10-QPeriod: Q3 FY2002

Apple Inc. Quarterly Report for Q3 Ended Jun 29, 2002

Filed August 9, 2002For Securities:AAPL

Summary

For the third quarter ended June 29, 2002, Apple Inc. reported net sales of $1.429 billion, a slight decrease of 3% compared to the same period in the previous year. Net income for the quarter was $32 million, or $0.09 per diluted share, down from $61 million, or $0.17 per diluted share, in the prior year's comparable quarter. This decline was primarily attributed to weaker than expected sales in Europe and Japan, and a softening in the U.S. consumer and education markets. While gross margin saw a year-over-year decrease to 27.4% due to higher component costs and a shift in product mix towards lower-margin consumer systems, operating expenses were managed effectively, with a decrease in both Research & Development and Selling, General & Administrative expenses compared to the prior year. The company's balance sheet showed total assets of $6.293 billion and total liabilities of $2.227 billion, resulting in shareholders' equity of $4.066 billion. Apple maintained a strong liquidity position with $1.246 billion in cash and cash equivalents and $3.060 billion in short-term investments. The company highlighted new product introductions, including Xserve, eMac, and updated iMac and PowerBook lines, alongside the upcoming Mac OS X "Jaguar" release, indicating continued investment in innovation despite prevailing weak market conditions. The outlook for the fourth quarter of 2002 anticipates relatively flat sales and a slight profit before non-recurring charges, with a cautious view on the global personal computer market's recovery.

Key Highlights

  • 1Net sales for the third quarter of fiscal year 2002 were $1.429 billion, a 3% decrease year-over-year.
  • 2Net income for the quarter was $32 million ($0.09 per diluted share), down from $61 million ($0.17 per diluted share) in the prior year's quarter.
  • 3Gross margin declined to 27.4% from 29.4% in the prior year's quarter, impacted by higher component costs and product mix.
  • 4Operating expenses were managed, with R&D down 5% and SG&A down 3% year-over-year for the quarter.
  • 5The company saw weakness in sales in Europe and Japan, and the U.S. education and consumer markets.
  • 6Apple introduced new products including Xserve, eMac, and updated iMac and PowerBook lines, demonstrating continued product innovation.
  • 7The company maintained a strong liquidity position with $1.246 billion in cash and cash equivalents and $3.060 billion in short-term investments as of June 29, 2002.

Frequently Asked Questions

For the quarter ended June 29, 2002, Apple reported net sales of $1.429 billion, a decrease of 3% from the prior year's quarter. Net income was $32 million, or $0.09 per diluted share, compared to $61 million, or $0.17 per diluted share, in the same period last year. The gross margin percentage decreased to 27.4% from 29.4% year-over-year.

The decline was primarily due to weaker-than-expected sales in Europe and Japan, along with softening demand in the U.S. education and consumer markets. Additionally, higher component costs, particularly for memory and flat panel displays, and a shift in product mix towards lower-margin consumer systems impacted gross margins.

Apple maintained a strong liquidity position. As of June 29, 2002, the company had $1.246 billion in cash and cash equivalents and $3.060 billion in short-term investments, indicating sufficient resources to meet its operational and capital needs.

Apple has been actively introducing new products, including the Xserve, eMac, and updated iMac and PowerBook lines. The company also announced the upcoming release of Mac OS X version 10.2 ('Jaguar'). The outlook for the fourth quarter of 2002 anticipates relatively flat sales compared to the third quarter and a slight profit before non-recurring charges, though management foresees continued weakness in the global personal computer market.