What changed in this filing

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Item 1. Financial Statements

2021-07-28 compared with 2021-04-29 · 132 added, 131 removed, 664 unchanged (28% of the section changed)

2 unchanged sentences

(In millions, except number of shares which are reflected in thousands and per share amounts)

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

Three Months Ended Nine Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Products $ 63,948 $ 46,529 $ 232,309 $ 170,598

25 unchanged sentences

(In millions)

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

Three Months Ended Nine Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

$ 21,744 $ 11,253 $ 74,129 $ 44,738

68 unchanged sentences

(In millions, except per share amounts)

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

Three Months Ended Nine Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Total shareholders’ equity, beginning balances $ 69,178 $ 78,425 $ 65,339 $ 90,488

2 unchanged sentences

Common stock issued

561 428 561 430

Common stock withheld related to net share settlement of equity awards

22 unchanged sentences

(In millions)

Six Months Ended

2021 March 28,

Nine Months Ended

2021 June 27,

Cash, cash equivalents and restricted cash, beginning balances $ 39,789 $ 50,224

4 unchanged sentences

Share-based compensation expense 5,961 5,105

Deferred income tax benefit ( 207 ) ( 651 )

Deferred income tax expense/(benefit) ( 737 ) 182

Other ( 689 ) ( 94 )

24 unchanged sentences

Proceeds from commercial paper, net 3,022 31

Proceeds from repurchase agreement — 2,556

Proceeds from repurchase agreements — 5,165

Other ( 72 ) ( 120 )

Cash used in financing activities ( 72,971 ) ( 65,463 )

Increase/(Decrease) in cash, cash equivalents and restricted cash 217 ( 7,175 )

Decrease in cash, cash equivalents and restricted cash ( 4,513 ) ( 15,185 )

Cash, cash equivalents and restricted cash, ending balances $ 35,276 $ 35,039

31 unchanged sentences

Earnings Per Share

The following table shows the computation of basic and diluted earnings per share for the three- and six-month periods ended March 27, 2021 and March 28, 2020 (net income in millions and shares in thousands):

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

The following table shows the computation of basic and diluted earnings per share for the three- and nine-month periods ended June 26, 2021 and June 27, 2020 (net income in millions and shares in thousands):

Three Months Ended Nine Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Net income $ 21,744 $ 11,253 $ 74,129 $ 44,738

37 unchanged sentences

Deferred Revenue

As of March 27, 2021 and September 26, 2020, the Company had total deferred revenue of $ 11.9 billion and $ 10.2 billion, respectively.

As of March 27, 2021, the Company expects 64 % of total deferred revenue to be realized in less than a year, 26 % within one-to-two years, 8 % within two-to-three years and 2 % in greater than three years.

As of June 26, 2021 and September 26, 2020, the Company had total deferred revenue of $ 12.0 billion and $ 10.2 billion, respectively.

As of June 26, 2021, the Company expects 64 % of total deferred revenue to be realized in less than a year, 26 % within one-to-two years, 8 % within two-to-three years and 2 % in greater than three years.

| Q3 2021 Form 10-Q | 7

Disaggregated Revenue

Net sales disaggregated by significant products and services for the three- and six-month periods ended March 27, 2021 and March 28, 2020 were as follows (in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

Net sales disaggregated by significant products and services for the three- and nine-month periods ended June 26, 2021 and June 27, 2020 were as follows (in millions):

Three Months Ended Nine Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

$ 39,570 $ 26,418 $ 153,105 $ 111,337

10 unchanged sentences

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

(4) Includes $ 2.7 billion of revenue recognized in the three months ended March 27, 2021 that was included in deferred revenue as of December 26, 2020, $ 1.9 billion of revenue recognized in the three months ended March 28, 2020 that was included in deferred revenue as of December 28, 2019, $ 4.1 billion of revenue recognized in the six months ended March 27, 2021 that was included in deferred revenue as of September 26, 2020, and $ 3.0 billion of revenue recognized in the six months ended March 28, 2020 that was included in deferred revenue as of September 28, 2019.

