Three Months Ended
December 30,
2017 December 31,
2016
Maturities less than 90 days:
Proceeds from/(Repayments of) commercial paper, net $ 1,621
$ 1,550

Maturities greater than 90 days:
Proceeds from commercial paper 3,441
2,544
Repayments of commercial paper (5,060 ) (1,709 )
Proceeds from/(Repayments of) commercial paper, net (1,619 ) 835

Total change in commercial paper, net $ 2
$ 2,385

Term Debt

As of December ~~30, 2017,~~31, 2022 and September 24, 2022, the Company had outstanding ~~floating- and~~ fixed-rate notes with varying maturities for an aggregate ~~principal~~carrying amount of ~~$111.0~~$109.4 billion and $110.1 billion, respectively (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, quarterly for the U.S. dollar-denominated and Australian dollar-denominated floating-rate notes, semi-annually for the U.S. dollar-denominated, Australian dollar-denominated, British pound-denominated, Japanese yen-denominated and Canadian dollar-denominated fixed-rate notes and annually for the euro-denominated and Swiss franc-denominated fixed-rate notes. The following table provides a summary of the Company’s term debt as of December 30, 2017 and September 30, 2017:

Maturities December 30, 2017 September 30, 2017

Amount
(in millions)

Effective
Interest Rate

Amount
(in millions)

Effective
Interest Rate
2013 debt issuance of $17.0 billion:
Floating-rate notes 2018 2018 $ 2,000
1.10% 1.10 % $ 2,000
1.10% 1.10 %
Fixed-rate 1.000% – 3.850% notes 2018 – 2043 12,500
1.08% – 3.91 % 12,500
1.08% – 3.91 %

2014 debt issuance of $12.0 billion:
Floating-rate notes 2019 2019 1,000
1.69% 1.69 % 1,000
1.61% 1.61 %
Fixed-rate 2.100% – 4.450% notes 2019 – 2044 8,500
1.69% – 4.48 % 8,500
1.61% – 4.48 %

2015 debt issuances of $27.3 billion:
Floating-rate notes 2019 – 2020 1,544
1.65% – 1.87 % 1,549
1.56% – 1.87 %
Fixed-rate 0.350% – 4.375% notes 2019 – 2045 24,555
0.28% – 4.51 % 24,522
0.28% – 4.51 %

2016 debt issuances of $24.9 billion:
Floating-rate notes 2019 – 2021 1,350
1.53% – 2.59 % 1,350
1.45% – 2.44 %
Fixed-rate 1.100% – 4.650% notes 2018 – 2046 23,635
1.13% – 4.78 % 23,645
1.13% – 4.78 %

2017 debt issuances of $28.7 billion:
Floating-rate notes 2019 – 2022 3,250
1.48% – 1.90 % 3,250
1.38% – 1.81 %
Fixed-rate 0.875% – 4.300% notes 2019 – 2047 25,699
1.54% – 4.30 % 25,705
1.51% – 4.30 %

First quarter 2018 debt issuance of $7.0 billion:
Fixed-rate 1.800% notes 2019 1,000
1.83 % —
— %
Fixed-rate 2.000% notes 2020 1,000
2.03 % —
— %
Fixed-rate 2.400% notes 2023 750
1.93 % —
— %
Fixed-rate 2.750% notes 2025 1,500
2.77 % —
— %
Fixed-rate 3.000% notes 2027 1,500
2.13 % —
— %
Fixed-rate 3.750% notes 2047 1,250
3.80 % —
— %
Total term debt 111,033
104,021

Unamortized premium/(discount) and issuance costs, net (246 ) (225 )
Hedge accounting fair value adjustments (367 ) (93 )
Less: Current portion of long-term debt (6,498 ) (6,496 )
Total long-term debt $ 103,922
$ 97,207

To manage interest rate risk on certain of its U.S. dollar-denominated fixed- or floating-rate notes, the Company has entered into interest rate swaps to effectively convert the fixed interest rates to floating interest rates or the floating interest rates to fixed interest rates on a portion of these notes. Additionally, to manage foreign currency risk on certain of its foreign currency-denominated notes, the Company has entered into foreign currency swaps to effectively convert these notes to U.S. dollar-denominated notes.

~~A portion of the Company’s Japanese yen-denominated notes is designated as a hedge of the foreign currency exposure of the Company’s net investment in a foreign operation.~~ As of December ~~30, 2017~~31, 2022 and September 30, 2017, the carrying value of the debt designated as a net investment hedge was $1.4 billion and $1.6 billion, respectively. For further discussion regarding the Company’s use of derivative instruments see the Derivative Financial Instruments section of Note 2, “Financial Instruments.”

The effective interest rates for the Notes include the interest on the Notes, amortization of the discount or premium and, if applicable, adjustments related to hedging. The Company recognized $695 million and $509 million of interest expense on its term debt for the three months ended December 30, 2017 and December 31, 2016, respectively.

~~As of December 30, 2017 and September 30, 2017,~~24, 2022, the fair value of the Company’s Notes, based on Level 2 inputs, was ~~$113.5~~$98.0 billion and ~~$106.1~~$98.8 billion, respectively.

Note 76 – Shareholders’ Equity

~~Dividends~~

~~The Company declared and paid cash dividends per share during the periods presented as follows:~~

Dividends
Per Share

Amount
(in millions)
2018:
First quarter $ 0.63
$ 3,232

2017:
Fourth quarter $ 0.63
$ 3,252
Third quarter 0.63
3,281
Second quarter 0.57
2,988
First quarter 0.57
3,042
Total cash dividends declared and paid $ 2.40
$ 12,563

~~Future dividends are subject to declaration by the Board of Directors.~~

Share Repurchase Program

~~In May 2017,~~During the ~~Company’s~~three months ended December 31, 2022, the Company repurchased 133 million shares of its common stock for $19.0 billion under a share repurchase program authorized by the Board of Directors ~~increased the share repurchase authorization from $175 billion to $210 billion of the Company’s common stock, of which $176 billion had been utilized as of December 30, 2017.~~(the “Program”). The ~~Company’s share repurchase program~~Program does not obligate itthe Company to acquire ~~any specific number~~a minimum amount of shares. Under the ~~program,~~Program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as ~~amended (the “Exchange Act”).~~amended.

The Company has entered, and in the future may enter, into accelerated share repurchase arrangements (“ASRs”) with financial institutions. In exchange for up-front payments, the financial institutions deliver shares of the Company’s common stock during the purchase periods of each ASR. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, is determined at the end of the applicable purchase period of each ASR based on the volume-weighted average price of the Company’s common stock during that period. The shares received are retired in the periods they are delivered, and the up-front payments are accounted for as a reduction to shareholders’ equity in the Company’s Condensed Consolidated Balance Sheets in the periods the payments are made. The Company reflects the ASRs as a repurchase of common stock in the period delivered for purposes of calculating earnings per share and as forward contracts indexed to its own common stock. The ASRs met all of the applicable criteria for equity classification, and therefore were not accounted for as derivative instruments.

~~The following table shows the Company’s ASR activity and related information during the three months ended December 30, 2017 and the year ended September 30, 2017:~~

Purchase Period
End Date

Number of Shares
(in thousands)

Average Repurchase
Price Per Share

ASR Amount
(in millions)
November 2017 ASR February 2018 23,602
⁽¹⁾
⁽¹⁾

$ 5,000
August 2017 ASR November 2017 18,887
⁽²⁾
$ 158.84
$ 3,000
May 2017 ASR August 2017 20,108
$ 149.20
$ 3,000
February 2017 ASR May 2017 20,949
$ 143.20
$ 3,000
November 2016 ASR February 2017 51,157
$ 117.29
$ 6,000
August 2016 ASR November 2016 26,850
$ 111.73
$ 3,000

~~(1)~~

“Number of Shares” represents those shares delivered at the beginning of the purchase period and does not represent the final number of shares to be delivered under the ASR. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, will be determined at the end of the purchase period based on the volume-weighted average price of the Company’s common stock during that period. The November 2017 ASR purchase period will end in February 2018.


~~(2)~~	~~Includes~~ ~~15.1 million~~ ~~shares delivered and retired at the beginning of the purchase period, which began in the fourth quarter of 2017, and~~ ~~3.8 million~~ ~~shares delivered and retired at the end of the purchase period, which concluded in the first quarter of 2018.~~

~~Additionally, the Company repurchased shares of its common stock in the open market, which were retired upon repurchase, during the periods presented as follows:~~

Number of Shares
(in thousands)

Average Repurchase
Price Per Share

Amount
(in millions)
2018:
First quarter 30,181
$ 169.26
$ 5,109

2017:
Fourth quarter 29,073
$ 154.78
$ 4,500
Third quarter 30,356
$ 148.24
4,500
Second quarter 31,070
$ 128.74
4,001
First quarter 44,333
$ 112.78
5,000
Total open market common stock repurchases 134,832
$ 18,001

Note ~~8 – Comprehensive Income~~

Comprehensive income consists of two components, net income and OCI. OCI refers to revenue, expenses, and gains and losses that under GAAP are recorded as an element of shareholders’ equity but are excluded from net income. The Company’s OCI consists of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency, net deferred gains and losses on certain derivative instruments accounted for as cash flow hedges and unrealized gains and losses on marketable securities classified as available-for-sale.

The following table shows the pre-tax amounts reclassified from AOCI into the Condensed Consolidated Statements of Operations, and the associated financial statement line item, for the three months ended December 30, 2017 and December 31, 2016 (in millions):

Three Months Ended
Comprehensive Income Components Financial Statement Line Item December 30,
2017 December 31,
2016
Unrealized (gains)/losses on derivative instruments:
Foreign exchange contracts Net sales $ 184
$ (101 )
Cost of sales (27 ) 13
Other income/(expense), net (33 ) 604
Interest rate contracts Other income/(expense), net (1 ) 1
123
517
Unrealized (gains)/losses on marketable securities Other income/(expense), net (116 ) 31
Total amounts reclassified from AOCI $ 7
$ 548

~~The following table shows the changes in AOCI by component for the three months ended December 30, 2017 (in millions):~~

Cumulative Foreign
Currency Translation

Unrealized Gains/Losses
on Derivative Instruments

Unrealized Gains/Losses
on Marketable Securities
Total
Balances as of September 30, 2017 $ (354 ) $ (124 ) $ 328
$ (150 )
Other comprehensive income/(loss) before reclassifications 41
154
(1,310 ) (1,115 )
Amounts reclassified from AOCI —
123
(116 ) 7
Tax effect (1 ) (87 ) 505
417
Other comprehensive income/(loss) 40
190
(921 ) (691 )
Balances as of December 30, 2017 $ (314 ) $ 66
$ (593 ) $ (841 )

~~Note 9~~7 – Benefit Plans

~~Stock Plans~~

The Company had 273.4 million shares reserved for future issuance under its stock plans as of December 30, 2017. RSUs granted generally vest over four years, based on continued employment, and are settled upon vesting in shares of the Company’s common stock on a one-for-one basis. Each share issued with respect to RSUs granted under the Company’s stock plans reduces the number of shares available for grant under the plan by two shares. RSUs canceled and shares withheld to satisfy tax withholding obligations increase the number of shares available for grant under the plans utilizing a factor of two times the number of RSUs canceled or shares withheld.

