Analysis of personal technology trends in iPods, Macs, wireless, PCs, chips, cell phones, and other stuff we use.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
ASSETS:
March 26, September 25,
2005 2004
Current assets:
Cash and cash equivalents $2,254 $2,969
Short-term investments 4,803 2,495
Accounts receivable, less allowances of $51
and $47, respectively 888 774
Inventories 164 101
Deferred tax assets 297 231
Other current assets 601 485
Total current assets 9,007 7,055
Property, plant, and equipment, net 742 707
Goodwill 80 80
Acquired intangible assets 33 17
Other assets 249 191
Total assets $10,111 $8,050
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $1,773 $1,451
Accrued expenses 1,579 1,200
Total current liabilities 3,352 2,651
Non-current liabilities 373 323
Total liabilities 3,725 2,974
Commitments and contingencies
Shareholders' equity:
Common stock, no par value; 1,800,000,000
shares authorized; 823,136,748 and 782,887,234
shares issued and outstanding, respectively 3,195 2,514
Deferred stock compensation (70) (93)
Retained earnings 3,255 2,670
Accumulated other comprehensive income (loss) 6 (15)
Total shareholders' equity 6,386 5,076
Total liabilities and shareholders' equity $10,111 $8,050
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
March 26, March 27, March 26, March 27,
2005 2004 2005 2004
Net sales $3,243 $1,909 $6,733 $3,915
Cost of sales 2,275 1,379 4,769 2,849
Gross margin 968 530 1,964 1,066
Operating expenses:
Research and development 119 123 242 242
Selling, general, and
administrative 447 345 917 688
Restructuring costs -- 10 -- 10
Total operating
expenses 566 478 1,159 940
Operating income 402 52 805 126
Other income and expense:
Gains on non-current
investments -- -- -- 4
Interest and other income,
net 33 12 59 21
Total other income and
expense 33 12 59 25
Income before provision for
income taxes 435 64 864 151
Provision for income taxes 145 18 279 42
Net income $290 $46 $585 $109
Earnings per common share:
Basic $0.36 $0.06 $0.73 $0.15
Diluted $0.34 $0.06 $0.69 $0.15
Shares used in computing
earnings per share
(in thousands):
Basic 808,172 730,694 798,602 727,796
Diluted 857,011 756,460 848,553 750,336
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
(In millions, except share and per share amounts)
Three Months Ended Three Months Ended
March 26, 2005 March 27, 2004
Non-GAAP Non-GAAP
As Adjustments Non- As Adjustments Non-
Reported (a) GAAP Reported (a) GAAP
Operating income 402 10(b) 412 52 16(c) 68
Total other income
and expense 33 -- 33 12 -- 12
Provision for
income taxes 145 1 (d) 146 18 4 (d) 22
Net income $290 $9 $299 $46 $12 $58
Earnings per
common share:
Basic $0.36 $0.37 $0.06 $0.08
Diluted $0.34 $0.35 $0.06 $0.08
Shares used in
computing
earnings
per share
(in thousands):
Basic 808,172 808,172 730,694 730,694
Diluted 857,011 857,011 756,460 756,460
(a) These adjustments reconcile the Company's GAAP results of operations
to its pro forma or non-GAAP results of operations. The Company believes that
presentation of results excluding items such as non-cash share-based
compensation, restructuring costs, and investment gains provides meaningful
supplemental information to both management and investors that is indicative
of the Company's core operating results and facilitates comparison of
operating results across reporting periods. The Company uses these non-GAAP
measures when evaluating its financial results as well as for internal
planning and forecasting purposes. These non-GAAP measures should not be
viewed as a substitute for the Company's GAAP results. Neither the Company's
GAAP nor non-GAAP results of operations include the accounting impact had the
Company chosen to apply the fair-value recognition provisions of SFAS No. 123
or SFAS No. 123 revised (123R) to expense share-based compensation, the impact
of which is disclosed in the Company's Forms 10-Q and 10-K as filed with the
SEC. The Company expects to adopt SFAS No. 123R in its fourth fiscal quarter
ending September 24, 2005.
(b) This adjustment reflects the non-cash compensation expense related
primarily to restricted stock awarded to the Company's CEO in fiscal 2003 and
restricted stock units awarded to selected members of the Company's senior
management team in fiscal 2004. Of the total non-cash compensation expense of
$10 million, $1 million is included in cost of sales; $1 million is included
in research and development expense; and $8 million is included in selling,
general and administrative expense. Note that neither the Company's GAAP nor
non-GAAP results of operations includes the accounting impact had the Company
chosen to apply the fair-value recognition provisions of SFAS No. 123R.
(c) This adjustment includes $6 million related to the non-cash
compensation expense primarily attributable to restricted stock awarded to the
Company's CEO in fiscal 2003, which is included in selling, general and
administrative expense, as well as $10 million related to restructuring
actions initiated during the second quarter of fiscal 2004.
(d) Amount reflects the expected tax impact on the above noted non-GAAP
adjustments.
