APPLE COMPUTER INC (Form: 8-K, Received: 07/14/2004 16:30:05)

Exhibit 99.1

Apple Reports Third Quarter Results

Revenue Increases 30 Percent and Net Profit Triples Year-Over-Year

CUPERTINO, California—July 14, 2004—Apple® today announced financial results for its fiscal 2004 third quarter ended June 26, 2004. For the quarter, the Company posted a net profit of $61 million, or $.16 per diluted share. These results compare to a net profit of $19 million, or $.05 per diluted share, in the year-ago quarter. Revenue for the quarter was $2.014 billion, 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 $6 million. Excluding this charge, the Company’s net profit for the quarter would have been $67 million, or $.17 per diluted share.

Apple shipped 876 thousand Macintosh® units and 860 thousand 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 $.16 to $.17, including $.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.

Apple will provide live streaming of its Q3 2004 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 2:00 p.m. PDT on Wednesday, July 14, 2004 at http://www.apple.com/quicktime/qtv/earningsq304/ 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 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 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, 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 27, 2003 and March 27, 2004; and the Company’s Form 10-Q for the quarter ended June 26, 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, 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.

Press Contact:

Steve Dowling

Apple

(408) 974-1896

sdowling@apple.com

Investor Relations Contacts:

Nancy Paxton

Apple

(408) 974-5420

paxton1@apple.com

Joan Hoover

Apple

(408) 974-4570

hoover1@apple.com

NOTE TO EDITORS: For additional information visit Apple’s PR web site (http://www.apple.com/pr/) or call Apple’s Media Helpline at (408) 974-2042

© 2004 Apple. All rights reserved. Apple, the Apple logo, Macintosh, Mac, Mac OS and QuickTime are either registered trademarks or trademarks of Apple. Other company and product names may be trademarks of their respective owners.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)

	June 26,			September 27,
	2004			2003
ASSETS:
Current assets:
Cash and cash equivalents	$	3,120		$	3,396
Short-term investments	1,846			1,170
Accounts receivable, less allowances of $47 and $49, respectively	629			766
Inventories	72			56
Deferred tax assets	227			190
Other current assets	392			309
Total current assets	6,286			5,887
Property, plant, and equipment, net	684			669
Goodwill	80			85
Acquired intangible assets	19			24
Other assets	154			150
Total assets	$	7,223		$	6,815

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	1,061		$	1,154
Accrued expenses	1,094			899
Current debt	—			304
Total current liabilities	2,155			2,357
Deferred tax liabilities and other non-current liabilities	256			235
Total liabilities	2,411			2,592

Commitments and contingencies

Shareholders’ equity:
Common stock, no par value; 900,000,000 shares authorized; 385,192,286 and 366,726,584 shares issued and outstanding, respectively	2,369			1,926
Deferred stock compensation	(103		)	(62		)
Retained earnings	2,564			2,394
Accumulated other comprehensive income (loss)	(18		)	(35		)
Total shareholders’ equity	4,812			4,223
Total liabilities and shareholders’ equity	$	7,223		$	6,815

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share amounts)

	THREE MONTHS ENDED				NINE MONTHS ENDED
	June 26,		June 28,		June 26,		June 28,
	2004		2003		2004		2003

Net sales	$	2,014	$	1,545	$	5,929	$	4,492
Cost of sales	1,455		1,117		4,304		3,240
Gross margin	559		428		1,625		1,252

Operating expenses:
Research and development	125		120		367		360
Selling, general, and administrative	354		299		1,042		898
Restructuring costs	8		—		18		26
Total operating expenses	487		419		1,427		1,284

Operating income (loss)	72		9		198		(32		)

Other income and expense:
Gain on sales of non-current investments	—		2		4		2
Interest and other income, net	13		15		34		67
Total other income and expense	13		17		38		69

Income before provision for income taxes	85		26		236		37
Provision for income taxes	24		7		66		10

Income before accounting change	61		19		170		27

Cumulative effect of accounting change, net	—		—		—		(2		)

Net income	$	61	$	19	$	170	$	25

Earnings per common share before accounting change:
Basic	$	0.16	$	0.05	$	0.46	$	0.07
Diluted	$	0.16	$	0.05	$	0.45	$	0.07

Earnings per common share:
Basic	$	0.16	$	0.05	$	0.46	$	0.07
Diluted	$	0.16	$	0.05	$	0.45	$	0.07

Shares used in computing earnings per share (in thousands):
Basic	375,023		360,793		367,606		360,113
Diluted	392,621		363,777		381,259		362,421

UNAUDITED NON-GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In millions, except share and per share amounts)

THREE MONTHS ENDED JUNE 26, 2004

			Non-GAAP
	As Reported		Adjustments			Non-GAAP

Net sales	$	2,014				$	2,014
Cost of sales	1,455					1,455
Gross margin	559					559

