UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December 31, 2022~~July 1, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-36743

Apple Inc.

(Exact name of Registrant as specified in its charter)


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

One Apple Park Way
Cupertino, California						95014
(Address of principal executive offices)						(Zip Code)

(408) 996-1010

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

~~15,821,946,000~~15,634,232,000 shares of common stock were issued and outstanding as of ~~January 20,~~July 21, 2023.

Apple Inc.

Form 10-Q

For the Fiscal Quarter Ended ~~December 31, 2022~~July 1, 2023

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

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


		Three Months Ended				Three Months Ended				Nine Months Ended
		December 31, 2022		December 25, 2021				July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Net sales:	Net sales:						Net sales:
Products	Products	$	96,388	$	104,429		Products	$	60,584	$	63,355	$	230,901	$	245,241
Services	Services	20,766		19,516			Services	21,213		19,604		62,886		58,941
Total net sales	Total net sales	117,154		123,945			Total net sales	81,797		82,959		293,787		304,182

Cost of sales:	Cost of sales:						Cost of sales:
Products	Products	60,765		64,309			Products	39,136		41,485		146,696		155,084
Services	Services	6,057		5,393			Services	6,248		5,589		18,370		16,411
Total cost of sales	Total cost of sales	66,822		69,702			Total cost of sales	45,384		47,074		165,066		171,495
Gross margin	Gross margin	50,332		54,243			Gross margin	36,413		35,885		128,721		132,687

Operating expenses:	Operating expenses:						Operating expenses:
Research and development	Research and development	7,709		6,306			Research and development	7,442		6,797		22,608		19,490
Selling, general and administrative	Selling, general and administrative	6,607		6,449			Selling, general and administrative	5,973		6,012		18,781		18,654
Total operating expenses	Total operating expenses	14,316		12,755			Total operating expenses	13,415		12,809		41,389		38,144

Operating income	Operating income	36,016		41,488			Operating income	22,998		23,076		87,332		94,543
Other income/(expense), net	Other income/(expense), net	(393)		(247)			Other income/(expense), net	(265)		(10)		(594)		(97)
Income before provision for income taxes	Income before provision for income taxes	35,623		41,241			Income before provision for income taxes	22,733		23,066		86,738		94,446
Provision for income taxes	Provision for income taxes	5,625		6,611			Provision for income taxes	2,852		3,624		12,699		15,364
Net income	Net income	$	29,998	$	34,630		Net income	$	19,881	$	19,442	$	74,039	$	79,082

Earnings per share:	Earnings per share:						Earnings per share:
Basic	Basic	$	1.89	$	2.11		Basic	$	1.27	$	1.20	$	4.69	$	4.86
Diluted	Diluted	$	1.88	$	2.10		Diluted	$	1.26	$	1.20	$	4.67	$	4.82

Shares used in computing earnings per share:	Shares used in computing earnings per share:						Shares used in computing earnings per share:
Basic	Basic	15,892,723		16,391,724			Basic	15,697,614		16,162,945		15,792,497		16,277,824
Diluted	Diluted	15,955,718		16,519,291			Diluted	15,775,021		16,262,203		15,859,263		16,394,937

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q1Q3 2023 Form 10-Q | 1

Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In millions)


		Three Months Ended				Three Months Ended				Nine Months Ended
		December 31, 2022		December 25, 2021				July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Net income	Net income	$	29,998	$	34,630		Net income	$	19,881	$	19,442	$	74,039	$	79,082
Other comprehensive income/(loss):	Other comprehensive income/(loss):						Other comprehensive income/(loss):
Change in foreign currency translation, net of tax	Change in foreign currency translation, net of tax	(14)		(360)			Change in foreign currency translation, net of tax	(385)		(721)		(494)		(1,102)

Change in unrealized gains/losses on derivative instruments, net of tax:	Change in unrealized gains/losses on derivative instruments, net of tax:						Change in unrealized gains/losses on derivative instruments, net of tax:
Change in fair value of derivative instruments	Change in fair value of derivative instruments	(988)		362			Change in fair value of derivative instruments	509		852		(492)		1,548
Adjustment for net (gains)/losses realized and included in net income	Adjustment for net (gains)/losses realized and included in net income	(1,766)		93			Adjustment for net (gains)/losses realized and included in net income	103		121		(1,854)		(87)
Total change in unrealized gains/losses on derivative instruments	Total change in unrealized gains/losses on derivative instruments	(2,754)		455			Total change in unrealized gains/losses on derivative instruments	612		973		(2,346)		1,461

