What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-02-02 compared with 2023-08-04 · 92 added, 176 removed, 277 unchanged (49% 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 Nine Months Ended

2023 June 25,

Three Months Ended

2023 December 31,

Products $ 96,458 $ 96,388

25 unchanged sentences

(In millions)

Three Months Ended Nine Months Ended

2023 June 25,

$ 19,881 $ 19,442 $ 74,039 $ 79,082

Three Months Ended

2023 December 31,

Net income $ 33,916 $ 29,998

Other comprehensive income/(loss):

Change in foreign currency translation, net of tax 308 ( 14 )

( 385 ) ( 721 ) ( 494 ) ( 1,102 )

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

2 unchanged sentences

Total change in unrealized gains/losses on derivative instruments ( 1,354 ) ( 2,754 )

612 973 ( 2,346 ) 1,461

Change in unrealized gains/losses on marketable debt securities, net of tax:

Change in fair value of marketable debt securities 3,045 900

( 340 ) ( 3,150 ) 1,963 ( 9,959 )

Adjustment for net (gains)/losses realized and included in net income 75 65

58 95 185 140

Total change in unrealized gains/losses on marketable debt securities 3,120 965

( 282 ) ( 3,055 ) 2,148 ( 9,819 )

Total other comprehensive income/(loss) 2,074 ( 1,803 )

9 unchanged sentences

Accounts receivable, net 23,194 29,508

Inventories 7,351 4,946

Vendor non-trade receivables 26,908 31,477

Inventories 6,511 6,331

Other current assets 13,979 14,695

5 unchanged sentences

Total non-current assets 209,822 209,017

212,379 217,350

$ 335,038 $ 352,755

Total assets $ 353,514 $ 352,583

LIABILITIES AND SHAREHOLDERS’ EQUITY:

7 unchanged sentences

Non-current liabilities:

98,071 98,959

Term debt 95,088 95,281

Other non-current liabilities 50,353 49,848

51,730 49,142

Total non-current liabilities 145,441 145,129

149,801 148,101

Total liabilities 279,414 290,437

274,764 302,083

Commitments and contingencies

5 unchanged sentences

Retained earnings/(Accumulated deficit) 8,242 ( 214 )

Accumulated other comprehensive income/(loss) ( 11,801 ) ( 11,109 )

Accumulated other comprehensive loss ( 9,378 ) ( 11,452 )

Total shareholders’ equity 74,100 62,146

4 unchanged sentences

(In millions, except per-share amounts)

Three Months Ended Nine Months Ended

2023 June 25,

Three Months Ended

2023 December 31,

Total shareholders’ equity, beginning balances $ 62,146 $ 50,672

1 unchanged sentence

Beginning balances 73,812 64,849

Common stock issued

Common stock withheld related to net share settlement of equity awards ( 1,660 ) ( 1,434 )

( 1,595 ) ( 1,371 ) ( 3,310 ) ( 2,783 )

Share-based compensation 3,084 2,984

5 unchanged sentences

Common stock withheld related to net share settlement of equity awards ( 1,018 ) ( 978 )

( 858 ) ( 1,403 ) ( 1,988 ) ( 3,323 )

Common stock repurchased ( 20,668 ) ( 19,000 )

10 unchanged sentences

(In millions)

Nine Months Ended

2023 June 25,

Three Months Ended

2023 December 31,

Cash, cash equivalents and restricted cash, beginning balances

$ 30,737 $ 24,977

Operating activities:

6 unchanged sentences

Accounts receivable, net 6,555 4,275

Inventories ( 2,570 ) 1,049

Vendor non-trade receivables 4,569 2,320

Inventories ( 137 ) ( 1,807 )

Other current and non-current assets ( 1,457 ) ( 4,099 )

13 unchanged sentences

Repurchases of common stock ( 20,139 ) ( 19,475 )

Proceeds from issuance of term debt, net 5,228 —

Repayments of term debt — ( 1,401 )

Proceeds from/(Repayments of) commercial paper, net ( 5,971 ) 4,970

Repayments of commercial paper, net ( 3,984 ) ( 8,214 )

Other ( 46 ) ( 389 )

2 unchanged sentences

Cash, cash equivalents and restricted cash, ending balances

$ 41,974 $ 21,974

Supplemental cash flow disclosure:

Cash paid for income taxes, net $ 7,255 $ 828

Cash paid for interest $ 2,590 $ 1,910

See accompanying Notes to Condensed Consolidated Financial Statements.

5 unchanged sentences

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

Intercompany accounts and transactions have been eliminated.

In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

The preparation of these condensed 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.

generally accepted accounting principles (“GAAP”) requires the use of management estimates.

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

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the fiscal year ended September 24, 2022.

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

2 unchanged sentences

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.

