APPLE INC (AAPL) SEC Filing 10-K Annual report for the fiscal year ending Saturday, September 29, 2018

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Exhibit 99.1


Apple Reports Fourth Quarter Results

Revenue Up 20 Percent and EPS Up 41 Percent to New September Quarter Records

Services Revenue of $10 Billion Reaches New All-Time High

CUPERTINO, California — November 1, 2018 — Apple
® today announced financial results for its fiscal 2018 fourth quarter ended September 29, 2018. The Company posted quarterly revenue of $62.9 billion, an increase of 20 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.91, up 41 percent. International sales accounted for 61 percent of the quarter’s revenue.

Services revenue reached an all-time high of $10 billion. Excluding a one-time favorable adjustment of $640 million recognized in the fourth quarter of fiscal 2017, Services revenue grew from $7.9 billion in the fourth quarter of fiscal 2017 to $10 billion in the fourth quarter of fiscal 2018, an increase of 27 percent.

“We’re thrilled to report another record-breaking quarter that caps a tremendous fiscal 2018, the year in which we shipped our 2 billionth iOS device, celebrated the 10th anniversary of the App Store and achieved the strongest revenue and earnings in Apple’s history,” said Tim Cook, Apple’s CEO. “Over the past two months, we’ve delivered huge advancements for our customers through new versions of iPhone, Apple Watch, iPad and Mac as well as our four operating systems, and we enter the holiday season with our strongest lineup of products and services ever.”

“We concluded a record year with our best September quarter ever, growing double digits in every geographic segment. We set September quarter revenue records for iPhone and Wearables and all-time quarterly records for Services and Mac,” said Luca Maestri, Apple’s CFO. “We generated $19.5 billion in operating cash flow and returned over $23 billion to shareholders in dividends and share repurchases in the September quarter, bringing total capital returned in fiscal 2018 to almost $90 billion.”

Apple is providing the following guidance for its fiscal 2019 first quarter:

revenue between $89 billion and $93 billion
gross margin between 38 percent and 38.5 percent
operating expenses between $8.7 billion and $8.8 billion
other income/(expense) of $300 million
tax rate of approximately 16.5 percent before discrete items

Apple’s board of directors has declared a cash dividend of $0.73 per share of the Company’s common stock. The dividend is payable on November 15, 2018 to shareholders of record as of the close of business on November 12, 2018.

Apple will provide live streaming of its Q4 2018 financial results conference call beginning at 2:00 p.m. PDT on November 1, 2018 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.

Apple periodically provides information for investors on its corporate website, apple.com, and its investors relations website, investor.apple.com. This includes press releases and other information about financial performance, reports filed or furnished with the SEC, information on corporate governance and details related to its annual meeting of shareholders.



