What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-04-29 compared with 2021-01-28 · 100 added, 82 removed, 145 unchanged (56% of the section changed)

26 unchanged sentences

The COVID-19 pandemic and the measures taken by many countries in response have affected and could in the future materially impact the Company’s business, results of operations, financial condition and stock price.

During the first quarter of 2021, aspects of the Company’s business continued to be affected by the COVID-19 pandemic, with many of the Company’s retail stores, as well as channel partner points of sale, temporarily closed at various times, and the vast majority of the Company’s employees working remotely.

During the second quarter of 2021, aspects of the Company’s business continued to be affected by the COVID-19 pandemic, with many of the Company’s retail stores, as well as channel partner points of sale, temporarily closed at various times, and the vast majority of the Company’s employees working remotely.

The Company has reopened some of its offices and retail stores, subject to operating restrictions to protect public health and the health and safety of employees and customers, and it continues to work on safely reopening the remainder of its offices and retail stores, subject to local rules and regulations.

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The Company believes its existing balances of cash, cash equivalents and marketable securities, along with commercial paper and other short-term liquidity arrangements, will be sufficient to satisfy its working capital needs, capital asset purchases, dividends, share repurchases, debt repayments and other liquidity requirements associated with its existing operations.

First Quarter Fiscal 2021 Highlights

Total net sales increased 21% or $19.6 billion during the first quarter of 2021 compared to the same quarter in 2020, driven by higher net sales in all Products and Services categories.

Additionally, net sales in all of the Company’s geographic reportable segments grew during the first quarter of 2021.

During the first quarter of 2021, the Company released the following products and services:

• iPhone 12, iPhone 12 mini, iPhone 12 Pro and iPhone 12 Pro Max, all with 5G technology;

• MacBook Air ® , 13-inch MacBook Pro ® and Mac mini ® , all powered by M1, the Company’s first chip designed specifically for the Mac;

• An all-new iPad Air ® ;

• AirPods Max™, new over-ear wireless headphones, and HomePod mini™;

• Apple Fitness+ SM , a fitness subscription service.

The Company repurchased $24.0 billion of its common stock and paid dividends and dividend equivalents of $3.6 billion during the first quarter of 2021.

Second Quarter Fiscal 2021 Highlights

Total net sales increased 54% or $31.3 billion during the second quarter of 2021 compared to the same quarter in 2020, driven by higher net sales in all Products and Services categories in each of the Company’s reportable segments.

The COVID-19 pandemic had an unfavorable impact on the Company’s net sales during the second quarter of 2020.

The Company repurchased $19.0 billion of its common stock and paid dividends and dividend equivalents of $3.4 billion during the second quarter of 2021.

In April 2021, the Company announced the following new products and services, all of which are expected to be available in the spring of 2021:

• iMac ® , powered by the Apple M1 chip;

• iPad Pro ® , powered by the Apple M1 chip;

• Apple TV 4K ® , with a redesigned Siri Remote ® ;

• AirTag™, an accessory that helps keep track of items using the Find My™ network;

• Apple Podcasts ® Subscriptions.

Products and Services Performance

The following table shows net sales by category for the three months ended December 26, 2020 and December 28, 2019 (dollars in millions):

Three Months Ended

2020 December 28,

The following table shows net sales by category for the three- and six-month periods ended March 27, 2021 and March 28, 2020 (dollars in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 Change March 27,

2021 March 28,

Net sales by category:

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Services net sales also include amortization of the deferred value of Maps, Siri, and free iCloud storage and Apple TV+ services, which are bundled in the sales price of certain products.

iPhone net sales increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher net sales from the successful launch of the Company’s four new iPhone models and a favorable mix of iPhone sales.

Mac net sales increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher net sales of MacBook Air and MacBook Pro.

iPad net sales increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher net sales of iPad Air and iPad Pro ® .

iPhone net sales increased during the second quarter and first six months of 2021 compared to the same periods in 2020 due primarily to higher net sales from the successful launch of the Company’s new iPhone models in the first quarter of 2021 and a favorable mix of iPhone sales.

