Apple Reports Fourth Quarter Results

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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 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013

Net sales	$	42,123	$	37,472	$	182,795	$	170,910
Cost of sales ⁽¹⁾		26,114		23,601		112,258		106,606
Gross margin		16,009		13,871		70,537		64,304

Operating expenses:
Research and development ⁽¹⁾		1,686		1,168		6,041		4,475
Selling, general and administrative ⁽¹⁾		3,158		2,673		11,993		10,830
Total operating expenses		4,844		3,841		18,034		15,305

Operating income		11,165		10,030		52,503		48,999
Other income/(expense), net		307		113		980		1,156
Income before provision for income taxes		11,472		10,143		53,483		50,155
Provision for income taxes		3,005		2,631		13,973		13,118
Net income	$	8,467	$	7,512	$	39,510	$	37,037

Earnings per share:
Basic	$	1.43	$	1.19	$	6.49	$	5.72
Diluted	$	1.42	$	1.18	$	6.45	$	5.68

Shares used in computing earnings per share:
Basic		5,933,845		6,329,139		6,085,572		6,477,320
Diluted		5,972,082		6,363,919		6,122,663		6,521,634

Cash dividends declared per common share	$	0.47	$	0.44	$	1.82	$	1.64

⁽¹⁾ Includes share-based compensation expense as follows:
Cost of sales	$	116	$	88	$	450	$	350
Research and development	$	314	$	209	$	1,216	$	917
Selling, general and administrative	$	332	$	258	$	1,197	$	986

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

	September 27, 2014		September 28, 2013

ASSETS:

Current assets:
Cash and cash equivalents	$	13,844	$	14,259
Short-term marketable securities		11,233		26,287
Accounts receivable, less allowances of $86 and $99, respectively		17,460		13,102
Inventories		2,111		1,764
Deferred tax assets		4,318		3,453
Vendor non-trade receivables		9,759		7,539
Other current assets		9,806		6,882
Total current assets		68,531		73,286

Long-term marketable securities		130,162		106,215
Property, plant and equipment, net		20,624		16,597
Goodwill		4,616		1,577
Acquired intangible assets, net		4,142		4,179
Other assets		3,764		5,146
Total assets	$	231,839	$	207,000


LIABILITIES AND SHAREHOLDERS’ EQUITY:

Current liabilities:
Accounts payable	$	30,196	$	22,367
Accrued expenses		18,453		13,856
Deferred revenue		8,491		7,435
Commercial paper		6,308		0
Total current liabilities		63,448		43,658

Deferred revenue – non-current		3,031		2,625
Long-term debt		28,987		16,960
Other non-current liabilities		24,826		20,208
Total liabilities		120,292		83,451

Commitments and contingencies

Shareholders' equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,866,161 and 6,294,494 shares issued and outstanding, respectively		23,313		19,764
Retained earnings		87,152		104,256
Accumulated other comprehensive income/(loss)		1,082		(471)
Total shareholders' equity		111,547		123,549
Total liabilities and shareholders' equity	$	231,839	$	207,000

Apple Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions)

	Twelve Months Ended
	September 27, 2014		September 28, 2013

Cash and cash equivalents, beginning of the year	$	14,259	$	10,746

Operating activities:
Net income	39,510			37,037
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization	7,946			6,757
Share-based compensation expense	2,863			2,253
Deferred income tax expense	2,347			1,141
Changes in operating assets and liabilities:
Accounts receivable, net	(4,232)			(2,172)
Inventories	(76)			(973)
Vendor non-trade receivables	(2,220)			223
Other current and non-current assets	167			1,080
Accounts payable	5,938			2,340
Deferred revenue	1,460			1,459
Other current and non-current liabilities	6,010			4,521
Cash generated by operating activities	59,713			53,666

Investing activities:
Purchases of marketable securities	(217,128)			(148,489)
Proceeds from maturities of marketable securities	18,810			20,317
Proceeds from sales of marketable securities	189,301			104,130
Payments made in connection with business acquisitions, net	(3,765)			(496)
Payments for acquisition of property, plant and equipment	(9,571)			(8,165)
Payments for acquisition of intangible assets	(242)			(911)
Other	16			(160)
Cash used in investing activities	(22,579)			(33,774)

Financing activities:
Proceeds from issuance of common stock	730			530
Excess tax benefits from equity awards	739			701
Taxes paid related to net share settlement of equity awards	(1,158)			(1,082)
Dividends and dividend equivalents paid	(11,126)			(10,564)
Repurchase of common stock	(45,000)			(22,860)
Proceeds from issuance of long-term debt, net	11,960			16,896
Proceeds from issuance of commercial paper, net	6,306			0
Cash used in financing activities	(37,549)			(16,379)

Increase/(decrease) in cash and cash equivalents	(415)			3,513
Cash and cash equivalents, end of the year	$	13,844	$	14,259

Supplemental cash flow disclosure:
Cash paid for income taxes, net	$	10,026	$	9,128
Cash paid for interest	$	339	$	0

Apple Inc.
Q4 2014 Unaudited Summary Data
(Units in thousands, Revenue in millions)


		Q4'14		Q3'14		Q4'13		Sequential Change		Year/Year Change

Operating Segments			Revenue		Revenue		Revenue		Revenue		Revenue
	Americas		$16,247		$14,577		$13,941		11%		17%
	Europe		9,535		8,091		8,005		18%		19%
	Greater China		5,778		5,935		5,733		- 3%		1%
	Japan		3,507		2,564		3,341		37%		5%
	Rest of Asia Pacific		1,923		2,161		1,980		- 11%		- 3%
	Retail		5,133		4,104		4,472		25%		15%
Total Apple			$42,123		$37,432		$37,472		13%		12%


		Q4'14		Q3'14		Q4'13		Sequential Change		Year/Year Change

Product Summary		Units	Revenue	Units	Revenue	Units	Revenue	Units	Revenue	Units	Revenue
	iPhone (1)	39,272	$23,678	35,203	$19,751	33,797	$19,510	12%	20%	16%	21%
	iPad (1)	12,316	5,316	13,276	5,889	14,079	6,186	- 7%	- 10%	- 13%	- 14%
	Mac (1)	5,520	6,625	4,413	5,540	4,574	5,624	25%	20%	21%	18%
	iPod (1)	2,641	410	2,926	442	3,498	573	- 10%	- 7%	- 24%	- 28%
	iTunes/Software/Services (2)		4,608		4,485		4,260		3%		8%
	Accessories (3)		1,486		1,325		1,319		12%		13%
Total Apple			$42,123		$37,432		$37,472		13%		12%

(1)		Includes deferrals and amortization of related non-software services and software upgrade rights.
(2)		Includes revenue from the iTunes Store, the App Store, the Mac App Store, the iBooks Store, AppleCare, licensing and other services.
(3)		Includes sales of Apple-branded and third-party accessories for iPhone, iPad, Mac and iPod.

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