The following information was filed by APPLE INC on Thursday, November 1, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Click a sentiment analysis snippet below from APPLE INC's Management Discussions to find these positive and negative remarks within their 10-K Annual report:
  • 17735380_78
    Financial - Earnings
    Gross margin increased in 2017 compared to 2016 due primarily to a shift in mix to Services and an overall increase in product volumes.
  • 17735380_86
    Financial - Expense
    R&D; expense increased during 2017 compared to 2016 due primarily to increases in headcount-related expenses and material costs to support expanded R&D; activities.
  • 17735380_75
    Financial - Earnings
    Gross Margin Gross margin for 2018, 2017 and 2016 was as follows (dollars in millions): Gross margin increased in 2018 compared to 2017 due primarily to a favorable shift in mix of iPhones with higher average selling prices and higher Services net sales, partially offset by higher product cost structures.
  • 17735380_203
    Revenue - Product
    For payment terms in excess of the Company?s standard payment terms, revenue is recognized as payments become due unless the Company has positive evidence that the sales price is fixed or determinable, such as a successful history of collection, without concession, on comparable arrangements.
  • 17735380_27
    Financial - Shares / Equity
    This included increasing its share repurchase authorization from $175 billion to $210 billion and raising its quarterly dividend from $0.57 to $0.63 per share beginning in May 2017.
  • 17735380_40
    Revenue - Geography
    The strength in foreign currencies relative to the U.S. dollar had a favorable impact on iPad net sales during 2018.
  • 17735380_44
    Revenue - Geography
    The strength in foreign currencies relative to the U.S. dollar had a favorable impact on Mac net sales during 2018.
  • 17735380_62
    Revenue - Geography
    The strength in foreign currencies relative to the U.S. dollar had a favorable impact on Europe net sales during 2018.
  • 17735380_66
    Revenue - Geography
    The strength in foreign currencies relative to the U.S. dollar had a favorable impact on Greater China net sales during 2018.
  • 17735380_72
    Revenue - Geography
    The strength in foreign currencies relative to the U.S. dollar had a favorable impact on Rest of Asia Pacific net sales during 2018.
  • 17735380_74
    Revenue - Geography
    The strength in foreign currencies relative to the U.S. dollar had a favorable impact on Rest of Asia Pacific net sales during 2017.
  • 17735380_77
    Revenue - Geography
    The strength in foreign currencies relative to the U.S. dollar had a favorable impact on gross margin and gross margin percentage during 2018.
  • 17735380_148
    Financial - Earnings
    During 2018, cash generated by operating activities of $77.4 billion was a result of $59.5 billion of net income and an increase in the net change in operating assets and liabilities of $34.7 billion, partially offset by non-cash adjustments to net income of $16.8 billion.
  • 17735380_99
    Other - Other
    The lower effective tax rate in 2018 compared to 2017 was due primarily to the lower 2018 blended U.S. tax rate, partially offset by the remeasurement of deferred tax assets and liabilities as a result of the Act.
  • 17735380_47
    Revenue - Product
    Services The following table presents Services net sales information for 2018, 2017 and 2016 (dollars in millions): The year-over-year growth in Services net sales in 2018 was due primarily to licensing, App Store and AppleCare.
  • 17735380_70
    Revenue - Product
    The year-over-year increase in Japan net sales in 2017 was due to higher net sales of Services and the strength in the Japanese yen relative to the U.S. dollar.
  • 17735380_165
    Financial - Shares / Equity
    Of the $73.1 billion, $44.0 billion was repurchased under the Company?s previous share repurchase program of up to $210 billion, thereby completing that program.
  • 17735380_19
    Revenue - Product
    Fiscal 2018 Highlights Net sales increased 16% or $36.4 billion during 2018 compared to 2017, driven by higher net sales of iPhone, Services and Other Products.
  • 17735380_23
    Revenue - Product
    Fiscal 2017 Highlights Net sales increased 6% or $13.6 billion during 2017 compared to 2016, primarily driven by growth in Services, iPhone and Mac.
  • 17735380_85
    Financial - Expense
    Operating Expenses Operating expenses for 2018, 2017 and 2016 were as follows (dollars in millions): Research and Development The year-over-year growth in R&D; expense in 2018 was driven primarily by increases in headcount-related expenses, infrastructure-related costs and material costs to support expanded R&D; activities.
  • 17735380_49
    Revenue - Product
    The year-over-year growth in Services net sales in 2017 was due primarily to increases in App Store and licensing sales.
  • 17735380_59
    Revenue - Geography
