Apple Reports First Quarter Profit of $38 Million

CUPERTINO, California—January 16, 2002—Apple® today announced financial results for its fiscal 2002 first quarter ended December 29, 2001. For the quarter, the Company posted a net profit of $38 million, or $.11 per diluted share. These results compare to a net loss of $195 million, or $.58 per diluted share, in the year ago quarter. Revenues for the quarter were $1.38 billion, up 37 percent from the year ago quarter, and gross margins were 30.7 percent, compared to –2.1 percent in the year ago quarter. International sales accounted for 48 percent of the quarter’s revenues.

The quarter’s results included a $24 million restructuring charge related to targeted reductions in the Company’s operations, information systems and administrative functions, and a $23 million realized gain from equity investments. These non-recurring items had a net neutral impact on reported earnings per share.

Apple shipped 746 thousand Macintosh® units during the quarter.

“Apple delivered a solid quarter and is one of the few companies making a profit in personal computers during these challenging times,” said Steve Jobs, Apple’s CEO. “During last quarter we continued our strategy of innovation. We launched the wildly popular iPod and sold more than 125,000 of them in two months. And we ended the year with 27 Apple retail stores that attracted over 800,000 visitors in the month of December alone.”

“We’re pleased to have delivered healthy results while maintaining lean channel inventories in a very challenging environment,” said Fred Anderson, Apple’s CFO. “Our balance sheet remains very strong, with almost $4.4 billion in cash. We are targeting March quarter revenues to be up sequentially to about $1.5 billion and EPS to be approximately flat with the December quarter.”

Apple will provide live streaming of its Q1 2002 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 2:30 p.m. PST on Wednesday, January 16, 2002 at https://www.apple.com/quicktime/qtv/earningsq102/ and will also be available for replay. The QuickTime player is available free for Macintosh and Windows users at www.apple.com/quicktime.

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 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; 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; 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; 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 2001 fiscal year, and the Company’s Form 10-Q for the quarter ended December 29th, 2001 to be filed with the SEC.

Apple, the Apple logo, Macintosh, iPod and QuickTime are either registered trademarks or trademarks of Apple. Other company and product names may be trademarks of their respective owners.