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 Apple Reports Second Quarter Results
   Tuesday, May 02, 2017 4:30:01 PM ET

Apple(R) today announced financial results for its fiscal 2017 second quarter ended April 1, 2017. The Company posted quarterly revenue of $52.9 billion and quarterly earnings per diluted share of $2.10. These results compare to revenue of $50.6 billion and earnings per diluted share of $1.90 in the year-ago quarter. International sales accounted for 65 percent of the quarter’s revenue.

"We are proud to report a strong March quarter, with revenue growth accelerating from the December quarter and continued robust demand for iPhone 7 Plus," said Tim Cook, Apple’s CEO. "We’ve seen great customer response to both models of the new iPhone 7 (PRODUCT)RED Special Edition and we’re thrilled with the strong momentum of our Services business, with our highest revenue ever for a 13-week quarter. Looking ahead, we are excited to welcome attendees from around the world to our annual Worldwide Developers Conference next month in San Jose."

Apple also announced that its Board of Directors has authorized an increase of $50 billion to the Company’s program to return capital to shareholders and is extending the program timeframe by four quarters. Under the expanded program, Apple plans to spend a cumulative total of $300 billion by the end of March 2019.

"We generated strong operating cash flow of $12.5 billion and returned over $10 billion to our investors in the March quarter," said Luca Maestri, Apple’s CFO. "Given the strength of our business and our confidence in our future, we are happy to announce another $50 billion increase to our capital return program today."

As part of the latest update to the program, the Board has increased its share repurchase authorization to $210 billion from the $175 billion level announced a year ago. The Company also expects to continue to net-share-settle vesting restricted stock units.

The Board has approved a 10.5% increase to the Company’s quarterly dividend, and has declared a dividend of $0.63 per share of the Company’s common stock, payable on May 18, 2017 to shareholders of record as of the close of business on May 15, 2017.

From the inception of its capital return program in August 2012 through March 2017, Apple has returned over $211 billion to shareholders, including $151 billion in share repurchases.

The Company plans to continue to access the domestic and international debt markets to assist in funding the program. The management team and the Board will continue to review each element of the capital return program regularly and plan to provide an update on the program on an annual basis.

Apple is providing the following guidance for its fiscal 2017 third quarter: ? revenue between $43.5 billion and $45.5 billion ? gross margin between 37.5 percent and 38.5 percent ? operating expenses between $6.6 billion and $6.7 billion ? other income/(expense) of $450 million ? tax rate of 25.5 percent

Apple will provide live streaming of its Q2 2017 financial results conference call beginning at 2:00 p.m. PDT on May 2, 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), tax rate, and plans for return of capital. 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, its Form 10-Q for the fiscal quarter ended December 31, 2016, and its Form 10-Q for the fiscal quarter ended April 1, 2017 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.
                                                                                                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                                                                                                    (In millions, except number of shares which are reflected in
                                                                                                                  thousands and per share amounts)
                                                                                                                                       
                                                                                                    Three Months Ended                                                                                           Six Months Ended
                                                                  ---------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------
                                                                              April 1,                           March 26,                                              April 1,                           March 26,
                                                                                2017                                                  2016                                                   2017                                                  2016
                                                                  ------------------------------                        ------------------------------                        -------------------------------                        ------------------------------
Net sales                                                            $ 52,896                                              $ 50,557                                              $ 131,247                                                    $              126,429
Cost of sales (1)                                                      32,305                             30,636                              80,480                                                 76,085
                                                                  --------------------------------                      --------------------------------                      ---------------------------------                      --------------------------------
   Gross margin                                                        20,591                             19,921                              50,767                                                 50,344
                                                                  --------------------------------                      --------------------------------                      ---------------------------------                      --------------------------------
                                                                                                                                                                                                                                      
Operating expenses:
   Research and development (1)                                         2,776                                                 2,511                                                  5,647                                                                     4,915
   Selling, general and administrative (1)                              3,718                              3,423                               7,664                                                  7,271
                                                                  --------------------------------                      --------------------------------                      ---------------------------------                      --------------------------------
      Total operating expenses                                          6,494                              5,934                              13,311                                                 12,186
                                                                  --------------------------------                      --------------------------------                      ---------------------------------                      --------------------------------
                                                                                                                                                                                                                                      