The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 11, “Segment Information and Geographic Data” for the three- and six-month periods ended March 27, 2021 and March 28, 2020.

(4) Includes $ 3.0 billion of revenue recognized in the three months ended June 26, 2021 that was included in deferred revenue as of March 27, 2021, $ 2.1 billion of revenue recognized in the three months ended June 27, 2020 that was included in deferred revenue as of March 28, 2020, $ 5.5 billion of revenue recognized in the nine months ended June 26, 2021 that was included in deferred revenue as of September 26, 2020, and $ 4.0 billion of revenue recognized in the nine months ended June 27, 2020 that was included in deferred revenue as of September 28, 2019.

The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 11, “Segment Information and Geographic Data” for the three- and nine-month periods ended June 26, 2021 and June 27, 2020.

| Q3 2021 Form 10-Q | 8

1 unchanged sentence

Cash, Cash Equivalents and Marketable Securities

The following tables show the Company’s cash and marketable securities by significant investment category as of March 27, 2021 and September 26, 2020 (in millions):

March 27, 2021

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of June 26, 2021 and September 26, 2020 (in millions):

June 26, 2021

Cost Unrealized

46 unchanged sentences

(2) Level 2 fair value estimates are based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

(3) 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”) and other agreements.

(3) As of June 26, 2021 and September 26, 2020, total marketable securities included $ 18.9 billion and $ 18.6 billion, respectively, that was restricted from general use, related to the State Aid Decision (refer to Note 5, “Income Taxes”) and other agreements.

| Q3 2021 Form 10-Q | 9

The Company may sell certain of its marketable debt securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation.

The following table shows the fair value of the Company’s non-current marketable debt securities, by contractual maturity, as of March 27, 2021 (in millions):

The following table shows the fair value of the Company’s non-current marketable debt securities, by contractual maturity, as of June 26, 2021 (in millions):

Due after 1 year through 5 years $ 83,577

7 unchanged sentences

The Company holds non-marketable equity securities of certain privately held companies without readily determinable fair values.

As of March 27, 2021 and September 26, 2020, the Company’s non-marketable equity securities had a carrying value of $ 2.7 billion and $ 2.8 billion, respectively.

As of both June 26, 2021 and September 26, 2020, the Company’s non-marketable equity securities had a carrying value of $ 2.8 billion.

Restricted Cash

A reconciliation of the Company’s cash and cash equivalents in the Condensed Consolidated Balance Sheets to cash, cash equivalents and restricted cash in the Condensed Consolidated Statements of Cash Flows as of March 27, 2021 and September 26, 2020 is as follows (in millions):

A reconciliation of the Company’s cash and cash equivalents in the Condensed Consolidated Balance Sheets to cash, cash equivalents and restricted cash in the Condensed Consolidated Statements of Cash Flows as of June 26, 2021 and September 26, 2020 is as follows (in millions):

2021 September 26,

19 unchanged sentences

The Company may designate these instruments as either cash flow or fair value hedges.

As of March 27, 2021, the Company’s hedged term debt– and marketable securities–related foreign currency transactions are expected to be recognized within 21 years.

As of June 26, 2021, the Company’s hedged term debt– and marketable securities–related foreign currency transactions are expected to be recognized within 21 years.

| Q3 2021 Form 10-Q | 10

3 unchanged sentences

The Company designates these instruments as either cash flow or fair value hedges.

As of March 27, 2021, the Company’s hedged interest rate transactions are expected to be recognized within seven years .

As of June 26, 2021, the Company’s hedged interest rate transactions are expected to be recognized within six years .

Cash Flow Hedges

14 unchanged sentences

For foreign exchange forward contracts designated as fair value hedges, the forward carry component is excluded from the assessment of hedge effectiveness and recognized in OI&E on a straight-line basis over the life of the hedge.

Amounts excluded from the effectiveness assessment of fair value hedges and recognized in OI&E were gains of $ 60 million and $ 142 million for the three- and six-month periods ended March 27, 2021, respectively, and were gains of $ 126 million and $ 254 million for the three- and six-month periods ended March 28, 2020, respectively.