RECONCILIATION OF NON-GAAP TO GAAP RESULTS OF OPERATIONS
(In millions, except share and per share amounts)
Non-GAAP Non-GAAP
As Adjustments Non- As Adjustments Non-
Reported (a) GAAP Reported (a) GAAP
Operating income 805 20(b) 825 126 22 (c) 148
Total other income
and expense 59 -- 59 25 (4)(d) 21
Provision for
income taxes 279 2(e) 281 42 2 (e) 44
Net income $585 $18 $603 $109 $16 $125
Earnings per
common share:
Basic $0.73 $0.76 $0.15 $0.17
Diluted $0.69 $0.71 $0.15 $0.17
Shares used in
computing
earnings
per share
(in thousands):
Basic 798,602 798,602 727,796 727,796
Diluted 848,553 848,553 750,336 750,336
(a) These adjustments reconcile the Company's GAAP results of operations
to its pro forma or non-GAAP results of operations. The Company believes that
presentation of results excluding items such as non-cash share-based
compensation, restructuring costs, and investment gains provides meaningful
supplemental information to both management and investors that is indicative
of the Company's core operating results and facilitates comparison of
operating results across reporting periods. The Company uses these non-GAAP
measures when evaluating its financial results as well as for internal
planning and forecasting purposes. These non-GAAP measures should not be
viewed as a substitute for the Company's GAAP results. Neither the Company's
GAAP nor non-GAAP results of operations include the accounting impact had the
Company chosen to apply the fair-value recognition provisions of SFAS No. 123
or SFAS No. 123 revised (123R) to expense share-based compensation, the impact
of which is disclosed in the Company's Forms 10-Q and 10-K as filed with the
SEC. The Company expects to adopt SFAS No. 123R in its fourth fiscal quarter
ending September 24, 2005.
(b) This adjustment reflects the non-cash compensation expense related
primarily to restricted stock awarded to the Company's CEO in fiscal 2003 and
restricted stock units awarded to selected members of the Company's senior
management team in fiscal 2004. Of the total non-cash compensation expense of
$20 million, $1 million is included in cost of sales; $2 million is included
in research and development expense; and $17 million is included in selling,
general and administrative expense. Note that neither the Company's GAAP nor
non-GAAP results of operations includes the accounting impact had the Company
chosen to apply the fair-value recognition provisions of SFAS No. 123R.
(c) This adjustment includes $12 million related to the non-cash
compensation expense primarily attributable to restricted stock awarded to the
Company's CEO in fiscal 2003, which is included in selling, general and
administrative expense, as well as $10 million related to restructuring
actions initiated during the second quarter of fiscal 2004.
(d) This adjustment represents gain on sales of non-current investments.
(e) Amount reflects the expected tax impact on the above noted non-GAAP
adjustments.
Apple Computer, Inc.
Q2 2005 Unaudited Summary Data
Q1 2005 Actual Q2 2004 Actual Q2 2005 Actual
CPU CPU CPU
Units Rev Units Rev Units Rev
Operating Segments k $m k $m k $m
Americas 476 $1,637 361 $881 477 $1,443
Europe 320 847 187 449 276 705
Japan 64 185 76 173 102 284
Retail 119 561 70 266 144 571
Other Segments (1) 67 260 55 140 71 240
Total Operating Segments 1,046 $3,490 749 $1,909 1,070 $3,243
Units Rev Units Rev Units Rev
Product Summary k $m k $m k $m
iMac (2) 456 $620 217 $252 467 $483
iBook 271 297 201 223 251 278
Power Mac (3) 167 381 174 349 141 320
PowerBook 152 307 157 336 211 413
Subtotal CPUs 1,046 1,605 749 1,160 1,070 1,494
iPod 4,580 1,211 807 264 5,311 1,014
Other Music Products (4) NM 177 NM 60 NM 216
Peripherals & Other HW NM 284 NM 238 NM 280
Software & Other NM 213 NM 187 NM 239
Total Apple $3,490 $1,909 $3,243
Sequential Change Year/Year Change
Operating Segments Units Revenue Units Revenue
Americas 0% -12% 32% 64%
Europe -14% -17% 48% 57%
Japan 59% 54% 34% 64%
Retail 21% 2% 106% 115%
Other Segments (1) 6% -8% 29% 71%
Total Operating Segments 2% -7% 43% 70%
Sequential Change Year/Year Change
Product Summary Units Revenue Units Revenue
iMac (2) 2% -22% 115% 92%
iBook -7% -6% 25% 25%
Power Mac (3) -16% -16% -19% -8%
PowerBook 39% 35% 34% 23%
Subtotal CPUs 2% -7% 43% 29%
iPod 16% -16% 558% 284%
Other Music Products (4) NM 22% NM 260%
Peripherals & Other HW NM -1% NM 18%
Software & Other NM 12% NM 28%
Total Apple -7% 70%
(1) Other Segments include Asia Pacific and FileMaker.
(2) Includes eMac and Mac mini product lines.
(3) Includes Xserve product line.
(4) Other Music Products consists of iTunes Music Store sales and iPod
related services and accessories.
NM: Not Meaningful
SOURCE Apple Computer, Inc.
