Apple Reports Fourth Fiscal Quarter Results

Quarterly sales to U.S. education customers top $500 million Company
progresses with cost-cutting initiatives Quarterly loss before special
charges half that of prior quarter

CUPERTINO, California–Oct. 15, 1997–Apple Computer, Inc. today announced
results of its fourth fiscal quarter ended Sept. 26, 1997. For the quarter,
Apple’s revenues were $1.6 billion, a decrease of 30 percent from the
fourth quarter a year ago, and a sequential decrease of 7 percent from the
quarter ended June 27, 1997. International revenues represented 42 percent
of the quarterly total. Gross margins were 20 percent, compared to 22
percent in the year ago quarter and 20 percent in the June 1997 quarter.

The Company continued to lower its breakeven level by reducing recurring
operating expenses to $353 million in the fourth quarter, compared to $505
million in the year-ago-quarter and $408 million in the June quarter.

Also included in the current quarter’s results were a $62 million charge to
increase the Company’s restructuring reserves, as well as a $75 million
write-off related to the Company’s purchase of the Mac OS license from
Power Computing Corporation.

The Company’s net loss for the quarter was $161 million, or $(1.26) per
share, compared with a net profit of $25 million, or $.20 a share, in the
same quarter a year ago. Without the charges related to restructuring and
the Power Computing transaction, the Company’s net loss for the quarter
would have been $24 million, or $(.19) per share, a sequential improvement
from the $56 million net loss, or $(.44) per share, posted in the June
quarter.

“Apple’s fourth fiscal quarter was marked by sweeping changes, from the
resignation of our CEO to the installation of new board members to
significant developments in our marketing programs and industry
relationships,” said Apple Chief Financial Officer Fred Anderson. “Amidst
this change, we’ve continued to make excellent progress with our
restructuring initiatives, having reduced quarterly operating expenses of a
recurring nature by an additional $55 million since the June quarter.”

“The July introduction of Mac OS 8 has resulted in record sales, covering
two million seats to date,” added Anderson. “Our U.S. education business
contributed over half a billion dollars in revenues during the quarter, and
we saw sequential improvement in both business and consumer sales in the
U.S. However, we were disappointed by sluggish demand outside the U.S.,
particularly in Japan.”

“We remain focused on our primary goal of returning Apple to sustainable
profitability,” said Anderson. “Our goal for fiscal 1998 is to continue to
reduce Apple’s breakeven point through a combination of further expense
reductions and gross margin improvements.”

For the Company’s fiscal year ended Sept. 26, 1997, revenues were $7.1
billion, a 28 percent percent decrease from the prior year. The net loss
for the year was $1.0 billion, or $(8.29) per share, compared with a net
loss of $816 million, or $(6.59) per share, in fiscal 1996. Included in the
fiscal 1997 loss were restructuring charges of $217 million as well as $450
million in writeoffs related to the acquisition of Next Software, Inc. and
the purchase of the Mac OS license from Power Computing Corporation.

For the year, international revenues accounted for 50 percent of Apple’s
net sales, compared to 52 percent in fiscal 1996.

The statements regarding the goals of reducing the breakeven level and
returning the Company to sustainable profitability are forward-looking and
involve risks and uncertainties. Potential risks and uncertainties include,
without limitation, continued competitive pressures in the marketplace; the
effect competitive factors and the Company’s reaction to them may have on
consumer and business buying decisions with respect to the Company’s
products; the consequences competitive factors and buying decisions may
have on current inventory valuations; the ability of the Company to make
timely delivery of successful technological innovations to the marketplace;
the effect of any future losses on the Company’s needs for liquidity; the
effect of the announced business restructuring on the future performance of
the Company, especially the performance of the Company’s employees; and the
need for any future restructuring, and the effect that it might have on the
performance of the Company. More information on potential factors that
could affect the Company’s financial results is included in the Company’s
Form 10-Q for the third fiscal quarter and will also be included in the
Company’s Form 10-K for the 1997 fiscal year, to be filed with the SEC.

Apple Computer, Inc. ignited the personal computer revolution in the 1970s
with the Apple II, and reinvented the personal computer in the 1980s with
the Macintosh. Apple (NASDAQ:AAPL) is now recommitted to its original
mission – to bring the best personal computing products and support to
students, educators, designers, scientists, engineers, businesspersons and
consumers in over 140 countries around the world.

Katie Cotton
(408) 974-7269
email: katiec@apple.com

Investor Relations Contact:
Nancy Paxton
(408) 974-5420
email: paxton1@apple.com