Amounts excluded from the effectiveness assessment of fair value hedges and recognized in OI&E were gains of $ 57 million and $ 199 million for the three- and nine-month periods ended June 26, 2021, respectively, and were gains of $ 119 million and $ 373 million for the three- and nine-month periods ended June 27, 2020, respectively.

Changes in the fair value of amounts excluded from the assessment of hedge effectiveness are recognized in OCI.

4 unchanged sentences

The Company’s accounting treatment for these derivative instruments is based on its hedge designation.

The following tables show the Company’s derivative instruments at gross fair value as of March 27, 2021 and September 26, 2020 (in millions):

March 27, 2021

The following tables show the Company’s derivative instruments at gross fair value as of June 26, 2021 and September 26, 2020 (in millions):

June 26, 2021

Fair Value of

22 unchanged sentences

The Company classifies cash flows related to derivative financial instruments as operating activities in its Condensed Consolidated Statements of Cash Flows.

The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow and net investment hedges in OCI and the Condensed Consolidated Statements of Operations for the three- and six-month periods ended March 27, 2021 and March 28, 2020 (in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow and net investment hedges in OCI and the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended June 26, 2021 and June 27, 2020 (in millions):

Three Months Ended Nine Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Gains/(Losses) recognized in OCI – included in effectiveness assessment:

11 unchanged sentences

| Q3 2021 Form 10-Q | 12

Amounts excluded from the effectiveness assessment of the Company’s hedges and recognized in OCI were a gain of $ 41 million and a loss of $ 97 million for the three- and six-month periods ended March 27, 2021, respectively, and were gains of $ 258 million and $ 169 million for the three- and six-month periods ended March 28, 2020, respectively.

The following tables show information about the Company’s derivative instruments designated as fair value hedges and the related hedged items for the three- and six-month periods ended March 27, 2021 and March 28, 2020 and as of March 27, 2021 and September 26, 2020 (in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

Amounts excluded from the effectiveness assessment of the Company’s hedges and recognized in OCI were a gain of $ 63 million and a loss of $ 34 million for the three- and nine-month periods ended June 26, 2021, respectively, and were losses of $ 220 million and $ 51 million for the three- and nine-month periods ended June 27, 2020, respectively.

The following tables show information about the Company’s derivative instruments designated as fair value hedges and the related hedged items for the three- and nine-month periods ended June 26, 2021 and June 27, 2020 and as of June 26, 2021 and September 26, 2020 (in millions):

Three Months Ended Nine Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Gains/(Losses) on derivative instruments (1) :

18 unchanged sentences

(3) The carrying amounts of fixed-rate debt instruments that are designated as hedged items in fair value hedges are included in current term debt and non-current term debt in the Condensed Consolidated Balance Sheets.

The following table shows the notional amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of March 27, 2021 and September 26, 2020 (in millions):

March 27, 2021 September 26, 2020

The following table shows the notional amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of June 26, 2021 and September 26, 2020 (in millions):

June 26, 2021 September 26, 2020

Amount Credit Risk

15 unchanged sentences

The Company presents its derivative assets and derivative liabilities at their gross fair values in its Condensed Consolidated Balance Sheets.

As of March 27, 2021 and September 26, 2020, the net cash collateral received by the Company related to derivative instruments under its collateral security arrangements was $ 935 million and $ 875 million, respectively.

As of June 26, 2021 and September 26, 2020, the net cash collateral received by the Company related to derivative instruments under its collateral security arrangements was $ 576 million and $ 875 million, respectively.

The Company includes gross collateral posted and received in other current assets and other current liabilities in the Condensed Consolidated Balance Sheets, respectively.

Under master netting arrangements with the respective counterparties to the Company’s derivative contracts, the Company is allowed to net settle transactions with a single net amount payable by one party to the other.