Change in unrealized gains/losses on marketable debt securities, net of tax:	Change in unrealized gains/losses on marketable debt securities, net of tax:						Change in unrealized gains/losses on marketable debt securities, net of tax:
Change in fair value of marketable debt securities	Change in fair value of marketable debt securities	900		(1,176)			Change in fair value of marketable debt securities	(340)		(3,150)		1,963		(9,959)
Adjustment for net (gains)/losses realized and included in net income	Adjustment for net (gains)/losses realized and included in net income	65		(9)			Adjustment for net (gains)/losses realized and included in net income	58		95		185		140
Total change in unrealized gains/losses on marketable debt securities	Total change in unrealized gains/losses on marketable debt securities	965		(1,185)			Total change in unrealized gains/losses on marketable debt securities	(282)		(3,055)		2,148		(9,819)

Total other comprehensive income/(loss)	Total other comprehensive income/(loss)	(1,803)		(1,090)			Total other comprehensive income/(loss)	(55)		(2,803)		(692)		(9,460)
Total comprehensive income	Total comprehensive income	$	28,195	$	33,540		Total comprehensive income	$	19,826	$	16,639	$	73,347	$	69,622

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q1Q3 2023 Form 10-Q | 2

Apple Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions, except number of shares which are reflected in thousands and par value)


		December 31, 2022		September 24, 2022			July 1, 2023		September 24, 2022
ASSETS:	ASSETS:					ASSETS:
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	20,535	$	23,646	Cash and cash equivalents	$	28,408	$	23,646
Marketable securities	Marketable securities	30,820		24,658		Marketable securities	34,074		24,658
Accounts receivable, net	Accounts receivable, net	23,752		28,184		Accounts receivable, net	19,549		28,184
Inventories	Inventories	6,820		4,946		Inventories	7,351		4,946
Vendor non-trade receivables	Vendor non-trade receivables	30,428		32,748		Vendor non-trade receivables	19,637		32,748
Other current assets	Other current assets	16,422		21,223		Other current assets	13,640		21,223
Total current assets	Total current assets	128,777		135,405		Total current assets	122,659		135,405

Non-current assets:	Non-current assets:					Non-current assets:
Marketable securities	Marketable securities	114,095		120,805		Marketable securities	104,061		120,805
Property, plant and equipment, net	Property, plant and equipment, net	42,951		42,117		Property, plant and equipment, net	43,550		42,117
Other non-current assets	Other non-current assets	60,924		54,428		Other non-current assets	64,768		54,428
Total non-current assets	Total non-current assets	217,970		217,350		Total non-current assets	212,379		217,350
Total assets	Total assets	$	346,747	$	352,755	Total assets	$	335,038	$	352,755

LIABILITIES AND SHAREHOLDERS’ EQUITY:	LIABILITIES AND SHAREHOLDERS’ EQUITY:					LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	57,918	$	64,115	Accounts payable	$	46,699	$	64,115
Other current liabilities	Other current liabilities	59,893		60,845		Other current liabilities	58,897		60,845
Deferred revenue	Deferred revenue	7,992		7,912		Deferred revenue	8,158		7,912
Commercial paper	Commercial paper	1,743		9,982		Commercial paper	3,993		9,982
Term debt	Term debt	9,740		11,128		Term debt	7,216		11,128
Total current liabilities	Total current liabilities	137,286		153,982		Total current liabilities	124,963		153,982

Non-current liabilities:	Non-current liabilities:					Non-current liabilities:
Term debt	Term debt	99,627		98,959		Term debt	98,071		98,959
Other non-current liabilities	Other non-current liabilities	53,107		49,142		Other non-current liabilities	51,730		49,142
Total non-current liabilities	Total non-current liabilities	152,734		148,101		Total non-current liabilities	149,801		148,101
Total liabilities	Total liabilities	290,020		302,083		Total liabilities	274,764		302,083

Commitments and contingencies	Commitments and contingencies					Commitments and contingencies

Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
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
Common stock and additional paid-in capital, $0.00001 par value: 50,400,000 shares authorized; 15,647,868 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; 15,647,868 and 15,943,425 shares issued and outstanding, respectively	70,667		64,849
Retained earnings/(Accumulated deficit)	Retained earnings/(Accumulated deficit)	3,240		(3,068)		Retained earnings/(Accumulated deficit)	1,408		(3,068)
Accumulated other comprehensive income/(loss)	Accumulated other comprehensive income/(loss)	(12,912)		(11,109)		Accumulated other comprehensive income/(loss)	(11,801)		(11,109)
Total shareholders’ equity	Total shareholders’ equity	56,727		50,672		Total shareholders’ equity	60,274		50,672
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	346,747	$	352,755	Total liabilities and shareholders’ equity	$	335,038	$	352,755

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q1Q3 2023 Form 10-Q | 3

Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

(In millions, except per share amounts)