Operating income                                                       14,097                                                13,987                                                 37,456                                                                    38,158
Other income/(expense), net                                               587                                155                               1,408                                                    557
                                                                  --------------------------------                      --------------------------------                      ---------------------------------                      --------------------------------
Income before provision for income taxes                               14,684                                                14,142                                                 38,864                                                                    38,715
Provision for income taxes                                              3,655                              3,626                               9,944                                                  9,838
                                                                  --------------------------------                      --------------------------------                      ---------------------------------                      --------------------------------
Net income                                                           $ 11,029                           $ 10,516                           $  28,920                                 $               28,877
                                                                  ==== ====== ====================                      ==== ====== ====================                      ==== ======= ====================                      ========== ====================
                                                                                                                                                                                                                                      
Earnings per share:
   Basic                                                             $   2.11                                              $   1.91                                              $    5.50                                                    $                 5.22
   Diluted                                                           $   2.10                                              $   1.90                                              $    5.46                                                    $                 5.19
                                                                                                                                                                                                                                      
Shares used in computing earnings per share:
   Basic                                                            5,225,791                                             5,514,381                                              5,262,226                                                                 5,536,656
   Diluted                                                          5,261,688                                             5,540,886                                              5,294,841                                                                 5,567,506
                                                                                                                                                                                                                                      
Cash dividends declared per share                                    $   0.57                                              $   0.52                                              $    1.14                                                    $                 1.04
                                                                                                                                                                                                                                      
(1) Includes share-based compensation expense as follows:
   Cost of sales                                                     $    217                                              $    191                                              $     446                                                    $                  395
   Research and development                                          $    575                                              $    468                                              $   1,164                                                    $                  934
   Selling, general and administrative                               $    425                                              $    389                                              $     863                                                    $                  797
                                                                                                                                                                                                                                                 
                                                                                         Apple Inc.
                                                                      CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
                                                                (In millions, except number of shares which are reflected in
                                                                                  thousands and par value)
                                                                                                                      
                                                                                                                April 1,                                               September 24,
                                                                                                                  2017                                                     2016
                                                                                                 ------------------------------------                        ------------------------------
                                                                                           ASSETS:
Current assets:
   Cash and cash equivalents                                                                            $   15,157                                                    $               20,484
   Short-term marketable securities                                                                         51,944                                                                    46,671
   Accounts receivable, less an allowance of $53 at each period end                                         11,579                                                                    15,754
   Inventories                                                                                               2,910                                                                     2,132
   Vendor non-trade receivables                                                                              9,033                                                                    13,545
   Other current assets                                                                                     11,367                                                  8,283
                                                                                                 --------------------------------------                      --------------------------------
      Total current assets                                                                                 101,990                                                                   106,869
                                                                                                                                                              
Long-term marketable securities                                                                            189,740                                                                   170,430
Property, plant and equipment, net                                                                          27,163                                                                    27,010
Goodwill                                                                                                     5,473                                                                     5,414
Acquired intangible assets, net                                                                              2,617                                                                     3,206
Other non-current assets                                                                                     7,549                                                  8,757
                                                                                                 --------------------------------------                      --------------------------------
      Total assets                                                                                      $  334,532                                 $              321,686
                                                                                                 ======== ======== ====================                      ========== ====================
                                                                                                                                                              
                                                              LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
   Accounts payable                                                                                     $   28,573                                                    $               37,294
   Accrued expenses                                                                                         23,096                                                                    22,027
   Deferred revenue                                                                                          7,682                                                                     8,080
   Commercial paper                                                                                          9,992                                                                     8,105
   Current portion of long-term debt                                                                         3,999                                                  3,500
                                                                                                 --------------------------------------                      --------------------------------
      Total current liabilities                                                                             73,342                                                                    79,006
                                                                                                                                                              