Earnings Per Share

The following table shows the computation of basic and diluted earnings per share for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 (net income in millions and shares in thousands):

Three Months Ended Nine Months Ended

2023 June 25,

Net income $ 19,881 $ 19,442 $ 74,039 $ 79,082

Weighted-average basic shares outstanding 15,697,614 16,162,945 15,792,497 16,277,824

Effect of dilutive securities 77,407 99,258 66,766 117,113

Weighted-average diluted shares 15,775,021 16,262,203 15,859,263 16,394,937

Basic earnings per share $ 1.27 $ 1.20 $ 4.69 $ 4.86

Diluted earnings per share $ 1.26 $ 1.20 $ 4.67 $ 4.82

Approximately 32 million restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share for the nine months ended July 1, 2023 because their effect would have been antidilutive.

| Q3 2023 Form 10-Q | 6

Note 2 – Revenue

Net sales disaggregated by significant products and services for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 were as follows (in millions):

Three Months Ended Nine Months Ended

2023 June 25,

$ 39,669 $ 40,665 $ 156,778 $ 162,863

6,840 7,382 21,743 28,669

Net sales disaggregated by significant products and services for the three months ended December 30, 2023 and December 31, 2022 were as follows (in millions):

Three Months Ended

2023 December 31,

$ 69,702 $ 65,775

2 unchanged sentences

Total net sales $ 119,575 $ 117,154

Total net sales include $ 3.3 billion of revenue recognized in the three months ended July 1, 2023 that was included in deferred revenue as of April 1, 2023, $ 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, $ 7.0 billion of revenue recognized in the nine months ended July 1, 2023 that was included in deferred revenue as of September 24, 2022, and $ 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.

The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 10, “Segment Information and Geographic Data” for the three- and nine-month periods ended July 1, 2023 and June 25, 2022, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales.

As of July 1, 2023 and September 24, 2022, the Company had total deferred revenue of $ 12.2 billion and $ 12.4 billion, respectively.

As of July 1, 2023, the Company expects 67 % of total deferred revenue to be realized in less than a year, 26 % within one-to-two years, 6 % within two-to-three years and 1 % in greater than three years.

Total net sales include $ 3.5 billion of revenue recognized in the three months ended December 30, 2023 that was included in deferred revenue as of September 30, 2023 and $ 3.4 billion of revenue recognized in the three months ended December 31, 2022 that was included in deferred revenue as of September 24, 2022.

The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 10, “Segment Information and Geographic Data” for the three months ended December 30, 2023 and December 31, 2022, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales.

As of December 30, 2023 and September 30, 2023, the Company had total deferred revenue of $ 12.5 billion and $ 12.1 billion, respectively.

As of December 30, 2023, the Company expects 66 % of total deferred revenue to be realized in less than a year, 26 % within one-to-two years, 7 % within two-to-three years and 1 % in greater than three years.

| Q1 2024 Form 10-Q | 6

Note 3 – Earnings Per Share

The following table shows the computation of basic and diluted earnings per share for the three months ended December 30, 2023 and December 31, 2022 (net income in millions and shares in thousands):

Three Months Ended

2023 December 31,

Net income $ 33,916 $ 29,998

Weighted-average basic shares outstanding 15,509,763 15,892,723

Effect of dilutive share-based awards

66,878 62,995

Weighted-average diluted shares 15,576,641 15,955,718

Basic earnings per share $ 2.19 $ 1.89

Diluted earnings per share $ 2.18 $ 1.88

Approximately 89 million restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share for the three months ended December 31, 2022 because their effect would have been antidilutive.

Note 4 – Financial Instruments

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 July 1, 2023 and September 24, 2022 (in millions):

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of December 30, 2023 and September 30, 2023 (in millions):

December 30, 2023

Cost Unrealized

4 unchanged sentences

Cash $ 29,542 $ — $ — $ 29,542 $ 29,542 $ — $ —

Level 1 (1) :

Money market funds 2,000 — — 2,000 2,000 — —

Mutual funds 366 15 ( 19 ) 362 — 362 —

448 35 ( 11 ) 472 — 472 —

Subtotal 2,448 35 ( 11 ) 2,472 2,000 472 —

4 unchanged sentences

Certificates of deposit and time deposits 1,448 — — 1,448 1,119 329 —

2,315 — — 2,315 1,960 355 —

Commercial paper 1,361 — — 1,361 472 889 —

2 unchanged sentences

Mortgage- and asset-backed securities 22,369 53 ( 1,907 ) 20,515 — 425 20,090

22,383 4 ( 2,299 ) 20,088 — 165 19,923

Subtotal 148,258 231 ( 7,928 ) 140,561 9,218 31,868 99,475

8 unchanged sentences

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

Level 1 (1) :

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

$ 173,752 $ 30 $ ( 11,683 ) $ 162,099 $ 29,965 $ 31,590 $ 100,544

(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.