Mac net sales increased during the second quarter and first six months of 2021 compared to the same periods in 2020 due primarily to higher net sales of MacBook Air ® and MacBook Pro ® .

iPad net sales increased during the second quarter and first six months of 2021 compared to the same periods in 2020 due primarily to higher net sales of iPad Air ® and the 10-inch version of iPad.

| Q2 2021 Form 10-Q | 24

Wearables, Home and Accessories

Wearables, Home and Accessories net sales increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher net sales of Apple Watch, accessories and AirPods.

Services net sales increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher net sales from the App Store, advertising and cloud services.

Wearables, Home and Accessories net sales increased during the second quarter and first six months of 2021 compared to the same periods in 2020 due primarily to higher net sales of Apple Watch and accessories.

Services net sales increased during the second quarter and first six months of 2021 compared to the same periods in 2020 due primarily to higher net sales from the App Store, advertising and cloud services.

Segment Operating Performance

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Further information regarding the Company’s reportable segments can be found in Part I, Item 1 of this Form 10-Q in the Notes to Condensed Consolidated Financial Statements in Note 11, “Segment Information and Geographic Data.”

The following table shows net sales by reportable segment for the three months ended December 26, 2020 and December 28, 2019 (dollars in millions):

Three Months Ended

2020 December 28,

The following table shows net sales by reportable segment for the three- and six-month periods ended March 27, 2021 and March 28, 2020 (dollars in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 Change March 27,

2021 March 28,

Net sales by reportable segment:

5 unchanged sentences

Total net sales $ 89,584 $ 58,313 54 % $ 201,023 $ 150,132 34 %

Americas net sales increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher net sales of Services, iPhone and Wearables, Home and Accessories.

Europe net sales increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher net sales of Wearables, Home and Accessories, iPhone and iPad.

Americas net sales increased during the second quarter and first six months of 2021 compared to the same periods in 2020 due primarily to higher net sales of iPhone, Services and Mac.

Europe net sales increased during the second quarter and first six months of 2021 compared to the same periods in 2020 due primarily to higher net sales of iPhone, iPad and Mac.

Greater China

Greater China net sales increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher net sales of iPhone, iPad and Wearables, Home and Accessories.

Greater China net sales increased during the second quarter and first six months of 2021 compared to the same periods in 2020 due primarily to higher net sales of iPhone and iPad.

The strength of the Chinese renminbi relative to the U.S.

dollar had a favorable impact on Greater China net sales during the first quarter of 2021.

Japan net sales increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher net sales of iPhone, Services and iPad.

dollar had a favorable impact on Greater China net sales during the second quarter and first six months of 2021.

Japan net sales increased during the second quarter and first six months of 2021 compared to the same periods in 2020 due primarily to higher net sales of iPhone, Services and iPad.

The strength of the Japanese yen relative to the U.S.

dollar had a favorable impact on Japan net sales during the first quarter of 2021.

dollar had a favorable impact on Japan net sales during the second quarter and first six months of 2021.

| Q2 2021 Form 10-Q | 25

Rest of Asia Pacific

Rest of Asia Pacific net sales increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher net sales of Services, iPad and Wearables, Home and Accessories.

Rest of Asia Pacific net sales increased during the second quarter of 2021 compared to the second quarter of 2020 due primarily to higher net sales of iPhone, iPad and Mac.

Year-over-year Rest of Asia Pacific net sales increased during the first six months of 2021 due primarily to higher net sales of iPhone, iPad and Wearables, Home and Accessories.

The movement of foreign currencies in the Rest of Asia Pacific relative to the U.S.

dollar had a net favorable impact on net sales during the first quarter of 2021.

Products and Services gross margin and gross margin percentage for the three months ended December 26, 2020 and December 28, 2019 were as follows (dollars in millions):

Three Months Ended

2020 December 28,

dollar had a net favorable impact on net sales during the second quarter and first six months of 2021.