    Americas The following table presents Americas net sales information for 2018, 2017 and 2016 (dollars in millions): Americas net sales increased during 2018 compared to 2017 due to higher net sales of iPhone, Services and Other Products.
  • 17735380_60
    Revenue - Geography
    Americas net sales increased during 2017 compared to 2016 due primarily to higher net sales of iPhone, Services and Mac.
  • 17735380_61
    Revenue - Geography
    Europe The following table presents Europe net sales information for 2018, 2017 and 2016 (dollars in millions): Europe net sales increased during 2018 compared to 2017 due primarily to higher net sales of iPhone and Services.
  • 17735380_63
    Revenue - Geography
    Europe net sales increased during 2017 compared to 2016 due primarily to higher net sales of iPhone and Services.
  • 17735380_65
    Revenue - Geography
    Greater China The following table presents Greater China net sales information for 2018, 2017 and 2016 (dollars in millions): Greater China net sales increased during 2018 compared to 2017 due primarily to higher net sales of iPhone and Services.
  • 17735380_69
    Revenue - Product
    Japan The following table presents Japan net sales information for 2018, 2017 and 2016 (dollars in millions): Japan net sales increased during 2018 compared to 2017 due primarily to higher net sales of iPhone and Services.
  • 17735380_71
    Revenue - Geography
    Rest of Asia Pacific The following table presents Rest of Asia Pacific net sales information for 2018, 2017 and 2016 (dollars in millions): Rest of Asia Pacific net sales increased during 2018 compared to 2017 due primarily to higher net sales of iPhone and Services.
  • 17735380_73
    Revenue - Geography
    Rest of Asia Pacific net sales increased during 2017 compared to 2016 due primarily to higher net sales of iPhone, Services and Mac.
  • 17735380_89
    Financial - Expense
    The increase in selling, general and administrative expense in 2017 compared to 2016 was driven primarily by an increase in headcount-related expenses, variable selling expenses and infrastructure-related costs.
  • 17735380_37
    Revenue - Product
    iPhone net sales increased during 2017 compared to 2016 due to higher iPhone unit sales and a different mix of iPhones with higher average selling prices.
  • 17735380_45
    Revenue - Product
    Mac net sales increased during 2017 compared to 2016 due primarily to a different mix of Macs with higher average selling prices and higher Mac unit sales.
  • 17735380_24
    Revenue - Product
    The year-over-year increase in net sales reflected growth in each of the geographic reportable segments, with the exception of Greater China.
  • 17735380_195
    Revenue - Product
    Management believes the Company?s critical accounting policies and estimates are those related to revenue recognition, valuation and impairment of marketable securities, inventory valuation, valuation of manufacturing-related assets and estimation of purchase commitment cancellation fees, warranty costs, income taxes, and legal and other contingencies.
  • 17735380_33
    Revenue - Product
    Services net sales in 2018 included a favorable one-time item of $236 million in connection with the final resolution of various lawsuits.
  • 17735380_36
    Revenue - Product
    Product Performance iPhone The following table presents iPhone net sales and unit sales information for 2018, 2017 and 2016 (dollars in millions and units in thousands): iPhone net sales increased during 2018 compared to 2017 due primarily to a different mix of iPhones resulting in higher average selling prices.
  • 17735380_84
    Financial - Earnings
    In general, the Company believes gross margins will be subject to volatility and remain under downward pressure due to a variety of factors, including: continued industry-wide global product pricing pressures and product pricing actions that the Company may take in response to such pressures; increased competition; the Company?s ability to effectively stimulate demand for certain of its products; compressed product life cycles; potential increases in the cost of components and outside manufacturing services; the Company?s ability to manage product quality and warranty costs effectively; shifts in the mix of products and services, or in the geographic, currency or channel mix; fluctuations in exchange rates; and costs associated with the Company?s frequent introductions and transitions of products and services.
  • 17735380_122
    Revenue - Geography
    However, the ultimate impact of adopting ASU 2016-16 will depend on the balance of intellectual property transferred between its subsidiaries as of the adoption date, as well as the deferred tax impact of the new minimum tax on certain future foreign earnings.
  • 17735380_26
    Other - Other
    In May 2017, the Company announced an increase to its capital return program by raising the total size of the program from $250 billion to $300 billion.
  • 17735380_20
    Revenue - Product
    Net sales increased year-over-year in each of the geographic reportable segments.
  • 17735380_109
