Apple Reports Fourth Quarter Results

CUPERTINO, California—October 15, 2003—Apple® today announced financialresults for its fiscal 2003 fourth quarter ended September 27, 2003. For thequarter, the Company posted a net profit of $44 million, or $.12 per dilutedshare. These results compare to a net loss of $45 million, or $.13 perdiluted share, in the year-ago quarter. Revenues for the quarter were $1.715billion, up 19 percent from the year-ago quarter, and gross margins were26.6 percent, up from 26.4 percent in the year-ago quarter. Internationalsales accounted for 38 percent of the quarter’s revenues.

The quarter’s results include an after-tax investment gain of $6 million, afavorable accounting transition adjustment of $3 million related to Apple’sstock repurchase agreement, and a gain on settlement of the stock repurchaseagreement of $6 million. Without these items, net income would have been $29million, or $.08 per share. Management believes that presentation of resultsexcluding these items provides meaningful supplemental information regardingthe Company’s operational performance.

Apple shipped 787 thousand Macintosh® units during the quarter, up 7 percentfrom the year-ago quarter, as well as 336 thousand iPod® units, up 140percent from the year-ago quarter.

“It was a great new product quarter for Apple,” said Steve Jobs, Apple’sCEO. “We launched the Power Mac G5, the fastest personal computer in theworld, new PowerBooks and new iPods. Plus, we’re delivering Panther, thenext major release of Mac OS X, later this month and we’ll have someexciting news regarding our music efforts tomorrow.”

“We are very pleased to have exceeded our revenue and profit targets for thefourth quarter,” said Fred Anderson, Apple’s CFO. “Our balance sheet remainsstrong and our working capital management is among the best in the industry.Looking ahead to the first quarter of fiscal 2004, we expect a sequentialincrease in revenues to about $1.9 billion and a slight sequential increasein GAAP earnings relative to the September quarter.”

For the year, the Company reported net income of $69 million on revenues of$6.21 billion compared to net income of $65 million on revenues of $5.74billion in 2002.

Apple will provide live streaming of its Q4 2003 financial resultsconference call utilizing QuickTime™, Apple’s standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:30 p.m. PDT on Wednesday, October 15, 2003 at https://www.apple.com/quicktime/qtv/earningsq403/ and will also be available for replay. The QuickTime player is available free for Macintosh and Windows users at www.apple.com/quicktime.

This press release contains forward-looking statements about futurerevenues, profit, and products, including statements regarding delivery ofMac OS® X version 10.3 “Panther,” announcements regarding the Company’smusic efforts and estimated revenues and earnings for the first quarter offiscal 2004. 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 andbusiness buying decisions with respect to the Company’s products; theability of the Company to make timely delivery of new programs, products andsuccessful 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; possible disruptionin commercial activity as a result of major health concerns, such as SevereAcute Respiratory Syndrome (SARS); risks associated with the Company'sretail initiative including significant investment cost, uncertain consumeracceptance and potential impact on existing reseller relationships; theeffect that the Company’s dependency on manufacturing and logistics servicesprovided by third-parties may have on the quality or quantity of productsmanufactured; and the ability of the Company to successfully evolve itsoperating system and attract sufficient Macintosh developers. Moreinformation on potential factors that could affect the Company’s financialresults is included from time to time in the Company’s public reports filedwith the SEC, including the Company’s Form 10-Q for the quarter ended June28, 2003 and the Company’s Form 10-K for the 2003 fiscal year to be filedwith the SEC. The Company assumes no obligation to update anyforward-looking statements or information, which speak as of theirrespective dates.

Press Contact:
Tara Hendela
Apple Canada
(905) 513-5853
thendela@apple.com

Investor Relations Contacts:
Nancy Paxton
(408) 974-5420
paxton1@apple.com

Joan Hoover
(408) 974-4570
hoover1@apple.com