What changed in this filing

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Item 1. Financial Statements

2024-05-03 compared with 2024-02-02 · 71 added, 53 removed, 316 unchanged (28% of the section changed)

2 unchanged sentences

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

Three Months Ended

2023 December 31,

Three Months Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Products $ 66,886 $ 73,929 $ 163,344 $ 170,317

25 unchanged sentences

(In millions)

Three Months Ended

2023 December 31,

Three Months Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Net income $ 23,636 $ 24,160 $ 57,552 $ 54,158

57 unchanged sentences

(In millions, except per-share amounts)

Three Months Ended

2023 December 31,

Three Months Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Total shareholders’ equity, beginning balances $ 74,100 $ 56,727 $ 62,146 $ 50,672

1 unchanged sentence

Beginning balances 75,236 66,399 73,812 64,849

Common stock issued 752 690 752 690

Common stock withheld related to net share settlement of equity awards ( 222 ) ( 281 ) ( 1,882 ) ( 1,715 )

18 unchanged sentences

(In millions)

Three Months Ended

2023 December 31,

Six Months Ended

2024 April 1,

Cash, cash equivalents and restricted cash, beginning balances

20 unchanged sentences

Other ( 729 ) ( 247 )

Cash generated by/(used in) investing activities 1,927 ( 1,445 )

Cash generated by investing activities 1,617 874

Financing activities:

6 unchanged sentences

Cash used in financing activities ( 61,018 ) ( 61,287 )

Increase/(Decrease) in cash, cash equivalents and restricted cash 11,237 ( 3,003 )

Increase in cash, cash equivalents and restricted cash 3,184 2,152

Cash, cash equivalents and restricted cash, ending balances

12 unchanged sentences

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 30, 2023 (the “2023 Form 10-K”).

4 unchanged sentences

Note 2 – Revenue

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,

Net sales disaggregated by significant products and services for the three- and six-month periods ended March 30, 2024 and April 1, 2023 were as follows (in millions):

Three Months Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

$ 45,963 $ 51,334 $ 115,665 $ 117,109

7,451 7,168 15,231 14,903

5,559 6,670 12,582 16,066

Wearables, Home and Accessories 7,913 8,757 19,866 22,239

1 unchanged sentence

Total net sales $ 90,753 $ 94,836 $ 210,328 $ 211,990

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.

Total net sales include $ 3.3 billion of revenue recognized in the three months ended March 30, 2024 that was included in deferred revenue as of December 30, 2023, $ 3.5 billion of revenue recognized in the three months ended April 1, 2023 that was included in deferred revenue as of December 31, 2022 , $ 5.1 billion of revenue recognized in the six months ended March 30, 2024 that was included in deferred revenue as of September 30, 2023, and $ 5.5 billion of revenue recognized in the six months ended April 1, 2023 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- and six-month periods ended March 30, 2024 and April 1, 2023, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales.

As of March 30, 2024 and September 30, 2023, the Company had total deferred revenue of $ 12.6 billion and $ 12.1 billion, respectively.

As of March 30, 2024, the Company expects 64 % of total deferred revenue to be realized in less than a year, 26 % within one-to-two years, 9 % within two-to-three years and 1 % in greater than three years.

| Q2 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,

The following table shows the computation of basic and diluted earnings per share for the three- and six-month periods ended March 30, 2024 and April 1, 2023 (net income in millions and shares in thousands):

Three Months Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Net income $ 23,636 $ 24,160 $ 57,552 $ 54,158

5 unchanged sentences

Diluted earnings per share $ 1.53 $ 1.52 $ 3.71 $ 3.41

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.

Approximately 48 million restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share for the six months ended April 1, 2023 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 December 30, 2023 and September 30, 2023 (in millions):

December 30, 2023

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of March 30, 2024 and September 30, 2023 (in millions):

March 30, 2024

Cost Unrealized

42 unchanged sentences

(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):

(2) As of March 30, 2024 and September 30, 2023, total marketable securities included $ 14.0 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 March 30, 2024 (in millions):

Due after 1 year through 5 years $ 67,987

11 unchanged sentences

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

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.

