Apple Reports Third Quarter Results

Apple today announced financial results for its fiscal 2004 third quarter which ended on June 26th, 2004. For the quarter, the Company posted a net profit of US$61 million (£33m*), or $0.16 per diluted share. These results compare to a net profit of US$19 million, or $0.05 per diluted share, in the year-ago quarter. Revenue for the quarter was US$2.014 billion (£1.09bn*), up 30 percent from the year-ago quarter. Gross margin was 27.8 percent, up from 27.7 percent in the year-ago quarter. International sales accounted for 39 percent of the quarter's revenue.

The quarter's results include an after-tax restructuring charge of US$6 million (£3.2m*). Excluding this charge, the Company's net profit for the quarter would have been US$67 million (£36.2m*), or $0.17 per diluted share.

Apple shipped 876,000 Macintosh units and 860,000 iPods during the quarter, representing a 14 percent increase in CPU units and a 183 percent increase in iPods over the year-ago quarter.

“It was an outstanding quarter — our highest third quarter revenue in eight years”, said Steve Jobs, Apple's CEO. “Our Mac-based revenue grew a healthy 19 percent, and our music-based revenue grew an incredible 162 percent. We've got a strong product portfolio, with some amazing new additions coming later this year”.

“We were very pleased with our 30 percent year-over-year revenue growth and our operating margin expansion”, said Peter Oppenheimer, Apple's CFO. “Looking ahead to the fourth quarter of fiscal 2004, we expect revenue of about $2.1 billion and earnings per diluted share of $0.16 to $0.17, including $0.01 per diluted share in restructuring charges”.

Non-GAAP Measures
The Company believes that presentation of results excluding items such as restructuring charges 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.

This press release contains forward-looking statements about the Company's estimated revenue and earnings for the fourth quarter of fiscal 2004. These statements involve risks and uncertainties and actual results may differ. Potential risks and uncertainties include continued competitive pressures in the marketplace; the effect competitive and economic factors and the Company's reaction to them may have on consumer and business buying decisions with respect to the Company's products; the ability of the Company to make timely delivery of new programmes, products and successful technological innovations to the marketplace; the continued availability of certain components and services essential to the Company's business currently obtained by the Company from sole or limited sources, including the timely resolution of manufacturing issues associated with the G5 microprocessors used in many of the Company's Macintosh systems; possible disruption in commercial activities caused by terrorist activity and armed conflict, such as changes in logistics and security arrangements, and reduced end-user purchases relative to expectations; possible disruption in commercial activity as a result of major health concerns, such as Severe Acute Respiratory Syndrome (SARS); risks associated with the Company's retail initiative including significant investment cost, uncertain consumer acceptance and potential impact on existing reseller relationships; the effect that the Company's dependency on manufacturing and logistics services provided by third-parties may have on the quality or quantity of products manufactured; the Company's reliance on the availability of third-party music content, and the ability of the Company to successfully evolve its operating system and attract sufficient Macintosh developers. More information on potential factors that could affect the Company'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-K for the fiscal year 2003; the Company's Forms 10-Q for the quarters ended December 27th, 2003 and March 27th, 2004; and the Company's Form 10-Q for the quarter ended June 26th, 2004 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 ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning desktop and notebook computers, Mac OS X operating system, and iLife and professional applications. Apple is also spearheading the digital music revolution with its iPod portable music players and iTunes online music store.

* 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
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Phone: +44 (0)20 8218 1440