		Three Months Ended				Three Months Ended				Nine Months Ended
		December 31, 2022		December 25, 2021				July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Total shareholders’ equity, beginning balances	Total shareholders’ equity, beginning balances	$	50,672	$	63,090		Total shareholders’ equity, beginning balances	$	62,158	$	67,399	$	50,672	$	63,090

Common stock and additional paid-in capital:	Common stock and additional paid-in capital:						Common stock and additional paid-in capital:
Beginning balances	Beginning balances	64,849		57,365			Beginning balances	69,568		61,181		64,849		57,365

Common stock issued							Common stock issued	—		—		690		593
Common stock withheld related to net share settlement of equity awards	Common stock withheld related to net share settlement of equity awards	(1,434)		(1,263)			Common stock withheld related to net share settlement of equity awards	(1,595)		(1,371)		(3,310)		(2,783)
Share-based compensation	Share-based compensation	2,984		2,322			Share-based compensation	2,694		2,305		8,438		6,940
Ending balances	Ending balances	66,399		58,424			Ending balances	70,667		62,115		70,667		62,115

Retained earnings/(Accumulated deficit):	Retained earnings/(Accumulated deficit):						Retained earnings/(Accumulated deficit):
Beginning balances	Beginning balances	(3,068)		5,562			Beginning balances	4,336		12,712		(3,068)		5,562
Net income	Net income	29,998		34,630			Net income	19,881		19,442		74,039		79,082
Dividends and dividend equivalents declared	Dividends and dividend equivalents declared	(3,712)		(3,665)			Dividends and dividend equivalents declared	(3,811)		(3,760)		(11,207)		(11,058)
Common stock withheld related to net share settlement of equity awards	Common stock withheld related to net share settlement of equity awards	(978)		(1,730)			Common stock withheld related to net share settlement of equity awards	(858)		(1,403)		(1,988)		(3,323)
Common stock repurchased	Common stock repurchased	(19,000)		(20,362)			Common stock repurchased	(18,140)		(21,702)		(56,368)		(64,974)
Ending balances	Ending balances	3,240		14,435			Ending balances	1,408		5,289		1,408		5,289

Accumulated other comprehensive income/(loss):	Accumulated other comprehensive income/(loss):						Accumulated other comprehensive income/(loss):
Beginning balances	Beginning balances	(11,109)		163			Beginning balances	(11,746)		(6,494)		(11,109)		163
Other comprehensive income/(loss)	Other comprehensive income/(loss)	(1,803)		(1,090)			Other comprehensive income/(loss)	(55)		(2,803)		(692)		(9,460)
Ending balances	Ending balances	(12,912)		(927)			Ending balances	(11,801)		(9,297)		(11,801)		(9,297)

Total shareholders’ equity, ending balances	Total shareholders’ equity, ending balances	$	56,727	$	71,932		Total shareholders’ equity, ending balances	$	60,274	$	58,107	$	60,274	$	58,107

Dividends and dividend equivalents declared per share or RSU	Dividends and dividend equivalents declared per share or RSU	$	0.23	$	0.22		Dividends and dividend equivalents declared per share or RSU	$	0.24	$	0.23	$	0.70	$	0.67

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q1Q3 2023 Form 10-Q | 4

Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)


		Three Months Ended					Nine Months Ended
		December 31, 2022		December 25, 2021			July 1, 2023		June 25, 2022
Cash, cash equivalents and restricted cash, beginning balances	Cash, cash equivalents and restricted cash, beginning balances	$	24,977	$	35,929	Cash, cash equivalents and restricted cash, beginning balances	$	24,977	$	35,929

Operating activities:	Operating activities:					Operating activities:
Net income	Net income	29,998		34,630		Net income	74,039		79,082
Adjustments to reconcile net income to cash generated by operating activities:	Adjustments to reconcile net income to cash generated by operating activities:					Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization	Depreciation and amortization	2,916		2,697		Depreciation and amortization	8,866		8,239
Share-based compensation expense	Share-based compensation expense	2,905		2,265		Share-based compensation expense	8,208		6,760

Other	Other	(317)		849		Other	(1,651)		2,695
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable, net	Accounts receivable, net	4,275		(3,934)		Accounts receivable, net	7,609		4,561
Inventories	Inventories	(1,807)		681		Inventories	(2,570)		1,049
Vendor non-trade receivables	Vendor non-trade receivables	2,320		(9,812)		Vendor non-trade receivables	13,111		4,789
Other current and non-current assets	Other current and non-current assets	(4,099)		(4,921)		Other current and non-current assets	(4,863)		(3,289)
Accounts payable	Accounts payable	(6,075)		19,813		Accounts payable	(16,790)		(6,108)
Deferred revenue		131		462

