AAPL 17Q4

Apple Reports Fourth Quarter Results

Revenue Up 12 Percent and EPS Up 24 Percent to New September Quarter Records

Services Revenue Reaches All-Time High

CUPERTINO, California — November 2, 2017 — Apple ® today announced financial results for its fiscal 2017 fourth quarter ended September 30, 2017. The Company posted quarterly revenue of $52.6 billion, an increase of 12 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.07, up 24 percent. International sales accounted for 62 percent of the quarter’s revenue.

“We’re happy to report a very strong finish to a great fiscal 2017, with record fourth quarter revenue, year-over-year growth for all our product categories, and our best quarter ever for Services,” said Tim Cook, Apple’s CEO. “With fantastic new products including iPhone 8 and iPhone 8 Plus, Apple Watch Series 3, and Apple TV 4K joining our product lineup, we’re looking forward to a great holiday season, and with the launch of iPhone X getting underway right now, we couldn’t be more excited as we begin to deliver our vision for the future with this stunning device.”

“Apple’s year-over-year revenue growth rate accelerated for the fourth consecutive quarter and drove EPS growth of 24 percent in the September quarter,” said Luca Maestri, Apple’s CFO. “We also generated strong operating cash flow of $15.7 billion and returned $11 billion to investors through our capital return program.”

Apple is providing the following guidance for its fiscal 2018 first quarter:

·	revenue between $84 billion and $87 billion

·	gross margin between 38 percent and 38.5 percent

·	operating expenses between $7.65 billion and $7.75 billion

·	other income/(expense) of $600 million

·	tax rate of 25.5 percent

Apple’s board of directors has declared a cash dividend of $0.63 per share of the Company’s common stock. The dividend is payable on November 16, 2017 to shareholders of record as of the close of business on November 13, 2017.

Apple will provide live streaming of its Q4 2017 financial results conference call beginning at 2:00 p.m. PDT on November 2, 2017 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.

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 30, 2017				September 24, 2016				September 30, 2017				September 24, 2016
Net sales	$	52,579			$	46,852			$	229,234			$	215,639
Cost of sales (1)	32,648				29,039				141,048				131,376
Gross margin	19,931				17,813				88,186				84,263
Operating expenses:
RD	2,997				2,570				11,581				10,045
SGA	3,814				3,482				15,261				14,194
Total	6,811				6,052				26,842				24,239
Operating income	13,120				11,761				61,344				60,024
Other income/(expense), net	797				427				2,745				1,348
Income before taxes	13,917				12,188				64,089				61,372
taxes	3,203				3,174				15,738				15,685
Net income	$	10,714			$	9,014			$	48,351			$	45,687
Earnings per share:
Basic	$	2.08			$	1.68			$	9.27			$	8.35
Diluted	$	2.07			$	1.67			$	9.21			$	8.31
Shares
Basic	5,149,428				5,366,912				5,217,242				5,470,820
Diluted	5,183,585				5,393,333				5,251,692				5,500,281
Cash dividends declared per share	$	0.63			$	0.57			$	2.40			$	2.18
(1)  Includes share-based compensation expense as follows:
Cost of sales	$	215			$	186			$	877			$	769
Research and development	$	569			$	476			$	2,299			$	1,889
Selling, general and administrative	$	390			$	368			$	1,664			$	1,552

---

Apple Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

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

 

	September 30, 2017				September 24, 2016
ASSETS:
Current assets:
Cash and cash equivalents	$	20,289			$	20,484
Short-term marketable securities	53,892				46,671
Accounts receivable,	17,874				15,754
Inventories	4,855				2,132
Vendor non-trade receivables	17,799				13,545
Other current assets	13,936				8,283
Total current assets	128,645				106,869
Long-term marketable securities	194,714				170,430
PPE	33,783				27,010
Goodwill	5,717				5,414
Acquired intangible assets, net	2,298				3,206
Other non-current assets	10,162				8,757
Total assets	$	375,319			$	321,686
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	49,049			$	37,294
Accrued expenses	25,744				22,027
Deferred revenue	7,548				8,080
Commercial paper	11,977				8,105
Current portion of long-term debt	6,496				3,500
Total current liabilities	100,814				79,006
Deferred revenue, non-current	2,836				2,930
Long-term debt	97,207				75,427
Other non-current liabilities	40,415				36,074
Total liabilities	241,272				193,437
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,126,201 and 5,336,166 shares issued and outstanding, respectively	35,867				31,251
Retained earnings	98,330				96,364
Accumulated other comprehensive income/(loss)	(150		)		634
Total shareholders’ equity	134,047				128,249
Total liabilities and shareholders’ equity	$	375,319			$	321,686

