UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended December 30, 2006

		or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to

Commission file number: 000-10030

Apple Inc.

(Exact name of Registrant as specified in its charter)

California		942404110
(State or other jurisdiction		(I.R.S. Employer Identification No.)
of incorporation or organization)

1 Infinite Loop
Cupertino, California		95014
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (408) 996-1010

Apple Computer, Inc.

(Former name or former address, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x

Accelerated filer o

Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

861,874,894 shares of common stock issued and outstanding as of January 24, 2007

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

APPLE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in millions, except share and per share amounts)

	Three Months Ended
	December 30, 2006		December 31, 2005

Net sales	$	7,115	$	5,749
Cost of sales (1)	4,895		4,185
Gross margin	2,220		1,564

Operating expenses:
Research and development (1)	184		182
Selling, general, and administrative (1)	714		632
Total operating expenses	898		814


Operating income	1,322		750

Other income and expense	126		81

Income before provision for income taxes	1,448		831

Provision for income taxes	444		266

Net income	$	1,004	$	565

Earnings per common share:
Basic	$	1.17	$	0.68
Diluted	$	1.14	$	0.65


Shares used in computing earnings per share (in thousands):
Basic	857,691		830,781
Diluted	883,297		874,207

(1) Includes stock-based compensation expense, which was allocated as follows:
Cost of sales	$	6	$	5
Research and development	$	16	$	15
Selling, general, and administrative	$	24	$	24

See accompanying Notes to Condensed Consolidated Financial Statements.

APPLE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except share amounts)

	December 30, 2006		September 30, 2006
ASSETS:

Current assets:
Cash and cash equivalents	$	7,159	$	6,392
Short-term investments	4,710		3,718
Accounts receivable, less allowances of $50 and $52, respectively	1,621		1,252
Inventories	303		270
Deferred tax assets	648		607
Other current assets	2,223		2,270
Total current assets	16,664		14,509
Property, plant and equipment, net	1,362		1,281
Goodwill	38		38
Acquired intangible assets, net	146		139
Other assets	1,251		1,238
Total assets	$	19,461	$	17,205

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	3,885	$	3,390
Accrued expenses	3,452		3,081
Total current liabilities	7,337		6,471
Non-current liabilitiesand other non-current liabilities	896		750
Total liabilities	8,233		7,221


Commitments and contingencies

Shareholders’ equity:
Common stock, no par value; 1,800,000,000 shares authorized; 860,219,891 and 855,262,568 shares issued and outstanding, respectively	4,594		4,355
Retained earnings	6,611		5,607
Accumulated other comprehensive income