~~Rule 10b5-1 Trading Plans~~

During the three months ended December 30, 2017, Section 16 officers Angela Ahrendts, Timothy D. Cook, Luca Maestri, Daniel Riccio and Philip Schiller had equity trading plans in place in accordance with Rule 10b5-1(c)(1) under the Exchange Act. An equity trading plan is a written document that pre-establishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including shares acquired pursuant to the Company’s employee and director equity plans.

Restricted Stock Units

A summary of the Company’s RSU activity and related information for the three months ended December ~~30, 2017~~31, 2022 is as follows:


								Number of RSUs (in thousands)	Weighted-Average Grant Date Fair Value Per RSU		Aggregate Fair Value (in millions)
	Number of RSUs (in thousands)		Weighted-Average Grant Date Fair Value Per Share		Aggregate Fair Value (in millions)
Balance as of September 30, 2017	97,571		$	110.33
Balance as of September 24, 2022							Balance as of September 24, 2022	201,501	$	109.48
RSUs granted	35,853		$	157.49			RSUs granted	82,123	$	149.85
RSUs vested	(19,741	)	$	102.40			RSUs vested	(47,298)	$	84.46
RSUs canceled	(1,316	)	$	121.76			RSUs canceled	(2,958)	$	120.26
Balance as of December 30, 2017	112,367		$	126.64	$	19,016
Balance as of December 31, 2022							Balance as of December 31, 2022	233,368	$	128.62	$	30,322

~~Further information regarding the Company’s debt issuances and related hedging activity can be found in Part I, Item 1 of this~~

Apple Inc. | Q1 2023 Form 10-Q ~~in the Notes to Condensed Consolidated Financial Statements in Note 2, “Financial Instruments” and Note 6, “Debt.”~~| 19

~~Capital Return Program~~

In May 2017, the Company’s Board of Directors increased the total capital return program from $250 billion to $300 billion, which included an increase in the share repurchase authorization from $175 billion to $210 billion of the Company’s common stock. Additionally, the Company announced that the Board of Directors raised the Company’s quarterly cash dividend from $0.57 to $0.63 per share, beginning with the dividend paid during the third quarter of 2017. The Company intends to increase its dividend on an annual basis, subject to declaration by the Board of Directors.

As of December 30, 2017, $176 billion of the share repurchase program had been utilized. The Company’s share repurchase program does not obligate it to acquire any specific number 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 Exchange Act.

The following table presents the Company’s dividends, dividend equivalents, share repurchases and net share settlement activity from the start of the capital return program in August 2012 through December 30, 2017 (in millions):

Dividends and
Dividend Equivalents Paid

Accelerated Share
Repurchases

Open Market
Share Repurchases

Taxes Related to Settlement
of Equity Awards
Total
Q1 2018 $ 3,339
$ 5,000
$ 5,109
$ 1,038
$ 14,486
2017 12,769
15,000
18,001
1,874
47,644
2016 12,150
12,000
17,000
1,570
42,720
2015 11,561
6,000
30,026
1,499
49,086
2014 11,126
21,000
24,000
1,158
57,284
2013 10,564
13,950
9,000
1,082
34,596
2012 2,488
—
—
56
2,544
Total $ 63,997
$ 72,950
$ 103,136
$ 8,277
$ 248,360

The Company expects to execute its capital return program by the end of March 2019 by paying dividends and dividend equivalents, repurchasing shares and remitting withheld taxes related to net share settlement of restricted stock units. The Company plans to use current cash and cash generated from ongoing operating activities to fund its capital return program.

~~Off-Balance Sheet Arrangements and Contractual Obligations~~

The Company has not entered into any transactions with unconsolidated entities whereby the Company has financial guarantees, subordinated retained interests, derivative instruments, or other contingent arrangements that expose the Company to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to the Company, or engages in leasing, hedging, or R&D services with the Company.

~~Operating Leases~~

As of December 30, 2017, the Company’s total future minimum lease payments under noncancelable operating leases were $9.6 billion. The Company’s retail store and other facility leases typically have original terms not exceeding 10 years and generally contain multi-year renewal options.

Manufacturing Purchase Obligations

The Company utilizes several outsourcing partners to manufacture ~~sub-assemblies~~subassemblies for the Company’s products and to perform final assembly and testing of finished products. ~~These outsourcing~~The Company also obtains individual components for its products from a wide variety of individual suppliers. Outsourcing partners acquire components and build product based on demand information supplied by the Company, which typically covers periods up to 150 days. ~~The Company also obtains individual components for its products from a wide variety of individual suppliers.~~ As of December ~~30, 2017,~~31, 2022, the Company ~~expects to pay $33.5~~had manufacturing purchase obligations of $55.1 billion, ~~under manufacturing-related supplier arrangements, substantially all of which is noncancelable.~~

~~Other Purchase Obligations~~

with $54.8 billion payable within 12 months. The Company’s ~~other~~manufacturing purchase obligations ~~consisted~~are primarily noncancelable.

In addition to its contractual cash requirements, the Company has a capital return program authorized by the Board of ~~noncancelable obligations~~Directors. The share repurchase program (the “Program”) does not obligate the Company to acquire capital assets, including product tooling and manufacturing process equipment, and noncancelable obligations related to advertising, licensing, R&D, internet and telecommunications services and other obligations.a minimum amount of shares. As of December ~~30, 2017,~~31, 2022, the ~~Company had other purchase obligations of $7.2 billion.~~

~~Other Non-Current Liabilities~~

~~The~~ Company’s other non-current liabilities in the Condensed Consolidated Balance Sheets consist primarily of long-term taxes payable of $34.9 billion, and net unrecognized tax benefits and related interest and penalties of $6.8 billion.quarterly cash dividend was $0.23 per share. The Company ~~plans~~intends to ~~pay the tax payable in installments in accordance with the Act. The Company is unable~~increase its dividend on an annual basis, subject to ~~make a reasonably reliable estimate of the timing of payments related to unrecognized tax benefits due to uncertainties in the timing of tax audit outcomes.~~

~~Indemnification~~

~~Agreements entered into~~declaration by the ~~Company sometimes include indemnification provisions which may subject the Company to costs and damages in the event~~Board of a claim against an indemnified third party. 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 in excess of a recorded accrual, with respect to indemnification of third parties.Directors.

The Company offers an iPhone Upgrade Program, which is available to customers who purchase a qualifying iPhone in the U.S., the U.K. and mainland China. The iPhone Upgrade Program provides customers the right to trade in that iPhone for a specified amount when purchasing a new iPhone, provided certain conditions are met. The Company accounts for the trade-in right as a guarantee liability and recognizes arrangement revenue net of the fair value of such right, with subsequent changes to the guarantee liability recognized within revenue.

The Company has entered into indemnification agreements with its directors and executive officers. Under these agreements, the Company has agreed to indemnify such individuals to the fullest extent permitted by law against liabilities that arise by reason of their status as directors or officers of the Company and to advance expenses incurred by such individuals in connection with related legal proceedings. It is not possible to determine the maximum potential amount of payments the Company could be required to make under these agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each claim. While the Company maintains directors and officers liability insurance coverage, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise.

Critical Accounting ~~Policies and~~ Estimates

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.

reported. Note 1, “Summary of Significant Accounting Policies” of the Notes to condensed consolidated Financial Statements in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of the ~~2017 Form 10-K, and “Critical Accounting Policies and Estimates” in Part II, Item 7 of the 2017~~2022 Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements. ~~With the exception of Income Taxes, there~~There have been no material changes to the Company’s critical accounting ~~policies and~~ estimates since the ~~2017~~2022 Form 10-K.

~~Income Taxes~~

~~The Company records a tax provision for the anticipated tax consequences of its reported operating results. The provision for income taxes is computed using the asset~~Item 3. Quantitative and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.Qualitative Disclosures About Market Risk

The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

Management believes it is more likely than not that forecasted income, including income that may be generated as a result of certain tax planning strategies, together with future reversals of existing taxable temporary differences, will be sufficient to fully recover the Company’s deferred tax assets. In the event that the Company determines all or part of its net deferred tax assets are not realizable in the future, the Company will record an adjustment to the valuation allowance that would be charged to earnings in the period such determination is made. In addition, the calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of GAAP and complex tax laws. Resolution of these uncertainties in a manner inconsistent with management’s expectations could have a material impact on the Company’s financial condition and operating results.

On December 22, 2017, the U.S. enacted the Act, which significantly changed U.S. tax law. The Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on deferred foreign income. The Act also created a new minimum tax on certain future foreign earnings. During the first quarter of 2018, the Company recognized a provision for income taxes of $7.0 billion, of which $2.6 billion was considered a provisional estimate under the SEC Staff Accounting Bulletin No. 118. The Company’s provisional estimate of $2.6 billion included $1.8 billion related to the impact of remeasuring the Company’s deferred tax balances to reflect the new tax rate and approximately $800 million, net, associated with the deemed repatriation tax. Resolution of the provisional estimates of the Act’s effects different from the assumptions made by the Company could have a material impact on the Company’s financial condition and operating results.


~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~

There have been no material changes to the Company’s market risk during the first three months of ~~2018.~~2023. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the ~~2017~~2022 Form 10-K.


~~Item 4.~~	~~Controls and Procedures~~

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) were effective as of December ~~30, 2017~~31, 2022 to ~~ensure~~provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control ~~Over~~over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the first quarter of ~~2018,~~2023, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Apple Inc. | Q1 2023 Form 10-Q | 20

PART II — OTHER INFORMATION


~~Item 1.~~	~~Legal Proceedings~~

Item 1. Legal Proceedings

Epic Games

Epic Games, Inc. (“Epic”) filed a lawsuit in the U.S. District Court for the Northern District of California (the “Northern California District Court”) against the Company alleging violations of federal and state antitrust laws and California’s unfair competition law based upon the Company’s operation of its App Store. The Company filed a counterclaim for breach of contract. On September 10, 2021, the Northern California District Court ruled in favor of the Company with respect to nine out of the ten counts included in Epic’s claim, and in favor of the Company with respect to the Company’s claims for breach of contract. The Northern California District Court found that certain provisions of the Company’s App Store Review Guidelines violate California’s unfair competition law and issued an injunction. Epic appealed the decision. The Company filed a cross-appeal and has been granted a stay pending the appeal.

