What changed in this filing

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Item 1. Financial Statements

2022-07-29 compared with 2022-04-29 · 80 added, 83 removed, 370 unchanged (31% 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

2022 March 27,

2021 March 26,

2022 March 27,

Three Months Ended Nine Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Products $ 63,355 $ 63,948 $ 245,241 $ 232,309

25 unchanged sentences

(In millions)

Three Months Ended Six Months Ended

2022 March 27,

2021 March 26,

2022 March 27,

Three Months Ended Nine Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

$ 19,442 $ 21,744 $ 79,082 $ 74,129

67 unchanged sentences

(In millions, except per share amounts)

Three Months Ended Six Months Ended

2022 March 27,

2021 March 26,

2022 March 27,

Three Months Ended Nine Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Total shareholders’ equity, beginning balances $ 67,399 $ 69,178 $ 63,090 $ 65,339

2 unchanged sentences

Common stock issued

593 561 593 561

Common stock withheld related to net share settlement of equity awards

20 unchanged sentences

(In millions)

Six Months Ended

2022 March 27,

Nine Months Ended

2022 June 26,

Cash, cash equivalents and restricted cash, beginning balances $ 35,929 $ 39,789

32 unchanged sentences

Cash used in financing activities ( 83,955 ) ( 72,971 )

Increase/(Decrease) in cash, cash equivalents and restricted cash ( 6,749 ) 217

Decrease in cash, cash equivalents and restricted cash ( 7,068 ) ( 4,513 )

Cash, cash equivalents and restricted cash, ending balances $ 28,861 $ 35,276

21 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 26, 2022 and March 27, 2021 (net income in millions and shares in thousands):

Three Months Ended Six Months Ended

2022 March 27,

2021 March 26,

2022 March 27,

The following table shows the computation of basic and diluted earnings per share for the three- and nine-month periods ended June 25, 2022 and June 26, 2021 (net income in millions and shares in thousands):

Three Months Ended Nine Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Net income $ 19,442 $ 21,744 $ 79,082 $ 74,129

6 unchanged sentences

Note 2 – Revenue

Net sales disaggregated by significant products and services for the three- and six-month periods ended March 26, 2022 and March 27, 2021 were as follows (in millions):

Three Months Ended Six Months Ended

2022 March 27,

2021 March 26,

2022 March 27,

Net sales disaggregated by significant products and services for the three- and nine-month periods ended June 25, 2022 and June 26, 2021 were as follows (in millions):

Three Months Ended Nine Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

$ 40,665 $ 39,570 $ 162,863 $ 153,105

7 unchanged sentences

(1) Products net sales include amortization of the deferred value of unspecified software upgrade rights, which are bundled in the sales price of the respective product.

(2) Wearables, Home and Accessories net sales include sales of AirPods ® , Apple TV ® , Apple Watch ® , Beats ® products, HomePod mini ® , iPod touch ® and accessories.

(2) Wearables, Home and Accessories net sales include sales of AirPods ® , Apple TV ® , Apple Watch ® , Beats ® products, HomePod mini ® and accessories.

(3) Services net sales include sales from the Company’s advertising, AppleCare ® , cloud, digital content, payment and other services.

Services net sales also include amortization of the deferred value of services bundled in the sales price of certain products.

(4) Includes $ 3.0 billion of revenue recognized in the three months ended March 26, 2022 that was included in deferred revenue as of December 25, 2021, $ 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, $ 4.8 billion of revenue recognized in the six months ended March 26, 2022 that was included in deferred revenue as of September 25, 2021, and $ 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.

The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 9, “Segment Information and Geographic Data” for the three- and six-month periods ended March 26, 2022 and March 27, 2021, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales.

As of March 26, 2022 and September 25, 2021, the Company had total deferred revenue of $ 12.5 billion and $ 11.9 billion, respectively.

As of March 26, 2022, the Company expects 63 % of total deferred revenue to be realized in less than a year, 27 % within one-to-two years, 8 % within two-to-three years and 2 % in greater than three years.