---

Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)

	Twelve Months Ended
	September 30, 2017				September 24, 2016
Cash and cash equivalents, beginning	$	20,484			$	21,120
Operating activities:
Net income	48,351				45,687
Adjustments
Depreciation and amortization	10,157				10,505
Share-based compensation expense	4,840				4,210
Deferred income tax expense	5,966				4,938
Other	(166		)		486
Changes in operating assets and liabilities:
Accounts receivable, net	(2,093		)		527
Inventories	(2,723		)		217
Vendor non-trade receivables	(4,254		)		(51		)
Other current and non-current assets	(5,318		)		1,055
Accounts payable	9,618				1,837
Deferred revenue	(626		)		(1,554		)
Other current and non-current liabilities	(154		)		(2,033		)
Cash generated by operating activities	63,598				65,824
Investing activities:
Purchases of marketable securities	(159,486		)		(142,428		)
Proceeds from maturities of marketable securities	31,775				21,258
Proceeds from sales of marketable securities	94,564				90,536
Payments made in connection with business acquisitions, net	(329		)		(297		)
Payments for acquisition of property, plant and equipment	(12,451		)		(12,734		)
Payments for acquisition of intangible assets	(344		)		(814		)
Payments for strategic investments, net	(395		)		(1,388		)
Other	220				(110		)
Cash used in investing activities	(46,446		)		(45,977		)
Financing activities:
Proceeds from issuance of common stock	555				495
Excess tax benefits from equity awards	627				407
Payments for taxes related to net share settlement of equity awards	(1,874		)		(1,570		)
Payments for dividends and dividend equivalents	(12,769		)		(12,150		)
Repurchases of common stock	(32,900		)		(29,722		)
Proceeds from issuance of term debt, net	28,662				24,954
Repayments of term debt	(3,500		)		(2,500		)
Change in commercial paper, net	3,852				(397		)
Cash used in financing activities	(17,347		)		(20,483		)
Increase/(Decrease) in cash and cash equivalents	(195		)		(636		)
Cash and cash equivalents, end of the period	$	20,289			$	20,484
Supplemental cash flow disclosure:
Cash paid for income taxes, net	$	11,591			$	10,444
Cash paid for interest	$	2,092			$	1,316

Apple Inc.
Q4 2017 Unaudited Summary Data
(Units in thousands, Revenue in millions)
		Q4 2017							Q3 2017							Q4 2016							Sequential Change						Year/Year Change
					Revenue							Revenue							Revenue							Revenue						Revenue
Operating Segments
	Americas				$	23,099						$	20,376						$	20,229						13	%					14	%
	Europe				13,009							10,675							10,842							22	%					20	%
	Greater China				9,801							8,004							8,785							22	%					12	%
	Japan				3,858							3,624							4,324							6	%					-11	%
	Rest of Asia Pacific				2,812							2,729							2,672							3	%					5	%
Total Apple					$	52,579						$	45,408						$	46,852						16	%					12	%
		Q4 2017							Q3 2017							Q4 2016							Sequential Change						Year/Year Change
		Units			Revenue				Units			Revenue				Units			Revenue				Units			Revenue			Units			Revenue
Product Summary
	iPhone (1)	46,677			$	28,846			41,026			$	24,846			45,513			$	28,160			14	%		16	%		3	%		2	%
	iPad (1)	10,326			4,831				11,424			4,969				9,267			4,255				-10	%		-3	%		11	%		14	%
	Mac (1)	5,386			7,170				4,292			5,592				4,886			5,739				25	%		28	%		10	%		25	%
	Services (2)				8,501							7,266							6,325							17	%					34	%
	Other Products (1)(3)				3,231							2,735							2,373							18	%					36	%
Total Apple					$	52,579						$	45,408						$	46,852						16	%					12	%
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. Services revenue in the fourth quarter of 2017 included a favorable one-time adjustment of $640 million due to a change in estimate based on the availability of additional supporting information.
3	Includes sales of Apple TV, Apple Watch, Beats products, iPod touch and Apple-branded and third-party accessories.