Apple Reports Third Quarter Profit of $101 Million

CUPERTINO, California–July 15, 1998–Apple Computer, Inc. today announced
a profit of $101 million, or $.65 per diluted share, for the Company’s
fiscal 1998 third quarter ended June 26, 1998. These results compare to a
profit of $55 million, or $.38 per diluted share, achieved in the March
1998 quarter. Revenues for the quarter were $1.4 billion, equal to revenues
of the prior quarter, and gross margins were 25.7 percent, up from 24.8
percent in the prior quarter. International sales accounted for 43 percent
of the quarter’s revenues.

The current quarter’s results included a $26 million net favorable impact
from non-recurring items, including an after-tax gain of $33 million
related to the initial public offering of ARM Holdings plc., in which the
Company is a shareholder, and a $7 million charge for purchased in-process
research and development related to the acquisition of technology from
Macromedia, Inc. Without these non-recurring items, the Company’s net
income for the quarter would have been $75 million, or $.50 per diluted
share.

“Apple had a terrific quarter–we sold a record number of Power Macintosh
G3 computers, customers love our new PowerBooks, Apple earned its highest
profits in years, and we ended the quarter with the lowest inventory level
among the major PC players,” said Apple’s interim CEO Steve Jobs. “Looking
forward, Apple’s improved operational efficiency has paved the way for us
to aggressively reenter the consumer market with iMac on August 15.”

“Apple’s three consecutive quarters of profitability and improved asset
management have made Apple much stronger financially,” said Apple’s CFO
Fred Anderson. “We have nearly $2 billion in cash and short-term
investments, and we believe we have the infrastructure in place to support
our upcoming reentry into the consumer market.”

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 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 products and
successful technological innovations to the marketplace; and the ability of
the company to successfully evolve its operating system. More information
on potential factors that could affect the Company’s financial results is
included in the Company’s public reports filed with the SEC, including the
Company’s Form 10-K for the 1997 fiscal year, the Company’s Form 10-Q for
the first and second fiscal quarters, and the Company’s Form 10-Q for the
third fiscal quarter, 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 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.

Press Contact:
Tami Begasse
Apple Computer, Inc.
(408) 974-3156
email: begasse@apple.com

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