Apple Inc. 10-Q

Item 1. Financial Statements Apple Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In millions, except number of shares, which are reflected in thousands, and per-share amounts) Three Months Ended Nine Months Ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Net sales: Products $ 61,564 $ 60,584 $ 224,908 $ 230,901 Services 24,213 21,213 71,197 62,886 Total net sales 85,777 81,797 296,105 293,787 Cost of sales: Products 39,803 39,136 140,667 146,696 Services 6,296 6,248 18,634 18,370 Total cost of sales 46,099 45,384 159,301 165,066 Gross margin 39,678 36,413 136,804 128,721 Operating expenses: Research and development 8,006 7,442 23,605 22,608 Selling, general and administrative 6,320 5,973 19,574 18,781 Total operating expenses 14,326 13,415 43,179 41,389 Operating income 25,352 22,998 93,625 87,332 Other income/(expense), net 142 ( 265 ) 250 ( 594 ) Income before provision for income taxes 25,494 22,733 93,875 86,738 Provision for income taxes 4,046 2,852 14,875 12,699 Net income $ 21,448 $ 19,881 $ 79,000 $ 74,039 Earnings per share: Basic $ 1.40 $ 1.27 $ 5.13 $ 4.69 Diluted $ 1.40 $ 1.26 $ 5.11 $ 4.67 Shares used in computing earnings per share: Basic 15,287,521 15,697,614 15,401,047 15,792,497 Diluted 15,348,175 15,775,021 15,463,175 15,859,263 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q3 2024 Form 10-Q | 1 Apple Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (In millions) Three Months Ended Nine Months Ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Net income $ 21,448 $ 19,881 $ 79,000 $ 74,039 Other comprehensive income/(loss): Change in foreign currency translation, net of tax ( 73 ) ( 385 ) ( 87 ) ( 494 ) Change in unrealized gains/losses on derivative instruments, net of tax: Change in fair value of derivative instruments 406 509 331 ( 492 ) Adjustment for net (gains)/losses realized and included in net income ( 87 ) 103 ( 678 ) ( 1,854 ) Total change in unrealized gains/losses on derivative instruments 319 612 ( 347 ) ( 2,346 ) Change in unrealized gains/losses on marketable debt securities, net of tax: Change in fair value of marketable debt securities 268 ( 340 ) 3,306 1,963 Adjustment for net (gains)/losses realized and included in net income 30 58 164 185 Total change in unrealized gains/losses on marketable debt securities 298 ( 282 ) 3,470 2,148 Total other comprehensive income/(loss) 544 ( 55 ) 3,036 ( 692 ) Total comprehensive income $ 21,992 $ 19,826 $ 82,036 $ 73,347 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q3 2024 Form 10-Q | 2 Apple Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions, except number of shares, which are reflected in thousands, and par value) June 29, 2024 September 30, 2023 ASSETS: Current assets: Cash and cash equivalents $ 25,565 $ 29,965 Marketable securities 36,236 31,590 Accounts receivable, net 22,795 29,508 Vendor non-trade receivables 20,377 31,477 Inventories 6,165 6,331 Other current assets 14,297 14,695 Total current assets 125,435 143,566 Non-current assets: Marketable securities 91,240 100,544 Property, plant and equipment, net 44,502 43,715 Other non-current assets 70,435 64,758 Total non-current assets 206,177 209,017 Total assets $ 331,612 $ 352,583 LIABILITIES AND SHAREHOLDERS’ EQUITY: Current liabilities: Accounts payable $ 47,574 $ 62,611 Other current liabilities 60,889 58,829 Deferred revenue 8,053 8,061 Commercial paper 2,994 5,985 Term debt 12,114 9,822 Total current liabilities 131,624 145,308 Non-current liabilities: Term debt 86,196 95,281 Other non-current liabilities 47,084 49,848 Total non-current liabilities 133,280 145,129 Total liabilities 264,904 290,437 Commitments and contingencies Shareholders’ equity: Common stock and additional paid-in capital, $ 0.00001 par value: 50,400,000 shares authorized; 15,222,259 and 15,550,061 shares issued and outstanding, respectively 79,850 73,812 Accumulated deficit ( 4,726 ) ( 214 ) Accumulated other comprehensive loss ( 8,416 ) ( 11,452 ) Total shareholders’ equity 66,708 62,146 Total liabilities and shareholders’ equity $ 331,612 $ 352,583 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q3 2024 Form 10-Q | 3 Apple Inc. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) (In millions, except per-share amounts) Three Months Ended Nine Months Ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Total shareholders’ equity, beginning balances $ 74,194 $ 62,158 $ 62,146 $ 50,672 Common stock and additional paid-in capital: Beginning balances 78,815 69,568 73,812 64,849 Common stock issued — — 752 690 Common stock withheld related to net share settlement of equity awards ( 1,920 ) ( 1,595 ) ( 3,802 ) ( 3,310 ) Share-based compensation 2,955 2,694 9,088 8,438 Ending balances 79,850 70,667 79,850 70,667 Retained earnings/(Accumulated deficit): Beginning balances 4,339 4,336 ( 214 ) ( 3,068 ) Net income 21,448 19,881 79,000 74,039 Dividends and dividend equivalents declared ( 3,864 ) ( 3,811 ) ( 11,384 ) ( 11,207 ) Common stock withheld related to net share settlement of equity awards ( 428 ) ( 858 ) ( 1,517 ) ( 1,988 ) Common stock repurchased ( 26,221 ) ( 18,140 ) ( 70,611 ) ( 56,368 ) Ending balances ( 4,726 ) 1,408 ( 4,726 ) 1,408 Accumulated other comprehensive income/(loss): Beginning balances ( 8,960 ) ( 11,746 ) ( 11,452 ) ( 11,109 ) Other comprehensive income/(loss) 544 ( 55 ) 3,036 ( 692 ) Ending balances ( 8,416 ) ( 11,801 ) ( 8,416 ) ( 11,801 ) Total shareholders’ equity, ending balances $ 66,708 $ 60,274 $ 66,708 $ 60,274 Dividends and dividend equivalents declared per share or RSU $ 0.25 $ 0.24 $ 0.73 $ 0.70 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q3 2024 Form 10-Q | 4 Apple Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) Nine Months Ended June 29, 2024 July 1, 2023 Cash, cash equivalents and restricted cash, beginning balances $ 30,737 $ 24,977 Operating activities: Net income 79,000 74,039 Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization 8,534 8,866 Share-based compensation expense 8,830 8,208 Other ( 1,964 ) ( 1,651 ) Changes in operating assets and liabilities: Accounts receivable, net 6,697 7,609 Vendor non-trade receivables 11,100 13,111 Inventories 41 ( 2,570 ) Other current and non-current assets ( 5,626 ) ( 4,863 ) Accounts payable ( 15,171 ) ( 16,790 ) Other current and non-current liabilities 2 2,986 Cash generated by operating activities 91,443 88,945 Investing activities: Purchases of marketable securities ( 38,074 ) ( 20,956 ) Proceeds from maturities of marketable securities 39,838 27,857 Proceeds from sales of marketable securities 7,382 3,959 Payments for acquisition of property, plant and equipment ( 6,539 ) ( 8,796 ) Other ( 1,117 ) ( 753 ) Cash generated by investing activities 1,490 1,311 Financing activities: Payments for taxes related to net share settlement of equity awards ( 5,163 ) ( 5,119 ) Payments for dividends and dividend equivalents ( 11,430 ) ( 11,267 ) 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 ) Repayments of commercial paper, net ( 2,985 ) ( 5,971 ) Other ( 191 ) ( 508 ) Cash used in financing activities ( 97,035 ) ( 85,335 ) Increase/(Decrease) in cash, cash equivalents and restricted cash ( 4,102 ) 4,921 Cash, cash equivalents and restricted cash, ending balances $ 26,635 $ 29,898 Supplemental cash flow disclosure: Cash paid for income taxes, net $ 19,230 $ 7,020 See accompanying Notes to Condensed Consolidated Financial Statements. Apple Inc. | Q3 2024 Form 10-Q | 5 Apple Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1 – Summary of Significant Accounting Policies Basis of Presentation and Preparation The condensed consolidated financial statements include the accounts of Apple Inc. and its wholly owned subsidiaries (collectively “Apple” or the “Company”). 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 (“GAAP”) requires the use of management estimates. 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”). 