Other Legal Proceedings

The Company is subject to other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business. 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 in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims. However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected. See the risk factor ~~“The Company could be impacted byunfavorable results of legal proceedings, such as being found to have infringed on intellectual property rights” in Part II, Item 1A of this Form 10-Q under the heading “Risk Factors.”~~ The Company settled certain matters during the first quarter of ~~2018~~2023 that did not individually or in the aggregate have a material impact on the Company’s financial condition or operating results.


~~Item 1A.~~	~~Risk Factors~~

The ~~following description~~outcome of ~~risk factors includes any material changes to, and supersedes~~litigation is inherently uncertain. If one or more legal matters were resolved against the ~~description of, risk factors associated with~~Company in a reporting period for amounts above management’s expectations, the Company’s ~~business previously disclosed in Part I, Item 1A of the 2017 Form 10-K under the heading “Risk Factors.” The business,~~ financial condition and operating results for that reporting period could be materially adversely affected.

Item 1A. Risk Factors

The Company’s business, reputation, results of ~~the Company~~operations, financial condition and stock price can be affected by a number of factors, whether currently known or unknown, including ~~but not limited to~~ those described ~~below,~~in Part I, Item 1A of the 2022 Form 10-K under the heading “Risk Factors.” When any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these ~~factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.~~

The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Form 10-Q. The following information should be read in conjunction with the condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.

Because of the following factors, as well as other factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

~~Global and regional economic conditions could materially adversely affect the Company.~~

The Company’s operations and performance depend significantly on global and regional economic conditions. Uncertainty about global and regional economic conditions poses a risk as consumers and businesses may postpone spending in response to tighter credit, higher unemployment, financial market volatility, government austerity programs, negative financial news, declines in income or asset values and/or other factors. These worldwide and regional economic conditions could have a material adverse effect on demand for the Company’s products and services. Demand also could differ materially from the Company’s expectations as a result of currency fluctuations because the Company generally raises prices on goods and services sold outside the U.S. to correspond with the effect of a strengthening of the U.S. dollar. Other factors that could influence worldwide or regional demand include changes in fuel and other energy costs, conditions in the real estate and mortgage markets, unemployment, labor and healthcare costs, access to credit, consumer confidence and other macroeconomic factors affecting consumer spending behavior. These and other economic factors could materially adversely affect demand for the Company’s products and services.

In the event of financial turmoil affecting the banking system and financial markets, additional consolidation of the financial services industry, or significant financial service institution failures, there could be tightening in the credit markets, low liquidity and extreme volatility in fixed income, credit, currency and equity markets. This could have a number of effects on the Company’s business, including the insolvency or financial instability of outsourcing partners or suppliers or their inability to obtain credit to finance development and/or manufacture products, resulting in product delays; inability of customers, including channel partners, to obtain credit to finance purchases of the Company’s products; failure of derivative counterparties and other financial institutions; and restrictions on the Company’s ability to issue new debt. Other income and expense also could vary materially from expectations depending on gains or losses realized on the sale or exchange of financial instruments; impairment charges resulting from revaluations of debt and equity securities and other investments; changes in interest rates; increases or decreases in cash balances; volatility in foreign exchange rates; and changes in fair value of derivative instruments. Increased volatility in the financial markets and overall economic uncertainty would increase the risk of the actual amounts realized in the future on the Company’s financial instruments differing significantly from the fair values currently assigned to them.

~~Global markets for the Company’s products and services are highly competitive and subject to rapid technological change, and the Company may be unable to compete effectively in these markets.~~

The Company’s products and services compete in highly competitive global markets characterized by aggressive price competition and resulting downward pressure on gross margins, frequent introduction of new products, short product life cycles, evolving industry standards, continual improvement in product price/performance characteristics, rapid adoption of technological and product advancements by competitors and price sensitivity on the part of consumers.

The Company’s ability to compete successfully depends heavily on its ability to ensure a continuing and timely introduction of innovative new products, services and technologies to the marketplace. The Company believes it is unique in that it designs and develops nearly the entire solution for its products, including the hardware, operating system, numerous software applications and related services. As a result, the Company must make significant investments in R&D. The Company currently holds a significant number of patents and copyrights and has registered and/or has applied to register numerous patents, trademarks and service marks. In contrast, many of the Company’s competitors seek to compete primarily through aggressive pricing and very low cost structures, and emulating the Company’s products and infringing on its intellectual property. If the Company is unable to continue to develop and sell innovative new products with attractive margins or if competitors infringe on the Company’s intellectual property, the Company’s ability to maintain a competitive advantage could be adversely affected.

The Company markets certain mobile communication and media devices based on the iOS mobile operating system and also markets related services, including third-party digital content and applications. The Company faces substantial competition in these markets from companies that have significant technical, marketing, distribution and other resources, as well as established hardware, software and digital content supplier relationships; and the Company has a minority market share in the global smartphone market. Additionally, the Company faces significant competition as competitors reduce their selling prices and attempt to imitate the Company’s product features and applications within their own products or, alternatively, collaborate with each other to offer solutions that are more competitive than those they currently offer. The Company competes with business models that provide content to users for free. The Company also competes with illegitimate means to obtain third-party digital content and applications. Some of the Company’s competitors have greater experience, product breadth and distribution channels than the Company. Because some current and potential competitors have substantial resources and/or experience and a lower cost structure, they may be able to provide products and services at little or no profit or even at a loss. The Company also expects competition to intensify as competitors attempt to imitate the Company’s approach to providing components seamlessly within their individual offerings or work collaboratively to offer integrated solutions. The Company’s financial condition and operating results depend substantially on the Company’s ability to continually improve iOS and iOS devices in order to maintain their functional and design advantages.

The Company is the only authorized maker of hardware using macOS, which has a minority market share in the personal computer market. This market has been contracting and is dominated by computer makers using competing operating systems, most notably Windows. In the market for personal computers and accessories, the Company faces a significant number of competitors, many of which have broader product lines, lower-priced products and a larger installed customer base. Historically, consolidation in this market has resulted in larger competitors. Competition has been particularly intense as competitors have aggressively cut prices and lowered product margins. An increasing number of internet-enabled devices that include software applications and are smaller and simpler than traditional personal computers compete for market share with the Company’s existing products. The Company’s financial condition and operating results also depend on its ability to continually improve the Mac platform to maintain its functional and design advantages.

~~There can be no assurance the Company will be able to continue to provide products and services that compete effectively.~~

~~To remain competitive and stimulate customer demand, the Company must successfully manage frequent product introductions and transitions.~~

Due to the highly volatile and competitive nature of the industries in which the Company competes, the Company must continually introduce new products, services and technologies, enhance existing products and services, effectively stimulate customer demand for new and upgraded products and successfully manage the transition to these new and upgraded products. The success of new product introductions depends on a number of factors including, but not limited to, timely and successful product development, market acceptance, the Company’s ability to manage the risks associated with new product production ramp-up issues, the availability of application software for new products, the effective management of purchase commitments and inventory levels in line with anticipated product demand, the availability of products in appropriate quantities and at expected costs to meet anticipated demand and the risk that new products may have quality or other defects or deficiencies in the early stages of introduction. Accordingly, the Company cannot determine in advance the ultimate effect of new product introductions and transitions.

~~The Company depends on the performance of distributors, carriers and other resellers.~~

The Company distributes its products through cellular network carriers, wholesalers, national and regional retailers and resellers, many of whom distribute products from competing manufacturers. The Company also sells its products and third-party products in most of its major markets directly to education, enterprise and government customers and consumers and small and mid-sized businesses through its retail and online stores.

Some carriers providing cellular network service for iPhone subsidize users’ purchases of the device. There is no assurance that such subsidies will be continued at all or in the same amounts upon renewal of the Company’s agreements with these carriers or in agreements the Company enters into with new carriers.

The Company has invested and will continue to invest in programs to enhance reseller sales, including staffing selected resellers’ stores with Company employees and contractors, and improving product placement displays. These programs could require a substantial investment while providing no assurance of return or incremental revenue. The financial condition of these resellers could weaken, these resellers could stop distributing the Company’s products, or uncertainty regarding demand for some or all of the Company’s products could cause resellers to reduce their ordering and marketing of the Company’s products.

~~The Company faces substantial inventory and other asset risk in addition to purchase commitment cancellation risk.~~

The Company records a write-down for product and component inventories that have become obsolete or exceed anticipated demand or net realizable value and accrues necessary cancellation fee reserves for orders of excess products and components. The Company also reviews its long-lived assets, including capital assets held at its suppliers’ facilities and inventory prepayments, for impairment whenever events or circumstances indicate the carrying amount of an asset may not be recoverable. If the Company determines that impairment has occurred, it records a write-down equal to the amount by which the carrying value of the asset exceeds its fair value. Although the Company believes its provisions related to inventory, capital assets, inventory prepayments and other assets and purchase commitments are currently adequate, no assurance can be given that the Company will not incur additional related charges given the rapid and unpredictable pace of product obsolescence in the industries in which the Company competes.

The Company must order components for its products and build inventory in advance of product announcements and shipments. Manufacturing purchase obligations typically cover forecasted component and manufacturing requirements for periods up to 150 days. Because the Company’s markets are volatile, competitive and subject to rapid technology and price changes, there is a risk the Company will forecast incorrectly and order or produce excess or insufficient amounts of components or products, or not fully utilize firm purchase commitments.