Other current and non-current liabilities	Other current and non-current liabilities	3,758		4,236		Other current and non-current liabilities	2,986		246
Cash generated by operating activities	Cash generated by operating activities	34,005		46,966		Cash generated by operating activities	88,945		98,024

Investing activities:	Investing activities:					Investing activities:
Purchases of marketable securities	Purchases of marketable securities	(5,153)		(34,913)		Purchases of marketable securities	(20,956)		(70,178)
Proceeds from maturities of marketable securities	Proceeds from maturities of marketable securities	7,127		11,309		Proceeds from maturities of marketable securities	27,857		24,203
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	509		10,675		Proceeds from sales of marketable securities	3,959		33,609
Payments for acquisition of property, plant and equipment	Payments for acquisition of property, plant and equipment	(3,787)		(2,803)		Payments for acquisition of property, plant and equipment	(8,796)		(7,419)

Other	Other	(141)		(374)		Other	(753)		(1,352)
Cash used in investing activities		(1,445)		(16,106)
Cash generated by/(used in) investing activities						Cash generated by/(used in) investing activities	1,311		(21,137)

Financing activities:	Financing activities:					Financing activities:
Payments for taxes related to net share settlement of equity awards	Payments for taxes related to net share settlement of equity awards	(2,316)		(2,888)		Payments for taxes related to net share settlement of equity awards	(5,119)		(5,915)
Payments for dividends and dividend equivalents	Payments for dividends and dividend equivalents	(3,768)		(3,732)		Payments for dividends and dividend equivalents	(11,267)		(11,138)
Repurchases of common stock	Repurchases of common stock	(19,475)		(20,478)		Repurchases of common stock	(56,547)		(64,974)

Proceeds from issuance of term debt, net						Proceeds from issuance of term debt, net	5,228		—
Repayments of term debt	Repayments of term debt	(1,401)		—		Repayments of term debt	(11,151)		(6,750)
Repayments of commercial paper, net		(8,214)		(1,000)
Proceeds from/(Repayments of) commercial paper, net						Proceeds from/(Repayments of) commercial paper, net	(5,971)		4,970
Other	Other	(389)		(61)		Other	(508)		(148)
Cash used in financing activities	Cash used in financing activities	(35,563)		(28,159)		Cash used in financing activities	(85,335)		(83,955)

Increase/(Decrease) in cash, cash equivalents and restricted cash	Increase/(Decrease) in cash, cash equivalents and restricted cash	(3,003)		2,701		Increase/(Decrease) in cash, cash equivalents and restricted cash	4,921		(7,068)
Cash, cash equivalents and restricted cash, ending balances	Cash, cash equivalents and restricted cash, ending balances	$	21,974	$	38,630	Cash, cash equivalents and restricted cash, ending balances	$	29,898	$	28,861

Supplemental cash flow disclosure:	Supplemental cash flow disclosure:					Supplemental cash flow disclosure:
Cash paid for income taxes, net	Cash paid for income taxes, net	$	828	$	5,235	Cash paid for income taxes, net	$	7,020	$	12,251
Cash paid for interest	Cash paid for interest	$	703	$	531	Cash paid for interest	$	2,590	$	1,910

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q1Q3 2023 Form 10-Q | 5

Apple Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 – Summary of Significant Accounting Policies

Basis of Presentation and Preparation

The condensed consolidated financial statements include the accounts of Apple Inc. and its wholly owned subsidiaries (collectively “Apple” or the “Company”). Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the fiscal year ended September 24, 2022.

The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. An additional week is included in the first fiscal quarter every five or six years to realign the Company’s fiscal quarters with calendar quarters, which occurred in the first fiscal quarter of 2023. The Company’s fiscal years 2023 and 2022 span 53 and 52 weeks, respectively. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years.

Earnings Per Share

The following table shows the computation of basic and diluted earnings per share for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023 and June 25, 2022 ~~and December 25, 2021~~ (net income in millions and shares in thousands):


		Three Months Ended				Three Months Ended				Nine Months Ended
		December 31, 2022		December 25, 2021				July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Numerator:	Numerator:						Numerator:
Net income	Net income	$	29,998	$	34,630		Net income	$	19,881	$	19,442	$	74,039	$	79,082

Denominator:	Denominator:						Denominator:
Weighted-average basic shares outstanding	Weighted-average basic shares outstanding	15,892,723		16,391,724			Weighted-average basic shares outstanding	15,697,614		16,162,945		15,792,497		16,277,824
Effect of dilutive securities	Effect of dilutive securities	62,995		127,567			Effect of dilutive securities	77,407		99,258		66,766		117,113
Weighted-average diluted shares	Weighted-average diluted shares	15,955,718		16,519,291			Weighted-average diluted shares	15,775,021		16,262,203		15,859,263		16,394,937

Basic earnings per share	Basic earnings per share	$	1.89	$	2.11		Basic earnings per share	$	1.27	$	1.20	$	4.69	$	4.86
Diluted earnings per share	Diluted earnings per share	$	1.88	$	2.10		Diluted earnings per share	$	1.26	$	1.20	$	4.67	$	4.82

Approximately 8932 million restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share for the ~~three~~nine months ended ~~December 31, 2022~~July 1, 2023 because their effect would have been antidilutive.