Products and Services gross margin and gross margin percentage for the three- and six-month periods ended March 27, 2021 and March 28, 2020 were as follows (dollars in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

Gross margin:

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Products Gross Margin

Products gross margin increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher Products volume and a different Products mix.

Products gross margin percentage increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher leverage.

Products gross margin increased during the second quarter and first six months of 2021 compared to the same periods in 2020 due primarily to higher Products volume, a different Products mix and the strength in foreign currencies relative to the U.S.

Year-over-year Products gross margin percentage increased during the second quarter and first six months of 2021 due primarily to higher leverage, a different Products mix and the strength in foreign currencies relative to the U.S.

Services Gross Margin

Services gross margin increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to higher Services net sales and a different Services mix.

Services gross margin percentage increased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to a different Services mix and higher leverage, partially offset by higher Services costs.

The Company’s future gross margins can be impacted by a variety of factors, as discussed in Part I, Item 1A of the 2020 Form 10-K under the heading “Risk Factors.” As a result, the Company believes, in general, gross margins will be subject to volatility and remain under downward pressure.

Services gross margin increased during the second quarter and first six months of 2021 compared to the same periods in 2020 due primarily to higher Services net sales, a different Services mix and the strength in foreign currencies relative to the U.S.

Year-over-year Services gross margin percentage increased during the second quarter and first six months of 2021 due primarily to a different Services mix, higher leverage and the strength in foreign currencies relative to the U.S.

| Q2 2021 Form 10-Q | 26

Operating Expenses

Operating expenses for the three months ended December 26, 2020 and December 28, 2019 were as follows (dollars in millions):

Three Months Ended

2020 December 28,

Operating expenses for the three- and six-month periods ended March 27, 2021 and March 28, 2020 were as follows (dollars in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

Research and development $ 5,262 $ 4,565 $ 10,425 $ 9,016

4 unchanged sentences

Percentage of total net sales 12 % 16 % 11 % 13 %

| Q1 2021 Form 10-Q | 25

Research and Development

The growth in research and development (“R&D”) expense during the first quarter of 2021 compared to the same quarter in 2020 was driven primarily by increases in headcount-related expenses.

The growth in research and development (“R&D”) expense during the second quarter and first six months of 2021 compared to the same periods in 2020 was driven primarily by increases in headcount-related expenses.

The Company continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace, and to the development of new and updated products and services that are central to the Company’s core business strategy.

Selling, General and Administrative

The growth in selling, general and administrative expense during the first quarter of 2021 compared to the same quarter in 2020 was driven primarily by increases in headcount-related expenses and higher variable selling expenses.

The growth in selling, general and administrative expense during the second quarter and first six months of 2021 compared to the same periods in 2020 was driven primarily by increases in headcount-related expenses and higher variable selling expenses.

Other Income/(Expense), Net

Other income/(expense), net (“OI&E”) for the three months ended December 26, 2020 and December 28, 2019 was as follows (dollars in millions):

Three Months Ended

2020 December 28,

Other income/(expense), net (“OI&E”) for the three- and six-month periods ended March 27, 2021 and March 28, 2020 was as follows (dollars in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 Change March 27,

2021 March 28,

Interest and dividend income $ 718 $ 1,049 $ 1,465 $ 2,094

2 unchanged sentences

Total other income/(expense), net $ 508 $ 282 80 % $ 553 $ 631 (12) %

OI&E decreased during the first quarter of 2021 compared to the same quarter in 2020 due primarily to lower interest income and an adjustment to the carrying value of a non-marketable security, partially offset by lower interest expense.

The weighted-average interest rate earned by the Company on its cash, cash equivalents and marketable securities was 1.49% and 2.08% in the first quarter of 2021 and 2020, respectively.

OI&E increased during the second quarter of 2021 compared to the second quarter of 2020 due primarily to impairments of marketable and non-marketable securities in 2020 and a favorable carrying value adjustment of non-marketable securities in 2021, partially offset by lower interest income in 2021.