(3) As of July 1, 2023 and September 24, 2022, total marketable securities included $ 14.1 billion and $ 12.7 billion, respectively, that were restricted from general use, related to the State Aid Decision (refer to Note 5, “Income Taxes”) and other agreements.

The following table shows the fair value of the Company’s non-current marketable debt securities, by contractual maturity, as of July 1, 2023 (in millions):

(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 December 30, 2023 and September 30, 2023, total marketable securities included $ 13.9 billion and $ 13.8 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.

The following table shows the fair value of the Company’s non-current marketable debt securities, by contractual maturity, as of December 30, 2023 (in millions):

Due after 1 year through 5 years $ 72,994

6 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.

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 July 1, 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.

As of December 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 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.

| Q1 2024 Form 10-Q | 8

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.

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.

The notional amounts of the Company’s outstanding derivative instruments as of July 1, 2023 and September 24, 2022 were as follows (in millions):

The notional amounts of the Company’s outstanding derivative instruments as of December 30, 2023 and September 30, 2023 were as follows (in millions):

2023 September 30,

4 unchanged sentences

Foreign exchange contracts $ 102,108 $ 104,777

The gross fair values of the Company’s derivative assets and liabilities as of September 24, 2022 were as follows (in millions):

September 24, 2022

Fair Value of

Derivatives Designated

as Accounting Hedges Fair Value of

Derivatives Not Designated

as Accounting Hedges Total

Derivative assets (1) :

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

Derivative liabilities (2) :

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

Interest rate contracts $ 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 Condensed 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 Condensed 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.

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.

The carrying amounts of the Company’s hedged items in fair value hedges as of July 1, 2023 and September 24, 2022 were as follows (in millions):

The carrying amounts of the Company’s hedged items in fair value hedges as of December 30, 2023 and September 30, 2023 were as follows (in millions):

2023 September 30,

2 unchanged sentences

Current and non-current term debt $ ( 18,661 ) $ ( 18,247 )

| Q3 2023 Form 10-Q | 9

Accounts Receivable

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 % of total trade receivables as of September 24, 2022.

The Company’s third-party cellular network carriers accounted for 34 % and 41 % of total trade receivables as of December 30, 2023 and September 30, 2023, 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.

As of July 1, 2023, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 54 % and 14 % .

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 December 30, 2023, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 50 % and 20 % .

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 %.

Note 5 – Condensed Consolidated Financial Statement Details

The following tables show the Company’s condensed consolidated financial statement details as of July 1, 2023 and September 24, 2022 (in millions):

2023 September 24,

Components $ 3,788 $ 1,637

Finished goods 3,563 3,309

Total inventories $ 7,351 $ 4,946

The following table shows the Company’s condensed consolidated financial statement details as of December 30, 2023 and September 30, 2023 (in millions):

Property, Plant and Equipment, Net

1 unchanged sentence

Gross property, plant and equipment $ 116,176 $ 114,599

Accumulated depreciation and amortization ( 70,787 ) ( 72,340 )

Accumulated depreciation

( 72,510 ) ( 70,884 )

Total property, plant and equipment, net $ 43,666 $ 43,715

Other Income/(Expense), Net

The following table shows the detail of other income/(expense), net for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 (in millions):

Three Months Ended Nine Months Ended

2023 June 25,

Interest and dividend income $ 980 $ 722 $ 2,766 $ 2,072

Interest expense ( 998 ) ( 719 ) ( 2,931 ) ( 2,104 )

Other expense, net ( 247 ) ( 13 ) ( 429 ) ( 65 )

Total other income/(expense), net $ ( 265 ) $ ( 10 ) $ ( 594 ) $ ( 97 )

| Q1 2024 Form 10-Q | 9

Note 5 – Income Taxes

European Commission State Aid Decision

On August 30, 2016, the European Commission announced its decision that Ireland granted state aid to the Company by providing tax opinions in 1991 and 2007 concerning the tax allocation of profits of the Irish branches of two subsidiaries of the Company (the “State Aid Decision”).

The State Aid Decision ordered Ireland to calculate and recover additional taxes from the Company for the period June 2003 through December 2014.

Irish legislative changes, effective as of January 2015, eliminated the application of the tax opinions from that date forward.

The Company and Ireland appealed the State Aid Decision to the General Court of the Court of Justice of the European Union (the “General Court”).

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 “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.

Note 6 – Debt

Commercial Paper

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

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.

