Apple Reports Fourth Quarter Results

CUPERTINO, California—October 15, 2003—Apple® today announced financial results for its fiscal 2003 fourth quarter ended September 27, 2003. For the quarter, the Company posted a net profit of $44 million, or $.12 per diluted share. These results compare to a net loss of $45 million, or $.13 per diluted share, in the year-ago quarter. Revenues for the quarter were $1.715 billion, up 19 percent from the year-ago quarter, and gross margins were 26.6 percent, up from 26.4 percent in the year-ago quarter. International sales accounted for 38 percent of the quarter’s revenues.

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

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

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

“We are very pleased to have exceeded our revenue and profit targets for the fourth quarter,” said Fred Anderson, Apple’s CFO. “Our balance sheet remains strong and our working capital management is among the best in the industry. Looking ahead to the first quarter of fiscal 2004, we expect a sequential increase in revenues to about $1.9 billion and a slight sequential increase in 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 $5.74 billion in 2002.

Apple will provide live streaming of its Q4 2003 financial results conference 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 future revenues, profit, and products, including statements regarding delivery of Mac OS® X version 10.3 “Panther,” announcements regarding the Company’s music efforts and estimated revenues and earnings for the first 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 programs, 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; 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; 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-Q for the quarter ended June 28, 2003 and the Company’s Form 10-K for the 2003 fiscal year 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.