~~Future operating results depend upon the Company’s ability to obtain components in sufficient quantities on commercially reasonable terms.~~

Because the Company currently obtains components from single or limited sources, the Company is subject to significant supply and pricing risks. Many components, including those that are available from multiple sources, are at times subject to industry-wide shortages and significant commodity pricing fluctuations. While the Company has entered into agreements for the supply of many components, there can be no assurance that the Company will be able to extend or renew these agreements on similar terms, or at all. A number of suppliers of components may suffer from poor financial conditions, which can lead to business failure for the supplier or consolidation within a particular industry, further limiting the Company’s ability to obtain sufficient quantities of components on commercially reasonable terms. The effects of global or regional economic conditions on the Company’s suppliers, described in “~~Global and regional economic conditions could materially adversely affect the Company”~~ ~~above, also could affect the Company’s ability to obtain components~~. ~~Therefore, the Company remains subject to significant risks of supply shortages and price increases.~~

The Company’s new products often utilize custom components available from only one source. When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or manufacturing capacity has increased. Continued availability of these components at acceptable prices, or at all, may be affected for any number of reasons, including if those suppliers decide to concentrate on the production of common components instead of components customized to meet the Company’s requirements. The supply of components for a new or existing product could be delayed or constrained, or a key manufacturing vendor could delay shipments of completed products to the Company.

~~The Company depends on component and product manufacturing and logistical services provided by outsourcing partners, many of which are located outside of the U.S.~~

Substantially all of the Company’s manufacturing is performed in whole or in part by a few outsourcing partners located primarily in Asia. The Company has also outsourced much of its transportation and logistics management. While these arrangements may lower operating costs, they also reduce the Company’s direct control over production and distribution. It is uncertain what effect such diminished control will have on the quality or quantity of products or services, or the Company’s flexibility to respond to changing conditions. Although arrangements with these partners may contain provisions for warranty expense reimbursement, the Company may remain responsible to the consumer for warranty service in the event of product defects and could experience an unanticipated product defect or warranty liability. While the Company relies on its partners to adhere to its supplier code of conduct, material violations of the supplier code of conduct could occur.

The Company relies on sole-sourced outsourcing partners in the U.S., Asia and Europe to supply and manufacture many critical components, and on outsourcing partners primarily located in Asia, for final assembly of substantially all of the Company’s hardware products. Any failure of these partners to perform may have a negative impact on the Company’s cost or supply of components or finished goods. In addition, manufacturing or logistics in these locations or transit to final destinations may be disrupted for a variety of reasons including, but not limited to, natural and man-made disasters, information technology system failures, commercial disputes, military actions or economic, business, labor, environmental, public health, or political issues.

The Company has invested in manufacturing process equipment, much of which is held at certain of its outsourcing partners, and has made prepayments to certain of its suppliers associated with long-term supply agreements. While these arrangements help ensure the supply of components and finished goods, if these outsourcing partners or suppliers experience severe financial problems or other disruptions in their business, such continued supply could be reduced or terminated and the net realizable value of these assets could be negatively impacted.

~~The Company’s products and services may experience quality problems~~materialize from time to time, ~~that~~the Company’s business, reputation, results of operations, financial condition and stock price can ~~result in decreased sales~~be materially and ~~operating margin and harm~~adversely affected. There have been no material changes to the Company’s ~~reputation.~~risk factors since the 2022 Form 10-K.

~~The Company sells complex hardware~~

Item 2. Unregistered Sales of Equity Securities and software products and services that can contain design and manufacturing defects. Sophisticated operating system software and applications, such as those sold by the Company, often contain “bugs” that can unexpectedly interfere with the software’s intended operation. The Company’s online services may from time to time experience outages, service slowdowns or errors. Defects may also occur in components and products the Company purchases from third parties. There can be no assurance the Company will be able to detect and fix all defects in the hardware, software and services it sells. Failure to do so could result in lost revenue, significant warranty and other expenses and harm to the Company’s reputation.

~~The Company relies on access to third-party digital content, which may not be available to the Company on commercially reasonable terms or at all.~~

The Company contracts with numerous third parties to offer their digital content to customers. This includes the right to sell currently available music, movies, TV shows and books. The licensing or other distribution arrangements with these third parties are for relatively short terms and do not guarantee the continuation or renewalUse of these arrangements on reasonable terms, if at all. Some third-party content providers and distributors currently or in the future may offer competing products and services, and could take action to make it more difficult or impossible for the Company to license or otherwise distribute their content in the future. Other content owners, providers or distributors may seek to limit the Company’s access to, or increase the cost of, such content. The Company may be unable to continue to offer a wide variety of content at reasonable prices with acceptable usage rules, or continue to expand its geographic reach. Failure to obtain the right to make third-party digital content available, or to make such content available on commercially reasonable terms, could have a material adverse impact on the Company’s financial condition and operating results.Proceeds

Some third-party digital content providers require the Company to provide digital rights management and other security solutions. If requirements change, the Company may have to develop or license new technology to provide these solutions. There is no assurance the Company will be able to develop or license such solutions at a reasonable cost and in a timely manner. In addition, certain countries have passed or may propose and adopt legislation that would force the Company to license its digital rights management, which could lessen the protection of content and subject it to piracy and also could negatively affect arrangements with the Company’s content providers.

~~The Company’s future performance depends in part on support from third-party software developers.~~

The Company believes decisions by customers to purchase its hardware products depend in part on the availability of third-party software applications and services. There is no assurance that third-party developers will continue to develop and maintain software applications and services for the Company’s products. If third-party software applications and services cease to be developed and maintained for the Company’s products, customers may choose not to buy the Company’s products.

With respect to its Mac products, the Company believes the availability of third-party software applications and services depends in part on the developers’ perception and analysis of the relative benefits of developing, maintaining and upgrading such software for the Company’s products compared to Windows-based products. This analysis may be based on factors such as the market position of the Company and its products, the anticipated revenue that may be generated, expected future growth of Mac sales and the costs of developing such applications and services. If the Company’s minority share of the global personal computer market causes developers to question the Mac’s prospects, developers could be less inclined to develop or upgrade software for the Company’s Mac products and more inclined to devote their resources to developing and upgrading software for the larger Windows market.

With respect to iOS devices, the Company relies on the continued availability and development of compelling and innovative software applications, including applications distributed through the App Store. iOS devices are subject to rapid technological change, and, if third-party developers are unable to or choose not to keep up with this pace of change, third-party applications might not successfully operate and may result in dissatisfied customers. As with applications for the Company’s Mac products, the availability and development of these applications also depend on developers’ perceptions and analysis of the relative benefits of developing, maintaining or upgrading software for the Company’s iOS devices rather than its competitors’ platforms, such as Android. If developers focus their efforts on these competing platforms, the availability and quality of applications for the Company’s iOS devices may suffer.

~~The Company relies on access to third-party intellectual property, which may not be available to the Company on commercially reasonable terms or at all.~~

Many of the Company’s products include third-party intellectual property, which requires licenses from those third parties. Based on past experience and industry practice, the Company believes such licenses generally can be obtained on reasonable terms. There is, however, no assurance that the necessary licenses can be obtained on acceptable terms or at all. Failure to obtain the right to use third-party intellectual property, or to use such intellectual property on commercially reasonable terms, could preclude the Company from selling certain products or otherwise have a material adverse impact on the Company’s financial condition and operating results.

~~The Company could be impacted by unfavorable results of legal proceedings, such as being found to have infringed on intellectual property rights.~~

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and have not yet been fully resolved, and new claims may arise in the future. In addition, agreements entered into by the Company sometimes include indemnification provisions which may subject the Company to costs and damages in the event of a claim against an indemnified third party.

Claims against the Company based on allegations of patent infringement or other violations of intellectual property rights have generally increased over time and may continue to increase. In particular, the Company has historically faced a significant number of patent claims relating to its cellular-enabled products, and new claims may arise in the future. For example, technology and other patent-holding companies frequently assert their patents and seek royalties and often enter into litigation based on allegations of patent infringement or other violations of intellectual property rights. The Company is vigorously defending infringement actions in courts in a number of U.S. jurisdictions and before the U.S. International Trade Commission, as well as internationally in various countries. The plaintiffs in these actions frequently seek injunctions and substantial damages.

Regardless of the merit of particular claims, litigation may be expensive, time-consuming, disruptive to the Company’s operations and distracting to management. In recognition of these considerations, the Company may enter into licensing agreements or other arrangements to settle litigation and resolve such disputes. No assurance can be given that such agreements can be obtained on acceptable terms or that litigation will not occur. These agreements may also significantly increase the Company’s operating expenses.

In management’s opinion, there is not at least a reasonable possibility the Company may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies, including matters related to infringement of intellectual property rights. However, the outcome of litigation is inherently uncertain.

Although management considers the likelihood of such an outcome to be remote, if one or more legal matters were resolved against the Company or an indemnified third party in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected. Further, such an outcome could result in significant compensatory, punitive or trebled monetary damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief against the Company that could materially adversely affect its financial condition and operating results.

~~While the Company maintains insurance coverage for certain types of claims, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise.~~

~~The Company is subject to laws and regulations worldwide, changes to which could increase the Company’s costs and individually or in the aggregate adversely affect the Company’s business.~~

The Company is subject to laws and regulations affecting its domestic and international operations in a number of areas. These U.S. and foreign laws and regulations affect the Company’s activities including, but not limited to, in areas of labor, advertising, digital content, consumer protection, real estate, billing, e-commerce, promotions, quality of services, telecommunications, mobile communications and media, television, intellectual property ownership and infringement, tax, import and export requirements, anti-corruption, foreign exchange controls and cash repatriation restrictions, data privacy requirements, anti-competition, environmental, health and safety.

By way of example, laws and regulations related to mobile communications and media devices in the many jurisdictions in which the Company operates are extensive and subject to change. Such changes could include, among others, restrictions on the production, manufacture, distribution and use of devices, locking devices to a carrier’s network, or mandating the use of devices on more than one carrier’s network. These devices are also subject to certification and regulation by governmental and standardization bodies, as well as by cellular network carriers for use on their networks. These certification processes are extensive and time consuming, and could result in additional testing requirements, product modifications, or delays in product shipment dates, or could preclude the Company from selling certain products.

Compliance with these laws, regulations and similar requirements may be onerous and expensive, and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business. Any such costs, which may rise in the future as a result of changes in these laws and regulations or in their interpretation, could individually or in the aggregate make the Company’s products and services less attractive to the Company’s customers, delay the introduction of new products in one or more regions, or cause the Company to change or limit its business practices. The Company has implemented policies and procedures designed to ensure compliance with applicable laws and regulations, but there can be no assurance that the Company’s employees, contractors, or agents will not violate such laws and regulations or the Company’s policies and procedures.

~~The Company’s business is subject to the risks of international operations.~~

The Company derives a significant portion of its revenue and earnings from its international operations. Compliance with applicable U.S. and foreign laws and regulations, such as import and export requirements, anti-corruption laws, tax laws, foreign exchange controls and cash repatriation restrictions, data privacy requirements, environmental laws, labor laws and anti-competition regulations, increases the costs of doing business in foreign jurisdictions. Although the Company has implemented policies and procedures to comply with these laws and regulations, a violation by the Company’s employees, contractors or agents could nevertheless occur. In some cases, compliance with the laws and regulations of one country could violate the laws and regulations of another country. Violations of these laws and regulations could materially adversely affect the Company’s brand, international growth efforts and business.