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 occurred in the first fiscal quarter of 2023. The Company’s fiscal years 2024 and 2023 span 52 and 53 weeks, respectively. 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. Note 2 – Revenue 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 June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 iPhone ® $ 39,296 $ 39,669 $ 154,961 $ 156,778 Mac ® 7,009 6,840 22,240 21,743 iPad ® 7,162 5,791 19,744 21,857 Wearables, Home and Accessories 8,097 8,284 27,963 30,523 Services 24,213 21,213 71,197 62,886 Total net sales $ 85,777 $ 81,797 $ 296,105 $ 293,787 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. Apple Inc. | 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 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 June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Numerator: Net income $ 21,448 $ 19,881 $ 79,000 $ 74,039 Denominator: Weighted-average basic shares outstanding 15,287,521 15,697,614 15,401,047 15,792,497 Effect of dilutive share-based awards 60,654 77,407 62,128 66,766 Weighted-average diluted shares 15,348,175 15,775,021 15,463,175 15,859,263 Basic earnings per share $ 1.40 $ 1.27 $ 5.13 $ 4.69 Diluted earnings per share $ 1.40 $ 1.26 $ 5.11 $ 4.67 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 June 29, 2024 and September 30, 2023 (in millions): June 29, 2024 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Current Marketable Securities Non-Current Marketable Securities Cash $ 22,866 $ — $ — $ 22,866 $ 22,866 $ — $ — Level 1: Money market funds 1,648 — — 1,648 1,648 — — Mutual funds 493 76 ( 7 ) 562 — 562 — Subtotal 2,141 76 ( 7 ) 2,210 1,648 562 — Level 2 (1) : U.S. Treasury securities 16,298 3 ( 855 ) 15,446 138 4,649 10,659 U.S. agency securities 5,500 — ( 418 ) 5,082 73 518 4,491 Non-U.S. government securities 17,560 31 ( 680 ) 16,911 — 11,592 5,319 Certificates of deposit and time deposits 1,337 — — 1,337 838 492 7 Commercial paper 1,346 — — 1,346 2 1,344 — Corporate debt securities 68,194 83 ( 3,350 ) 64,927 — 15,489 49,438 Municipal securities 480 — ( 13 ) 467 — 197 270 Mortgage- and asset-backed securities 24,508 27 ( 2,086 ) 22,449 — 1,393 21,056 Subtotal 135,223 144 ( 7,402 ) 127,965 1,051 35,674 91,240 Total (2) $ 160,230 $ 220 $ ( 7,409 ) $ 153,041 $ 25,565 $ 36,236 $ 91,240 Apple Inc. | Q3 2024 Form 10-Q | 7 September 30, 2023 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Current Marketable Securities Non-Current Marketable Securities Cash $ 28,359 $ — $ — $ 28,359 $ 28,359 $ — $ — Level 1: Money market funds 481 — — 481 481 — — Mutual funds and equity securities 442 12 ( 26 ) 428 — 428 — Subtotal 923 12 ( 26 ) 909 481 428 — Level 2 (1) : U.S. Treasury securities 19,406 — ( 1,292 ) 18,114 35 5,468 12,611 U.S. agency securities 5,736 — ( 600 ) 5,136 36 271 4,829 Non-U.S. government securities 17,533 6 ( 1,048 ) 16,491 — 11,332 5,159 Certificates of deposit and time deposits 1,354 — — 1,354 1,034 320 — Commercial paper 608 — — 608 — 608 — Corporate debt securities 76,840 6 ( 5,956 ) 70,890 20 12,627 58,243 Municipal securities 628 — ( 26 ) 602 — 192 410 Mortgage- and asset-backed securities 22,365 6 ( 2,735 ) 19,636 — 344 19,292 Subtotal 144,470 18 ( 11,657 ) 132,831 1,125 31,162 100,544 Total (2) $ 173,752 $ 30 $ ( 11,683 ) $ 162,099 $ 29,965 $ 31,590 $ 100,544 (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 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 Due after 5 years through 10 years 8,660 Due after 10 years 18,371 Total fair value $ 91,240 Derivative Instruments and Hedging The Company may use derivative instruments to partially offset its business exposure to foreign exchange and interest rate risk. However, the Company may choose not to hedge certain exposures for a variety of reasons, including accounting considerations or the prohibitive economic cost of hedging particular exposures. 