Apple Reports Fourth Quarter Results Quarterly Mac Sales Set New Record Quarterly iPhone Sales Exceed One Million

Apple(R) today announced financial results for its fiscal 2007 fourth quarter ended September 29, 2007. The Company posted revenue of $6.22 billion and net quarterly profit of $904 million, or $1.01 per diluted share. These results compare to revenue of $4.84 billion and net quarterly profit of $542 million, or $.62 per diluted share, in the year-ago quarter. Gross margin was 33.6 percent, up from 29.2 percent in the year-ago quarter. International sales accounted for 40 percent of the quarter's revenue.

This press release contains forward-looking statements about the Company's estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include potential litigation and government enforcement actions that may result from the matters investigated by the special committee of the board of directors and the restatement of the Company's consolidated financial statements; unfavorable results of legal proceedings; the effect of competitive and economic factors, and the Company's reaction to those factors, on consumer and business buying decisions with respect to the Company's products; war, terrorism, public health issues, and other circumstances that could disrupt supply, delivery, or demand of products; continued competitive pressures in the marketplace; the Company's reliance on sole service providers for iPhone in the U.S., U.K., Germany and France; the continued availability on acceptable terms of certain components and services essential to the Company's business currently obtained by the Company from sole or limited sources; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company's gross margin; the effect that product quality problems could have on the Company's sales and operating profits; the inventory risk associated with the Company's need to order or commit to order product components in advance of customer orders; the effect that the Company's dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; the Company's dependency on the performance of distributors and other resellers of the Company's products; the Company's reliance on the availability of third-party digital content; and the potential impact of a finding that the Company has infringed on the intellectual property rights of others. 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 ended September 30, 2006, its Forms 10-Q for the quarters ended December 30, 2006, March 31, 2007, and June 30, 2007, and its Form 10-K for the year ended September 29, 2007 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.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except share amounts) September 29, September 30, 2007 2006 ASSETS: Current assets: Cash and cash equivalents $9,352 $6,392 Short-term investments 6,034 3,718 Accounts receivable, less allowances of $47 and $52, respectively 1,637 1,252 Inventories 346 270 Deferred tax assets 782 607 Other current assets 3,805 2,270 Total current assets 21,956 14,509 Property, plant and equipment, net 1,832 1,281 Goodwill 38 38 Acquired intangible assets, net 299 139 Other assets 1,222 1,238 Total assets $25,347 $17,205 LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable $4,970 $3,390 Accrued expenses 4,329 3,053 Total current liabilities 9,299 6,443 Non-current liabilities 1,516 778 Total liabilities 10,815 7,221 Commitments and contingencies Shareholders' equity: Common stock, no par value; 1,800,000,000 shares authorized; 872,328,972 and 855,262,568 shares issued and outstanding, respectively 5,368 4,355 Retained earnings 9,101 5,607 Accumulated other comprehensive income 63 22 Total shareholders' equity 14,532 9,984 Total liabilities and shareholders' equity $25,347 $17,205 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except share and per share amounts) Three Months Ended Twelve Months Ended September September September September 29, 30, 29, 30, 2007 2006 2007 2006 Net sales $6,217 $4,837 $24,006 $19,315 Cost of sales (1) 4,127 3,425 15,852 13,717 Gross margin 2,090 1,412 8,154 5,598 Operating expenses: Research and development (1) 207 179 782 712 Selling, general, and administrative (1) 823 625 2,963 2,433 Total operating expenses 1,030 804 3,745 3,145 Operating income 1,060 608 4,409 2,453 Other income and expense 170 113 599 365 Income before provision for income taxes 1,230 721 5,008 2,818 Provision for income taxes 326 179 1,512 829 Net income $904 $542 $3,496 $1,989 Earnings per common share: Basic $1.04 $0.63 $4.04 $2.36 Diluted $1.01 $0.62 $3.93 $2.27 Shares used in computing earnings per share (in thousands): Basic 870,881 854,187 864,595 844,058 Diluted 895,666 878,757 889,292 877,526 (1) Stock-based compensation expense was allocated as follows: Cost of sales $10 $5 $35 $21 Research and development $21 $13 $77 $53 Selling, general, and administrative $37 $22 $130 $89 UNAUDITED CONSOLIDATED SCHEDULE OF DEFERRED REVENUE (in millions) September June March September 29, 30, 31, 30, 2007 2007 2007 2006 Deferred revenue-current: iPhone and Apple TV $346 $92 $10 $- AppleCare 430 399 373 333 Other 634 572 520 385 Total deferred revenue-current 1,410 1,063 903 718 Deferred revenue-non-current: iPhone and Apple TV 290 88 10 - AppleCare 495 435 392 355 Other 45 38 31 28 Total deferred revenue-non-current 830 561 43 383 Total deferred revenue $2,240 $1,624 $1,336 $1,101 Apple Inc. Q4 2007 Unaudited Summary Data Q3 2007 Q4 2006 Q4 2007 CPU Rev CPU Rev CPU Rev Operating Segments Units K $M Units K $M Units K $M Americas 824 $2,680 781 $2,348 965 $2,928 Europe 393 1,160 342 988 499 1,339 Japan 81 258 62 286 72 255 Retail 330 915 323 884 473 1,251 Other Segments (1) 136 397 102 331 155 444 Total Operating Segments 1,764 $5,410 1,610 $4,837 2,164 $6,217 Rev Rev Rev Units K $M Units K $M Units K $M Product Summary Desktops (2) 634 $956 624 $869 817 $1,195 Portables (3) 1,130 1,577 986 1,344 1,347 1,908 Subtotal CPUs 1,764 2,533 1,610 2,213 2,164 3,103 iPod 9,815 1,570 8,729 1,559 10,200 1,619 Other Music Related Products and Services (4) 608 452 601 iPhone and Related Products & Services (5) 270 5 - - 1,119 118 Peripherals and Other Hardware 308 297 346 Software, Service and Other Sales 386 316 430 Total Apple $5,410 $4,837 $6,217 Sequential Change Year/Year Change CPU CPU Operating Segments Units Revenue Units Revenue Americas 17% 9% 24% 25% Europe 27% 15% 46% 36% Japan - 11% - 1% 16% - 11% Retail 43% 37% 46% 42% Other Segments (1) 14% 12% 52% 34% Total Operating Segments 23% 15% 34% 29% Sequential Change Year/Year Change Units Revenue Units Revenue Product Summary Desktops (2) 29% 25% 31% 38% Portables (3) 19% 21% 37% 42% Subtotal CPUs 23% 23% 34% 40% iPod 4% 3% 17% 4% Other Music Related Products and Services (4) - 1% 33% iPhone and Related Products & Services (5) NM NM NM NM Peripherals and Other Hardware 12% 16% Software, Service and Other Sales 11% 36% Total Apple 15% 29% (1) Other Segments include Asia Pacific and FileMaker. (2) Includes iMac, eMac, Mac mini, Mac Pro, PowerMac and Xserve product lines. (3) Includes MacBook, iBook, MacBook Pro and PowerBook product lines. (4) Consists of iTunes Store sales, iPod services, and Apple-branded and third-party iPod accessories. (5) Units consist of iPhone handset sales; revenue is derived from handset sales, carrier agreements, and Apple-branded and third-party iPhone accessories. NM: Not Meaningful