As of March 27, 2021 and September 26, 2020, the potential effects of these rights of set-off associated with the Company’s derivative contracts, including the effects of collateral, would be a reduction to both derivative assets and derivative liabilities of $ 2.4 billion and $ 2.8 billion, respectively, resulting in net derivative liabilities of $ 233 million and $ 312 million, respectively.

As of June 26, 2021 and September 26, 2020, the potential effects of these rights of set-off associated with the Company’s derivative contracts, including the effects of collateral, would be a reduction to both derivative assets and derivative liabilities of $ 2.2 billion and $ 2.8 billion, respectively, resulting in a net derivative asset of $ 6 million and a net derivative liability of $ 312 million, respectively.

Accounts Receivable

6 unchanged sentences

As such, the Company generally does not assume any recourse or credit risk sharing related to any of these arrangements.

As of March 27, 2021, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 13 %.

As of September 26, 2020, the Company had no customers that individually represented 10% or more of total trade receivables.

The Company’s cellular network carriers accounted for 35 % of total trade receivables as of March 27, 2021.

As of both June 26, 2021 and September 26, 2020, the Company had no customers that individually represented 10% or more of total trade receivables.

The Company’s cellular network carriers accounted for 36 % of total trade receivables as of June 26, 2021.

Vendor Non-Trade Receivables

1 unchanged sentence

The Company purchases these components directly from suppliers.

As of March 27, 2021, the Company had one vendor that represented 10% or more of total vendor non-trade receivables, which accounted for 65 %.

As of June 26, 2021, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 56 % and 13 %.

As of September 26, 2020, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 57 % and 11 %.

1 unchanged sentence

Note 4 – Condensed Consolidated Financial Statement Details

The following tables show the Company’s condensed consolidated financial statement details as of March 27, 2021 and September 26, 2020 (in millions):

The following tables show the Company’s condensed consolidated financial statement details as of June 26, 2021 and September 26, 2020 (in millions):

Property, Plant and Equipment, Net

12 unchanged sentences

Other Income/(Expense), Net

The following table shows the detail of OI&E for the three- and six-month periods ended March 27, 2021 and March 28, 2020 (in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

The following table shows the detail of OI&E for the three- and nine-month periods ended June 26, 2021 and June 27, 2020 (in millions):

Three Months Ended Nine Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Interest and dividend income $ 719 $ 901 $ 2,184 $ 2,995

4 unchanged sentences

Uncertain Tax Positions

As of March 27, 2021, the total amount of gross unrecognized tax benefits was $ 16.9 billion, of which $ 8.3 billion, if recognized, would impact the Company’s effective tax rate.

The Company had accrued $ 1.6 billion of gross interest and penalties related to income tax matters as of March 27, 2021.

As of June 26, 2021, the total amount of gross unrecognized tax benefits was $ 16.8 billion, of which $ 7.6 billion, if recognized, would impact the Company’s effective tax rate.

The Company had accrued $ 1.6 billion of gross interest and penalties related to income tax matters as of June 26, 2021.

The Company is subject to taxation and files income tax returns in the U.S.

federal jurisdiction and many state and foreign jurisd ictions.

Internal Revenue Service concluded its review of the years 2013 through 2015 in 2018, and all years before 2016 are closed.

Tax years after 2014 remain open in certain major foreign jurisdictions and are subject to examination by the taxing authorities.

Tax years after 2015 for the U.S.

federal jurisdiction, and after 2014 in certain major foreign jurisdictions, remain subject to examination.

The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations.

However, the outcome of tax audits cannot be predicted with certainty.

If any issues addressed in the Company’s tax audits are resolved in a manner inconsistent with its expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.

Although the timing of resolution and/or closure of audits is not certain, the Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease in the next 12 months by as much as $ 3.1 billion.

However, the outcome of tax examinations cannot be predicted with certainty.

If any issues addressed in the Company’s tax examinations are resolved in a manner inconsistent with its expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.

Although the timing of resolution and/or closure of examinations is not certain, the Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease in the next 12 months by as much as $ 2.4 billion.

| Q3 2021 Form 10-Q | 15

11 unchanged sentences

On an annual basis, the Company may request approval from the Irish Minister for Finance to reduce the recovery amount for certain taxes paid to other countries.