    Other - Other
    Irish legislative changes, effective as of January 2015, eliminated the application of the tax opinions from that date forward.
  • 17735380_94
    Financial - Income
    The Act lowered the Company?s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on previously deferred foreign income.
  • 17735380_256
    Financial - Income
    The Act lowered the Company?s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on previously deferred foreign income.
  • 17735380_212
    Revenue - Product
    Revenue allocated to the unspecified software upgrade rights and non-software services based on the Company?s ESPs is deferred and recognized on a straight-line basis over the estimated period the software upgrades and non-software services are expected to be provided.
  • 17735380_261
    Other - Other
    Resolution of the Act?s effects different from the assumptions made by the Company could have a material impact on the Company?s financial condition and operating results.
  • 17735380_10
    Other - Other
    Overview and Highlights The Company designs, manufactures and markets mobile communication and media devices and personal computers, and sells a variety of related software, services, accessories and third-party digital content and applications.
  • 17735380_162
    Revenue - Geography
    In addition, the Company has entered, and in the future may enter, into foreign currency swaps to manage foreign currency risk on the Notes.
  • 17735380_34
    Revenue - Product
    Services net sales in 2017 included a favorable one-time adjustment of $640 million due to a change in estimate based on the availability of additional supporting information.
  • 17735380_50
    Revenue - Product
    Services net sales in 2017 included a favorable one-time adjustment of $640 million due to a change in estimate based on the availability of additional supporting information.
  • 17735380_218
    Revenue - Product
    The Company?s policy requires that, if refunds cannot be reliably estimated, revenue is not recognized until reliable estimates can be made or the price protection lapses.
  • 17735380_88
    Financial - Expense
    Selling, General and Administrative The year-over-year growth in selling, general and administrative expense in 2018 was driven primarily by increases in in headcount-related expenses, professional services and infrastructure-related costs.
  • 17735380_1
    Other - Other
    Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact.
  • 17735380_227
    Revenue - Product
    Changes in the fair value of available-for-sale securities impact the Company?s net income only when such securities are sold or an other-than-temporary impairment is recognized.
  • 17735380_41
    Revenue - Product
    iPad net sales decreased during 2017 compared to 2016 due to lower iPad unit sales and a different mix of iPads with lower average selling prices.
  • 17735380_179
    Other - Other
    Deemed Repatriation Tax Payable As of September 29, 2018, a significant portion of the other non-current liabilities in the Company?s Consolidated Balance Sheet consisted of the deemed repatriation tax payable imposed by the Act.
  • 17735380_138
    Revenue - Product
    The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption.
  • 17735380_169
    Financial - Shares / Equity
    Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.
  • 17735380_133
    Other - Other
    Based on the composition of the Company?s investment portfolio, current market conditions, and historical credit loss activity, the adoption of ASU 2016-13 is not expected to have a material impact on its consolidated financial statements.
  • 17735380_31
    Revenue - Product
    Sales Data The following table shows net sales by reportable segment and net sales and unit sales by product for 2018, 2017 and 2016 (dollars in millions and units in thousands): (1) Includes deferrals and amortization of related software upgrade rights and non-software services.
  • 17735380_182
    Financial - Expense
    Indemnification Agreements entered into by the Company may include indemnification provisions which may subject the Company to costs and damages in the event of a claim against an indemnified third party.
  • 17735380_11
    Other - Other
    The Company?s products and services include iPhone, iPad, Mac, Apple Watch, AirPods, Apple TV, HomePod, a portfolio of consumer and professional software applications, iOS, macOS, watchOS and tvOS operating systems, iCloud, Apple Pay and a variety of other accessory, service and support offerings.
  • 17735380_254
    Other - Other
    Resolution of these uncertainties in a manner inconsistent with management?s expectations could have a material impact on the Company?s financial condition and operating results.
  • 17735380_166
    Other - Other
    On May 1, 2018, the Company announced the Board of Directors had authorized a new program to repurchase up to $100 billion of the Company?s common stock.
  • 17735380_93
    Financial - Income