(4) Includes $ 3.1 billion of revenue recognized in the three months ended June 25, 2022 that was included in deferred revenue as of March 26, 2022, $ 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, $ 6.3 billion of revenue recognized in the nine months ended June 25, 2022 that was included in deferred revenue as of September 25, 2021, and $ 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.

The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 9, “Segment Information and Geographic Data” for the three- and nine-month periods ended June 25, 2022 and June 26, 2021, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales.

As of June 25, 2022 and September 25, 2021, the Company had total deferred revenue of $ 12.2 billion and $ 11.9 billion, respectively.

As of June 25, 2022, the Company expects 63 % of total deferred revenue to be realized in less than a year, 27 % within one-to-two years, 8 % within two-to-three years and 2 % in greater than three years.

| Q3 2022 Form 10-Q | 7

1 unchanged sentence

Cash, Cash Equivalents and Marketable Securities

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of March 26, 2022 and September 25, 2021 (in millions):

March 26, 2022

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of June 25, 2022 and September 25, 2021 (in millions):

June 25, 2022

Cost Unrealized

9 unchanged sentences

Level 2 (2) :

Equity securities 1,527 — ( 1,132 ) 395 — 395 —

Treasury securities 25,296 — ( 1,328 ) 23,968 91 3,511 20,366

37 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 26, 2022 and September 25, 2021, total marketable securities included $ 15.4 billion and $ 17.9 billion, respectively, that were restricted from general use, related to the European Commission decision finding that Ireland granted state aid to the Company, and other agreements.

(3) As of June 25, 2022 and September 25, 2021, total marketable securities included $ 14.1 billion and $ 17.9 billion, respectively, that were restricted from general use, related to the European Commission decision finding that Ireland granted state aid to the Company, and other agreements.

| Q3 2022 Form 10-Q | 8

The following table shows the fair value of the Company’s non-current marketable debt securities, by contractual maturity, as of March 26, 2022 (in millions):

The following table shows the fair value of the Company’s non-current marketable debt securities, by contractual maturity, as of June 25, 2022 (in millions):

Due after 1 year through 5 years $ 92,970

11 unchanged sentences

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

As of March 26, 2022, the Company’s hedged term debt– and marketable securities–related foreign currency transactions are expected to be recognized within 20 years.

As of June 25, 2022, the Company’s hedged term debt– and marketable securities–related foreign currency transactions are expected to be recognized within 20 years.

The Company may also enter into derivative instruments that are not designated as accounting hedges to protect gross margins from certain fluctuations in foreign currency exchange rates, as well as to offset a portion of the foreign currency exchange gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies.

2 unchanged sentences

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

The notional amounts of the Company’s outstanding derivative instruments as of March 26, 2022 and September 25, 2021 were as follows (in millions):

The notional amounts of the Company’s outstanding derivative instruments as of June 25, 2022 and September 25, 2021 were as follows (in millions):

2022 September 25,

4 unchanged sentences

Foreign exchange contracts $ 84,506 $ 126,918

The gross fair values of the Company’s derivative assets and liabilities were not material as of March 26, 2022 and September 25, 2021.

The gains and losses recognized in other comprehensive income/(loss) and amounts reclassified from accumulated other comprehensive income/(loss) to net income for the Company’s derivative instruments designated as cash flow hedges were not material in the three- and six-month periods ended March 26, 2022 and March 27, 2021.

The gross fair values of the Company’s derivative assets and liabilities were not material as of June 25, 2022 and September 25, 2021.

The gains and losses recognized in other comprehensive income/(loss) and amounts reclassified from accumulated other comprehensive income/(loss) to net income for the Company’s derivative instruments designated as cash flow hedges were not material in the three- and nine-month periods ended June 25, 2022 and June 26, 2021.

| Q3 2022 Form 10-Q | 9

The carrying amounts of the Company’s hedged items in fair value hedges as of March 26, 2022 and September 25, 2021 were as follows (in millions):

The carrying amounts of the Company’s hedged items in fair value hedges as of June 25, 2022 and September 25, 2021 were as follows (in millions):

2022 September 25,

2 unchanged sentences

Current and non-current term debt $ ( 19,281 ) $ ( 17,857 )

The gains and losses on the Company’s derivative instruments designated as fair value hedges and the related hedged item adjustments were not material in the three- and six-month periods ended March 26, 2022 and March 27, 2021.