The Company also could be significantly affected by other risks associated with international activities including, but not limited to, economic and labor conditions, increased duties, taxes and other costs and political instability. Margins on sales of the Company’s products in foreign countries, and on sales of products that include components obtained from foreign suppliers, could be materially adversely affected by international trade regulations, including duties, tariffs and antidumping penalties. The Company is also exposed to credit and collectibility risk on its trade receivables with customers in certain international markets. There can be no assurance the Company can effectively limit its credit risk and avoid losses.

~~The Company’s retail stores have required and will continue to require a substantial investment and commitment of resources and are subject to numerous risks and uncertainties.~~

The Company’s retail stores have required substantial investment in equipment and leasehold improvements, information systems, inventory and personnel. The Company also has entered into substantial operating lease commitments for retail space. Certain stores have been designed and built to serve as high-profile venues to promote brand awareness and serve as vehicles for corporate sales and marketing activities. Because of their unique design elements, locations and size, these stores require substantially more investment than the Company’s more typical retail stores. Due to the high cost structure associated with the Company’s retail stores, a decline in sales or the closure or poor performance of individual or multiple stores could result in significant lease termination costs, write-offs of equipment and leasehold improvements and severance costs.

Many factors unique to retail operations, some of which are beyond the Company’s control, pose risks and uncertainties. These risks and uncertainties include, but are not limited to, macro-economic factors that could have an adverse effect on general retail activity, as well as the Company’s inability to manage costs associated with store construction and operation, the Company’s failure to manage relationships with its existing retail partners, more challenging environments in managing retail operations outside the U.S., costs associated with unanticipated fluctuations in the value of retail inventory, and the Company’s inability to obtain and renew leases in quality retail locations at a reasonable cost.

~~Investment in new business strategies and acquisitions could disrupt the Company’s ongoing business and present risks not originally contemplated.~~

The Company has invested, and in the future may invest, in new business strategies or acquisitions. Such endeavors may involve significant risks and uncertainties, including distraction of management from current operations, greater than expected liabilities and expenses, inadequate return of capital and unidentified issues not discovered in the Company’s due diligence. These new ventures are inherently risky and may not be successful.

~~The Company’s business and reputation may be impacted by information technology system failures or network disruptions.~~

The Company may be subject to information technology system failures or network disruptions caused by natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, or other events or disruptions. System redundancy and other continuity measures may be ineffective or inadequate, and the Company’s business continuity and disaster recovery planning may not be sufficient for all eventualities. Such failures or disruptions could adversely impact the Company’s business by, among other things, preventing access to the Company’s online services, interfering with customer transactions or impeding the manufacturing and shipping of the Company’s products. These events could materially adversely affect the Company’s reputation, financial condition and operating results.

There may be losses or unauthorized access to or releases of confidential information, including personally identifiable information, that could subject the Company to significant reputational, financial, legal and operational consequences.

The Company’s business requires it to use and store confidential information, including, among other things, personally identifiable information (“PII”) with respect to the Company’s customers and employees. The Company devotes significant resources to network and data security, including through the use of encryption and other security measures intended to protect its systems and data. But these measures cannot provide absolute security, and losses or unauthorized access to or releases of confidential information may still occur, which could materially adversely affect the Company’s reputation, financial condition and operating results.

The Company’s business also requires it to share confidential information with suppliers and other third parties. Although the Company takes steps to secure confidential information that is provided to third parties, such measures may not be effective and losses or unauthorized access to or releases of confidential information may still occur, which could materially adversely affect the Company’s reputation, financial condition and operating results.

For example, the Company may experience a security breach impacting the Company’s information technology systems that compromises the confidentiality, integrity or availability of confidential information. Such an incident could, among other things, impair the Company’s ability to attract and retain customers for its products and services, impact the Company’s stock price, materially damage supplier relationships, and expose the Company to litigation or government investigations, which could result in penalties, fines or judgments against the Company.

Although malicious attacks perpetrated to gain access to confidential information, including PII, affect many companies across various industries, the Company is at a relatively greater risk of being targeted because of its high profile and the value of the confidential information it creates, owns, manages, stores and processes.

The Company has implemented systems and processes intended to secure its information technology systems and prevent unauthorized access to or loss of sensitive data, including through the use of encryption and authentication technologies. As with all companies, these security measures may not be sufficient for all eventualities and may be vulnerable to hacking, employee error, malfeasance, system error, faulty password management or other irregularities. For example, third parties may attempt to fraudulently induce employees or customers into disclosing user names, passwords or other sensitive information, which may in turn be used to access the Company’s information technology systems. To help protect customers and the Company, the Company monitors its services and systems for unusual activity and may freeze accounts under suspicious circumstances, which, among other things, may result in the delay or loss of customer orders or impede customer access to the Company’s products and services.

In addition to the risks relating to general confidential information described above, the Company may also be subject to specific obligations relating to health data and payment card data. Health data may be subject to additional privacy, security and breach notification requirements, and the Company may be subject to audit by governmental authorities regarding the Company’s compliance with these obligations. If the Company fails to adequately comply with these rules and requirements, or if health data is handled in a manner not permitted by law or under the Company’s agreements with healthcare institutions, the Company could be subject to litigation or government investigations, may be liable for associated investigatory expenses, and could also incur significant fees or fines.

Under payment card rules and obligations, if cardholder information is potentially compromised, the Company could be liable for associated investigatory expenses and could also incur significant fees or fines if the Company fails to follow payment card industry data security standards. The Company could also experience a significant increase in payment card transaction costs or lose the ability to process payment cards if it fails to follow payment card industry data security standards, which would materially adversely affect the Company’s reputation, financial condition and operating results.

While the Company maintains insurance coverage that is intended to address certain aspects of data security risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise.

~~The Company’s business is subject to a variety of U.S. and international laws, rules, policies and other obligations regarding data protection.~~

The Company is subject to federal, state and international laws relating to the collection, use, retention, security and transfer of PII. In many cases, these laws apply not only to third-party transactions, but also may restrict transfers of PII among the Company and its international subsidiaries. Several jurisdictions have passed laws in this area, and other jurisdictions are considering imposing additional restrictions. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing international requirements may cause the Company to incur substantial costs or require the Company to change its business practices. Noncompliance could result in significant penalties or legal liability.

The Company makes statements about its use and disclosure of PII through its privacy policy, information provided on its website and press statements. Any failure by the Company to comply with these public statements or with other federal, state or international privacy-related or data protection laws and regulations could result in proceedings against the Company by governmental entities or others. In addition to reputational impacts, penalties could include ongoing audit requirements and significant legal liability.

~~The Company’s success depends largely on the continued service and availability of key personnel.~~

Much of the Company’s future success depends on the continued availability and service of key personnel, including its Chief Executive Officer, executive team and other highly skilled employees. Experienced personnel in the technology industry are in high demand and competition for their talents is intense, especially in Silicon Valley, where most of the Company’s key personnel are located.

~~The Company’s business may be impacted by political events, war, terrorism, public health issues, natural disasters and other business interruptions.~~

War, terrorism, geopolitical uncertainties, public health issues and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a material adverse effect on the Company, its suppliers, logistics providers, manufacturing vendors and customers, including channel partners. The Company’s business operations are subject to interruption by, among others, natural disasters, whether as a result of climate change or otherwise, fire, power shortages, nuclear power plant accidents and other industrial accidents, terrorist attacks and other hostile acts, labor disputes, public health issues and other events beyond its control. Such events could decrease demand for the Company’s products, make it difficult or impossible for the Company to make and deliver products to its customers, including channel partners, or to receive components from its suppliers, and create delays and inefficiencies in the Company’s supply chain. While the Company’s suppliers are required to maintain safe working environments and operations, an industrial accident could occur and could result in disruption to the Company’s business and harm to the Company’s reputation. Should major public health issues, including pandemics, arise, the Company could be adversely affected by more stringent employee travel restrictions, additional limitations in freight services, governmental actions limiting the movement of products between regions, delays in production ramps of new products and disruptions in the operations of the Company’s manufacturing vendors and component suppliers. The majority of the Company’s R&D activities, its corporate headquarters, information technology systems and other critical business operations, including certain component suppliers and manufacturing vendors, are in locations that could be affected by natural disasters. In the event of a natural disaster, the Company could incur significant losses, require substantial recovery time and experience significant expenditures in order to resume operations.

~~The Company expects its quarterly revenue and operating results to fluctuate.~~

The Company’s profit margins vary across its products and distribution channels. The Company’s software, accessories, and service and support contracts generally have higher gross margins than certain of the Company’s other products. Gross margins on the Company’s hardware products vary across product lines and can change over time as a result of product transitions, pricing and configuration changes, and component, warranty, and other cost fluctuations. The Company’s direct sales generally have higher associated gross margins than its indirect sales through its channel partners. In addition, the Company’s gross margin and operating margin percentages, as well as overall profitability, may be materially adversely impacted as a result of a shift in product, geographic or channel mix, component cost increases, the strengthening U.S. dollar, price competition, or the introduction of new products, including those that have higher cost structures with flat or reduced pricing.

The Company has typically experienced higher net sales in its first quarter compared to other quarters due in part to seasonal holiday demand. Additionally, new product introductions can significantly impact net sales, product costs and operating expenses. Further, the Company generates a majority of its net sales from a single product and a decline in demand for that product could significantly impact quarterly net sales. The Company could also be subject to unexpected developments late in a quarter, such as lower-than-anticipated demand for the Company’s products, issues with new product introductions, an internal systems failure, or failure of one of the Company’s logistics, components supply, or manufacturing partners.

~~The Company’s stock price is subject to volatility.~~

The Company’s stock price has experienced substantial price volatility in the past and may continue to do so in the future. Additionally, the Company, the technology industry and the stock market as a whole have experienced extreme stock price and volume fluctuations that have affected stock prices in ways that may have been unrelated to these companies’ operating performance. Price volatility over a given period may cause the average price at which the Company repurchases its own stock to exceed the stock’s price at a given point in time. The Company believes its stock price should reflect expectations of future growth and profitability. The Company also believes its stock price should reflect expectations that its cash dividend will continue at current levels or grow and that its current share repurchase program will be fully consummated. Future dividends are subject to declaration by the Company’s Board of Directors, and the Company’s share repurchase program does not obligate it to acquire any specific number of shares. If the Company fails to meet expectations related to future growth, profitability, dividends, share repurchases or other market expectations, its stock price may decline significantly, which could have a material adverse impact on investor confidence and employee retention.

