What changed in this filing

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Item 1. Financial Statements

2024-08-02 compared with 2024-05-03 · 65 added, 71 removed, 316 unchanged (30% of the section changed)

2 unchanged sentences

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

Three Months Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Three Months Ended Nine Months Ended

2023 June 29,

Products $ 61,564 $ 60,584 $ 224,908 $ 230,901

25 unchanged sentences

(In millions)

Three Months Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Three Months Ended Nine Months Ended

2023 June 29,

Net income $ 21,448 $ 19,881 $ 79,000 $ 74,039

49 unchanged sentences

79,850 73,812

Retained earnings/(Accumulated deficit) 4,339 ( 214 )

Accumulated deficit ( 4,726 ) ( 214 )

Accumulated other comprehensive loss ( 8,416 ) ( 11,452 )

5 unchanged sentences

(In millions, except per-share amounts)

Three Months Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

Three Months Ended Nine Months Ended

2023 June 29,

Total shareholders’ equity, beginning balances $ 74,194 $ 62,158 $ 62,146 $ 50,672

22 unchanged sentences

(In millions)

Six Months Ended

2024 April 1,

Nine Months Ended

Cash, cash equivalents and restricted cash, beginning balances

25 unchanged sentences

Repurchases of common stock ( 69,866 ) ( 56,547 )

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

Repayments of term debt ( 7,400 ) ( 11,151 )

2 unchanged sentences

Cash used in financing activities ( 97,035 ) ( 85,335 )

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

Increase/(Decrease) in cash, cash equivalents and restricted cash ( 4,102 ) 4,921

Cash, cash equivalents and restricted cash, ending balances

18 unchanged sentences

Note 2 – Revenue

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,

Net sales disaggregated by significant products and services for the three- and nine-month periods ended June 29, 2024 and July 1, 2023 were as follows (in millions):

Three Months Ended Nine Months Ended

2023 June 29,

$ 39,296 $ 39,669 $ 154,961 $ 156,778

4 unchanged sentences

Total net sales $ 85,777 $ 81,797 $ 296,105 $ 293,787

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.

Total net sales include $ 3.4 billion of revenue recognized in the three months ended June 29, 2024 that was included in deferred revenue as of March 30, 2024, $ 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 , $ 6.5 billion of revenue recognized in the nine months ended June 29, 2024 that was included in deferred revenue as of September 30, 2023, and $ 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.

The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 11, “Segment Information and Geographic Data” for the three- and nine-month periods ended June 29, 2024 and July 1, 2023, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales.

As of June 29, 2024 and September 30, 2023, the Company had total deferred revenue of $ 12.5 billion and $ 12.1 billion, respectively.

As of June 29, 2024, the Company expects 64 % of total deferred revenue to be realized in less than a year, 25 % within one-to-two years, 9 % within two-to-three years and 2 % in greater than three years.

| Q3 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- 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,

The following table shows the computation of basic and diluted earnings per share for the three- and nine-month periods ended June 29, 2024 and July 1, 2023 (net income in millions and shares in thousands):

Three Months Ended Nine Months Ended

2023 June 29,

Net income $ 21,448 $ 19,881 $ 79,000 $ 74,039

5 unchanged sentences

Diluted earnings per share $ 1.40 $ 1.26 $ 5.11 $ 4.67

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.

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.

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 March 30, 2024 and September 30, 2023 (in millions):

March 30, 2024

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of June 29, 2024 and September 30, 2023 (in millions):

June 29, 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 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):

(2) As of June 29, 2024 and September 30, 2023, total marketable securities included $ 14.1 billion and $ 13.8 billion, respectively, that were restricted from general use, related to the State Aid Decision (refer to Note 6, “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 June 29, 2024 (in millions):

Due after 1 year through 5 years $ 64,209

11 unchanged sentences

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

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.

As of June 29, 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 March 30, 2024 and September 30, 2023 were as follows (in millions):

The notional amounts of the Company’s outstanding derivative instruments as of June 29, 2024 and September 30, 2023 were as follows (in millions):

2024 September 30,

4 unchanged sentences

Foreign exchange contracts $ 97,136 $ 104,777

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):

The carrying amounts of the Company’s hedged items in fair value hedges as of June 29, 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 March 30, 2024 and September 30, 2023, respectively.