Apple Inc. | Q1Q3 2023 Form 10-Q | 6

Note 2 – Revenue

Net sales disaggregated by significant products and services for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023 and June 25, 2022 ~~and December 25, 2021~~ were as follows (in millions):


		Three Months Ended				Three Months Ended				Nine Months Ended
		December 31, 2022		December 25, 2021				July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
iPhone® ~~(1)~~	iPhone® ~~(1)~~	$	65,775	$	71,628		iPhone® ~~(1)~~	$	39,669	$	40,665	$	156,778	$	162,863
Mac® ~~(1)~~	Mac® ~~(1)~~	7,735		10,852			Mac® ~~(1)~~	6,840		7,382		21,743		28,669
iPad® ~~(1)~~	iPad® ~~(1)~~	9,396		7,248			iPad® ~~(1)~~	5,791		7,224		21,857		22,118
Wearables, Home and Accessories ~~(2)~~	Wearables, Home and Accessories ~~(2)~~	13,482		14,701			Wearables, Home and Accessories ~~(2)~~	8,284		8,084		30,523		31,591
Services ~~(3)~~	Services ~~(3)~~	20,766		19,516			Services ~~(3)~~	21,213		19,604		62,886		58,941
Total net sales ~~(4)~~	Total net sales ~~(4)~~	$	117,154	$	123,945		Total net sales ~~(4)~~	$	81,797	$	82,959	$	293,787	$	304,182

~~(1)Products~~Total net sales include ~~amortization of the deferred value of unspecified software upgrade rights, which are bundled in the sales price of the respective product.~~

~~(2)Wearables, Home and Accessories net sales include sales of AirPods~~®~~, Apple TV~~®~~, Apple Watch~~®~~, Beats~~® ~~products, HomePod mini~~® ~~and accessories.~~

~~(3)Services net sales include sales from the Company’s advertising, AppleCare~~®~~, cloud, digital content, payment and other services. Services net sales also include amortization of the deferred value of services bundled in the sales price of certain products.~~

~~(4)Includes $3.4~~$3.3 billion of revenue recognized in the three months ended ~~December 31,~~July 1, 2023 that was included in deferred revenue as of April 1, 2023, $3.1 billion of revenue recognized in the three months ended June 25, 2022 that was included in deferred revenue as of March 26, 2022, $7.0 billion of revenue recognized in the nine months ended July 1, 2023 that was included in deferred revenue as of September 24, 2022, and ~~$3.0~~$6.3 billion of revenue recognized in the ~~three~~nine months ended ~~December~~June 25, ~~2021~~2022 that was included in deferred revenue as of September 25, 2021.

The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 9,10, “Segment Information and Geographic Data” for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023 and June 25, 2022, ~~and December 25, 2021,~~ except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales.

As of ~~December 31, 2022~~July 1, 2023 and September 24, 2022, the Company had total deferred revenue of ~~$12.6~~$12.2 billion and $12.4 billion, respectively. As of ~~December 31, 2022,~~July 1, 2023, the Company expects ~~63%~~67% of total deferred revenue to be realized in less than a year, ~~27%~~26% within one-to-two years, 8%6% within two-to-three years and 2%1% in greater than three years.

~~Apple Inc. | Q1 2023 Form 10-Q | 7~~

Note 3 – Financial Instruments

Cash, Cash Equivalents and Marketable Securities

The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of ~~December 31, 2022~~July 1, 2023 and September 24, 2022 (in millions):