As of March 27, 2021, the adjusted recovery amount was € 12.9 billion, excluding interest.

As of June 26, 2021, the adjusted recovery amount was € 12.7 billion, excluding interest.

The adjusted recovery amount plus interest is funded into escrow, where it will remain restricted from general use pending the conclusion of all legal proceedings.

1 unchanged sentence

Note 6 – Debt

Commercial Paper and Repurchase Agreement

Commercial Paper and Repurchase Agreements

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

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

As of both March 27, 2021 and September 26, 2020, the Company had $ 5.0 billion of Commercial Paper outstanding, with maturities generally less than nine months .

The weighted-average interest rate of the Company’s Commercial Paper was 0.06 % and 0.62 % as of March 27, 2021 and September 26, 2020, respectively.

The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for the six months ended March 27, 2021 and March 28, 2020 (in millions):

Six Months Ended

2021 March 28,

As of June 26, 2021 and September 26, 2020, the Company had $ 8.0 billion and $ 5.0 billion of Commercial Paper outstanding, respectively, with maturities generally less than nine months .

The weighted-average interest rate of the Company’s Commercial Paper was 0.04 % and 0.62 % as of June 26, 2021 and September 26, 2020, respectively.

The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for the nine months ended June 26, 2021 and June 27, 2020 (in millions):

Nine Months Ended

2021 June 27,

Maturities 90 days or less:

5 unchanged sentences

Total proceeds from commercial paper, net $ 3,022 $ 31

In the second quarter of 2020, the Company entered into an agreement to sell certain of its marketable securities with a promise to repurchase the securities at a specified time and amount (“Repo”).

Due to the Company’s continuing involvement with the marketable securities, the Company accounted for the Repo as a collateralized borrowing.

As of September 26, 2020, the Repo had been settled.

In 2020, the Company entered into agreements to sell certain of its marketable securities with a promise to repurchase the securities at a specified time and amount (“Repos”).

Due to the Company’s continuing involvement with the marketable securities, the Company accounted for its Repos as collateralized borrowings.

As of September 26, 2020, the Repos had been settled.

| Q3 2021 Form 10-Q | 16

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”).

As of June 26, 2021, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $ 113.2 billion (collectively the “Notes”).

The Notes are senior unsecured obligations and interest is payable in arrears.

The following table provides a summary of the Company’s term debt as of March 27, 2021 and September 26, 2020:

The following table provides a summary of the Company’s term debt as of June 26, 2021 and September 26, 2020:

(calendar year)

March 27, 2021 September 26, 2020

June 26, 2021 September 26, 2020

(in millions)

23 unchanged sentences

The effective interest rates for the Notes include the interest on the Notes, amortization of the discount or premium and, if applicable, adjustments related to hedging.

The Company recognized $ 657 million and $ 1.3 billion of interest cost on its term debt for the three- and six-month periods ended March 27, 2021, respectively.

The Company recognized $ 725 million and $ 1.5 billion of interest cost on its term debt for the three- and six-month periods ended March 28, 2020, respectively.

As of March 27, 2021 and September 26, 2020, the fair value of the Company’s Notes, based on Level 2 inputs, was $ 121.2 billion and $ 117.1 billion, respectively.

The Company recognized $ 657 million and $ 1.9 billion of interest cost on its term debt for the three- and nine-month periods ended June 26, 2021, respectively.

The Company recognized $ 664 million and $ 2.1 billion of interest cost on its term debt for the three- and nine-month periods ended June 27, 2020, respectively.

As of June 26, 2021 and September 26, 2020, the fair value of the Company’s Notes, based on Level 2 inputs, was $ 120.3 billion and $ 117.1 billion, respectively.

Note 7 – Shareholders’ Equity

Share Repurchase Program

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.

As of June 26, 2021, the Company was authorized to purchase up to $ 315 billion of the Company’s common stock under a share repurchase program (the “Program”).