As of July 1, 2023 and September 24, 2022, the Company had $ 4.0 billion and $ 10.0 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 July 1, 2023 and June 25, 2022 (in millions):

Nine Months Ended

2023 June 25,

As of December 30, 2023 and September 30, 2023, the Company had $ 2.0 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 three months ended December 30, 2023 and December 31, 2022 (in millions):

Three Months Ended

2023 December 31,

Maturities 90 days or less:

Proceeds from/(Repayments of) commercial paper, net $ ( 3,326 ) $ 4,383

Repayments of commercial paper, net $ ( 3,984 ) $ ( 5,569 )

Maturities greater than 90 days:

Proceeds from commercial paper — 5,731

Repayments of commercial paper — ( 2,645 )

Proceeds from/(Repayments of) commercial paper, net ( 2,645 ) 587

Total proceeds from/(repayments of) commercial paper, net $ ( 5,971 ) $ 4,970

As of July 1, 2023 and September 24, 2022, the Company had outstanding fixed-rate notes with varying maturities for an aggregate carrying amount of $ 105.3 billion and $ 110.1 billion, respectively (collectively the “Notes”).

As of July 1, 2023 and September 24, 2022, the fair value of the Company’s Notes, based on Level 2 inputs, was $ 95.3 billion and $ 98.8 billion, respectively.

Total repayments of commercial paper, net $ ( 3,984 ) $ ( 8,214 )

As of December 30, 2023 and September 30, 2023, the Company had outstanding fixed-rate notes with varying maturities for an aggregate carrying amount of $ 106.0 billion and $ 105.1 billion, respectively (collectively the “Notes”).

As of December 30, 2023 and September 30, 2023, the fair value of the Company’s Notes, based on Level 2 inputs, was $ 96.7 billion and $ 90.8 billion, respectively.

Note 7 – Shareholders’ Equity

Share Repurchase Program

During the nine months ended July 1, 2023, the Company repurchased 365 million shares of its common stock for $ 56.1 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 Securities Exchange Act of 1934, as amended.

| Q3 2023 Form 10-Q | 11

Note 8 – Benefit Plans

During the three months ended December 30, 2023, the Company repurchased 118 million shares of its common stock for $ 20.5 billion.

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

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

Note 8 – Share-Based Compensation

Restricted Stock Units

A summary of the Company’s RSU activity and related information for the nine months ended July 1, 2023 is as follows:

A summary of the Company’s RSU activity and related information for the three months ended December 30, 2023 is as follows:

(in thousands)

7 unchanged sentences

RSUs canceled ( 3,026 ) $ 109.05

Balance as of July 1, 2023 184,716 $ 135.08 $ 35,829

The fair value as of the respective vesting dates of RSUs was $ 7.0 billion and $ 14.9 billion for the three- and nine-month periods ended July 1, 2023, respectively, and was $ 7.8 billion and $ 17.3 billion for the three- and nine-month periods ended June 25, 2022, respectively.

Balance as of December 30, 2023 208,972 $ 154.09 $ 40,233

The fair value as of the respective vesting dates of RSUs was $ 7.7 billion and $ 6.8 billion for the three months ended December 30, 2023 and December 31, 2022, respectively.

| Q1 2024 Form 10-Q | 10

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 nine-month periods ended July 1, 2023 and June 25, 2022 (in millions):

Three Months Ended Nine Months Ended

2023 June 25,

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 months ended December 30, 2023 and December 31, 2022 (in millions):

Three Months Ended

2023 December 31,

Share-based compensation expense $ 2,997 $ 2,905

Income tax benefit related to share-based compensation expense $ ( 1,235 ) $ ( 1,178 )

As of July 1, 2023, the total unrecognized compensation cost related to outstanding RSUs and stock options was $ 20.9 billion, which the Company expects to recognize over a weighted-average period of 2.7 years.

Note 9 – Commitments and Contingencies

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 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 July 1, 2023, are as follows (in millions):

2023 (remaining three months) $ 1,260

Thereafter 8,198

Total $ 18,957

Contingencies

As of December 30, 2023, the total unrecognized compensation cost related to outstanding RSUs was $ 27.4 billion, which the Company expects to recognize over a weighted-average period of 2.9 years.

Note 9 – Contingencies

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully resolved.

1 unchanged sentence

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.

| Q3 2023 Form 10-Q | 12

Note 10 – Segment Information and Geographic Data

The following table shows information by reportable segment for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 (in millions):

Three Months Ended Nine Months Ended

2023 June 25,

The following table shows information by reportable segment for the three months ended December 30, 2023 and December 31, 2022 (in millions):

Three Months Ended

2023 December 31,

Net sales $ 50,430 $ 49,278

10 unchanged sentences

Operating income $ 4,579 $ 3,851

A reconciliation of the Company’s segment operating income to the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 is as follows (in millions):

Three Months Ended Nine Months Ended

2023 June 25,

| Q1 2024 Form 10-Q | 11

A reconciliation of the Company’s segment operating income to the Condensed Consolidated Statements of Operations for the three months ended December 30, 2023 and December 31, 2022 is as follows (in millions):

Three Months Ended

2023 December 31,

Segment operating income $ 50,088 $ 45,405

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