Operating expenses:
Research and development	125					125
Selling, general, and administrative	354					354
Restructuring costs	8		(8		) (a)	—
Total operating expenses	487		(8		)	479

Operating income	72		8			80

Other income and expense:
Interest and other income, net	13					13
Total other income and expense	13					13

Income before provision for income taxes	85		8			93
Provision for income taxes	24		2		(b)	26

Net income	$	61	$	6		$	67

Earnings per common share:
Basic	$	0.16				$	0.18
Diluted	$	0.16				$	0.17

Shares used in computing earnings per share (in thousands):
Basic	375,023					375,023
Diluted	392,621					392,621

Notes:

(a) Pre-tax restructuring costs

(b) Tax impact of restructuring costs

UNAUDITED NON-GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In millions, except share and per share amounts)

NINE MONTHS ENDED JUNE 26, 2004

			Non-GAAP
	As Reported		Adjustments			Non-GAAP

Net sales	$	5,929				$	5,929
Cost of sales	4,304					4,304
Gross margin	1,625					1,625

Operating expenses:
Research and development	367					367
Selling, general, and administrative	1,042					1,042
Restructuring costs	18		(18		) (a)	—
Total operating expenses	1,427		(18		)	1,409

Operating income	198		18			216

Other income and expense:
Gain on sales of non-current investments	4		(4		) (b)	—
Interest and other income, net	34					34
Total other income and expense	38		(4		)	34

Income before provision for income taxes	236		14			250
Provision for income taxes	66		4		(c)	70

Net income	$	170	$	10		$	180

Earnings per common share:
Basic	$	0.46				$	0.49
Diluted	$	0.45				$	0.47

Shares used in computing earnings per share (in thousands):
Basic	367,606					367,606
Diluted	381,259					381,259

Notes:

(a) Pre-tax restructuring costs

(b) Pre-tax gain on sales of non-current investments

(c) Tax impact of restructuring costs and gain on sales of non-current investments

California	0-10030	94-2404110
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

1 Infinite Loop, Cupertino, CA 95014
(Address of principal executive offices)

(408) 996-1010
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Exhibit Number		Description

99.1		Text of press release issued by Apple Computer, Inc. dated July 14, 2004.

99.2		Data sheet issued by Apple Computer, Inc. dated July 14, 2004.

		APPLE COMPUTER, INC.
Date: July 14, 2004
	By:	/s/ Peter Oppenheimer
		Peter Oppenheimer Senior Vice President and Chief Financial Officer

Exhibit Number		Description

99.1		Text of press release issued by Apple Computer, Inc. dated July 14, 2004.

99.2		Data sheet issued by Apple Computer, Inc. dated July 14, 2004.

	Q2’04 Actual			Q3’03 Actual			Q3’04 Actual			Sequential Change				Year/Year Change
	CPU Units k	Rev $m		CPU Units k	Rev $m		CPU Units k	Rev $m		Units		Revenue		Units		Revenue
Operating Segments
Americas	361	$	881	452	$	831	472	$	1,018	31	%	16	%	4	%	23	%
Europe	187	449		144	297		191	408		2	%	-9	%	33	%	37	%
Japan	76	173		85	168		82	172		8	%	-1	%	-4	%	2	%
Retail	70	266		40	145		73	270		4	%	2	%	83	%	86	%
Other Segments (1)	55	140		50	104		58	146		5	%	4	%	16	%	40	%

Total Operating Segments	749	$	1,909	771	$	1,545	876	$	2,014	17	%	6	%	14	%	30	%

										Sequential Change				Year/Year Change
	Units k	Rev $m		Units k	Rev $m		Units k	Rev $m		Units		Revenue		Units		Revenue
Product Summary
iMac (2)	217	$	252	287	$	301	243	$	235	12	%	-7	%	-15	%	-22	%
iBook	201	223		190	196		240	261		19	%	17	%	26	%	33	%
Power Mac (3)	174	349		133	234		173	332		-1	%	-5	%	30	%	42	%
PowerBook	157	336		161	363		220	435		40	%	29	%	37	%	20	%
Subtotal CPUs	749	1,160		771	1,094		876	1,263		17	%	9	%	14	%	15	%
iPod	807	264		304	111		860	249		7	%	-6	%	183	%	124	%
Other Music Products (4)	NM	60		NM	12		NM	73		NM		22	%	NM		508	%
Peripherals & Other HW	NM	238		NM	168		NM	219		NM		-8	%	NM		30	%
Software & Other	NM	187		NM	160		NM	210		NM		12	%	NM		31	%

Total Apple		$	1,909		$	1,545		$	2,014			6	%			30	%