		December 31, 2022															July 1, 2023
		Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Non-Current Marketable Securities			Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Non-Current Marketable Securities
Cash	Cash	$	17,908	$	—	$	—	$	17,908	$	17,908	$	—	$	—	Cash	$	25,337	$	—	$	—	$	25,337	$	25,337	$	—	$	—
Level 1 (1):	Level 1 (1):															Level 1 (1):
Money market funds	Money market funds	818		—		—		818		818		—		—		Money market funds	1,108		—		—		1,108		1,108		—		—
Mutual funds	Mutual funds	330		2		(40)		292		—		292		—		Mutual funds	366		15		(19)		362		—		362		—
Subtotal	Subtotal	1,148		2		(40)		1,110		818		292		—		Subtotal	1,474		15		(19)		1,470		1,108		362		—
Level 2 (2):	Level 2 (2):															Level 2 (2):
U.S. Treasury securities	U.S. Treasury securities	24,128		1		(1,576)		22,553		13		9,105		13,435		U.S. Treasury securities	22,274		—		(1,354)		20,920		—		8,076		12,844
U.S. agency securities	U.S. agency securities	5,743		—		(643)		5,100		—		310		4,790		U.S. agency securities	5,709		—		(594)		5,115		3		272		4,840
Non-U.S. government securities	Non-U.S. government securities	17,778		14		(1,029)		16,763		—		9,907		6,856		Non-U.S. government securities	17,588		19		(927)		16,680		—		11,262		5,418
Certificates of deposit and time deposits	Certificates of deposit and time deposits	2,025		—		—		2,025		1,795		230		—		Certificates of deposit and time deposits	2,315		—		—		2,315		1,960		355		—
Commercial paper	Commercial paper	237		—		—		237		—		237		—		Commercial paper	364		—		—		364		—		364		—
Corporate debt securities	Corporate debt securities	85,895		14		(7,039)		78,870		1		10,377		68,492		Corporate debt securities	79,621		22		(6,079)		73,564		—		13,005		60,559
Municipal securities	Municipal securities	864		—		(26)		838		—		278		560		Municipal securities	713		—		(23)		690		—		213		477
Mortgage- and asset-backed securities	Mortgage- and asset-backed securities	22,448		3		(2,405)		20,046		—		84		19,962		Mortgage- and asset-backed securities	22,383		4		(2,299)		20,088		—		165		19,923
Subtotal	Subtotal	159,118		32		(12,718)		146,432		1,809		30,528		114,095		Subtotal	150,967		45		(11,276)		139,736		1,963		33,712		104,061
Total (3)	Total (3)	$	178,174	$	34	$	(12,758)	$	165,450	$	20,535	$	30,820	$	114,095	Total (3)	$	177,778	$	60	$	(11,295)	$	166,543	$	28,408	$	34,074	$	104,061

Apple Inc. | Q3 2023 Form 10-Q | 7


	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

(1)Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities.

(2)Level 2 fair value estimates are based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

(3)As of ~~December 31, 2022~~July 1, 2023 and September 24, 2022, total marketable securities included ~~$13.6~~$14.1 billion and $12.7 billion, respectively, that were restricted from general use, related to the ~~European Commission decision finding that Ireland granted state aid~~State Aid Decision (refer to ~~the Company,~~Note 5, “Income Taxes”) and other agreements.

~~Apple Inc. | Q1 2023 Form 10-Q | 8~~

The following table shows the fair value of the Company’s non-current marketable debt securities, by contractual maturity, as of ~~December 31, 2022~~July 1, 2023 (in millions):


Due after 1 year through 5 years	$	~~82,497~~76,267
Due after 5 years through 10 years	~~14,243~~11,148
Due after 10 years	~~17,355~~16,646
Total fair value	$	~~114,095~~104,061

Derivative Instruments and Hedging

The Company may use derivative instruments to partially offset its business exposure to foreign exchange and interest rate risk. However, the Company may choose not to hedge certain exposures for a variety of reasons, including accounting considerations or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange or interest rates.

Foreign Exchange Risk

To protect gross margins from fluctuations in foreign currency exchange rates, the Company may enter into forward contracts, option contracts or other instruments, and may designate these instruments as cash flow hedges. The Company generally hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months.

To protect the Company’s foreign currency–denominated term debt or marketable securities from fluctuations in foreign currency exchange rates, the Company may enter into forward contracts, cross-currency swaps or other instruments. The Company designates these instruments as either cash flow or fair value hedges. As of ~~December 31, 2022,~~July 1, 2023, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for term debt–related foreign currency transactions is 2019 years.

Apple Inc. | Q3 2023 Form 10-Q | 8

The Company may also enter into derivative instruments that are not designated as accounting hedges to protect gross margins from certain fluctuations in foreign currency exchange rates, as well as to offset a portion of the foreign currency exchange gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies.

Interest Rate Risk

To protect the Company’s term debt or marketable securities from fluctuations in interest rates, the Company may enter into interest rate swaps, options or other instruments. The Company designates these instruments as either cash flow or fair value hedges.