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 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 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 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. Apple Inc. | Q3 2024 Form 10-Q | 8 Interest Rate Risk 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 June 29, 2024 and September 30, 2023 were as follows (in millions): June 29, 2024 September 30, 2023 Derivative instruments designated as accounting hedges: Foreign exchange contracts $ 65,542 $ 74,730 Interest rate contracts $ 13,875 $ 19,375 Derivative instruments not designated as accounting hedges: Foreign exchange contracts $ 97,136 $ 104,777 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): June 29, 2024 September 30, 2023 Hedged assets/(liabilities): Current and non-current marketable securities $ 15,007 $ 14,433 Current and non-current term debt $ ( 13,096 ) $ ( 18,247 ) Accounts Receivable Trade Receivables 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. Vendor Non-Trade Receivables The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these vendors who manufacture subassemblies or assemble final products for the Company. 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 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 June 29, 2024 and September 30, 2023 (in millions): Property, Plant and Equipment, Net June 29, 2024 September 30, 2023 Gross property, plant and equipment $ 117,129 $ 114,599 Accumulated depreciation ( 72,627 ) ( 70,884 ) Total property, plant and equipment, net $ 44,502 $ 43,715 Apple Inc. | 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 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. 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 June 29, 2024 July 1, 2023 Maturities 90 days or less: Repayments of commercial paper, net $ ( 2,985 ) $ ( 3,326 ) Maturities greater than 90 days: Repayments of commercial paper — ( 2,645 ) Total repayments of commercial paper, net $ ( 2,985 ) $ ( 5,971 ) Term Debt 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 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”). Apple Inc. | 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 nine months ended June 29, 2024 is as follows: Number of RSUs (in thousands) Weighted-Average Grant Date Fair Value Per RSU Aggregate Fair Value (in millions) Balance as of September 30, 2023 180,247 $ 135.91 RSUs granted 78,276 $ 172.26 RSUs vested ( 83,842 ) $ 126.47 RSUs canceled ( 8,258 ) $ 137.85 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 nine-month periods ended June 29, 2024 and July 1, 2023 (in millions): Three Months Ended Nine Months Ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 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 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 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. The outcome of litigation is inherently uncertain. 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. Apple Inc. | 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 nine-month periods ended June 29, 2024 and July 1, 2023 (in millions): Three Months Ended Nine Months Ended June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Americas: Net sales $ 37,678 $ 35,383 $ 125,381 $ 122,445 Operating income $ 15,209 $ 13,117 $ 50,640 $ 44,908 Europe: Net sales $ 21,884 $ 20,205 $ 76,404 $ 71,831 Operating income $ 9,170 $ 7,995 $ 31,872 $ 27,380 Greater China: Net sales $ 14,728 $ 15,758 $ 51,919 $ 57,475 Operating income $ 5,562 $ 6,207 $ 20,884 $ 24,175 Japan: Net sales $ 5,097 $ 4,821 $ 19,126 $ 18,752 Operating income $ 2,544 $ 2,443 $ 9,498 $ 9,073 Rest of Asia Pacific: Net sales $ 6,390 $ 5,630 $ 23,275 $ 23,284 Operating income $ 2,610 $ 2,328 $ 9,995 $ 9,447 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 June 29, 2024 July 1, 2023 June 29, 2024 July 1, 2023 Segment operating income $ 35,095 $ 32,090 $ 122,889 $ 114,983 Research and development expense ( 8,006 ) ( 7,442 ) ( 23,605 ) ( 22,608 ) Other corporate expenses, net ( 1,737 ) ( 1,650 ) ( 5,659 ) ( 5,043 ) Total operating income $ 25,352 $ 22,998 $ 93,625 $ 87,332 Apple Inc. | Q3 2024 Form 10-Q | 12