The gains and losses on the Company’s derivative instruments designated as fair value hedges and the related hedged item adjustments were not material in the three- and nine-month periods ended June 25, 2022 and June 26, 2021.

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.

The Company’s cellular network carriers accounted for 36 % and 42 % of total trade receivables as of March 26, 2022 and September 25, 2021, respectively.

The Company’s cellular network carriers accounted for 36 % and 42 % of total trade receivables as of June 25, 2022 and September 25, 2021, respectively.

Vendor Non-Trade Receivables

1 unchanged sentence

The Company purchases these components directly from suppliers.

As of March 26, 2022, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 52 % and 12 %.

As of June 25, 2022, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 54 % and 12 % .

As of September 25, 2021, the Company had three vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 52 %, 11 % and 11 %.

Note 4 – Condensed Consolidated Financial Statement Details

The following tables show the Company’s condensed consolidated financial statement details as of March 26, 2022 and September 25, 2021 (in millions):

The following tables show the Company’s condensed consolidated financial statement details as of June 25, 2022 and September 25, 2021 (in millions):

Property, Plant and Equipment, Net

10 unchanged sentences

Other Income/(Expense), Net

The following table shows the detail of other income/(expense), net for the three- and six-month periods ended March 26, 2022 and March 27, 2021 (in millions):

Three Months Ended Six Months Ended

2022 March 27,

2021 March 26,

2022 March 27,

The following table shows the detail of other income/(expense), net for the three- and nine-month periods ended June 25, 2022 and June 26, 2021 (in millions):

Three Months Ended Nine Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Interest and dividend income $ 722 $ 719 $ 2,072 $ 2,184

6 unchanged sentences

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

As of March 26, 2022 and September 25, 2021, the Company had $ 7.0 billion and $ 6.0 billion of Commercial Paper outstanding, 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 26, 2022 and March 27, 2021 (in millions):

Six Months Ended

2022 March 27,

As of June 25, 2022 and September 25, 2021, the Company had $ 11.0 billion and $ 6.0 billion of Commercial Paper outstanding, 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 25, 2022 and June 26, 2021 (in millions):

Nine Months Ended

2022 June 26,

Maturities 90 days or less:

3 unchanged sentences

Repayments of commercial paper ( 5,144 ) ( 3,716 )

Repayments of commercial paper, net ( 3,953 ) ( 1,986 )

Proceeds from commercial paper, net 587 277

Total proceeds from commercial paper, net $ 4,970 $ 3,022

As of March 26, 2022 and September 25, 2021, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate carrying amount of $ 113.0 billion and $ 118.7 billion, respectively (collectively the “Notes”).

As of March 26, 2022 and September 25, 2021, the fair value of the Company’s Notes, based on Level 2 inputs, was $ 110.5 billion and $ 125.3 billion, respectively.

As of June 25, 2022 and September 25, 2021, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate carrying amount of $ 108.7 billion and $ 118.7 billion, respectively (collectively the “Notes”).

As of June 25, 2022 and September 25, 2021, the fair value of the Company’s Notes, based on Level 2 inputs, was $ 101.0 billion and $ 125.3 billion, respectively.

Note 6 – Shareholders’ Equity

Share Repurchase Program

During the six months ended March 26, 2022, the Company repurchased 266 million shares of its common stock for $ 43.3 billion under a share repurchase program authorized by the Board of Directors (the “Program”), including 35 million shares delivered under accelerated share repurchase agreements totaling $ 6.0 billion that were entered into in November 2021.