~~The Company’s financial performance is subject to risks associated with changes in the value of the U.S. dollar versus local currencies.~~

The Company’s primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar-denominated sales and operating expenses worldwide. Weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of the Company’s foreign currency-denominated sales and earnings, and generally leads the Company to raise international pricing, potentially reducing demand for the Company’s products. Margins on sales of the Company’s products in foreign countries and on sales of products that include components obtained from foreign suppliers, could be materially adversely affected by foreign currency exchange rate fluctuations. In some circumstances, for competitive or other reasons, the Company may decide not to raise local prices to fully offset the dollar’s strengthening, or at all, which would adversely affect the U.S. dollar value of the Company’s foreign currency-denominated sales and earnings. Conversely, a strengthening of foreign currencies relative to the U.S. dollar, while generally beneficial to the Company’s foreign currency-denominated sales and earnings, could cause the Company to reduce international pricing and incur losses on its foreign currency derivative instruments, thereby limiting the benefit. Additionally, strengthening of foreign currencies may increase the Company’s cost of product components denominated in those currencies, thus adversely affecting gross margins.

The Company uses derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates. The use of such hedging activities may not offset any, or more than a portion, of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place.

~~The Company is exposed to credit risk and fluctuations in the market values of its investment portfolio.~~

Given the global nature of its business, the Company has both domestic and international investments. Credit ratings and pricing of the Company’s investments can be negatively affected by liquidity, credit deterioration, financial results, economic risk, political risk, sovereign risk or other factors. As a result, the value and liquidity of the Company’s cash, cash equivalents and marketable securities may fluctuate substantially. Therefore, although the Company has not realized any significant losses on its cash, cash equivalents and marketable securities, future fluctuations in their value could result in significant realized losses.

The Company is exposed to credit risk on its trade accounts receivable, vendor non-trade receivables and prepayments related to long-term supply agreements, and this risk is heightened during periods when economic conditions worsen.

The Company distributes its products through third-party cellular network carriers, wholesalers, retailers and resellers. The Company also sells its products directly to small and mid-sized businesses and education, enterprise and government customers. A substantial majority of the Company’s outstanding trade receivables are not covered by collateral, third-party financing arrangements or credit insurance. The Company’s exposure to credit and collectibility risk on its trade receivables is higher in certain international markets and its ability to mitigate such risks may be limited. The Company also has unsecured vendor non-trade receivables resulting from purchases of components by outsourcing partners and other vendors that manufacture sub-assemblies or assemble final products for the Company. In addition, the Company has made prepayments associated with long-term supply agreements to secure supply of inventory components. As of December 30, 2017, a significant portion of the Company’s trade receivables was concentrated within cellular network carriers, and its vendor non-trade receivables and prepayments related to long-term supply agreements were concentrated among a few individual vendors located primarily in Asia. While the Company has procedures to monitor and limit exposure to credit risk on its trade and vendor non-trade receivables, as well as long-term prepayments, there can be no assurance such procedures will effectively limit its credit risk and avoid losses.

~~The Company could be subject to changes in its tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities.~~

The Company is subject to taxes in the U.S. and numerous foreign jurisdictions, including Ireland, where a number of the Company’s subsidiaries are organized. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change. The Company’s effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation, including in the U.S. and Ireland.

The Company is also subject to the examination of its tax returns and other tax matters by the U.S. Internal Revenue Service and other tax authorities and governmental bodies. The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for taxes. There can be no assurance as to the outcome of these examinations. If the Company’s effective tax rates were to increase, particularly in the U.S. or Ireland, or if the ultimate determination of the Company’s taxes owed is for an amount in excess of amounts previously accrued, the Company’s financial condition, operating results and cash flows could be adversely affected.


~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Share repurchase activity during the three months ended December ~~30, 2017~~31, 2022 was as follows (in millions, except number of shares, which are reflected in thousands, and per share amounts):


Periods	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
September 25, 2022 to October 29, 2022:
Open market and privately negotiated purchases	69,169	$	144.57	69,169

October 30, 2022 to November 26, 2022:
Open market and privately negotiated purchases	23,113	$	149.26	23,113

November 27, 2022 to December 31, 2022:
Open market and privately negotiated purchases	40,557	$	136.85	40,557
Total	132,839				$	41,665

(1)On April 28, 2022, the Board of Directors authorized the purchase of an additional $90 billion of the Company’s common stock under the Program. As of December 31, 2022, total utilization under the April 2022 authorization was $48.3 billion. The Program does not obligate the Company to acquire a minimum amount of shares. Under the Program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

Item 3. Defaults Upon Senior Securities

None.

Apple Inc. | Q1 2023 Form 10-Q | 21

Periods
Total Number
of Shares Purchased

Average Price
Paid Per Share

Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs

Approximate Dollar Value of
Shares That May Yet Be Purchased
Under the Plans or Programs ⁽¹⁾
October 1, 2017 to November 4, 2017:
Open market and privately negotiated purchases 6,308
$ 158.53
6,308

November 5, 2017 to December 2, 2017:
August 2017 ASR 3,818

⁽²⁾

3,818

November 2017 ASR 23,602
⁽³⁾
⁽³⁾

23,602
⁽³⁾

Open market and privately negotiated purchases 12,166
$ 172.61
12,166

December 3, 2017 to December 30, 2017:
Open market and privately negotiated purchases 11,707
$ 171.55
11,707

Total 57,601
$ 33,914

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the three months ended December 31, 2022, Katherine L. Adams, Timothy D. Cook, Luca Maestri, Deirdre O’Brien and Jeffrey Williams, each an officer for purposes of Section 16 of the Exchange Act, had equity trading plans in place in accordance with Rule 10b5-1(c)(1) under the Exchange Act. An equity trading plan is a written document that preestablishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including sales of shares acquired under the Company’s employee and director equity plans.

Item 6. Exhibits

~~(1)~~

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing Date/
Period End Date

10.1*

In ~~May 2017, the Company’s Board~~Form of ~~Directors increased the share repurchase authorization from $175 billion to~~ ~~$210 billion~~ ~~of the Company’s common stock, of which~~ ~~$176 billion~~ ~~had been utilized~~CEO Restricted Stock Unit Award Agreement under 202 2 Employee Stock Plan effective as of ~~December 30, 2017~~September 25 , 202 2 . ~~The remaining~~ ~~$34 billion~~ ~~in the table represents the amount available to repurchase shares under the authorized repurchase program as of~~ ~~December 30, 2017~~. The Company’s share repurchase program does not obligate it to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

~~(2)~~10.2*

~~In August 2017, the Company entered into an accelerated share repurchase arrangement (“ASR”) to purchase up to~~ ~~$3.0 billion~~Form of ~~the Company’s common stock. In November 2017, the purchase period for this ASR ended and an additional~~ ~~3.8 million~~ ~~shares were delivered and retired. In total,~~ ~~18.9 million~~ ~~shares were delivered~~CEO Performance Award Agreement under ~~this ASR at an average repurchase price~~202 2 Employee Stock Plan effective as of ~~$158.84~~September 25 , 202 2 .

~~(3)~~31.1*

~~In November 2017, the Company entered into a new ASR to purchase up to~~ ~~$5.0 billion~~Rule 13a-14(a) / 15d-14(a) Certification of ~~the Company’s common stock. In exchange for up-front payments totaling~~ ~~$5.0 billion~~, the financial institutions that are party to the arrangement committed to deliver shares to the Company during the ASR’s purchase period, which will end in February 2018. The total number of shares ultimately delivered, and therefore the average price paid per share, will be determined at the end of the applicable purchase period based on the volume-weighted average price of the Company’s common stock during that period.Chief Executive Officer.

~~Item 3.~~31.2*

~~Defaults Upon Senior Securities~~

~~None.~~

Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.

~~Item 4.~~32.1**

~~Mine Safety Disclosures~~

~~Not applicable.~~

Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.

101*

Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 5.1, “Financial Statements” of this Quarterly Report on Form 10-Q.

~~Other Information~~

~~None.~~

~~Item 6.~~104*

~~Exhibits~~

Incorporated by Reference

Exhibit
Number
Exhibit Description Form Exhibit
Filing Date/
Period End Date
4.1
Officer’s Certificate of the Registrant, dated as of November 13, 2017, including forms of global notes representing the 1.800% Notes due 2019, 2.000% Notes due 2020, 2.400% Notes due 2023, 2.750% Notes due 2025, 3.000% Notes due 2027 and 3.750% Notes due 2047.
8-K 4.1 11/13/17
31.1*
Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.

31.2*
Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.

32.1**
Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.

101.INS* XBRL Instance Document.
101.SCH* XBRL Taxonomy Extension Schema Document.
101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* XBRL Taxonomy Extension Label Linkbase Document.
101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document.

Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.

~~Filed herewith.~~


**	~~Furnished herewith.~~

* Filed herewith.

** Furnished herewith.

Apple Inc. | Q1 2023 Form 10-Q | 22

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: February 2, 2023		Apple Inc.