As of March 30, 2024, 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 18 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.

3 unchanged sentences

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

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

The notional amounts of the Company’s outstanding derivative instruments as of March 30, 2024 and September 30, 2023 were as follows (in millions):

2024 September 30,

4 unchanged sentences

Foreign exchange contracts $ 75,552 $ 104,777

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):

The carrying amounts of the Company’s hedged items in fair value hedges as of March 30, 2024 and September 30, 2023 were as follows (in millions):

2024 September 30,

4 unchanged sentences

Trade Receivables

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’s third-party cellular network carriers accounted for 34 % and 41 % of total trade receivables as of March 30, 2024 and September 30, 2023, respectively.

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

4 unchanged sentences

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 %.

As of March 30, 2024, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted f or 47 % and 19 %.

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

The following table shows the Company’s condensed consolidated financial statement details as of March 30, 2024 and September 30, 2023 (in millions):

Property, Plant and Equipment, Net

9 unchanged sentences

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

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,

As of March 30, 2024 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 six months ended March 30, 2024 and April 1, 2023 (in millions):

Six Months Ended

2024 April 1,

Maturities 90 days or less:

3 unchanged sentences

Total repayments of commercial paper, net $ ( 3,982 ) $ ( 7,960 )

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.

As of March 30, 2024 and September 30, 2023, the Company had outstanding fixed-rate notes with varying maturities for an aggregate carrying amount of $ 102.6 billion and $ 105.1 billion, respectively (collectively the “Notes”).

As of March 30, 2024 and September 30, 2023, the fair value of the Company’s Notes, based on Level 2 inputs, was $ 91.6 billion and $ 90.8 billion, respectively.

Note 7 – Shareholders’ Equity

Share Repurchase Program

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

During the six months ended March 30, 2024, the Company repurchased 248 million shares of its common stock for $ 44.0 billion.

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

2 unchanged sentences

Restricted Stock Units

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

A summary of the Company’s RSU activity and related information for the six months ended March 30, 2024 is as follows:

(in thousands)

7 unchanged sentences

RSUs canceled ( 5,195 ) $ 126.83

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.

Balance as of March 30, 2024 203,851 $ 154.66 $ 34,956

The fair value as of the respective vesting dates of RSUs was $ 821 million an d $ 8.6 billion for the three- and six-month periods ended March 30, 2024, respectively, and was $ 1.1 billion and $ 8.0 billion for the three- and six-month periods ended April 1, 2023, respectively.

| Q2 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 months ended December 30, 2023 and December 31, 2022 (in millions):

Three Months Ended

2023 December 31,

The following table shows share-based compensation expense and the related income tax benefit included in the Condensed Consolidated Statements of Operations for the three- and six-month periods ended March 30, 2024 and April 1, 2023 (in millions):

Three Months Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Share-based compensation expense $ 2,964 $ 2,686 $ 5,961 $ 5,591

Income tax benefit related to share-based compensation expense $ ( 663 ) $ ( 620 ) $ ( 1,898 ) $ ( 1,798 )

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.

As of March 30, 2024, the total unrecognized compensation cost related to outstanding RSUs was $ 24.7 billion, which the Company expects to recognize over a weighted-average period of 2.7 years.

Note 9 – Contingencies

3 unchanged sentences

Note 10 – Segment Information and Geographic Data

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,

The following table shows information by reportable segment for the three- and six-month periods ended March 30, 2024 and April 1, 2023 (in millions):

Three Months Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Net sales $ 37,273 $ 37,784 $ 87,703 $ 87,062

11 unchanged sentences

| Q2 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,

A reconciliation of the Company’s segment operating income to the Condensed Consolidated Statements of Operations for the three- and six-month periods ended March 30, 2024 and April 1, 2023 is as follows (in millions):

Three Months Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Segment operating income $ 37,706 $ 37,488 $ 87,794 $ 82,893

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