updated 11:05 pm EST, Mon February 12, 2001
Apple today filed its Quarterly SEC Form 10-Q, which is available online and covers much of the same info presented in the Apple Q1 financial results and conference call earlier this year and the January Analyst meeting.
Some annotated highlights:
- Net sales decreased 57% to $1.007 billion in the first quarter of 2001 compared to the same quarter in 2000 and decreased 46% from the fourth quarter of 2000. Both the year-over-year and sequential declines in net sales are attributable to several factors including continued deterioration in worldwide demand for PC and rebate programs and price cuts during the quarter that negatively affected net sales for the quarter by approximately $138 million.
- There was a 52% year-over-year decline in total Macintosh unit sales that were experienced across the Company's entire product line.
- Apple Japan segment was most impacted by the plan to reduce channel inventory during the first quarter of 2001. It is reflected in the 91% decrease in unit sales of iMac in Japan during the first quarter of 2001 compared to the same quarter in 2000.
- Gross margin for the first quarter of 2001 was negative 2.1% compared to 25.9% for the same quarter in 2000 and 25.0% for the fourth quarter of 2000. Margins were negatively impacted by the rebate programs and price cuts and other factors which caused approximately $122 million of charges associated with purchase order cancellations and loss commitments for component purchases. Without these charges, gross margin for the first quarter of 2001 would have been approximately 21%.
- For all of 2001, Apple anticipates net sales will decline as compared to 2000 to approximately $6 billion and it expects that it will be profitable, before the effect of any investment gains [or losses?], during each of the last three quarters of 2001.
- In general, gross margin and margins on individual products will remain under significant downward pressure due to continued industry wide global pricing pressures, increased competition, compressed product life cycles, potential increases in the cost and availability of raw material and outside manufacturing services, and potential changes to Apple's product mix, including higher unit sales of consumer products with lower average selling prices and lower gross margins.
- The 7% ($22 million) decrease in selling, general and administrative expenses during the quarter is the result of lower variable selling and marketing expenses resulting from the year-over-year 57% decrease in net sales and due to lower discretionary spending on marketing and advertising.
- Expenditures for research and development increased 13% between the first quarter of fiscal 2001 and the same quarter in 2000 primarily as a result of increased spending in 2001 to support multiple new product manufacturing ramps and increased research and development headcount of approximately 8%.
- In December 1999, the Company's Board of Directors approved a special executive bonus for CEO Steve Jobs for past services in the form of an aircraft with a total cost of approximately $90 million, the majority of which is not tax deductible. Approximately half of the total charge is the cost of the aircraft. The other half represents all other costs and taxes associated with the purchase... Apple's effective tax rate for the first quarter of 2000 was approximately 33% and includes the effect of the special executive bonus of $90 million accrued during that quarter. The effective tax rate during the first quarter of 2000 without this charge was approximately 25%.
- Several of the Apple's competitors have introduced or announced plans to introduce products that mimic many of the unique design, technical features, and solutions of the Company's products. Many have greater financial, marketing, manufacturing, and technological resources, as well as broader product lines and larger installed customer bases. The Company's future operating results and financial condition may be affected by overall demand for PCs and general customer preferences for one platform over another or one set of product features over another.