AAPL
$113.95
Apple
$1.83
1.63%
Earnings Details
4th Quarter September 2016
Tuesday, October 25, 2016 4:30:11 PM
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Summary

Apple Misses

Apple (AAPL) reported 4th Quarter September 2016 earnings of $1.67 per share on revenue of $46.9 billion. The consensus earnings estimate was $1.66 per share on revenue of $46.6 billion. The Earnings Whisper number was $1.75 per share. Revenue fell 9.0% compared to the same quarter a year ago.

The company said it expects first quarter revenue of $76.0 billion to $78.0 billion and gross margins of 38.0% to 38.5%, which suggests earnings of $3.06 to $3.23 per share. The current consensus earnings estimate is $3.11 per share on revenue of $75.3 billion for the quarter ending December 31, 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
$1.67
Earnings Whisper
$1.75
Consensus Estimate
$1.66
Reported Revenue
$46.85 Bil
Revenue Estimate
$46.55 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Apple Reports Fourth Quarter Results

Apple(R) today announced financial results for its fiscal 2016 fourth quarter ended September 24, 2016. The Company posted quarterly revenue of $46.9 billion and quarterly net income of $9 billion, or $1.67 per diluted share. These results compare to revenue of $51.5 billion and net income of $11.1 billion, or $1.96 per diluted share, in the year-ago quarter. Gross margin was 38 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter’s revenue.

"Our strong September quarter results cap a very successful fiscal 2016 for Apple," said Tim Cook, Apple’s CEO. "We’re thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24 percent to set another all-time record."

"We are pleased to have generated $16.1 billion in operating cash flow, a new record for the September quarter," said Luca Maestri, Apple’s CFO. "We also returned $9.3 billion to investors through dividends and share repurchases during the quarter and have now completed over $186 billion of our capital return program."

Apple is providing the following guidance for its fiscal 2017 first quarter: ? revenue between $76 billion and $78 billion ? gross margin between 38 percent and 38.5 percent ? operating expenses between $6.9 billion and $7 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 November 10, 2016 to shareholders of record as of the close of business on November 7, 2016.