During the nine months ended June 26, 2021, the Company repurchased 515 million shares of its common stock for $ 65.5 billion, including 32 million shares initially delivered under a May 2021 accelerated share repurchase agreement (“ASR”), bringing the total utilization under the Program to $ 234.1 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”).

Under the terms of the Company’s May 2021 ASR, a financial institution committed to deliver shares of the Company’s common stock during the purchase period in exchange for an up-front payment of $ 5.0 billion.

The total number of shares ultimately delivered under the ASR, and therefore the average repurchase price paid per share, is determined based on the volume-weighted average price of the Company’s common stock during the ASR’s purchase period, which will end in or before August 2021.

The shares received are retired in the periods they are delivered, and the up-front payment is accounted for as a reduction to retained earnings in the Company’s Condensed Consolidated Statement of Shareholders’ Equity in the period the payment is made.

| Q3 2021 Form 10-Q | 17

2 unchanged sentences

dollar as their functional currency, net deferred gains and losses on certain derivative instruments accounted for as hedges, and unrealized gains and losses on marketable debt securities classified as available-for-sale.

The following table shows the pre-tax amounts reclassified from AOCI into the Condensed Consolidated Statements of Operations, and the associated financial statement line items, for the three- and six-month periods ended March 27, 2021 and March 28, 2020 (in millions):

Three Months Ended Six Months Ended

Comprehensive Income Components Financial Statement Line Items March 27,

2021 March 28,

2020 March 27,

2021 March 28,

The following table shows the pre-tax amounts reclassified from AOCI into the Condensed Consolidated Statements of Operations, and the associated financial statement line items, for the three- and nine-month periods ended June 26, 2021 and June 27, 2020 (in millions):

Three Months Ended Nine Months Ended

Comprehensive Income Components Financial Statement Line Items June 26,

2021 June 27,

2020 June 26,

2021 June 27,

Unrealized (gains)/losses on derivative instruments:

7 unchanged sentences

Total amounts reclassified from AOCI $ ( 63 ) $ ( 1,403 ) $ 362 $ ( 1,050 )

The following table shows the changes in AOCI by component for the six months ended March 27, 2021 (in millions):

The following table shows the changes in AOCI by component for the nine months ended June 26, 2021 (in millions):

Cumulative Foreign

8 unchanged sentences

Other comprehensive income/(loss) 659 597 ( 792 ) 464

Balances as of March 27, 2021 $ ( 904 ) $ ( 273 ) $ 891 $ ( 286 )

Balances as of June 26, 2021 $ ( 716 ) $ ( 280 ) $ 1,054 $ 58

Note 9 – Benefit Plans

The Company had 718 million shares reserved for future issuance under its stock plans as of March 27, 2021.

The Company had 757 million shares reserved for future issuance under its stock plans as of June 26, 2021.

RSUs granted under the Company’s stock plans generally vest over four years , based on continued employment, and are settled upon vesting in shares of the Company’s common stock on a one -for-one basis.

2 unchanged sentences

Rule 10b5-1 Trading Plans

During the three months ended March 27, 2021, Section 16 officers Katherine L.

During the three months ended June 26, 2021, Section 16 officers Katherine L.

Adams, Timothy D.

Cook, Chris Kondo, Luca Maestri, Deirdre O’Brien and Jeffrey Williams had equity trading plans in place in accordance with Rule 10b5-1(c)(1) under the Exchange Act.

Cook, Luca Maestri, Deirdre O’Brien and Jeffrey Williams had equity trading plans in place in accordance with Rule 10b5-1(c)(1) under the Exchange Act.

An equity trading plan is a written document that pre-establishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including shares acquired under the Company’s employee and director equity plans.

1 unchanged sentence

Restricted Stock Units

A summary of the Company’s RSU activity and related information for the six months ended March 27, 2021 is as follows:

A summary of the Company’s RSU activity and related information for the nine months ended June 26, 2021 is as follows:

(in thousands)

7 unchanged sentences

RSUs canceled ( 10,396 ) $ 67.08

Balance as of March 27, 2021 308,633 $ 68.58 $ 37,409

The fair value as of the respective vesting dates of RSUs was $ 867 million and $ 9.4 billion for the three- and six-month periods ended March 27, 2021, respectively, and was $ 558 million and $ 4.8 billion for the three- and six-month periods ended March 28, 2020, respectively.

