Apple Reports Second Quarter Profit of $135 Million
27% unit growth outpaces industry average (Consolidated Statements online at http://www.apple.com/pr/library/1999/apr/q299consolidatedstatements.pdf)
CUPERTINO, California-April 14, 1999-Apple Computer, Inc. today announced financial results for its fiscal 1999 second quarter which ended March 27, 1999. For the quarter, the Company posted a net profit of $135 million, or $.84 per diluted share. These results compare to a net profit of $55 million, or $.38 per diluted share, achieved in the year-ago quarter. Revenues for the quarter were $1.53 billion, up 9 percent from the year-ago quarter, and gross margins were 26.3 percent, up from 24.8 percent in the prior year quarter. International sales accounted for 50 percent of the quarter's revenues.
The current quarter's results included a $42 million net favorable impact from non-recurring items including an after-tax gain of $50 million resulting from the sale of 2 million shares of ARM Holdings plc., and a net restructuring charge of $8 million associated with improving the flexibility and efficiency of manufacturing operations. Without these non-recurring items, the Company's net profit for the quarter would have been $93 million, or $.60 per diluted share.
Strong sales of iMac(tm) and Power Macintosh® G3 computers drove overall unit growth to 27% year-over-year. This compares favorably to IDC's worldwide forecast for industry growth of 14%.
"We are delighted that Apple grew faster than the industry in its sixth consecutive profitable quarter," said Steve Jobs, Apple's interim CEO. "Demand for iMac exceeded our most optimistic forecasts, with Apple's share of U.S. retail and mail order desktop sales climbing as high as 12.5 percent during the quarter, as reported by ZD Storeboard. And Apple continues to lead the industry in asset management by ending the quarter with a record 1 day of inventory, beating Dell for the third quarter in a row."
"Strong demand for iMac and new Power Macintosh G3 computers combined with continued operational efficiency and asset management improvements resulted in positive cash flow from operations of $269 million," said Fred Anderson, Apple's CFO. "Apple now has over $2.9 billion in cash and short-term investments."
Apple® also announced today the early call for redemption on June 1, 1999 of all of its 6 percent convertible subordinated debentures due June 1, 2001.
Except for the historical information contained herein, the statements in this press release are forward-looking statements that involve risks and uncertainties. Potential risks and uncertainties include, without limitation, 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 products and successful technological innovations to the marketplace; the ability of the Company to successfully evolve its operating system and impact on the Company's business due to internal systems or systems of suppliers, infrastructure providers and other third parties adversely affected by year 2000 problems. 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 1998 fiscal year, and the Company's Form 10-Q for the quarter ended March 27, 1999, to be filed with the SEC.
Apple Computer, Inc. ignited the personal computer revolution in the 1970s with the Apple II, and reinvented the personal computer in the 1980s with the Macintosh. Apple is now recommitted to its original mission-to bring the best personal computing products and support to students, educators, designers, scientists, engineers, businesspersons and consumers in over 140 countries around the world.
Bob Nunn - President, Operator Headgap Systems President, AppleCore of Memphis, Inc. E-mail: headgap@headgap.com
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