Apple will provide live streaming of its Q4 2016 financial results conference call beginning at 2:00 p.m. PDT on October 25, 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, its Form 10-Q for the fiscal quarter ended June 25, 2016, and its Form 10-K for the fiscal year ended September 24, 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) 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
Twelve Months Ended
September 24,
September 26,
September 24,
September 26,
2016
2015
2016
2015
Net sales
$ 46,852
$ 51,501
$ 215,639
$
233,715
Cost of sales (1)
29,039
30,953
131,376
140,089
Gross margin
17,813
20,548
84,263
93,626
Operating expenses:
Research and development (1)
2,570
2,220
10,045
8,067
Selling, general and administrative (1)
3,482
3,705
14,194
14,329
Total operating expenses
6,052
5,925
24,239
22,396
Operating income
11,761
14,623
60,024
71,230
Other income/(expense), net
427
439
1,348
1,285
Income before provision for income taxes
12,188
15,062
61,372
72,515
Provision for income taxes
3,174
3,938
15,685
19,121
Net income
$
9,014
$ 11,124
$
45,687
$
53,394
Earnings per share:
Basic
$
1.68
$
1.97
$
8.35
$
9.28
Diluted
$
1.67
$
1.96
$
8.31
$
9.22
Shares used in computing earnings per share:
Basic
5,366,912
5,646,916
5,470,820
5,753,421
Diluted
5,393,333
5,682,519
5,500,281
5,793,069
Cash dividends declared per share
$
0.57
$
0.52
$
2.18
$
1.98
(1) Includes share-based compensation expense as follows:
Cost of sales
$
186
$
145
$
769
$
575
Research and development
$
476
$
390
$
1,889
$
1,536
Selling, general and administrative
$
368
$
380
$
1,552
$
1,475
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except number of shares which are reflected in
thousands and par value)
September 24,
September 26,
2016
2015
ASSETS:
Current assets:
Cash and cash equivalents
$
20,484
$
21,120
Short-term marketable securities
46,671
20,481
Accounts receivable, less allowances of $53 and $63, respectively
15,754
16,849
Inventories
2,132
2,349
Vendor non-trade receivables
13,545
13,494
Other current assets
8,283
15,085
Total current assets
106,869
89,378
Long-term marketable securities
170,430
164,065
Property, plant and equipment, net
27,010
22,471
Goodwill
5,414
5,116
Acquired intangible assets, net
3,206
3,893
Other non-current assets
8,757
5,422
Total assets
$ 321,686
$ 290,345
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable
$
37,294
$
35,490
Accrued expenses
22,027
25,181
Deferred revenue
8,080
8,940
Commercial paper
8,105
8,499
Current portion of long-term debt
3,500
2,500
Total current liabilities
79,006
80,610
Deferred revenue, non-current
2,930
3,624
Long-term debt
75,427
53,329
Other non-current liabilities
36,074
33,427
Total liabilities
193,437
170,990
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value:
31,251
27,416
12,600,000 shares authorized; 5,336,166 and 5,578,753 shares issued
and outstanding, respectively
Retained earnings
96,364
92,284
Accumulated other comprehensive income/(loss)
634
(345 )
Total shareholders’ equity
128,249
119,355
Total liabilities and shareholders’ equity
$ 321,686
$ 290,345
Apple Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Twelve Months Ended
September 24,
September 26,
2016
2015
Cash and cash equivalents, beginning of the period
$ 21,120
$
13,844
Operating activities:
Net income
45,687
53,394
Adjustments to reconcile net income to cash generated by operating
activities:
Depreciation and amortization
10,505
11,257
Share-based compensation expense
4,210
3,586
Deferred income tax expense
4,938
1,382
Changes in operating assets and liabilities:
Accounts receivable, net
1,095
611
Inventories
217
(238 )
Vendor non-trade receivables
(51 )
(3,735 )
Other current and non-current assets
1,090
(179 )
Accounts payable
1,791
5,400
Deferred revenue
(1,554 )
1,042
Other current and non-current liabilities
(2,104 )
8,746
Cash generated by operating activities
65,824
81,266
Investing activities:
Purchases of marketable securities
(142,428 )
(166,402 )
Proceeds from maturities of marketable securities
21,258
14,538
Proceeds from sales of marketable securities
90,536
107,447
Payments made in connection with business acquisitions, net
(297 )
(343 )
Payments for acquisition of property, plant and equipment
(12,734 )
(11,247 )
Payments for acquisition of intangible assets
(814 )
(241 )
Payments for strategic investments
(1,388 )
--
Other
(110 )
(26 )
Cash used in investing activities
(45,977 )
(56,274 )
Financing activities:
Proceeds from issuance of common stock
495
543
Excess tax benefits from equity awards
407
749
Payments for taxes related to net share settlement of equity awards
(1,570 )
(1,499 )
Payments for dividends and dividend equivalents
(12,150 )
(11,561 )
Repurchases of common stock
(29,722 )
(35,253 )
Proceeds from issuance of term debt, net
24,954
27,114
Repayments of term debt
(2,500 )
--
Change in commercial paper, net
(397 )
2,191
Cash used in financing activities
(20,483 )
(17,716 )
Increase/(Decrease) in cash and cash equivalents
(636 )
7,276
Cash and cash equivalents, end of the period
$ 20,484
$
21,120
Supplemental cash flow disclosure:
Cash paid for income taxes, net
$ 10,444
$
13,252
Cash paid for interest
$
1,316
$
514
Apple Inc.
Q4 2016 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Q4 2016
Q3 2016
Q4 2015
Sequential Change
Year/Year Change
Operating Segments
Revenue
Revenue
Revenue
Revenue
Revenue
Americas
$20,229
$17,963
$21,773
13%
- 7%
Europe
10,842
9,643
10,577
12%
3%
Greater China
8,785
8,848
12,518
- 1%
- 30%
Japan
4,324
3,529
3,929
23%
10%
Rest of Asia Pacific
2,672
2,375
2,704
13%
- 1%
Total Apple
$46,852
$42,358
$51,501
11%
- 9%
Q4 2016
Q3 2016
Q4 2015
Sequential Change
Year/Year Change
Product Summary
Units
Revenue
Units
Revenue
Units
Revenue
Units
Revenue
Units
Revenue
iPhone (1)
45,513
$28,160
40,399
$24,048
48,046
$32,209
13%
17%
- 5%
- 13%
iPad (1)
9,267
4,255
9,950
4,876
9,883
4,276
- 7%
- 13%
- 6%
0%
Mac (1)
4,886
5,739
4,252
5,239
5,709
6,882
15%
10%
- 14%
- 17%
Services (2)
6,325
5,976
5,086
6%
24%
Other Products (1)(3)
2,373
2,219
3,048
7%
- 22%
Total Apple
$46,852
$42,358
$51,501
11%
- 9%
(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.

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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
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