Deferred revenue, non-current                                                                                3,107                                                                     2,930
Long-term debt                                                                                              84,531                                                                    75,427
Other non-current liabilities                                                                               39,470                                                 36,074
                                                                                                 --------------------------------------                      --------------------------------
      Total liabilities                                                                                    200,450                                                193,437
                                                                                                 --------------------------------------                      --------------------------------
                                                                                                                                                              
Commitments and contingencies
                                                                                                                                                              
Shareholders’ equity:
   Common stock and additional paid-in capital, $0.00001 par value:                                         33,579                                                                    31,251
   12,600,000 shares authorized; 5,205,815 and 5,336,166 shares issued
   and outstanding, respectively
   Retained earnings                                                                                       100,925                                                                    96,364
   Accumulated other comprehensive income/(loss)                                                              (422 )                                                                     634
                                                                                                 --------------------------------------                      --------------------------------
      Total shareholders’ equity                                                134,082                                                128,249
                                                                                                 --------------------------------------                      --------------------------------
      Total liabilities and shareholders’ equity                             $  334,532                                 $              321,686
                                                                                                 ======== ======== ====================                      ========== ====================
                                                                                                                                                                         
                                                                                       Apple Inc.
                                                               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                                                                      (In millions)
                                                                       
                                                                                                                                 Six Months Ended
                                                                                           ---------------------------------------------------------------------------------------------
                                                                                                         April 1,                              March 26,
                                                                                                           2017                                                     2016
                                                                                           ----------------------------------                        --------------------------------
Cash and cash equivalents, beginning of the period                                               $  20,484                             $ 21,120  
                                                                                           ------- ------- --------------------                      ------ ------ --------------------
Operating activities:
  Net income                                                                                        28,920                                                  28,877
  Adjustments to reconcile net income to cash generated by operating
  activities:
     Depreciation and amortization                                                                   5,319                                                   5,431
     Share-based compensation expense                                                                2,473                                                   2,126
     Deferred income tax expense                                                                     2,822                                                   3,092
     Other                                                                                            (209 )                                                   308
  Changes in operating assets and liabilities:
     Accounts receivable, net                                                                        4,183                                                   4,538
     Inventories                                                                                      (778 )                                                    68
     Vendor non-trade receivables                                                                    4,512                                                   5,899
     Other current and non-current assets                                                             (896 )                                                   186
     Accounts payable                                                                               (6,862 )                                                (9,388 )
     Deferred revenue                                                                                 (221 )                                                   219
     Other current and non-current liabilities                                                         316                               (2,292 )
                                                                                           ------------------------------------                      ----------------------------------
        Cash generated by operating activities                                                      39,579                               39,064  
                                                                                           ------------------------------------                      ----------------------------------
Investing activities:
  Purchases of marketable securities                                                               (99,821 )                                               (86,242 )
  Proceeds from maturities of marketable securities                                                 12,429                                                   9,148
  Proceeds from sales of marketable securities                                                      60,454                                                  50,051
  Payments made in connection with business acquisitions, net                                          (67 )                                                  (140 )
  Payments for acquisition of property, plant and equipment                                         (6,309 )                                                (5,948 )
  Payments for acquisition of intangible assets                                                       (126 )                                                  (657 )
  Payments for strategic investments                                                        --                                                    (126 )
  Other                                                                                                116                                 (196 )
                                                                                           ------------------------------------                      ----------------------------------
        Cash used in investing activities                                                          (33,324 )                                               (34,110 )
                                                                                           ------------------------------------                      ----------------------------------
Financing activities:
  Proceeds from issuance of common stock                                                               273                                                     247
  Excess tax benefits from equity awards                                                               225                                                     264
  Payments for taxes related to net share settlement of equity awards                                 (788 )                                                  (751 )
  Payments for dividends and dividend equivalents                                                   (6,134 )                                                (5,871 )
  Repurchases of common stock                                                                      (18,012 )                                               (13,530 )
  Proceeds from issuance of term debt, net                                                          10,975                                                  15,584
  Change in commercial paper, net                                                                    1,879                                 (503 )
                                                                                           ------------------------------------                      ----------------------------------
        Cash used in financing activities                                                          (11,582 )                                                (4,560 )
                                                                                           ------------------------------------                      ----------------------------------
Increase/(Decrease) in cash and cash equivalents                                                    (5,327 )                                                   394  
                                                                                           ------------------------------------                      ----------------------------------
Cash and cash equivalents, end of the period                                                     $  15,157                             $ 21,514  
                                                                                           ======= ======= ====================                      ====== ====== ====================
Supplemental cash flow disclosure:
  Cash paid for income taxes, net                                                                $   6,878                                                $  6,630
  Cash paid for interest                                                                         $   1,007                                                $    565
                                                                                                                                                                    