OI&E decreased during the first six months of 2021 compared to the same period in 2020 due primarily to lower interest income in 2021, partially offset by impairments of marketable and non-marketable securities in 2020 and lower interest expense in 2021.

The weighted-average interest rate earned by the Company on its cash, cash equivalents and marketable securities was 1.37% and 2.01% in the second quarter of 2021 and 2020, respectively, and 1.43% and 2.05% in the first six months of 2021 and 2020, respectively.

| Q2 2021 Form 10-Q | 27

Provision for Income Taxes

Provision for income taxes, effective tax rate and statutory federal income tax rate for the three months ended December 26, 2020 and December 28, 2019 were as follows (dollars in millions):

Three Months Ended

2020 December 28,

Provision for income taxes, effective tax rate and statutory federal income tax rate for the three- and six-month periods ended March 27, 2021 and March 28, 2020 were as follows (dollars in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

Provision for income taxes $ 4,381 $ 1,886 $ 9,205 $ 5,568

1 unchanged sentence

Statutory federal income tax rate 21 % 21 % 21 % 21 %

The Company’s effective tax rate for the first quarter of 2021 was lower than the statutory federal income tax rate due primarily to lower tax rates on foreign earnings and tax benefits from share-based compensation.

The Company’s effective tax rate for the first quarter of 2021 was relatively flat compared to the same quarter in 2020.

| Q1 2021 Form 10-Q | 26

The Company’s effective tax rate for the second quarter of 2021 was lower than the statutory federal income tax rate due primarily to lower taxes on foreign earnings.

The Company’s effective tax rate for the first six months of 2021 was lower than the statutory federal income tax rate due primarily to lower taxes on foreign earnings and tax benefits from share-based compensation.

The Company’s effective tax rate for the second quarter of 2021 was higher compared to the second quarter of 2020 due primarily to higher taxes on foreign earnings and a lower impact of the U.S.

federal R&D tax credit.

The Company’s effective tax rate for the first six months of 2021 was higher compared to the same period in 2020 due primarily to higher taxes on foreign earnings, partially offset by higher tax benefits from share-based compensation.

Liquidity and Capital Resources

The following tables present selected financial information and statistics as of December 26, 2020 and September 26, 2020 and for the first three months of 2021 and 2020 (in millions):

The following tables present selected financial information and statistics as of March 27, 2021 and September 26, 2020 and for the first six months of 2021 and 2020 (in millions):

2021 September 26,

5 unchanged sentences

Working capital $ 15,080 $ 38,321

Three Months Ended

2020 December 28,

Six Months Ended

2021 March 28,

Cash generated by operating activities $ 62,744 $ 43,827

1 unchanged sentence

Cash used in financing activities $ (43,575) $ (46,347)

(1) As of December 26, 2020 and September 26, 2020, total marketable securities included $19.5 billion and $18.6 billion, respectively, that was restricted from general use, related to the State Aid Decision (refer to Note 5, “Income Taxes” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q) and other agreements.

(1) As of March 27, 2021 and September 26, 2020, total marketable securities included $19.0 billion and $18.6 billion, respectively, that was restricted from general use, related to the State Aid Decision (refer to Note 5, “Income Taxes” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q) and other agreements.

In connection with the State Aid Decision, as of December 26, 2020, the adjusted recovery amount of €12.9 billion plus interest of €1.2 billion was funded into escrow, where it will remain restricted from general use pending the conclusion of all legal proceedings.

In connection with the State Aid Decision, as of March 27, 2021, the adjusted recovery amount of €12.9 billion plus interest of €1.2 billion was funded into escrow, where it will remain restricted from general use pending the conclusion of all legal proceedings.

Further information regarding the State Aid Decision can be found in Part I, Item 1 of this Form 10-Q in the Notes to Condensed Consolidated Financial Statements in Note 5, “Income Taxes.”

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The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.

During the three months ended December 26, 2020, cash generated by operating activities of $38.8 billion was a result of $28.8 billion of net income, non-cash adjustments to net income of $4.7 billion and an increase in the net change in operating assets and liabilities of $5.4 billion.