During the nine months ended June 25, 2022, the Company repurchased 408 million shares of its common stock for $ 65.0 billion under a share repurchase program authorized by the Board of Directors (the “Program”), including 35 million shares delivered under accelerated share repurchase agreements totaling $ 6.0 billion that were entered into in November 2021.

The Program does not obligate the Company to acquire a minimum amount of shares.

3 unchanged sentences

Restricted Stock Units

A summary of the Company’s restricted stock unit (“RSU”) activity and related information for the six months ended March 26, 2022 is as follows:

A summary of the Company’s restricted stock unit (“RSU”) activity and related information for the nine months ended June 25, 2022 is as follows:

(in thousands)

7 unchanged sentences

RSUs canceled ( 12,986 ) $ 98.26

Balance as of March 26, 2022 246,464 $ 100.84 $ 43,062

The fair value as of the respective vesting dates of RSUs was $ 1.0 billion and $ 9.5 billion for the three- and six-month periods ended March 26, 2022, respectively, and was $ 867 million and $ 9.4 billion for the three- and six-month periods ended March 27, 2021, respectively.

Balance as of June 25, 2022 202,522 $ 107.35 $ 28,689

The fair value as of the respective vesting dates of RSUs was $ 7.8 billion and $ 17.3 billion for the three- and nine-month periods ended June 25, 2022, respectively, and was $ 7.9 billion and $ 17.3 billion for the three- and nine-month periods ended June 26, 2021, 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 26, 2022 and March 27, 2021 (in millions):

Three Months Ended Six Months Ended

2022 March 27,

2021 March 26,

2022 March 27,

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 25, 2022 and June 26, 2021 (in millions):

Three Months Ended Nine Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Share-based compensation expense $ 2,243 $ 1,960 $ 6,760 $ 5,961

Income tax benefit related to share-based compensation expense $ ( 1,231 ) $ ( 1,319 ) $ ( 3,416 ) $ ( 3,518 )

$ ( 649 ) $ ( 575 ) $ ( 2,185 ) $ ( 2,199 )

As of March 26, 2022, the total unrecognized compensation cost related to outstanding RSUs and stock options was $ 19.3 billion, which the Company expects to recognize over a weighted-average period of 2.8 years.

As of June 25, 2022, the total unrecognized compensation cost related to outstanding RSUs and stock options was $ 18.1 billion, which the Company expects to recognize over a weighted-average period of 2.7 years.

Note 8 – Commitments and Contingencies

Accrued Warranty

The following table shows changes in the Company’s accrued warranties and related costs for the three- and six-month periods ended March 26, 2022 and March 27, 2021 (in millions):

Three Months Ended Six Months Ended

2022 March 27,

2021 March 26,

2022 March 27,

The following table shows changes in the Company’s accrued warranties and related costs for the three- and nine-month periods ended June 25, 2022 and June 26, 2021 (in millions):

Three Months Ended Nine Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Beginning accrued warranty and related costs $ 3,206 $ 3,784 $ 3,364 $ 3,354

8 unchanged sentences

Note 9 – Segment Information and Geographic Data

The following table shows information by reportable segment for the three- and six-month periods ended March 26, 2022 and March 27, 2021 (in millions):

Three Months Ended Six Months Ended

2022 March 27,

2021 March 26,

2022 March 27,

The following table shows information by reportable segment for the three- and nine-month periods ended June 25, 2022 and June 26, 2021 (in millions):

Three Months Ended Nine Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Net sales $ 37,472 $ 35,870 $ 129,850 $ 116,486

10 unchanged sentences

Operating income $ 2,367 $ 2,116 $ 9,185 $ 7,805

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 26, 2022 and March 27, 2021 is as follows (in millions):

Three Months Ended Six Months Ended

2022 March 27,

2021 March 26,

2022 March 27,

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 25, 2022 and June 26, 2021 is as follows (in millions):

Three Months Ended Nine Months Ended

2022 June 26,

2021 June 25,

2022 June 26,

Segment operating income $ 31,583 $ 31,451 $ 119,455 $ 106,048

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