The Company’s third-party cellular network carriers accounted for 32 % and 41 % of total trade receivables as of June 29, 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 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 %.

As of June 29, 2024, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted f or 46 % and 18 % .

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 March 30, 2024 and September 30, 2023 (in millions):

The following table shows the Company’s condensed consolidated financial statement details as of June 29, 2024 and September 30, 2023 (in millions):

Property, Plant and Equipment, Net

5 unchanged sentences

| Q3 2024 Form 10-Q | 9

Note 6 – Income Taxes

European Commission State Aid Decision

On August 30, 2016, the European Commission (the “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 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 the fourth quarter of 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 7 – Debt

2 unchanged sentences

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

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,

As of June 29, 2024 and September 30, 2023, the Company had $ 3.0 billion and $ 6.0 billion of commercial paper outstanding, respectively.

The following table provides a summary of cash flows associated with the issuance and maturities of commercial paper for the nine months ended June 29, 2024 and July 1, 2023 (in millions):

Nine Months Ended

Maturities 90 days or less:

3 unchanged sentences

Total repayments of commercial paper, net $ ( 2,985 ) $ ( 5,971 )

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.

As of June 29, 2024 and September 30, 2023, the Company had outstanding fixed-rate notes with varying maturities for an aggregate carrying amount of $ 98.3 billion and $ 105.1 billion, respectively (collectively the “Notes”).

As of June 29, 2024 and September 30, 2023, the fair value of the Company’s Notes, based on Level 2 inputs, was $ 86.2 billion and $ 90.8 billion, respectively.

Note 8 – Shareholders’ Equity

Share Repurchase Program

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.

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”).

During the nine months ended June 29, 2024, the Company repurchased 387 million shares of its common stock for $ 70.0 billion.

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 (the “Exchange Act”).

| Q3 2024 Form 10-Q | 10

Note 9 – Share-Based Compensation

Restricted Stock Units

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

A summary of the Company’s RSU activity and related information for the nine months ended June 29, 2024 is as follows:

(in thousands)

7 unchanged sentences

RSUs canceled ( 8,258 ) $ 137.85

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

Balance as of June 29, 2024 166,423 $ 157.66 $ 35,052

The fair value as of the respective vesting dates of RSUs was $ 6.4 billion an d $ 15.0 billion for the three- and nine-month periods ended June 29, 2024, respectively, and was $ 7.0 billion and $ 14.9 billion for the three- and nine-month periods ended July 1, 2023, respectively.

Share-Based Compensation

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

Three Months Ended Six Months Ended

2024 April 1,

2023 March 30,

2024 April 1,

The following table shows share-based compensation expense and the related income tax benefit included in the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended June 29, 2024 and July 1, 2023 (in millions):

Three Months Ended Nine Months Ended

2023 June 29,

Share-based compensation expense $ 2,869 $ 2,617 $ 8,830 $ 8,208

Income tax benefit related to share-based compensation expense $ ( 764 ) $ ( 993 ) $ ( 2,662 ) $ ( 2,791 )

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.

As of June 29, 2024, the total unrecognized compensation cost related to outstanding RSUs was $ 21.9 billion, which the Company expects to recognize over a weighted-average period of 2.6 years.

Note 10 – Contingencies

2 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.

| Q3 2024 Form 10-Q | 11

Note 11 – Segment Information and Geographic Data

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,

The following table shows information by reportable segment for the three- and nine-month periods ended June 29, 2024 and July 1, 2023 (in millions):

Three Months Ended Nine Months Ended

2023 June 29,

Net sales $ 37,678 $ 35,383 $ 125,381 $ 122,445

10 unchanged sentences

Operating income $ 2,610 $ 2,328 $ 9,995 $ 9,447

| 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- 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,

A reconciliation of the Company’s segment operating income to the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended June 29, 2024 and July 1, 2023 is as follows (in millions):

Three Months Ended Nine Months Ended

2023 June 29,

Segment operating income $ 35,095 $ 32,090 $ 122,889 $ 114,983

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