(8,757 )
(7,629 )
Payments for acquisition of intangible assets
(753 )
(201 )
Payments for strategic investments
(1,376 )
--
Other
(321 )
134
Cash used in investing activities
(38,580 )
(54,899 )
Financing activities:
Proceeds from issuance of common stock
247
324
Excess tax benefits from equity awards
391
684
Payments for taxes related to net share settlement of equity awards
(1,361 )
(1,332 )
Payments for dividends and dividend equivalents
(9,058 )
(8,597 )
Repurchases of common stock
(23,696 )
(22,000 )
Proceeds from issuance of term debt, net
17,984
21,312
Repayments of term debt
(2,500 )
--
Change in commercial paper, net
3,992
(1,808 )
Cash used in financing activities
(14,001 )
(11,417 )
Increase/(decrease) in cash and cash equivalents
(2,883 )
1,475
Cash and cash equivalents, end of the period
$ 18,237
$
15,319
Supplemental cash flow disclosure:
Cash paid for income taxes, net
$
8,990
$
10,604
Cash paid for interest
$
892
$
427
Apple Inc.
Q3 2016 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Q3 2016
Q2 2016
Q3 2015
Sequential Change
Year/Year Change
Operating Segments
Revenue
Revenue
Revenue
Revenue
Revenue
Americas
$17,963
$19,096
$20,209
- 6%
- 11%
Europe
9,643
11,535
10,342
- 16%
- 7%
Greater China
8,848
12,486
13,230
- 29%
- 33%
Japan
3,529
4,281
2,872
- 18%
23%
Rest of Asia Pacific
2,375
3,159
2,952
- 25%
- 20%
Total Apple
$42,358
$50,557
$49,605
- 16%
- 15%
Q3 2016
Q2 2016
Q3 2015
Sequential Change
Year/Year Change
Product Summary
Units
Revenue
Units
Revenue
Units
Revenue
Units
Revenue
Units
Revenue
iPhone (1)
40,399
$24,048
51,193
$32,857
47,534
$31,368
- 21%
- 27%
- 15%
- 23%
iPad (1)
9,950
4,876
10,251
4,413
10,931
4,538
- 3%
10%
- 9%
7%
Mac (1)
4,252
5,239
4,034
5,107
4,796
6,030
5%
3%
- 11%
- 13%
Services (2)
5,976
5,991
5,028
0%
19%
Other Products (1)(3)
2,219
2,189
2,641
1%
- 16%
Total Apple
$42,358
$50,557
$49,605
- 16%
- 15%
(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.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20160726006434r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20160726006434/en/

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