Balance as of June 26, 2021 250,972 $ 72.31 $ 33,407

The fair value as of the respective vesting dates of RSUs was $ 7.9 billion and $ 17.3 billion for the three- and nine-month periods ended June 26, 2021, respectively, and was $ 5.0 billion and $ 9.8 billion for the three- and nine-month periods ended June 27, 2020, respectively.

Share-Based Compensation

The following table shows share-based compensation expense and the related income tax benefit included in the Condensed Consolidated Statements of Operations for the three- and six-month periods ended March 27, 2021 and March 28, 2020 (in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

The following table shows share-based compensation expense and the related income tax benefit included in the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended June 26, 2021 and June 27, 2020 (in millions):

Three Months Ended Nine Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Share-based compensation expense $ 1,960 $ 1,698 $ 5,961 $ 5,105

1 unchanged sentence

$ ( 1,319 ) $ ( 740 ) $ ( 3,518 ) $ ( 1,942 )

As of March 27, 2021, the total unrecognized compensation cost related to outstanding RSUs and stock options was $ 16.7 billion, which the Company expects to recognize over a weighted-average period of 2.8 years.

As of June 26, 2021, the total unrecognized compensation cost related to outstanding RSUs and stock options was $ 15.3 billion, which the Company expects to recognize over a weighted-average period of 2.7 years.

Note 10 – Commitments and Contingencies

Accrued Warranty and Guarantees

The following table shows changes in the Company’s accrued warranties and related costs for the three- and six-month periods ended March 27, 2021 and March 28, 2020 (in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

The following table shows changes in the Company’s accrued warranties and related costs for the three- and nine-month periods ended June 26, 2021 and June 27, 2020 (in millions):

Three Months Ended Nine Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Beginning accrued warranty and related costs $ 3,784 $ 3,923 $ 3,354 $ 3,570

20 unchanged sentences

The Company’s unconditional purchase obligations primarily consist of payments for content creation, Internet and telecommunications services and supplier arrangements.

As of March 27, 2021, the Company’s total future payments under noncancelable unconditional purchase obligations having a remaining term in excess of one year were $ 8.2 billion.

As of June 26, 2021, the Company’s total future payments under noncancelable unconditional purchase obligations having a remaining term in excess of one year were $ 8.8 billion.

Contingencies

28 unchanged sentences

On August 11, 2020, a jury returned a verdict against the Company and awarded damages of $ 506 million.

In post-trial proceedings, the damages portion of the verdict was set aside, and the case remains pending further proceedings.

In post-trial proceedings, the damages portion of the verdict was set aside, and a retrial was scheduled for August 2021.

The case remains pending further proceedings.

Note 11 – Segment Information and Geographic Data

16 unchanged sentences

The Company does not include intercompany transfers between segments for management reporting purposes.

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

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

The following table shows information by reportable segment for the three- and nine-month periods ended June 26, 2021 and June 27, 2020 (in millions):

Three Months Ended Nine Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Net sales $ 35,870 $ 27,018 $ 116,486 $ 93,858

11 unchanged sentences

| Q3 2021 Form 10-Q | 21

A reconciliation of the Company’s segment operating income to the Condensed Consolidated Statements of Operations for the three- and six-month periods ended March 27, 2021 and March 28, 2020 is as follows (in millions):

Three Months Ended Six Months Ended

2021 March 28,

2020 March 27,

2021 March 28,

A reconciliation of the Company’s segment operating income to the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended June 26, 2021 and June 27, 2020 is as follows (in millions):

Three Months Ended Nine Months Ended

2021 June 27,

2020 June 26,

2021 June 27,

Segment operating income $ 31,451 $ 19,296 $ 106,048 $ 70,052

4 unchanged sentences

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 1. Financial Statements