Apple Inc. Quarterly Report for Q2 Ended Mar 26, 2016

Summary

Apple Inc. reported its financial results for the second quarter and first half of fiscal year 2016. For the quarter ending March 26, 2016, net sales decreased by 13% year-over-year to $50.6 billion, driven primarily by lower iPhone sales and currency headwinds. Net income for the quarter was $10.5 billion, or $1.90 per diluted share, a decline from the prior year's $13.6 billion, or $2.33 per diluted share. Despite the overall sales decline, the Services segment showed strong year-over-year growth of 20%. The company continued its robust capital return program, repurchasing $7.0 billion in stock and paying $2.9 billion in dividends during the quarter. Apple also strengthened its balance sheet by issuing $15.5 billion in long-term debt. Management expressed confidence in its ability to meet working capital needs and outlined future capital expenditures of approximately $15.0 billion for fiscal year 2016.

Key Highlights

• 1Net sales for the quarter decreased 13% to $50.6 billion, primarily due to lower iPhone sales and unfavorable currency exchange rates.
• 2Net income for the quarter was $10.5 billion, resulting in diluted earnings per share of $1.90, down from $2.33 in the prior year's comparable quarter.
• 3The Services segment demonstrated strong growth, with net sales increasing 20% year-over-year.
• 4Apple returned $9.9 billion to shareholders in the quarter through $7.0 billion in share repurchases and $2.9 billion in dividends.
• 5The company issued $15.5 billion in new long-term debt during the quarter.
• 6Gross margin percentage declined to 39.4% from 40.8% in the prior year's quarter, attributed to currency impacts and unfavorable leverage on fixed costs.
• 7Research and Development expenses increased significantly, reflecting continued investment in innovation.

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