Cash used in investing activities of $8.6 billion during the three months ended December 26, 2020 consisted primarily of cash used for purchases of marketable securities, net of maturities and sales, of $5.3 billion and cash used to acquire property, plant and equipment of $3.5 billion.

Cash used in financing activities of $32.2 billion during the three months ended December 26, 2020 consisted primarily of cash used to repurchase common stock of $24.8 billion, cash used to pay dividends and dividend equivalents of $3.6 billion, cash used for taxes related to net share settlement of equity awards of $2.9 billion, and cash used to repay term debt of $1.0 billion.

During the three months ended December 28, 2019, cash generated by operating activities of $30.5 billion was a result of $22.2 billion of net income, non-cash adjustments to net income of $4.0 billion and an increase in the net change in operating assets and liabilities of $4.2 billion.

Cash used in investing activities of $13.7 billion during the three months ended December 28, 2019 consisted primarily of cash used for purchases of marketable securities, net of sales and maturities, of $10.4 billion and cash used to acquire property, plant and equipment of $2.1 billion.

Cash used in financing activities of $25.4 billion during the three months ended December 28, 2019 consisted primarily of cash used to repurchase common stock of $20.7 billion, cash used to pay dividends and dividend equivalents of $3.5 billion and cash used to repay term debt of $1.0 billion, partially offset by net proceeds from the issuance of term debt of $2.2 billion.

| Q2 2021 Form 10-Q | 28

During the six months ended March 27, 2021, cash generated by operating activities of $62.7 billion was a result of $52.4 billion of net income, non-cash adjustments to net income of $8.8 billion and an increase in the net change in operating assets and liabilities of $1.6 billion.

Cash used in investing activities of $19.0 billion during the six months ended March 27, 2021 consisted primarily of cash used for purchases of marketable securities, net of maturities and sales, of $13.2 billion and cash used to acquire property, plant and equipment of $5.8 billion.

Cash used in financing activities of $43.6 billion during the six months ended March 27, 2021 consisted primarily of cash used to repurchase common stock of $43.3 billion, cash used to pay dividends and dividend equivalents of $7.1 billion and cash used to repay or redeem term debt of $4.5 billion, partially offset by net proceeds from issuance of term debt of $13.9 billion.

During the six months ended March 28, 2020, cash generated by operating activities of $43.8 billion was a result of $33.5 billion of net income, non-cash adjustments to net income of $8.1 billion and an increase in the net change in operating assets and liabilities of $2.2 billion.

Cash used in investing activities of $4.7 billion during the six months ended March 28, 2020 consisted primarily of cash used to acquire property, plant and equipment of $4.0 billion, partially offset by proceeds from maturities and sales of marketable securities, net of purchases, of $1.0 billion.

Cash used in financing activities of $46.3 billion during the six months ended March 28, 2020 consisted primarily of cash used to repurchase common stock of $39.3 billion, cash used to pay dividends and dividend equivalents of $6.9 billion and cash used to repay or redeem term debt of $5.3 billion, partially offset by net proceeds from commercial paper and repurchase agreement of $4.1 billion and net proceeds from issuance of term debt of $2.2 billion.

The Company issues unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program.

The Company uses the net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases.

As of December 26, 2020, the Company had $5.0 billion of Commercial Paper outstanding, with a weighted-average interest rate of 0.10% and maturities generally less than nine months.

| Q1 2021 Form 10-Q | 27

As of December 26, 2020, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $105.9 billion (collectively the “Notes”).

During the first three months of 2021, the Company repaid $1.0 billion of Notes.

As of March 27, 2021, the Company had $5.0 billion of Commercial Paper outstanding, with a weighted-average interest rate of 0.06% and maturities generally less than nine months.

As of March 27, 2021, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $116.0 billion (collectively the “Notes”).

During the first six months of 2021, the Company issued $13.9 billion and repaid or redeemed $4.5 billion of Notes.