    Provision for Income Taxes Provision for income taxes and effective tax rates for 2018, 2017 and 2016 were as follows (dollars in millions): On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the "Act"), which significantly changed U.S. tax law.
  • 17735380_2
    Other - Other
    Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," and similar terms.
  • 17735380_159
    Other - Other
    As of September 29, 2018, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $104.2 billion (collectively the "Notes").
  • 17735380_141
    Other - Other
    Liquidity and Capital Resources The following table presents selected financial information and statistics as of and for the years ended September 29, 2018, September 30, 2017 and September 24, 2016 (in millions): (1) As of September 29, 2018, total cash, cash equivalents and marketable securities included $20.3 billion that was restricted from general use, related to the State Aid Decision and other agreements.
  • 17735380_79
    Financial - Earnings
    Gross margin percentage decreased year-over-year due primarily to higher product costs, partially offset by a favorable shift in mix to Services.
  • 17735380_21
    Financial - Dividend
    In May 2018, the Company announced a new capital return program of $100 billion and raised its quarterly dividend from $0.63 to $0.73 per share beginning in May 2018.
  • 17735380_82
    Financial - Earnings
    The foregoing statement regarding the Company?s expected gross margin percentage in the first quarter of 2019 is forward-looking and could differ from actual results.
  • 17735380_92
    Other - Other
    The weighted-average interest rate earned by the Company on its cash, cash equivalents and marketable securities was 2.16%, 1.99% and 1.73% in 2018, 2017 and 2016, respectively.
  • 17735380_25
    Revenue - Geography
    The weakness in foreign currencies relative to the U.S. dollar had an unfavorable impact on net sales during 2017.
  • 17735380_38
    Revenue - Geography
    The weakness in foreign currencies relative to the U.S. dollar had an unfavorable impact on iPhone net sales during 2017.
  • 17735380_42
    Revenue - Geography
    The weakness in foreign currencies relative to the U.S. dollar had an unfavorable impact on iPad net sales during 2017.
  • 17735380_46
    Revenue - Geography
    The weakness in foreign currencies relative to the U.S. dollar had an unfavorable impact on Mac net sales during 2017.
  • 17735380_64
    Revenue - Geography
    The weakness in foreign currencies relative to the U.S. dollar had an unfavorable impact on Europe net sales during 2017.
  • 17735380_68
    Revenue - Geography
    The weakness in foreign currencies relative to the U.S. dollar had an unfavorable impact on Greater China net sales during 2017.
  • 17735380_80
    Revenue - Geography
    The weakness in foreign currencies relative to the U.S. dollar had an unfavorable impact on gross margin and gross margin percentage during 2017.
  • 17735380_98
    Financial - Income
    The Company?s effective tax rates for 2017 and 2016 were lower than the historical statutory federal income tax rate of 35% due primarily to certain undistributed foreign earnings, a substantial portion of which was generated by subsidiaries organized in Ireland, for which no U.S. taxes were provided when such earnings were intended to be indefinitely reinvested outside the U.S.
  • 17735380_206
    Revenue - Product
    For multi-element arrangements that include hardware products containing software essential to the hardware product?s functionality, undelivered software elements that relate to the hardware product?s essential software and/or undelivered non-software services, the Company allocates revenue to all deliverables based on their relative selling prices.
  • 17735380_102
    Financial - Shares / Equity
    The Company anticipates that these excess tax benefits or deficiencies will have the greatest impact on its effective tax rates in the first and third quarters, as the majority of the Company?s equity awards vest in those quarters.

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Exhibit 10.17 - MATERIAL CONTRACT

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Exhibit 10.18 - MATERIAL CONTRACT

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Exhibit 21.1 - SUBSIDARIES OF THE REGISTRANT

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Exhibit 23.1 - CONSENTS OF EXPERTS AND COUNSEL

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Exhibit 31.1 - RULE 13A-14(A)/15D-14(A) CERTIFICATION

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Exhibit 31.2 - RULE 13A-14(A)/15D-14(A) CERTIFICATION

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Exhibit 32.1 - SECTION 1350 CERTIFICATION

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  • Form Type: Annual
  • Number of times amended: 0
  • Accession Number: 0000320193-18-000145
  • Submitted to the SEC: Monday, November 5, 2018 8:01:40 AM EST
  • Accepted by the SEC: Monday, November 5, 2018
  • Fiscal Year ending: September 2018
  • Industry: Electronic Computers