The notional amounts of the Company’s outstanding derivative instruments as of ~~December 31, 2022~~July 1, 2023 and September 24, 2022 were as follows (in millions):

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

~~Apple Inc. | Q1 2023 Form 10-Q | 9~~


	July 1, 2023		September 24, 2022
Derivative instruments designated as accounting hedges:
Foreign exchange contracts	$	45,425	$	102,670
Interest rate contracts	$	19,375	$	20,125

Derivative instruments not designated as accounting hedges:
Foreign exchange contracts	$	90,977	$	185,381

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


	September 24, 2022
	Fair Value of Derivatives Designated as Accounting Hedges		Fair Value of Derivatives Not Designated as Accounting Hedges		Total Fair Value
Derivative assets (1):
Foreign exchange contracts	$	4,317	$	2,819	$	7,136


Derivative liabilities (2):
Foreign exchange contracts	$	2,205	$	2,547	$	4,752
Interest rate contracts	$	1,367	$	—	$	1,367

(1)Derivative assets are measured using Level 2 fair value inputs and are included in other current assets and other non-current assets in the Condensed Consolidated Balance Sheet.

(2)Derivative liabilities are measured using Level 2 fair value inputs and are included in other current liabilities and other non-current liabilities in the Condensed Consolidated Balance Sheet.

The derivative assets above represent the Company’s gross credit exposure if all counterparties failed to perform. To mitigate credit risk, the Company generally enters into collateral security arrangements that provide for collateral to be received or posted when the net fair values of certain derivatives fluctuate from contractually established thresholds. To further limit credit risk, the Company generally enters into master netting arrangements with the respective counterparties to the Company’s derivative contracts, under which the Company is allowed to settle transactions with a single net amount payable by one party to the other. As of September 24, 2022, the potential effects of these rights of set-off associated with the Company’s derivative contracts, including the effects of collateral, would be a reduction to both derivative assets and derivative liabilities of $7.8 billion, resulting in a net derivative asset of $412 million.

The carrying amounts of the Company’s hedged items in fair value hedges as of ~~December 31, 2022~~July 1, 2023 and September 24, 2022 were as follows (in millions):


		December 31, 2022		September 24, 2022			July 1, 2023		September 24, 2022
Hedged assets/(liabilities):	Hedged assets/(liabilities):					Hedged assets/(liabilities):
Current and non-current marketable securities	Current and non-current marketable securities	$	14,311	$	13,378	Current and non-current marketable securities	$	14,863	$	13,378
Current and non-current term debt	Current and non-current term debt	$	(18,731)	$	(18,739)	Current and non-current term debt	$	(17,986)	$	(18,739)

Apple Inc. | Q3 2023 Form 10-Q | 9

Accounts Receivable

Trade Receivables

The Company has considerable trade receivables outstanding with its third-party cellular network carriers, wholesalers, retailers, resellers, small and mid-sized businesses and education, enterprise and government customers. The Company generally does not require collateral from its customers; however, the Company will require collateral or third-party credit support in certain instances to limit credit risk. In addition, when possible, the Company attempts to limit credit risk on trade receivables with credit insurance for certain customers or by requiring third-party financing, loans or leases to support credit exposure. These credit-financing arrangements are directly between the third-party financing company and the end customer. As such, the Company generally does not assume any recourse or credit risk sharing related to any of these arrangements.

As of ~~both December 31, 2022 and~~ September 24, 2022, the Company had one customer that represented 10% or more of total trade receivables, which accounted for ~~11% and~~ 10%~~, respectively.~~. The Company’s cellular network carriers accounted for ~~43% and~~ 44% of total trade receivables as of ~~December 31, 2022 and~~ September 24, ~~2022, respectively.~~2022.

Vendor Non-Trade Receivables

The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these vendors who manufacture subassemblies or assemble final products for the Company. The Company purchases these components directly from suppliers. As of ~~December 31, 2022,~~July 1, 2023, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 54% and ~~16%~~14%. As of September 24, 2022, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 54% and 13%.

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

Note 4 – Condensed Consolidated Financial Statement Details

The following tables show the Company’s condensed consolidated financial statement details as of ~~December 31, 2022~~July 1, 2023 and September 24, 2022 (in millions):

Inventories


		December 31, 2022		September 24, 2022			July 1, 2023		September 24, 2022
Components	Components	$	2,513	$	1,637	Components	$	3,788	$	1,637
Finished goods	Finished goods	4,307		3,309		Finished goods	3,563		3,309
Total inventories	Total inventories	$	6,820	$	4,946	Total inventories	$	7,351	$	4,946

Property, Plant and Equipment, Net


		December 31, 2022		September 24, 2022			July 1, 2023		September 24, 2022
Gross property, plant and equipment	Gross property, plant and equipment	$	110,995	$	114,457	Gross property, plant and equipment	$	114,337	$	114,457
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(68,044)		(72,340)		Accumulated depreciation and amortization	(70,787)		(72,340)
Total property, plant and equipment, net	Total property, plant and equipment, net	$	42,951	$	42,117	Total property, plant and equipment, net	$	43,550	$	42,117

Other Income/(Expense), Net

The following table shows the detail of other income/(expense), net for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023 and June 25, 2022 ~~and December 25, 2021~~ (in millions):