~~February 2, 2018~~		~~Apple Inc.~~
By:
	~~By:~~	/s/ Luca Maestri
			Luca Maestri
			Senior Vice President, Chief Financial Officer

Apple Inc. | Q1 ~~2018~~2023 Form 10-Q | 4523


California		94-2404110
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~California~~One Apple Park Way		~~94-2404110~~
~~(State or other jurisdiction~~ ~~of incorporation or organization)~~ Cupertino, California		~~(I.R.S. Employer Identification No.)~~95014
~~1 Infinite Loop~~ ~~Cupertino, California~~	~~95014~~
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.00001 par value per share	AAPL	The Nasdaq Stock Market LLC
1.375% Notes due 2024	—	The Nasdaq Stock Market LLC
0.000% Notes due 2025	—	The Nasdaq Stock Market LLC
0.875% Notes due 2025	—	The Nasdaq Stock Market LLC
1.625% Notes due 2026	—	The Nasdaq Stock Market LLC
2.000% Notes due 2027	—	The Nasdaq Stock Market LLC
1.375% Notes due 2029	—	The Nasdaq Stock Market LLC
3.050% Notes due 2029	—	The Nasdaq Stock Market LLC
0.500% Notes due 2031	—	The Nasdaq Stock Market LLC
3.600% Notes due 2042	—	The Nasdaq Stock Market LLC


						Three Months Ended
	Three Months Ended					December 31, 2022		December 25, 2021
Net sales:					Net sales:
Products					Products	$	96,388	$	104,429
Services					Services	20,766		19,516
Total net sales					Total net sales	117,154		123,945
	December 30, 2017		December 31, 2016
Net sales	$	88,293	$	78,351
Cost of sales	54,381		48,175
Cost of sales:					Cost of sales:
Products					Products	60,765		64,309
Services					Services	6,057		5,393
Total cost of sales					Total cost of sales	66,822		69,702
Gross margin	33,912		30,176		Gross margin	50,332		54,243

Operating expenses:					Operating expenses:
Research and development	3,407		2,871		Research and development	7,709		6,306
Selling, general and administrative	4,231		3,946		Selling, general and administrative	6,607		6,449
Total operating expenses	7,638		6,817		Total operating expenses	14,316		12,755

Operating income	26,274		23,359		Operating income	36,016		41,488
Other income/(expense), net	756		821		Other income/(expense), net	(393)		(247)
Income before provision for income taxes	27,030		24,180		Income before provision for income taxes	35,623		41,241
Provision for income taxes	6,965		6,289		Provision for income taxes	5,625		6,611
Net income	$	20,065	$	17,891	Net income	$	29,998	$	34,630

Earnings per share:					Earnings per share:
Basic	$	3.92	$	3.38	Basic	$	1.89	$	2.11
Diluted	$	3.89	$	3.36	Diluted	$	1.88	$	2.10

Shares used in computing earnings per share:					Shares used in computing earnings per share:
Basic	5,112,877		5,298,661		Basic	15,892,723		16,391,724
Diluted	5,157,787		5,327,995		Diluted	15,955,718		16,519,291

Cash dividends declared per share	$	0.63	$	0.57



	Three Months Ended
	December 30, 2017			December 31, 2016
Net income	$	20,065		$	17,891
Other comprehensive income/(loss):
Change in foreign currency translation, net of tax effects of $(1) and $76, respectively	40			(375		)

Change in unrealized gains/losses on derivative instruments:
Change in fair value of derivatives, net of tax benefit/(expense) of $(66) and $(228), respectively	88			1,468
Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $(21) and $(211), respectively	102			306
Total change in unrealized gains/losses on derivative instruments, net of tax	190			1,774

Change in unrealized gains/losses on marketable securities:
Change in fair value of marketable securities, net of tax benefit/(expense) of $464 and $989, respectively	(846		)	(1,808		)
Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $41 and $(11), respectively	(75		)	20
Total change in unrealized gains/losses on marketable securities, net of tax	(921		)	(1,788		)

Total other comprehensive income/(loss)	(691		)	(389		)
Total comprehensive income	$	19,374		$	17,502


	Three Months Ended
	December 31, 2022		December 25, 2021
Net income	$	29,998	$	34,630
Other comprehensive income/(loss):
Change in foreign currency translation, net of tax	(14)		(360)

Change in unrealized gains/losses on derivative instruments, net of tax:
Change in fair value of derivative instruments	(988)		362
Adjustment for net (gains)/losses realized and included in net income	(1,766)		93
Total change in unrealized gains/losses on derivative instruments	(2,754)		455

Change in unrealized gains/losses on marketable debt securities, net of tax:
Change in fair value of marketable debt securities	900		(1,176)
Adjustment for net (gains)/losses realized and included in net income	65		(9)
Total change in unrealized gains/losses on marketable debt securities	965		(1,185)

Total other comprehensive income/(loss)	(1,803)		(1,090)
Total comprehensive income	$	28,195	$	33,540



		Page
Part I
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2115
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3220
Item 4.	Controls and Procedures	3220
Part II
Item 1.	Legal Proceedings	3321
Item 1A.	Risk Factors	3321
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4321
Item 3.	Defaults Upon Senior Securities	4321
Item 4.	Mine Safety Disclosures	4322
Item 5.	Other Information	4322
Item 6.	Exhibits	4422


	December 30, 2017			September 30, 2017				December 31, 2022		September 24, 2022
ASSETS:	ASSETS:						ASSETS:
Current assets:							Current assets:
Cash and cash equivalents	$	27,491		$	20,289		Cash and cash equivalents	$	20,535	$	23,646
Short-term marketable securities	49,662			53,892
Accounts receivable, less allowances of $59 and $58, respectively	23,440			17,874
Marketable securities							Marketable securities	30,820		24,658
Accounts receivable, net							Accounts receivable, net	23,752		28,184
Inventories	4,421			4,855			Inventories	6,820		4,946
Vendor non-trade receivables	27,459			17,799			Vendor non-trade receivables	30,428		32,748
Other current assets	11,337			13,936			Other current assets	16,422		21,223
Total current assets	143,810			128,645			Total current assets	128,777		135,405

Long-term marketable securities	207,944			194,714
Non-current assets:							Non-current assets:
Marketable securities							Marketable securities	114,095		120,805
Property, plant and equipment, net	33,679			33,783			Property, plant and equipment, net	42,951		42,117
Goodwill	5,889			5,717
Acquired intangible assets, net	2,149			2,298
Other non-current assets	13,323			10,162			Other non-current assets	60,924		54,428
Total non-current assets							Total non-current assets	217,970		217,350
Total assets	$	406,794		$	375,319		Total assets	$	346,747	$	352,755

LIABILITIES AND SHAREHOLDERS’ EQUITY:	LIABILITIES AND SHAREHOLDERS’ EQUITY:						LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:							Current liabilities:
Accounts payable	$	62,985		$	49,049		Accounts payable	$	57,918	$	64,115
Accrued expenses	26,281			25,744
Other current liabilities							Other current liabilities	59,893		60,845
Deferred revenue	8,044			7,548			Deferred revenue	7,992		7,912
Commercial paper	11,980			11,977			Commercial paper	1,743		9,982
Current portion of long-term debt	6,498			6,496
Term debt							Term debt	9,740		11,128
Total current liabilities	115,788			100,814			Total current liabilities	137,286		153,982

Deferred revenue, non-current	3,131			2,836
Long-term debt	103,922			97,207
Non-current liabilities:							Non-current liabilities:
Term debt							Term debt	99,627		98,959
Other non-current liabilities	43,754			40,415			Other non-current liabilities	53,107		49,142
Total non-current liabilities							Total non-current liabilities	152,734		148,101
Total liabilities	266,595			241,272			Total liabilities	290,020		302,083

Commitments and contingencies							Commitments and contingencies

Shareholders’ equity:							Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,081,651 and 5,126,201 shares issued and outstanding, respectively	36,447			35,867
Retained earnings	104,593			98,330
Common stock and additional paid-in capital, $0.00001 par value: 50,400,000 shares authorized; 15,842,407 and 15,943,425 shares issued and outstanding, respectively							Common stock and additional paid-in capital, $0.00001 par value: 50,400,000 shares authorized; 15,842,407 and 15,943,425 shares issued and outstanding, respectively	66,399		64,849
Retained earnings/(Accumulated deficit)							Retained earnings/(Accumulated deficit)	3,240		(3,068)
Accumulated other comprehensive income/(loss)	(841		)	(150		)	Accumulated other comprehensive income/(loss)	(12,912)		(11,109)
Total shareholders’ equity	140,199			134,047			Total shareholders’ equity	56,727		50,672
Total liabilities and shareholders’ equity	$	406,794		$	375,319		Total liabilities and shareholders’ equity	$	346,747	$	352,755


	December 31, 2022
	Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Non-Current Marketable Securities
Cash	$	17,908	$	—	$	—	$	17,908	$	17,908	$	—	$	—
Level 1 (1):
Money market funds	818		—		—		818		818		—		—
Mutual funds	330		2		(40)		292		—		292		—
Subtotal	1,148		2		(40)		1,110		818		292		—
Level 2 (2):
U.S. Treasury securities	24,128		1		(1,576)		22,553		13		9,105		13,435
U.S. agency securities	5,743		—		(643)		5,100		—		310		4,790
Non-U.S. government securities	17,778		14		(1,029)		16,763		—		9,907		6,856
Certificates of deposit and time deposits	2,025		—		—		2,025		1,795		230		—
Commercial paper	237		—		—		237		—		237		—
Corporate debt securities	85,895		14		(7,039)		78,870		1		10,377		68,492
Municipal securities	864		—		(26)		838		—		278		560
Mortgage- and asset-backed securities	22,448		3		(2,405)		20,046		—		84		19,962
Subtotal	159,118		32		(12,718)		146,432		1,809		30,528		114,095
Total (3)	$	178,174	$	34	$	(12,758)	$	165,450	$	20,535	$	30,820	$	114,095


	September 24, 2022
	Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Non-Current Marketable Securities
Cash	$	18,546	$	—	$	—	$	18,546	$	18,546	$	—	$	—
Level 1 (1):
Money market funds	2,929		—		—		2,929		2,929		—		—
Mutual funds	274		—		(47)		227		—		227		—
Subtotal	3,203		—		(47)		3,156		2,929		227		—
Level 2 (2):
U.S. Treasury securities	25,134		—		(1,725)		23,409		338		5,091		17,980
U.S. agency securities	5,823		—		(655)		5,168		—		240		4,928
Non-U.S. government securities	16,948		2		(1,201)		15,749		—		8,806		6,943
Certificates of deposit and time deposits	2,067		—		—		2,067		1,805		262		—
Commercial paper	718		—		—		718		28		690		—
Corporate debt securities	87,148		9		(7,707)		79,450		—		9,023		70,427
Municipal securities	921		—		(35)		886		—		266		620
Mortgage- and asset-backed securities	22,553		—		(2,593)		19,960		—		53		19,907
Subtotal	161,312		11		(13,916)		147,407		2,171		24,431		120,805
Total (3)	$	183,061	$	11	$	(13,963)	$	169,109	$	23,646	$	24,658	$	120,805



	December 30, 2017
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	9,529	$	—	$	—		$	9,529	$	9,529	$	—	$	—

Level 1 ⁽¹⁾:
Money market funds	8,570		—		—			8,570		8,570		—		—
Mutual funds	800		—		(92		)	708		—		708		—
Subtotal	9,370		—		(92		)	9,278		8,570		708		—

