Apple Reports Fourth Quarter Results

Apple today announced financial results for its fiscal 2002 fourth quarter ended September 28th, 2002. For the quarter, the Company posted a net loss of US$45 million (£28.9m*), or US$0.13 per share. These results compare to a net profit of US$66 million (£42.5m*), or US$0.19 per diluted share, in the year-ago quarter. Revenues for the quarter were US$1.44 billion (£926.6m*), flat with the year-ago quarter, and gross margins were 26.4 percent, down from 30.1 percent in the year-ago quarter. International sales accounted for 35 percent of the quarter's revenues.

The quarter's results included several non-recurring items: the write-downof certain equity investments totalling US$49 million (£31.5m*) net of tax; a restructuring charge of US$4 million (£2.6m*) net of tax; an in-process R&D charge of US$1 million (£643,000*) net of tax; and the reversal of a portion of a previous executive compensation expense resulting in a favourable impact of US$2 million (£1.3m*). Excluding these non-recurring items, the Company's net profit for the quarter would have been US$7 million (£4.5m*), or US$0.02 per share.

Apple shipped 734,000 Macintosh units during the quarter, down 14percent from the year-ago quarter.

“Though our industry continues to struggle, we had some bright spots thisquarter — Mac OS X version 10.2 is a big hit and on track to have 5 millionusers by the end of this year, our ‘Switchers' campaign is very wellreceived and is attracting a lot of new customers, and our US retailstores sold over $100 million and hosted 2.25 million visitors thisquarter”, said Steve Jobs, Apple's CEO. “Looking forward, we do not expect our industry to pick up anytime soon, though we're hoping to help put a lot of iPods, iMacs and iBooks under trees this holiday season. With the stability of our rock-solid balance sheet, Apple will continue to investthrough this downturn to create the industry's most innovative products andbest buying experience”.

“We were extremely pleased with our ability to achieve our revenue targetfor the fourth quarter while reducing channel inventory to a normal level”,said Fred Anderson, Apple's CFO. “Continued strong asset management enabled us to maintain a solid balance sheet with over $4.3 billion in cash. Looking ahead to the first quarter of 2003, we expect revenue to be up slightly from the September quarter, and expect a slight profit for the quarter beforenon-recurring items”.

For the year, the Company reported net earnings of US$65 million (£41.8m*) on revenues of US$5.74 billion (£3.7bn*), compared to a net loss of US$25 million (£16.1m*) on revenues of US$5.36 billion (£3.45bn*) in 2001.

Financial Statements & Data Summary:

For consolidated financial statements and data summary for the period, see:https://102.p.syniva.es/pr/library/2002/oct/16earnings.html

QuickTime Broadcast of Conference Call:

Apple will provide live streaming of its Q4 2002 financial resultsconference call utilising QuickTime 6, Apple's standards-based technologyfor live and on-demand audio and video streaming. The live webcast willbegin at 10:00 p.m. BST on Wednesday, October 16th, 2002 athttps://102.p.syniva.es/quicktime/qtv/earningsq402/ and will also be available for replay. The QuickTime player is available free for Macintosh and Windows users at https://102.p.syniva.es/ie/quicktime.

This press release contains forward-looking statements about future revenuesand profit. These statements involve risks and uncertainties and actualresults may differ. Potential risks and uncertainties include continuedcompetitive pressures in the marketplace; the effect competitive andeconomic factors and the Company's reaction to them may have on consumer and business buying decisions with respect to the Company's products; theability of the Company to make timely delivery of new programmes, productsand successful technological innovations to the marketplace; the continuedavailability of certain components and services essential to the Company'sbusiness currently obtained by the Company from sole or limited sources;possible disruption in commercial activities caused by terrorist activityand armed conflict, such as changes in logistics and security arrangements,and reduced end-user purchases relative to expectations; risks associatedwith the Company's retail initiative including significant investment cost,uncertain consumer acceptance and potential impact on existing resellerrelationships; the effect that the Company's dependency on manufacturing and logistics services provided by third-parties may have on the quality orquantity of products manufactured; and the ability of the Company tosuccessfully evolve its operating system and attract sufficient Macintoshdevelopers. More information on potential factors that could affect theCompany's financial results is included from time to time in the Company's public reports filed with the SEC, including the Company's Form 10-Q for the quarter ended June 29th, 2002, and the Company's Form 10-K for the 2002 fiscal year to be filed with the SEC.

* Figures based on currency exchange rates at the time of going to press; exchange rates are subject to fluctuation.

Press Contacts:
Apple UK and Ireland Public Relations
Email: [email protected]
Phone: +44 (0)20 8218 1440