                                                                                                                                                                                  Apple Inc.
                                                                                                                                                                        Q2 2017 Unaudited Summary Data
                                                                                                                                                                   (Units in thousands, Revenue in millions)
                                                                                                                                       
                                                                     
                                                                -------------------- -------------------- --------------------
                                                                                            Q2 2017                                                                Q1 2017                                                  Q2 2016                                            Sequential Change                                              Year/Year Change
                                                                ---------------------------------------------------------------                     ------------------------------------                     ------------------------------------                     -----------------------------------                     ------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                          
Operating Segments                                                                                               Revenue                                                         Revenue                                                  Revenue                                                 Revenue                                                       Revenue
                                                                                                          --------------------                                                  -------                                                  -------                                                 -------                                                 --------------------
                     Americas                                                                                          $21,157                                                  $31,968                                                  $19,096                                                   - 34%                                                                  11%
                     Europe                                                                                             12,733                                                   18,521                                                   11,535                                                   - 31%                                                                  10%
                     Greater China                                                                                      10,726                                                   16,233                                                   12,486                                                   - 34%                                                                - 14%
                     Japan                                                                                               4,485                                                    5,766                                                    4,281                                                   - 22%                                                                   5%
                     Rest of Asia Pacific                                                                                3,795                                                    5,863                                                    3,159                                                   - 35%                                                                  20%
                                                                                                          --------------------                                                  -------                                                  -------                                                 -------                                                 --------------------
Total Apple                                                                      $52,896                                                  $78,351                                                  $50,557                                                   - 32%                                                                   5%
                                                                -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                          
                                                                     
                                                                -------------------- -------------------- --------------------
                                                                                            Q2 2017                                                                Q1 2017                                                  Q2 2016                                            Sequential Change                                              Year/Year Change
                                                                ---------------------------------------------------------------                     ------------------------------------                     ------------------------------------                     -----------------------------------                     ------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                          
Product Summary                                                         Units                                    Revenue                             Units                       Revenue                      Units                       Revenue                      Units                      Revenue                      Units                            Revenue
                                                                --------------------                      --------------------                      ------                      -------                      ------                      -------                      -----                      -------                      -----                      --------------------
                     iPhone (1)                                               50,763                                   $33,249                      78,290                      $54,378                      51,193                      $32,857                      - 35%                        - 39%                       - 1%                                        1%
                     iPad (1)                                                  8,922                                     3,889                      13,081                        5,533                      10,251                        4,413                      - 32%                        - 30%                      - 13%                                     - 12%
                     Mac (1)                                                   4,199                                     5,844                       5,374                        7,244                       4,034                        5,107                      - 22%                        - 19%                         4%                                       14%
                     Services (2)                                                                                        7,041                                                    7,172                                                    5,991                                                    - 2%                                                                  18%
                     Other Products (1)(3)                                                                               2,873                                                    4,024                                                    2,189                                                   - 29%                                                                  31%
                                                                                                          --------------------                                                  -------                                                  -------                                                 -------                                                 --------------------
Total Apple                                                                      $52,896                                                  $78,351                                                  $50,557                                                   - 32%                                                                   5%
                                                                -------------------- -------------------- --------------------
(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.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170502006733r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170502006733/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


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