The Company has entered, and in the future may enter, into interest rate swaps to manage interest rate risk on the Notes.

1 unchanged sentence

Further information regarding the Company’s debt issuances and related hedging activity can be found in Part I, Item 1 of this Form 10-Q in the Notes to Condensed Consolidated Financial Statements in Note 3, “Financial Instruments” and Note 6, “Debt.”

Capital Return Program

As of December 26, 2020, the Company was authorized to purchase up to $225 billion of the Company’s common stock under a share repurchase program, of which $192.6 billion had been utilized.

During the three months ended December 26, 2020, the Company repurchased 200 million shares of its common stock for $24.0 billion.

The Company’s share repurchase program does not obligate it to acquire any specific number of shares.

Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

As of December 26, 2020, the Company’s quarterly cash dividend was $0.205 per share.

Capital Return

As of March 27, 2021, the Company was authorized to purchase up to $225 billion of the Company’s common stock under a share repurchase program (the “Program”).

During the six months ended March 27, 2021, the Company repurchased 347 million shares of its common stock for $43.0 billion, bringing the total utilization under the Program to $211.6 billion.

On April 28, 2021, the Company announced the Board of Directors increased the Program authorization by $90 billion.

The Program does not obligate the Company to acquire any specific number of shares.

Under the Program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

On April 28, 2021, the Company also announced the Board of Directors raised the Company’s quarterly cash dividend from $0.205 to $0.22 per share, beginning with the dividend to be paid during the third quarter of 2021.

The Company intends to increase its dividend on an annual basis, subject to declaration by the Board of Directors.

2 unchanged sentences

The Company’s retail store and other facility leases typically have original terms not exceeding 10 years and generally contain multi-year renewal options.

The Company’s total fixed lease payment obligation of $13.0 billion as of December 26, 2020 included future payments under leases that had commenced as of December 26, 2020, and were therefore recorded on the Company’s Condensed Consolidated Balance Sheet, as well as leases that had been signed but not yet commenced as of December 26, 2020.

The Company’s total fixed lease payment obligation of $13.1 billion as of March 27, 2021 included future payments under leases that had commenced as of March 27, 2021, and were therefore recorded on the Company’s Condensed Consolidated Balance Sheet, as well as leases that had been signed but not yet commenced as of March 27, 2021.

| Q2 2021 Form 10-Q | 29

Manufacturing Purchase Obligations

2 unchanged sentences

The Company also obtains individual components for its products from a wide variety of individual suppliers.

As of December 26, 2020, the Company expects to pay $45.8 billion under manufacturing-related supplier arrangements, which are primarily noncancelable.

As of March 27, 2021, the Company expects to pay $35.4 billion under manufacturing-related supplier arrangements, which are primarily noncancelable.

Other Purchase Obligations

The Company’s other purchase obligations primarily consist of noncancelable obligations to acquire capital assets, including product tooling and manufacturing process equipment, and noncancelable obligations related to advertising, content creation and Internet and telecommunications services.

As of December 26, 2020, the Company had other purchase obligations of $7.8 billion.

As of March 27, 2021, the Company had other purchase obligations of $8.6 billion.

Deemed Repatriation Tax Payable

As of December 26, 2020, the balance of the deemed repatriation tax payable imposed by the U.S.

As of March 27, 2021, the balance of the deemed repatriation tax payable imposed by the U.S.

Tax Cuts and Jobs Act (the “Act”) was $27.8 billion, of which $25.1 billion was included in other non-current liabilities in the Company’s Condensed Consolidated Balance Sheet.

2 unchanged sentences

The Company’s remaining other non-current liabilities primarily consist of items for which the Company is unable to make a reasonably reliable estimate of the timing or amount of payments.

| Q1 2021 Form 10-Q | 28

Critical Accounting Policies and Estimates

6 unchanged sentences

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the Company’s market risk during the first three months of 2021.

There have been no material changes to the Company’s market risk during the first six months of 2021.

For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the 2020 Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis