What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-11-03 compared with 2022-10-28 · 180 added, 366 removed, 589 unchanged (48% of the section changed)

25 unchanged sentences

Research and development 29,915 26,251 21,914

26,251 21,914 18,752

Selling, general and administrative 24,932 25,094 21,973

25,094 21,973 19,916

Total operating expenses 54,847 51,345 43,887

51,345 43,887 38,668

Operating income 114,301 119,437 108,949

119,437 108,949 66,288

Other income/(expense), net ( 565 ) ( 334 ) 258

( 334 ) 258 803

Income before provision for income taxes 113,736 119,103 109,207

119,103 109,207 67,091

Provision for income taxes 16,741 19,300 14,527

19,300 14,527 9,680

$ 99,803 $ 94,680 $ 57,411

Net income $ 96,995 $ 99,803 $ 94,680

Earnings per share:

$ 6.15 $ 5.67 $ 3.31

$ 6.11 $ 5.61 $ 3.28

Basic $ 6.16 $ 6.15 $ 5.67

Diluted $ 6.13 $ 6.11 $ 5.61

Shares used in computing earnings per share:

16,215,963 16,701,272 17,352,119

16,325,819 16,864,919 17,528,214

Basic 15,744,231 16,215,963 16,701,272

Diluted 15,812,547 16,325,819 16,864,919

See accompanying Notes to Consolidated Financial Statements.

5 unchanged sentences

2022 September 25,

$ 99,803 $ 94,680 $ 57,411

Net income $ 96,995 $ 99,803 $ 94,680

Other comprehensive income/(loss):

Change in foreign currency translation, net of tax ( 765 ) ( 1,511 ) 501

( 1,511 ) 501 88

Change in unrealized gains/losses on derivative instruments, net of tax:

1 unchanged sentence

Adjustment for net (gains)/losses realized and included in net income ( 1,717 ) ( 1,074 ) 1,003

( 1,074 ) 1,003 ( 1,264 )

Total change in unrealized gains/losses on derivative instruments ( 1,394 ) 2,138 1,035

1 unchanged sentence

Change in fair value of marketable debt securities 1,563 ( 12,104 ) ( 694 )

( 12,104 ) ( 694 ) 1,202

Adjustment for net (gains)/losses realized and included in net income 253 205 ( 273 )

205 ( 273 ) ( 63 )

Total change in unrealized gains/losses on marketable debt securities 1,816 ( 11,899 ) ( 967 )

( 11,899 ) ( 967 ) 1,139

Total other comprehensive income/(loss) ( 343 ) ( 11,272 ) 569

( 11,272 ) 569 42

Total comprehensive income $ 96,652 $ 88,531 $ 95,249

$ 88,531 $ 95,249 $ 57,453

See accompanying Notes to Consolidated Financial Statements.

6 unchanged sentences

Cash and cash equivalents $ 29,965 $ 23,646

$ 23,646 $ 34,940

Marketable securities 31,590 24,658

24,658 27,699

Accounts receivable, net 29,508 28,184

28,184 26,278

Vendor non-trade receivables 31,477 32,748

32,748 25,228

Inventories 6,331 4,946

Other current assets 14,695 21,223

21,223 14,111

Total current assets 143,566 135,405

135,405 134,836

Non-current assets:

Marketable securities 100,544 120,805

120,805 127,877

Property, plant and equipment, net 43,715 42,117

42,117 39,440

Other non-current assets 64,758 54,428

54,428 48,849

Total non-current assets 209,017 217,350

217,350 216,166

$ 352,755 $ 351,002

Total assets $ 352,583 $ 352,755

LIABILITIES AND SHAREHOLDERS’ EQUITY:

1 unchanged sentence

Accounts payable $ 62,611 $ 64,115

$ 64,115 $ 54,763

Other current liabilities 58,829 60,845

60,845 47,493

Deferred revenue 8,061 7,912

Commercial paper 5,985 9,982

Term debt 9,822 11,128

Total current liabilities 145,308 153,982

153,982 125,481

Non-current liabilities:

98,959 109,106

Term debt 95,281 98,959

Other non-current liabilities 49,848 49,142

49,142 53,325

Total non-current liabilities 145,129 148,101

148,101 162,431

Total liabilities 290,437 302,083

302,083 287,912

Commitments and contingencies

4 unchanged sentences

73,812 64,849

Retained earnings/(Accumulated deficit) ( 3,068 ) 5,562

Accumulated other comprehensive income/(loss)

( 11,109 ) 163

Accumulated deficit ( 214 ) ( 3,068 )

Accumulated other comprehensive loss ( 11,452 ) ( 11,109 )

Total shareholders’ equity 62,146 50,672

50,672 63,090

Total liabilities and shareholders’ equity $ 352,583 $ 352,755

$ 352,755 $ 351,002

See accompanying Notes to Consolidated Financial Statements.

9 unchanged sentences

Common stock issued 1,346 1,175 1,105

1,175 1,105 880

Common stock withheld related to net share settlement of equity awards ( 3,521 ) ( 2,971 ) ( 2,627 )

( 2,971 ) ( 2,627 ) ( 2,250 )

Share-based compensation 11,138 9,280 8,108

5 unchanged sentences

Common stock withheld related to net share settlement of equity awards ( 2,099 ) ( 3,454 ) ( 4,151 )

( 3,454 ) ( 4,151 ) ( 1,604 )

Common stock repurchased ( 77,046 ) ( 90,186 ) ( 85,502 )

Cumulative effect of change in accounting principle — — ( 136 )

Ending balances ( 214 ) ( 3,068 ) 5,562

2 unchanged sentences

Other comprehensive income/(loss) ( 343 ) ( 11,272 ) 569

Cumulative effect of change in accounting principle — — 136

Ending balances ( 11,452 ) ( 11,109 ) 163

9 unchanged sentences

Cash, cash equivalents and restricted cash, beginning balances $ 24,977 $ 35,929 $ 39,789

$ 35,929 $ 39,789 $ 50,224

Operating activities:

99,803 94,680 57,411

Net income 96,995 99,803 94,680

Adjustments to reconcile net income to cash generated by operating activities:

Depreciation and amortization 11,519 11,104 11,284

11,104 11,284 11,056

Share-based compensation expense 10,833 9,038 7,906

9,038 7,906 6,829

Deferred income tax expense/(benefit) 895 ( 4,774 ) ( 215 )

111 ( 147 ) ( 97 )

Other ( 2,227 ) 1,006 ( 4,921 )

Changes in operating assets and liabilities:

Accounts receivable, net ( 1,688 ) ( 1,823 ) ( 10,125 )

( 1,823 ) ( 10,125 ) 6,917

1,484 ( 2,642 ) ( 127 )

Vendor non-trade receivables 1,271 ( 7,520 ) ( 3,903 )

( 7,520 ) ( 3,903 ) 1,553

Inventories ( 1,618 ) 1,484 ( 2,642 )

Other current and non-current assets ( 5,684 ) ( 6,499 ) ( 8,042 )

( 6,499 ) ( 8,042 ) ( 9,588 )

Accounts payable ( 1,889 ) 9,448 12,326

9,448 12,326 ( 4,062 )

Deferred revenue

478 1,676 2,081

Other current and non-current liabilities 3,031 6,110 7,475

5,632 5,799 8,916

Cash generated by operating activities 110,543 122,151 104,038

1 unchanged sentence

Purchases of marketable securities ( 29,513 ) ( 76,923 ) ( 109,558 )

( 76,923 ) ( 109,558 ) ( 114,938 )

Proceeds from maturities of marketable securities 39,686 29,917 59,023

29,917 59,023 69,918

Proceeds from sales of marketable securities 5,828 37,446 47,460

37,446 47,460 50,473

Payments for acquisition of property, plant and equipment ( 10,959 ) ( 10,708 ) ( 11,085 )

( 10,708 ) ( 11,085 ) ( 7,309 )

Payments made in connection with business acquisitions, net

( 306 ) ( 33 ) ( 1,524 )

( 1,780 ) ( 352 ) ( 909 )

Cash used in investing activities ( 22,354 ) ( 14,545 ) ( 4,289 )

Other ( 1,337 ) ( 2,086 ) ( 385 )

Cash generated by/(used in) investing activities 3,705 ( 22,354 ) ( 14,545 )

Financing activities:

Payments for taxes related to net share settlement of equity awards ( 5,431 ) ( 6,223 ) ( 6,556 )

( 6,223 ) ( 6,556 ) ( 3,634 )

Payments for dividends and dividend equivalents ( 15,025 ) ( 14,841 ) ( 14,467 )

( 14,841 ) ( 14,467 ) ( 14,081 )

Repurchases of common stock ( 77,550 ) ( 89,402 ) ( 85,971 )

( 89,402 ) ( 85,971 ) ( 72,358 )

Proceeds from issuance of term debt, net 5,228 5,465 20,393

5,465 20,393 16,091

Repayments of term debt ( 11,151 ) ( 9,543 ) ( 8,750 )

( 9,543 ) ( 8,750 ) ( 12,629 )

Proceeds from/(Repayments of) commercial paper, net ( 3,978 ) 3,955 1,022

( 160 ) 976 754

Other ( 581 ) ( 160 ) 976

Cash used in financing activities ( 108,488 ) ( 110,749 ) ( 93,353 )

( 110,749 ) ( 93,353 ) ( 86,820 )

Decrease in cash, cash equivalents and restricted cash ( 10,952 ) ( 3,860 ) ( 10,435 )

Increase/(Decrease) in cash, cash equivalents and restricted cash 5,760 ( 10,952 ) ( 3,860 )

Cash, cash equivalents and restricted cash, ending balances $ 30,737 $ 24,977 $ 35,929

$ 24,977 $ 35,929 $ 39,789

Supplemental cash flow disclosure:

Cash paid for income taxes, net $ 18,679 $ 19,573 $ 25,385

$ 19,573 $ 25,385 $ 9,501

Cash paid for interest $ 3,803 $ 2,865 $ 2,687

$ 2,865 $ 2,687 $ 3,002

See accompanying Notes to Consolidated Financial Statements.

4 unchanged sentences

The consolidated financial statements include the accounts of Apple Inc.

and its wholly owned subsidiaries (collectively “Apple” or the “Company”).

Intercompany accounts and transactions have been eliminated.

The preparation of these consolidated financial statements and accompanying notes in conformity with U.S.

generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported.

Actual results could differ materially from those estimates.

and its wholly owned subsidiaries.

The preparation of these consolidated financial statements and accompanying notes in conformity with GAAP requires the use of management estimates.

Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation.

The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September.

An additional week is included in the first fiscal quarter every five or six years to realign the Company’s fiscal quarters with calendar quarters, which will occur in the first quarter of the Company’s fiscal year ending September 30, 2023.

The Company’s fiscal years 2022, 2021 and 2020 spanned 52 weeks each.

An additional week is included in the first fiscal quarter every five or six years to realign the Company’s fiscal quarters with calendar quarters, which occurred in the first fiscal quarter of 2023.

The Company’s fiscal year 2023 spanned 53 weeks, whereas fiscal years 2022 and 2021 spanned 52 weeks each.

Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years.

Revenue Recognition

Net sales consist of revenue from the sale of iPhone, Mac, iPad, Services and other products.

The Company records revenue net of taxes collected from customers that are remitted to governmental authorities.

Share-Based Compensation

The Company recognizes share-based compensation expense on a straight-line basis for its estimate of equity awards that will ultimately vest.

Cash Equivalents

All highly liquid investments with maturities of three months or less at the date of purchase are treated as cash equivalents.

Marketable Securities

The cost of securities sold is determined using the specific identification method.

Inventories are measured using the first-in, first-out method.

Property, Plant and Equipment

Depreciation on property, plant and equipment is recognized on a straight-line basis.

Derivative Instruments

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

The Company records certain deferred tax assets and liabilities in connection with the minimum tax on certain foreign earnings created by the Act.

The Company combines and accounts for lease and nonlease components as a single lease component for leases of corporate, data center and retail facilities.

| 2023 Form 10-K | 33

Note 2 – Revenue

The Company recognizes revenue at the amount to which it expects to be entitled when control of the products or services is transferred to its customers.

16 unchanged sentences

Revenue allocated to the product-related bundled services and unspecified software upgrade rights is deferred and recognized on a straight-line basis over the estimated period they are expected to be provided.

Cost of sales related to delivered hardware and bundled software, including estimated warranty costs, are recognized at the time of sale.

Costs incurred to provide product-related bundled services and unspecified software upgrade rights are recognized as cost of sales as incurred.

For certain long-term service arrangements, the Company has performance obligations for services it has not yet delivered.

2 unchanged sentences

Accordingly, the Company has not recognized revenue, and does not disclose amounts, related to these undelivered services.

| 2022 Form 10-K | 34

For the sale of third-party products where the Company obtains control of the product before transferring it to the customer, the Company recognizes revenue based on the gross amount billed to customers.

The Company considers multiple factors when determining whether it obtains control of third-party products, including evaluating if it can establish the price of the product, retains inventory risk for tangible products or has the responsibility for ensuring acceptability of the product.

For third-party applications sold through the App Store and certain digital content sold through the Company’s other digital content stores, the Company does not obtain control of the product before transferring it to the customer.

Therefore, the Company accounts for such sales on a net basis by recognizing in Services net sales only the commission it retains.

The Company records revenue net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded within other current liabilities until remitted to the relevant government authority.

Share-Based Compensation

The Company generally measures share-based compensation based on the closing price of the Company’s common stock on the date of grant, and recognizes expense on a straight-line basis for its estimate of equity awards that will ultimately vest.

Further information regarding share-based compensation can be found in Note 9, “Benefit Plans.”

Earnings Per Share

The following table shows the computation of basic and diluted earnings per share for 2022, 2021 and 2020 (net income in millions and shares in thousands):

2022 2021 2020

$ 99,803 $ 94,680 $ 57,411

Weighted-average basic shares outstanding

16,215,963 16,701,272 17,352,119

Effect of dilutive securities

109,856 163,647 176,095

Weighted-average diluted shares

16,325,819 16,864,919 17,528,214

Basic earnings per share

$ 6.15 $ 5.67 $ 3.31

Diluted earnings per share

$ 6.11 $ 5.61 $ 3.28

The Company applies the treasury stock method to determine the dilutive effect of potentially dilutive securities.

Cash Equivalents and Marketable Securities

All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents.

The Company’s investments in marketable debt securities have been classified and accounted for as available-for-sale.

The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date.

The Company’s investments in marketable equity securities are classified based on the nature of the securities and their availability for use in current operations.

The cost of securities sold is determined using the specific identification method.

Inventories are measured using the first-in, first-out method.

| 2022 Form 10-K | 35

Restricted Marketable Securities

The Company considers marketable securities to be restricted when withdrawal or general use is legally restricted.

The Company reports restricted marketable securities as current or non-current marketable securities in the Consolidated Balance Sheets based on the classification of the underlying securities.

Property, Plant and Equipment

Depreciation on property, plant and equipment is recognized on a straight-line basis over the estimated useful lives of the assets, which for buildings is the shorter of 40 years or the remaining life of the building;

between one and five years for machinery and equipment, including manufacturing equipment;

and the shorter of the lease term or useful life for leasehold improvements.

Capitalized costs related to internal-use software are amortized on a straight-line basis over the estimated useful lives of the assets, which range from five to seven years .

Depreciation and amortization expense on property, plant and equipment was $ 8.7 billion, $ 9.5 billion and $ 9.7 billion during 2022, 2021 and 2020, respectively.

Derivative Instruments and Hedging

All derivative instruments are recorded in the Consolidated Balance Sheets at fair value.

The accounting treatment for derivative gains and losses is based on intended use and hedge designation.

Gains and losses arising from amounts that are included in the assessment of cash flow hedge effectiveness are initially deferred in accumulated other comprehensive income/(loss) (“AOCI”) and subsequently reclassified into earnings when the hedged transaction affects earnings, and in the same line item in the Consolidated Statements of Operations.

For options designated as cash flow hedges, the Company excludes time value from the assessment of hedge effectiveness and recognizes it on a straight-line basis over the life of the hedge in the Consolidated Statements of Operations line item to which the hedge relates.

Changes in the fair value of amounts excluded from the assessment of hedge effectiveness are recognized in other comprehensive income/(loss) (“OCI”).

Gains and losses arising from amounts that are included in the assessment of fair value hedge effectiveness are recognized in the Consolidated Statements of Operations line item to which the hedge relates along with offsetting losses and gains related to the change in value of the hedged item.

For foreign exchange forward contracts designated as fair value hedges, the Company excludes the forward carry component from the assessment of hedge effectiveness and recognizes it in other income/(expense), net (“OI&E”) on a straight-line basis over the life of the hedge.

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

Gains and losses arising from changes in the fair values of derivative instruments that are not designated as accounting hedges are recognized in the Consolidated Statements of Operations line items to which the derivative instruments relate.

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

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

Fair Value Measurements

The fair values of the Company’s money market funds and certain marketable equity securities are based on quoted prices in active markets for identical assets.

The valuation techniques used to measure the fair value of the Company’s debt instruments and all other financial instruments, which generally have counterparties with high credit ratings, are based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data.

The Company records certain deferred tax assets and liabilities in connection with the minimum tax on certain foreign earnings created by the U.S.

Tax Cuts and Jobs Act of 2017 (the “Act”).

The Company combines and accounts for lease and nonlease components as a single lease component for leases of corporate, data center and retail facilities.

The discount rates related to the Company’s lease liabilities are generally based on estimates of the Company’s incremental borrowing rate, as the discount rates implicit in the Company’s leases cannot be readily determined.

For third-party applications sold through the App Store, the Company does not obtain control of the product before transferring it to the customer.

Therefore, the Company accounts for all third-party application–related sales on a net basis by recognizing in Services net sales only the commission it retains.

| 2023 Form 10-K | 34

Segment Reporting

The Company reports segment information based on the “management” approach.

The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.

The Company manages its business primarily on a geographic basis.

The Company’s reportable segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific.

Americas includes both North and South America.

Europe includes European countries, as well as India, the Middle East and Africa.

Greater China includes China mainland, Hong Kong and Taiwan.

Rest of Asia Pacific includes Australia and those Asian countries not included in the Company’s other reportable segments.

Although the reportable segments provide similar hardware and software products and similar services, each one is managed separately to better align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic region.

The accounting policies of the various segments are the same as those described elsewhere in this Note 1, “Summary of Significant Accounting Policies.”

The Company evaluates the performance of its reportable segments based on net sales and operating income.

Net sales for geographic segments are generally based on the location of customers and sales through the Company’s retail stores located in those geographic locations.

Operating income for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment.

Advertising expenses are generally included in the geographic segment in which the expenditures are incurred.

Operating income for each segment excludes other income and expense and certain expenses managed outside the reportable segments.

Costs excluded from segment operating income include various corporate expenses such as research and development (“R&D”), corporate marketing expenses, certain share-based compensation expenses, income taxes, various nonrecurring charges and other separately managed general and administrative costs.

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

Note 2 – Revenue

Net sales disaggregated by significant products and services for 2023, 2022 and 2021 were as follows (in millions):

7 unchanged sentences

Total net sales $ 383,285 $ 394,328 $ 365,817

$ 394,328 $ 365,817 $ 274,515

(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 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 $ 7.5 billion of revenue recognized in 2022 that was included in deferred revenue as of September 25, 2021, $ 6.7 billion of revenue recognized in 2021 that was included in deferred revenue as of September 26, 2020, and $ 5.0 billion of revenue recognized in 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 2022, 2021 and 2020, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales in 2022 and 2021.

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

Total net sales include $ 8.2 billion of revenue recognized in 2023 that was included in deferred revenue as of September 24, 2022, $ 7.5 billion of revenue recognized in 2022 that was included in deferred revenue as of September 25, 2021, and $ 6.7 billion of revenue recognized in 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 13, “Segment Information and Geographic Data” for 2023, 2022 and 2021, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales.

As of September 30, 2023 and September 24, 2022, the Company had total deferred revenue of $ 12.1 billion and $ 12.4 billion, respectively.

As of September 30, 2023, the Company expects 67 % of total deferred revenue to be realized in less than a year, 25 % within one-to-two years, 7 % within two-to-three years and 1 % in greater than three years.

Note 3 – Earnings Per Share

The following table shows the computation of basic and diluted earnings per share for 2023, 2022 and 2021 (net income in millions and shares in thousands):

2023 2022 2021

Net income $ 96,995 $ 99,803 $ 94,680

Weighted-average basic shares outstanding 15,744,231 16,215,963 16,701,272

Effect of dilutive share-based awards 68,316 109,856 163,647

Weighted-average diluted shares 15,812,547 16,325,819 16,864,919

Basic earnings per share $ 6.16 $ 6.15 $ 5.67

Diluted earnings per share $ 6.13 $ 6.11 $ 5.61

Approximately 24 million restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share for 2023 because their effect would have been antidilutive.

| 2023 Form 10-K | 35

7 unchanged sentences

Securities Non-Current

$ 18,546 $ — $ — $ 18,546 $ 18,546 $ — $ —

Level 1 (1) :

Cash $ 28,359 $ — $ — $ 28,359 $ 28,359 $ — $ —

Money market funds 481 — — 481 481 — —

Mutual funds 274 — ( 47 ) 227 — 227 —

Mutual funds and equity securities 442 12 ( 26 ) 428 — 428 —

Subtotal 923 12 ( 26 ) 909 481 428 —

4 unchanged sentences

Certificates of deposit and time deposits 1,354 — — 1,354 1,034 320 —

2,067 — — 2,067 1,805 262 —

Commercial paper 608 — — 608 — 608 —

2 unchanged sentences

Mortgage- and asset-backed securities 22,365 6 ( 2,735 ) 19,636 — 344 19,292

22,553 — ( 2,593 ) 19,960 — 53 19,907

Subtotal 144,470 18 ( 11,657 ) 132,831 1,125 31,162 100,544

5 unchanged sentences

Securities Non-Current

$ 17,305 $ — $ — $ 17,305 $ 17,305 $ — $ —

Level 1 (1) :

Cash $ 18,546 $ — $ — $ 18,546 $ 18,546 $ — $ —

Money market funds 2,929 — — 2,929 2,929 — —

2 unchanged sentences

Level 2 (1) :

Equity securities 1,527 — ( 564 ) 963 — 963 —

Treasury securities 25,134 — ( 1,725 ) 23,409 338 5,091 17,980

agency securities 5,823 — ( 655 ) 5,168 — 240 4,928

8,949 2 ( 64 ) 8,887 1,775 1,930 5,182

government securities 16,948 2 ( 1,201 ) 15,749 — 8,806 6,943

20,201 211 ( 101 ) 20,311 390 3,091 16,830

Certificates of deposit and time deposits 2,067 — — 2,067 1,805 262 —

1,300 — — 1,300 490 810 —

Commercial paper 718 — — 718 28 690 —

2,639 — — 2,639 1,776 863 —

Corporate debt securities 87,148 9 ( 7,707 ) 79,450 — 9,023 70,427

83,883 1,242 ( 267 ) 84,858 — 12,327 72,531

Municipal securities 921 — ( 35 ) 886 — 266 620

967 14 — 981 — 130 851

Mortgage- and asset-backed securities 22,553 — ( 2,593 ) 19,960 — 53 19,907

20,529 171 ( 124 ) 20,576 — 775 19,801

Subtotal 161,312 11 ( 13,916 ) 147,407 2,171 24,431 120,805

$ 183,061 $ 11 $ ( 13,963 ) $ 169,109 $ 23,646 $ 24,658 $ 120,805

(1) Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities.

(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.

(1) The valuation techniques used to measure the fair values of the Company’s Level 2 financial instruments, which generally have counterparties with high credit ratings, are based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data.

(2) As of September 30, 2023 and September 24, 2022, total marketable securities included $ 13.8 billion and $ 12.7 billion, respectively, that were restricted from general use, related to the State Aid Decision (refer to Note 7, “Income Taxes”) and other agreements.

5 unchanged sentences

Total fair value $ 100,544

The Company’s investments in marketable debt securities have been classified and accounted for as available-for-sale.

The Company classifies marketable debt securities as either current or non-current based solely on each instrument’s underlying contractual maturity date.

Derivative Instruments and Hedging

2 unchanged sentences

There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange or interest rates.

Foreign Exchange Risk

To protect gross margins from fluctuations in foreign currency exchange rates, the Company may enter into forward contracts, option contracts or other instruments, and may designate these instruments as cash flow hedges.

The Company classifies cash flows related to derivative instruments in the same section of the Consolidated Statements of Cash Flows as the items being hedged, which are generally classified as operating activities.

Foreign Exchange Rate Risk

To protect gross margins from fluctuations in foreign exchange rates, the Company may use forwards, options or other instruments, and may designate these instruments as cash flow hedges.

The Company generally hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months.

To protect the Company’s foreign currency–denominated term debt or marketable securities from fluctuations in foreign currency exchange rates, the Company may enter into forward contracts, cross-currency swaps or other instruments.

To protect the Company’s foreign currency–denominated term debt or marketable securities from fluctuations in foreign exchange rates, the Company may use forwards, cross-currency swaps or other instruments.

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

As of September 30, 2023, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for term debt–related foreign currency transactions is 19 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.

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

Interest Rate Risk

To protect the Company’s term debt or marketable securities from fluctuations in interest rates, the Company may enter into interest rate swaps, options or other instruments.

To protect the Company’s term debt or marketable securities from fluctuations in interest rates, the Company may use interest rate swaps, options or other instruments.

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

2 unchanged sentences

Foreign exchange contracts $ 74,730 $ 102,670

$ 102,670 $ 76,475

Interest rate contracts $ 19,375 $ 20,125

$ 20,125 $ 16,875

Derivative instruments not designated as accounting hedges:

Foreign exchange contracts $ 104,777 $ 185,381

$ 185,381 $ 126,918

| 2023 Form 10-K | 37

7 unchanged sentences

Foreign exchange contracts $ 4,317 $ 2,819 $ 7,136

$ 4,317 $ 2,819 $ 7,136

Derivative liabilities (2) :

Foreign exchange contracts $ 2,205 $ 2,547 $ 4,752

$ 2,205 $ 2,547 $ 4,752

Interest rate contracts $ 1,367 $ — $ 1,367

$ 1,367 $ — $ 1,367

(1) Derivative assets are measured using Level 2 fair value inputs and are included in other current assets and other non-current assets in the Consolidated Balance Sheets.

(2) Derivative liabilities are measured using Level 2 fair value inputs and are included in other current liabilities and other non-current liabilities in the Consolidated Balance Sheets.

(1) Derivative assets are measured using Level 2 fair value inputs and are included in other current assets and other non-current assets in the Consolidated Balance Sheet.

(2) Derivative liabilities are measured using Level 2 fair value inputs and are included in other current liabilities and other non-current liabilities in the Consolidated Balance Sheet.

The derivative assets above represent the Company’s gross credit exposure if all counterparties failed to perform.

To mitigate credit risk, the Company generally enters into collateral security arrangements that provide for collateral to be received or posted when the net fair values of certain derivatives fluctuate from contractually established thresholds.

To further limit credit risk, the Company generally enters into master netting arrangements with the respective counterparties to the Company’s derivative contracts, under which the Company is allowed to settle transactions with a single net amount payable by one party to the other.

To mitigate credit risk, the Company generally uses collateral security arrangements that provide for collateral to be received or posted when the net fair values of certain derivatives fluctuate from contractually established thresholds.

To further limit credit risk, the Company generally uses master netting arrangements with the respective counterparties to the Company’s derivative contracts, under which the Company is allowed to settle transactions with a single net amount payable by one party to the other.

As of September 24, 2022, 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 $ 7.8 billion, resulting in a net derivative asset of $ 412 million.

5 unchanged sentences

Trade Receivables

The Company has considerable trade receivables outstanding with its third-party cellular network carriers, wholesalers, retailers, resellers, small and mid-sized businesses and education, enterprise and government customers.

The Company generally does not require collateral from its customers;

however, the Company will require collateral or third-party credit support in certain instances to limit credit risk.

In addition, when possible, the Company attempts to limit credit risk on trade receivables with credit insurance for certain customers or by requiring third-party financing, loans or leases to support credit exposure.

These credit-financing arrangements are directly between the third-party financing company and the end customer.

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

As of September 24, 2022, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 10 %.

The Company’s cellular network carriers accounted for 44 % and 42 % of total trade receivables as of September 24, 2022 and September 25, 2021, respectively.

The Company’s third-party cellular network carriers accounted for 41 % and 44 % of total trade receivables as of September 30, 2023 and September 24, 2022, respectively.

The Company requires third-party credit support or collateral from certain customers to limit credit risk.

Vendor Non-Trade Receivables

1 unchanged sentence

The Company purchases these components directly from suppliers.

The Company does not reflect the sale of these components in products net sales.

Rather, the Company recognizes any gain on these sales as a reduction of products cost of sales when the related final products are sold by the Company.

As of September 30, 2023, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 48 % and 23 %.

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 %.

As of September 24, 2022, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 54 % and 13 %.

| 2023 Form 10-K | 38

Note 4 – Consolidated Financial Statement Details

The following tables show the Company’s consolidated financial statement details as of September 24, 2022 and September 25, 2021 (in millions):

Property, Plant and Equipment, Net

Note 5 – Property, Plant and Equipment

The following table shows the Company’s gross property, plant and equipment by major asset class and accumulated depreciation as of September 30, 2023 and September 24, 2022 (in millions):

Land and buildings $ 23,446 $ 22,126

$ 22,126 $ 20,041

Machinery, equipment and internal-use software 78,314 81,060

81,060 78,659

Leasehold improvements 12,839 11,271

11,271 11,023

Gross property, plant and equipment 114,599 114,457

114,457 109,723

Accumulated depreciation and amortization

Accumulated depreciation

( 70,884 ) ( 72,340 )

Total property, plant and equipment, net $ 43,715 $ 42,117

$ 42,117 $ 39,440

Depreciation expense on property, plant and equipment was $ 8.5 billion, $ 8.7 billion and $ 9.5 billion during 2023, 2022 and 2021, respectively.

Note 6 – Consolidated Financial Statement Details

The following tables show the Company’s consolidated financial statement details as of September 30, 2023 and September 24, 2022 (in millions):

Other Non-Current Assets

Deferred tax assets $ 17,852 $ 15,375

Other non-current assets 46,906 39,053

Total other non-current assets $ 64,758 $ 54,428

Other Current Liabilities

Income taxes payable $ 8,819 $ 6,552

Other current liabilities 50,010 54,293

Total other current liabilities $ 58,829 $ 60,845

Other Non-Current Liabilities

1 unchanged sentence

Other non-current liabilities 34,391 32,485

32,485 28,636

Total other non-current liabilities $ 49,848 $ 49,142

$ 49,142 $ 53,325

Other Income/(Expense), Net

The following table shows the detail of OI&E for 2022, 2021 and 2020 (in millions):

The following table shows the detail of other income/(expense), net for 2023, 2022 and 2021 (in millions):

2023 2022 2021

Interest and dividend income $ 3,750 $ 2,825 $ 2,843

$ 2,825 $ 2,843 $ 3,763

Interest expense ( 3,933 ) ( 2,931 ) ( 2,645 )

( 2,931 ) ( 2,645 ) ( 2,873 )

Other income/(expense), net ( 382 ) ( 228 ) 60

Total other income/(expense), net $ ( 565 ) $ ( 334 ) $ 258

$ ( 334 ) $ 258 $ 803

| 2023 Form 10-K | 39

Note 7 – Income Taxes

2 unchanged sentences

2023 2022 2021

$ 7,890 $ 8,257 $ 6,306

( 2,265 ) ( 7,176 ) ( 3,619 )

5,625 1,081 2,687

1,519 1,620 455

84 ( 338 ) 21

1,603 1,282 476

8,996 9,424 3,134

3,076 2,740 3,383

12,072 12,164 6,517

Current $ 9,445 $ 7,890 $ 8,257

Deferred ( 3,644 ) ( 2,265 ) ( 7,176 )

Total 5,801 5,625 1,081

Current 1,570 1,519 1,620

Deferred ( 49 ) 84 ( 338 )

Total 1,521 1,603 1,282

Current 8,750 8,996 9,424

Deferred 669 3,076 2,740

Total 9,419 12,072 12,164

Provision for income taxes $ 16,741 $ 19,300 $ 14,527

$ 19,300 $ 14,527 $ 9,680

The foreign provision for income taxes is based on foreign pretax earnings of $ 72.9 billion, $ 71.3 billion and $ 68.7 billion in 2023, 2022 and 2021, respectively.

| 2022 Form 10-K | 41

A reconciliation of the provision for income taxes to the amount computed by applying the statutory federal income tax rate ( 21 % in 2023, 2022 and 2021) to income before provision for income taxes for 2023, 2022 and 2021, is as follows (dollars in millions):

1 unchanged sentence

Computed expected tax $ 23,885 $ 25,012 $ 22,933

$ 25,012 $ 22,933 $ 14,089

State taxes, net of federal effect 1,124 1,518 1,151

1,518 1,151 423

Impacts of the Act 542 — ( 582 )

Earnings of foreign subsidiaries ( 5,744 ) ( 4,366 ) ( 4,715 )

Foreign-derived intangible income deduction ( 296 ) ( 1,372 ) ( 169 )

Research and development credit, net ( 1,212 ) ( 1,153 ) ( 1,033 )

( 1,153 ) ( 1,033 ) ( 728 )

Excess tax benefits from equity awards ( 1,120 ) ( 1,871 ) ( 2,137 )

( 1,871 ) ( 2,137 ) ( 930 )

( 86 ) ( 300 ) 111

Foreign-derived intangible income deduction — ( 296 ) ( 1,372 )

Other ( 192 ) 456 ( 300 )

Provision for income taxes $ 16,741 $ 19,300 $ 14,527

$ 19,300 $ 14,527 $ 9,680

Effective tax rate 14.7 % 16.2 % 13.3 %

16.2 % 13.3 % 14.4 %

| 2023 Form 10-K | 40

Deferred Tax Assets and Liabilities

1 unchanged sentence

Deferred tax assets:

Amortization and depreciation

$ 1,496 $ 5,575

Tax credit carryforwards $ 8,302 $ 6,962

Accrued liabilities and other reserves 6,365 6,515

Lease liabilities 2,400 2,406

Capitalized research and development 6,294 1,267

Deferred revenue 4,571 5,742

Unrealized losses 2,447 2,913

Tax credit carryforwards 6,962 4,262

Lease liabilities 2,421 2,400

Other 2,343 3,407

2 unchanged sentences

Total deferred tax assets, net 24,369 21,676

20,094 20,326

Deferred tax liabilities:

Minimum tax on foreign earnings

Right-of-use assets 2,179 2,163

Depreciation 1,998 1,582

Minimum tax on foreign earnings 1,940 1,983

Unrealized gains 511 942

Other 490 469

Total deferred tax liabilities 7,118 7,139

2 unchanged sentences

A valuation allowance has been recorded for the credit carryforwards and a portion of other temporary differences.

| 2022 Form 10-K | 42

Uncertain Tax Positions

4 unchanged sentences

Beginning balances $ 16,758 $ 15,477 $ 16,475

$ 15,477 $ 16,475 $ 15,619

Increases related to tax positions taken during a prior year 2,044 2,284 816

2,284 816 454

Decreases related to tax positions taken during a prior year ( 1,463 ) ( 1,982 ) ( 1,402 )

( 1,982 ) ( 1,402 ) ( 791 )

Increases related to tax positions taken during the current year 2,628 1,936 1,607

1,936 1,607 1,347

Decreases related to settlements with taxing authorities ( 19 ) ( 28 ) ( 1,838 )

( 28 ) ( 1,838 ) ( 85 )

Decreases related to expiration of the statute of limitations ( 494 ) ( 929 ) ( 181 )

( 929 ) ( 181 ) ( 69 )

Ending balances $ 19,454 $ 16,758 $ 15,477

$ 16,758 $ 15,477 $ 16,475

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

2 unchanged sentences

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

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 $ 4.8 billion.

Altho ugh the timing of resolution 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 $ 4.5 billion.

| 2023 Form 10-K | 41

European Commission State Aid Decision

5 unchanged sentences

On July 15, 2020, the General Court annulled the State Aid Decision.

On September 25, 2020, the European Commission appealed the General Court’s decision to the European Court of Justice.

The Company believes that any incremental Irish corporate income taxes potentially due related to the State Aid Decision would be creditable against U.S.

taxes, subject to any foreign tax credit limitations in the Act.

On September 25, 2020, the European Commission appealed the General Court’s decision to the European Court of Justice (the “ECJ”) and a hearing was held on May 23, 2023.

A decision from the ECJ is expected in calendar year 2024.

The Company believes it would be eligible to claim a U.S.

foreign tax credit for a portion of any incremental Irish corporate income taxes potentially due related to the State Aid Decision.

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.

9 unchanged sentences

The Company made $ 1.9 billion, $ 1.8 billion and $ 1.4 billion of fixed cash payments related to operating leases in 2023, 2022 and 2021, respectively.

Noncash activities involving right-of-use (“ROU”) assets obtained in exchange for lease liabilities were $ 2.8 billion for 2022, $ 3.3 billion for 2021 and $ 10.5 billion for 2020, including the impact of adopting the Financial Accounting Standards Board’s Accounting Standards Update No.

2016-02, Leases (Topic 842) in the first quarter of 2020.

| 2022 Form 10-K | 43

Noncash activities involving right-of-use (“ROU”) assets obtained in exchange for lease liabilities were $ 2.1 billion, $ 2.8 billion and $ 3.3 billion for 2023, 2022 and 2021, respectively.

The following table shows ROU assets and lease liabilities, and the associated financial statement line items, as of September 30, 2023 and September 24, 2022 (in millions):

10 unchanged sentences

Total lease liabilities $ 12,842 $ 12,411

| 2023 Form 10-K | 42

Lease liability maturities as of September 30, 2023, are as follows (in millions):

11 unchanged sentences

The discount rate related to the Company’s lease liabilities as of September 30, 2023 and September 24, 2022 was 3.0 % and 2.3 %, respectively.

As of September 24, 2022, the Company had $ 1.2 billion of future payments under additional leases, primarily for corporate facilities and retail space, that had not yet commenced.

These leases will commence between 2023 and 2026, with lease terms ranging from less than 1 year to 21 years.

| 2022 Form 10-K | 44

As of September 30, 2023, the Company had $ 544 million of future payments under additional leases, primarily for corporate facilities and retail space, that had not yet commenced.

These leases will commence between 2024 and 2026, with lease terms ranging from 1 year to 21 years.

Note 9 – Debt

Commercial Paper and Repurchase Agreements

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

Commercial Paper

The Company issues unsecured short-term promissory notes 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.

7 unchanged sentences

Proceeds from commercial paper — 5,948 7,946

5,948 7,946 6,185

Repayments of commercial paper ( 2,645 ) ( 7,257 ) ( 6,567 )

( 7,257 ) ( 6,567 ) ( 7,248 )

Proceeds from/(Repayments of) commercial paper, net ( 2,645 ) ( 1,309 ) 1,379

Total proceeds from/(repayments of) commercial paper, net $ ( 3,978 ) $ 3,955 $ 1,022

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.

The Company entered into $ 5.2 billion of Repos during 2020, all of which had been settled as of September 26, 2020.

The Company has outstanding fixed-rate notes with varying maturities (collectively the “Notes”).

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

| 2023 Form 10-K | 43

The Company has outstanding Notes, which are senior unsecured obligations with interest payable in arrears.

The following table provides a summary of the Company’s term debt as of September 30, 2023 and September 24, 2022:

5 unchanged sentences

2013 – 2022 debt issuances:

Floating-rate notes $ — $ 1,750 0.48 % – 0.63 %

Fixed-rate 0.000 % – 4.650 % notes

1 unchanged sentence

$ 111,824 0.03 % – 4.78 %

Fourth quarter 2022 debt issuance:

Third quarter 2023 debt issuance:

Fixed-rate 4.000 % – 4.850 % notes

5,250 4.04 % – 4.88 %

Total term debt 111,824 118,063

Total term debt principal

106,572 111,824

Unamortized premium/(discount) and issuance costs, net

1 unchanged sentence

Hedge accounting fair value adjustments ( 1,113 ) ( 1,363 )

Total term debt

105,103 110,087

Current portion of term debt ( 9,822 ) ( 11,128 )

1 unchanged sentence

To manage interest rate risk on certain of its U.S.

dollar–denominated fixed-rate notes, the Company has entered into interest rate swaps to effectively convert the fixed interest rates to floating interest rates on a portion of these notes.

Additionally, to manage foreign currency risk on certain of its foreign currency–denominated notes, the Company has entered into foreign currency swaps to effectively convert these notes to U.S.

dollar–denominated fixed-rate notes, the Company uses interest rate swaps to effectively convert the fixed interest rates to floating interest rates on a portion of these notes.

Additionally, to manage foreign exchange rate risk on certain of its foreign currency–denominated notes, the Company uses cross-currency swaps to effectively convert these notes to U.S.

dollar–denominated notes.

1 unchanged sentence

The Company recognized $ 3.7 billion, $ 2.8 billion and $ 2.6 billion of interest expense on its term debt for 2023, 2022 and 2021, respectively.

| 2022 Form 10-K | 45

The future principal payments for the Company’s Notes as of September 30, 2023, are as follows (in millions):

2023 $ 11,139

Thereafter 56,003

Total term debt $ 111,824

Total term debt principal $ 106,572

As of September 30, 2023 and September 24, 2022, the fair value of the Company’s Notes, based on Level 2 inputs, was $ 90.8 billion and $ 98.8 billion, respectively.

1 unchanged sentence

Share Repurchase Program

During 2022, the Company repurchased 569 million shares of its common stock for $ 90.2 billion under a share repurchase program authorized by the Board of Directors (the “Program”).

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

During 2023, the Company repurchased 471 million shares of its common stock for $ 76.6 billion, excluding excise tax due under the Inflation Reduction Act of 2022.

The Company’s share repurchase programs do not obligate the Company to acquire a minimum amount of shares.

Under the programs, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

| 2023 Form 10-K | 44

Shares of Common Stock

2 unchanged sentences

Common stock outstanding, beginning balances 15,943,425 16,426,786 16,976,763

16,426,786 16,976,763 17,772,945

Common stock repurchased ( 471,419 ) ( 568,589 ) ( 656,340 )

( 568,589 ) ( 656,340 ) ( 917,270 )

Common stock issued, net of shares withheld for employee taxes 78,055 85,228 106,363

85,228 106,363 121,088

Common stock outstanding, ending balances 15,550,061 15,943,425 16,426,786

15,943,425 16,426,786 16,976,763

Note 9 – Benefit Plans

Note 11 – Share-Based Compensation

2022 Employee Stock Plan

In the second quarter of 2022, shareholders approved the Apple Inc.

2022 Employee Stock Plan (the “2022 Plan”), which provides for broad-based equity grants to employees, including executive officers, and permits the granting of restricted stock units (“RSUs”), stock grants, performance-based awards, stock options and stock appreciation rights.

The Apple Inc.

2022 Employee Stock Plan (the “2022 Plan”) is a shareholder-approved plan that provides for broad-based equity grants to employees, including executive officers, and permits the granting of RSUs, stock grants, performance-based awards, stock options and stock appreciation rights.

RSUs granted under the 2022 Plan 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.

RSUs granted under the 2022 Plan reduce the number of shares available for grant under the plan by a factor of two times the number of RSUs granted.

RSUs canceled and shares withheld to satisfy tax withholding obligations increase the number of shares available for grant under the 2022 Plan utilizing a factor of two times the number of RSUs canceled or shares withheld.

All RSUs granted under the 2022 Plan have dividend equivalent rights (“DERs”), which entitle holders of RSUs to the same dividend value per share as holders of common stock.

DERs are subject to the same vesting and other terms and conditions as the underlying RSUs.

All RSUs granted under the 2022 Plan have dividend equivalent rights, which entitle holders of RSUs to the same dividend value per share as holders of common stock.

A maximum of approximately 1.3 billion shares were authorized for issuance pursuant to 2022 Plan awards at the time the plan was approved on March 4, 2022.

5 unchanged sentences

In the third quarter of 2022, the Company terminated the authority to grant new awards under the 2014 Plan.

| 2022 Form 10-K | 46

Non-Employee Director Stock Plan

The Apple Inc.

Non-Employee Director Stock Plan (the “Director Plan”) is a shareholder-approved plan that (i) permits the Company to grant awards of RSUs or stock options to the Company’s non-employee directors, (ii) provides for automatic initial grants of RSUs upon a non-employee director joining the Board of Directors and automatic annual grants of RSUs at each annual meeting of shareholders, and (iii) permits the Board of Directors to prospectively change the value and relative mixture of stock options and RSUs for the initial and annual award grants and the methodology for determining the number of shares of the Company’s common stock subject to these grants, in each case within the limits set forth in the Director Plan and without further shareholder approval.

RSUs granted under the Director Plan reduce the number of shares available for grant under the plan by a factor of two times the number of RSUs granted.

The Director Plan expires on November 12, 2027.

All RSUs granted under the Director Plan are entitled to DERs, which are subject to the same vesting and other terms and conditions as the underlying RSUs.

A maximum of approximately 45 million shares (split-adjusted) were authorized for issuance pursuant to Director Plan awards at the time the plan was last amended on November 9, 2021.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan (the “Purchase Plan”) is a shareholder-approved plan under which substantially all employees may voluntarily enroll to purchase the Company’s common stock through payroll deductions at a price equal to 85 % of the lower of the fair market values of the stock as of the beginning or the end of six-month offering periods.

An employee’s payroll deductions under the Purchase Plan are limited to 10 % of the employee’s eligible compensation and employees may not purchase more than $ 25,000 of stock during any calendar year.

A maximum of approximately 230 million shares (split-adjusted) were authorized for issuance under the Purchase Plan at the time the plan was last amended and restated on March 10, 2015.

The Company’s 401(k) Plan is a tax-qualified deferred compensation arrangement under Section 401(k) of the Internal Revenue Code.

Under the 401(k) Plan, participating U.S.

employees may contribute a portion of their eligible earnings, subject to applicable U.S.

Internal Revenue Service and plan limits.

The Company matches 50 % to 100 % of each employee’s contributions, depending on length of service, up to a maximum of 6 % of the employee’s eligible earnings.

Restricted Stock Units

6 unchanged sentences

Balance as of September 26, 2020 310,778 $ 51.58

156,800 $ 59.20

( 157,743 ) $ 40.29

RSUs granted 89,363 $ 116.33

RSUs vested ( 145,766 ) $ 50.71

RSUs canceled ( 13,948 ) $ 68.95

( 14,347 ) $ 48.07

Balance as of September 25, 2021 240,427 $ 75.16

89,363 $ 116.33

( 145,766 ) $ 50.71

RSUs granted 91,674 $ 150.70

RSUs vested ( 115,861 ) $ 72.12

RSUs canceled ( 14,739 ) $ 99.77

( 13,948 ) $ 68.95

Balance as of September 24, 2022 201,501 $ 109.48

91,674 $ 150.70

( 115,861 ) $ 72.12

RSUs granted 88,768 $ 150.87

RSUs vested ( 101,878 ) $ 97.31

RSUs canceled ( 8,144 ) $ 127.98

( 14,739 ) $ 99.77

Balance as of September 30, 2023 180,247 $ 135.91 $ 30,860

9 unchanged sentences

Income tax benefit related to share-based compensation expense $ ( 3,421 ) $ ( 4,002 ) $ ( 4,056 )

$ ( 4,002 ) $ ( 4,056 ) $ ( 2,476 )

As of September 24, 2022, 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 2.6 years.

Note 10 – Commitments and Contingencies

Concentrations in the Available Sources of Supply of Materials and Product

Although most components essential to the Company’s business are generally available from multiple sources, certain components are currently obtained from single or limited sources.

The Company also competes for various components with other participants in the markets for smartphones, personal computers, tablets, wearables and accessories.

Therefore, many components used by the Company, including those that are available from multiple sources, are at times subject to industry-wide shortage and significant commodity pricing fluctuations.

The Company uses some custom components that are not commonly used by its competitors, and new products introduced by the Company often utilize custom components available from only one source.

When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or their manufacturing capacities have increased.

The continued availability of these components at acceptable prices, or at all, may be affected if suppliers decide to concentrate on the production of common components instead of components customized to meet the Company’s requirements.

Substantially all of the Company’s hardware products are manufactured by outsourcing partners that are located primarily in Asia, with some Mac computers manufactured in the U.S.

As of September 30, 2023, the total unrecognized compensation cost related to outstanding RSUs was $ 18.6 billion, which the Company expects to recognize over a weighted-average period of 2.5 years.

Note 12 – Commitments, Contingencies and Supply Concentrations

Unconditional Purchase Obligations

The Company has entered into certain off–balance sheet commitments that require the future purchase of goods or services (“unconditional purchase obligations”).

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

The Company’s unconditional purchase obligations primarily consist of supplier arrangements, licensed intellectual property and content, and distribution rights.

Future payments under noncancelable unconditional purchase obligations with a remaining term in excess of one year as of September 30, 2023, are as follows (in millions):

2023 $ 13,488

Thereafter 3,215

4 unchanged sentences

In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss greater than a recorded accrual, concerning loss contingencies for asserted legal and other claims.

Concentrations in the Available Sources of Supply of Materials and Product

Although most components essential to the Company’s business are generally available from multiple sources, certain components are currently obtained from single or limited sources.

The Company also competes for various components with other participants in the markets for smartphones, personal computers, tablets, wearables and accessories.

The Company uses some custom components that are not commonly used by its competitors, and new products introduced by the Company often utilize custom components available from only one source.

When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or their manufacturing capacities have increased.

Substantially all of the Company’s hardware products are manufactured by outsourcing partners that are located primarily in China mainland, India, Japan, South Korea, Taiwan and Vietnam.

| 2023 Form 10-K | 46

Note 13 – Segment Information and Geographic Data

The Company manages its business primarily on a geographic basis.

The Company’s reportable segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific.

Americas includes both North and South America.

Europe includes European countries, as well as India, the Middle East and Africa.

Greater China includes China mainland, Hong Kong and Taiwan.

Rest of Asia Pacific includes Australia and those Asian countries not included in the Company’s other reportable segments.

The Company evaluates the performance of its reportable segments based on net sales and operating income.

Net sales for geographic segments are generally based on the location of customers and sales through the Company’s retail stores located in those geographic locations.

Operating income for each segment consists of net sales to third parties, related cost of sales, and operating expenses directly attributable to the segment.

The information provided to the Company’s chief operating decision maker for purposes of making decisions and assessing segment performance excludes asset information.

The following table shows information by reportable segment for 2023, 2022 and 2021 (in millions):

2023 2022 2021

$ 169,658 $ 153,306 $ 124,556

Net sales $ 162,560 $ 169,658 $ 153,306

Operating income $ 60,508 $ 62,683 $ 53,382

$ 62,683 $ 53,382 $ 37,722

$ 95,118 $ 89,307 $ 68,640

Net sales $ 94,294 $ 95,118 $ 89,307

Operating income $ 36,098 $ 35,233 $ 32,505

$ 35,233 $ 32,505 $ 22,170

Greater China:

$ 74,200 $ 68,366 $ 40,308

Net sales $ 72,559 $ 74,200 $ 68,366

Operating income $ 30,328 $ 31,153 $ 28,504

$ 31,153 $ 28,504 $ 15,261

$ 25,977 $ 28,482 $ 21,418

Net sales $ 24,257 $ 25,977 $ 28,482

Operating income $ 11,888 $ 12,257 $ 12,798

$ 12,257 $ 12,798 $ 9,279

Rest of Asia Pacific:

$ 29,375 $ 26,356 $ 19,593

Net sales $ 29,615 $ 29,375 $ 26,356

Operating income $ 12,066 $ 11,569 $ 9,817

$ 11,569 $ 9,817 $ 6,808

A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2023, 2022 and 2021 is as follows (in millions):

1 unchanged sentence

Segment operating income $ 150,888 $ 152,895 $ 137,006

$ 152,895 $ 137,006 $ 91,240

Research and development expense ( 29,915 ) ( 26,251 ) ( 21,914 )

( 26,251 ) ( 21,914 ) ( 18,752 )

Other corporate expenses, net (1)

1 unchanged sentence

Total operating income $ 114,301 $ 119,437 $ 108,949

$ 119,437 $ 108,949 $ 66,288

(1) Includes corporate marketing expenses, certain share-based compensation expenses, various nonrecurring charges, and other separately managed general and administrative costs.

| 2023 Form 10-K | 47

and China were the only countries that accounted for more than 10% of the Company’s net sales in 2023, 2022 and 2021.

4 unchanged sentences

Other countries 172,153 172,269 163,648

172,269 163,648 125,010

Total net sales $ 383,285 $ 394,328 $ 365,817

$ 394,328 $ 365,817 $ 274,515

Long-lived assets:

2 unchanged sentences

Total long-lived assets $ 43,715 $ 42,117

$ 42,117 $ 39,440

(1) China includes Hong Kong and Taiwan.

Long-lived assets located in China consist primarily of assets related to product manufacturing, retail stores and related infrastructure.

| 2023 Form 10-K | 48

7 unchanged sentences

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), Apple Inc.’s internal control over financial reporting as of September 24, 2022, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated October 27, 2022 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), Apple Inc.’s internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 2, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

20 unchanged sentences

As of September 30, 2023, the total amount of gross unrecognized tax benefits was $ 19.5 billion, of which $ 9.5 billion, if recognized, would impact Apple Inc.’s effective tax rate.

In accounting for uncertain tax positions, Apple Inc.

In accounting for some of the uncertain tax positions, Apple Inc.

uses significant judgment in the interpretation and application of complex domestic and international tax laws.

11 unchanged sentences

San Jose, California

October 27, 2022

November 2, 2023

| 2023 Form 10-K | 50

6 unchanged sentences

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), the consolidated balance sheets of Apple Inc.

as of September 24, 2022 and September 25, 2021, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended September 24, 2022, and the related notes and our report dated October 27, 2022 expressed an unqualified opinion thereon.

as of September 30, 2023 and September 24, 2022, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended September 30, 2023, and the related notes and our report dated November 2, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

20 unchanged sentences

San Jose, California

October 27, 2022

November 2, 2023

| 2023 Form 10-K | 51

1 unchanged sentence

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-K

Item 8. Financial Statements and Supplementary Data