Level 2 ⁽²⁾:
U.S. Treasury securities	60,329		4		(502		)	59,831		2,268		13,661		43,902
U.S. agency securities	5,384		—		(22		)	5,362		1,376		1,980		2,006
Non-U.S. government securities	8,651		206		(60		)	8,797		—		223		8,574
Certificates of deposit and time deposits	6,307		—		—			6,307		2,237		3,064		1,006
Commercial paper	5,384		—		—			5,384		3,186		2,198		—
Corporate securities	157,043		506		(681		)	156,868		325		27,252		129,291
Municipal securities	971		—		(8		)	963		—		110		853
Mortgage- and asset-backed securities	23,052		17		(291		)	22,778		—		466		22,312
Subtotal	267,121		733		(1,564		)	266,290		9,392		48,954		207,944

Total	$	286,020	$	733	$	(1,656	)	$	285,097	$	27,491	$	49,662	$	207,944



	September 30, 2017
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	7,982	$	—	$	—		$	7,982	$	7,982	$	—	$	—

Level 1 ⁽¹⁾:
Money market funds	6,534		—		—			6,534		6,534		—		—
Mutual funds	799		—		(88		)	711		—		711		—
Subtotal	7,333		—		(88		)	7,245		6,534		711		—

Level 2 ⁽²⁾:
U.S. Treasury securities	55,254		58		(230		)	55,082		865		17,228		36,989
U.S. agency securities	5,162		2		(9		)	5,155		1,439		2,057		1,659
Non-U.S. government securities	7,827		210		(37		)	8,000		9		123		7,868
Certificates of deposit and time deposits	5,832		—		—			5,832		1,142		3,918		772
Commercial paper	3,640		—		—			3,640		2,146		1,494		—
Corporate securities	152,724		969		(242		)	153,451		172		27,591		125,688
Municipal securities	961		4		(1		)	964		—		114		850
Mortgage- and asset-backed securities	21,684		35		(175		)	21,544		—		656		20,888
Subtotal	253,084		1,278		(694		)	253,668		5,773		53,181		194,714

Total	$	268,399	$	1,278	$	(782	)	$	268,895	$	20,289	$	53,892	$	194,714


~~(1)~~Due after 1 year through 5 years			~~Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities.~~$

82,497
~~(2)~~Due after 5 years through 10 years	~~Level 2~~14,243
Due after 10 years	17,355
Total 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.	$	114,095



	December 30, 2017
	Fair Value of Derivatives Designated as Hedge Instruments		Fair Value of Derivatives Not Designated as Hedge Instruments		Total Fair Value
Derivative assets ⁽¹⁾:
Foreign exchange contracts	$	985	$	284	$	1,269
Interest rate contracts	$	100	$	—	$	100

Derivative liabilities ⁽²⁾:
Foreign exchange contracts	$	460	$	283	$	743
Interest rate contracts	$	462	$	—	$	462


~~(1)~~	~~The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets and other non-current assets in the Condensed Consolidated Balance Sheets.~~


~~(2)~~	~~The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued expenses and other non-current liabilities in the Condensed Consolidated Balance Sheets.~~


	December 31, 2022		September 24, 2022
Derivative instruments designated as accounting hedges:
Foreign exchange contracts	$	66,054	$	102,670
Interest rate contracts	$	20,125	$	20,125

Derivative instruments not designated as accounting hedges:
Foreign exchange contracts	$	134,971	$	185,381



	December 30, 2017				September 30, 2017
	Notional Amount		Credit Risk Amount		Notional Amount		Credit Risk Amount
Instruments designated as accounting hedges:
Foreign exchange contracts	$	48,337	$	985	$	56,156	$	1,049
Interest rate contracts	$	35,250	$	100	$	33,000	$	218

Instruments not designated as accounting hedges:
Foreign exchange contracts	$	77,059	$	284	$	69,774	$	363


	December 31, 2022		September 24, 2022
Hedged assets/(liabilities):
Current and non-current marketable securities	$	14,311	$	13,378
Current and non-current term debt	$	(18,731)	$	(18,739)


	December 31, 2022		September 24, 2022
Components	$	2,513	$	1,637
Finished goods	4,307		3,309
Total inventories	$	6,820	$	4,946



	December 30, 2017			September 30, 2017
Land and buildings	$	14,189		$	13,587
Machinery, equipment and internal-use software	55,479			54,210
Leasehold improvements	7,442			7,279
Gross property, plant and equipment	77,110			75,076
Accumulated depreciation and amortization	(43,431		)	(41,293		)
Total property, plant and equipment, net	$	33,679		$	33,783



	December 30, 2017		September 30, 2017
Long-term taxes payable	$	34,913	$	257
Deferred tax liabilities	548		31,504
Other non-current liabilities	8,293		8,654
Total other non-current liabilities	$	43,754	$	40,415



	December 30, 2017							September 30, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Definite-lived and amortizable acquired intangible assets	$	7,540	$	(5,491	)	$	2,049	$	7,507	$	(5,309	)	$	2,198
Indefinite-lived and non-amortizable acquired intangible assets	100		—			100		100		—			100
Total acquired intangible assets	$	7,640	$	(5,491	)	$	2,149	$	7,607	$	(5,309	)	$	2,298



	Maturities			December 30, 2017								September 30, 2017
	Maturities			Amount (in millions)			Effective Interest Rate					Amount (in millions)			Effective Interest Rate
2013 debt issuance of $17.0 billion:
Floating-rate notes	2018		2018	$	2,000			1.10%		1.10	%	$	2,000			1.10%		1.10	%
Fixed-rate 1.000% – 3.850% notes	2018	–	2043	12,500				1.08%	–	3.91	%	12,500				1.08%	–	3.91	%

2014 debt issuance of $12.0 billion:
Floating-rate notes	2019		2019	1,000				1.69%		1.69	%	1,000				1.61%		1.61	%
Fixed-rate 2.100% – 4.450% notes	2019	–	2044	8,500				1.69%	–	4.48	%	8,500				1.61%	–	4.48	%

2015 debt issuances of $27.3 billion:
Floating-rate notes	2019	–	2020	1,544				1.65%	–	1.87	%	1,549				1.56%	–	1.87	%
Fixed-rate 0.350% – 4.375% notes	2019	–	2045	24,555				0.28%	–	4.51	%	24,522				0.28%	–	4.51	%

2016 debt issuances of $24.9 billion:
Floating-rate notes	2019	–	2021	1,350				1.53%	–	2.59	%	1,350				1.45%	–	2.44	%
Fixed-rate 1.100% – 4.650% notes	2018	–	2046	23,635				1.13%	–	4.78	%	23,645				1.13%	–	4.78	%

2017 debt issuances of $28.7 billion:
Floating-rate notes	2019	–	2022	3,250				1.48%	–	1.90	%	3,250				1.38%	–	1.81	%
Fixed-rate 0.875% – 4.300% notes	2019	–	2047	25,699				1.54%	–	4.30	%	25,705				1.51%	–	4.30	%

First quarter 2018 debt issuance of $7.0 billion:
Fixed-rate 1.800% notes			2019	1,000						1.83	%	—						—	%
Fixed-rate 2.000% notes			2020	1,000						2.03	%	—						—	%
Fixed-rate 2.400% notes			2023	750						1.93	%	—						—	%
Fixed-rate 2.750% notes			2025	1,500						2.77	%	—						—	%
Fixed-rate 3.000% notes			2027	1,500						2.13	%	—						—	%
Fixed-rate 3.750% notes			2047	1,250						3.80	%	—						—	%
Total term debt				111,033								104,021

Unamortized premium/(discount) and issuance costs, net				(246		)						(225		)
Hedge accounting fair value adjustments				(367		)						(93		)
Less: Current portion of long-term debt				(6,498		)						(6,496		)
Total long-term debt				$	103,922							$	97,207



	Dividends Per Share		Amount (in millions)
2018:
First quarter	$	0.63	$	3,232

2017:
Fourth quarter	$	0.63	$	3,252
Third quarter	0.63		3,281
Second quarter	0.57		2,988
First quarter	0.57		3,042
Total cash dividends declared and paid	$	2.40	$	12,563



	Purchase Period End Date	Number of Shares (in thousands)		Average Repurchase Price Per Share		ASR Amount (in millions)
November 2017 ASR	February 2018	23,602	⁽¹⁾	⁽¹⁾		$	5,000
August 2017 ASR	November 2017	18,887	⁽²⁾	$	158.84	$	3,000
May 2017 ASR	August 2017	20,108		$	149.20	$	3,000
February 2017 ASR	May 2017	20,949		$	143.20	$	3,000
November 2016 ASR	February 2017	51,157		$	117.29	$	6,000
August 2016 ASR	November 2016	26,850		$	111.73	$	3,000



		Three Months Ended
Comprehensive Income Components	Financial Statement Line Item	December 30, 2017			December 31, 2016
Unrealized (gains)/losses on derivative instruments:
Foreign exchange contracts	Net sales	$	184		$	(101	)
	Cost of sales	(27		)	13
	Other income/(expense), net	(33		)	604
Interest rate contracts	Other income/(expense), net	(1		)	1
		123			517
Unrealized (gains)/losses on marketable securities	Other income/(expense), net	(116		)	31
Total amounts reclassified from AOCI		$	7		$	548



	Cumulative Foreign Currency Translation			Unrealized Gains/Losses on Derivative Instruments			Unrealized Gains/Losses on Marketable Securities			Total
Balances as of September 30, 2017	$	(354	)	$	(124	)	$	328		$	(150	)
Other comprehensive income/(loss) before reclassifications	41			154			(1,310		)	(1,115		)
Amounts reclassified from AOCI	—			123			(116		)	7
Tax effect	(1		)	(87		)	505			417
Other comprehensive income/(loss)	40			190			(921		)	(691		)
Balances as of December 30, 2017	$	(314	)	$	66		$	(593	)	$	(841	)


2023 (remaining nine months)	$	2,899
2024	2,897
2025	1,584
2026	6,554
2027	348
Thereafter	444
Total	$	14,726


~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~


~~(1)~~	~~Includes deferrals and amortization of related software upgrade rights and non-software services.~~


~~(2)~~	~~Includes revenue from Digital Content and Services, AppleCare®, Apple Pay, licensing and other services.~~


~~(3)~~	~~Includes sales of Apple TV, Apple Watch, Beats® products, iPod touch and Apple-branded and third-party accessories.~~


Gross margin percentage:
Products	37.0	%	38.4	%
Services	70.8	%	72.4	%
Total gross margin percentage	43.0	%	43.8	%



	December 30, 2017		September 30, 2017
Cash, cash equivalents and marketable securities	$	285,097	$	268,895
Property, plant and equipment, net	$	33,679	$	33,783
Commercial paper	$	11,980	$	11,977
Total term debt	$	110,420	$	103,703
Working capital	$	28,022	$	27,831