		Three Months Ended				Three Months Ended				Nine Months Ended
		December 31, 2022		December 25, 2021				July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Interest and dividend income	Interest and dividend income	$	868	$	650		Interest and dividend income	$	980	$	722	$	2,766	$	2,072
Interest expense	Interest expense	(1,003)		(694)			Interest expense	(998)		(719)		(2,931)		(2,104)
Other expense, net	Other expense, net	(258)		(203)			Other expense, net	(247)		(13)		(429)		(65)
Total other income/(expense), net	Total other income/(expense), net	$	(393)	$	(247)		Total other income/(expense), net	$	(265)	$	(10)	$	(594)	$	(97)

Apple Inc. | Q3 2023 Form 10-Q | 10

Note 5 – Income Taxes

European Commission State Aid Decision

On August 30, 2016, the European Commission announced its decision that Ireland granted state aid to the Company by providing tax opinions in 1991 and 2007 concerning the tax allocation of profits of the Irish branches of two subsidiaries of the Company (the “State Aid Decision”). The State Aid Decision ordered Ireland to calculate and recover additional taxes from the Company for the period June 2003 through December 2014. Irish legislative changes, effective as of January 2015, eliminated the application of the tax opinions from that date forward. The Company and Ireland appealed the State Aid Decision to the General Court of the Court of Justice of the European Union (the “General Court”). On July 15, 2020, the General Court annulled the State Aid Decision. On September 25, 2020, the European Commission appealed the General Court’s decision to the European Court of Justice (the “ECJ”) and a hearing was held on May 23, 2023. A decision from the ECJ is expected in calendar year 2024. The Company believes it would be eligible to claim a U.S. foreign tax credit for a portion of any incremental Irish corporate income taxes potentially due related to the State Aid Decision.

Note 56 – Debt

Commercial Paper

The Company issues unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program. The Company uses net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases. As of ~~December 31, 2022~~July 1, 2023 and September 24, 2022, the Company had ~~$1.7~~$4.0 billion and $10.0 billion of Commercial Paper outstanding, respectively. The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for the ~~three~~nine months ended ~~December 31,~~July 1, 2023 and June 25, 2022 ~~and December 25, 2021~~ (in millions):

Three Months Ended
December 31,
2022 December 25,
2021
Maturities 90 days or less:
Proceeds from/(Repayments of) commercial paper, net $ (5,569) $ 1,339
Maturities greater than 90 days:
Proceeds from commercial paper — 1,191
Repayments of commercial paper (2,645) (3,530)
Repayments of commercial paper, net (2,645) (2,339)
Total repayments of commercial paper, net $ (8,214) $ (1,000)

~~Apple Inc. | Q1 2023 Form 10-Q | 11~~


	Nine Months Ended
	July 1, 2023		June 25, 2022
Maturities 90 days or less:
Proceeds from/(Repayments of) commercial paper, net	$	(3,326)	$	4,383

Maturities greater than 90 days:
Proceeds from commercial paper	—		5,731
Repayments of commercial paper	(2,645)		(5,144)
Proceeds from/(Repayments of) commercial paper, net	(2,645)		587

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

Term Debt

As of ~~December 31, 2022~~July 1, 2023 and September 24, 2022, the Company had outstanding fixed-rate notes with varying maturities for an aggregate carrying amount of ~~$109.4~~$105.3 billionand $110.1 billion, respectively (collectively the “Notes”). As of ~~December 31, 2022~~July 1, 2023 and September 24, 2022, the fair value of the Company’s Notes, based on Level 2 inputs, was ~~$98.0~~$95.3 billion and $98.8 billion, respectively.

Note 67 – Shareholders’ Equity

Share Repurchase Program

During the ~~three~~nine months ended ~~December 31, 2022,~~July 1, 2023, the Company repurchased ~~133~~365 million shares of its common stock for ~~$19.0~~$56.1 billion, excluding excise tax due under athe Inflation Reduction Act of 2022. The Company’s share repurchase ~~program authorized by the Board of Directors (the “Program”). The Program does~~programs do not obligate the Company to acquire a minimum amount of shares. Under the ~~Program,~~programs, 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.

Apple Inc. | Q3 2023 Form 10-Q | 11

Note 78 – Benefit Plans

Restricted Stock Units

A summary of the Company’s RSU activity and related information for the ~~three~~nine months ended ~~December 31, 2022~~July 1, 2023 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 RSU		Aggregate Fair Value (in millions)
Balance as of September 24, 2022	Balance as of September 24, 2022	201,501	$	109.48			Balance as of September 24, 2022	201,501	$	109.48
RSUs granted	RSUs granted	82,123	$	149.85			RSUs granted	86,896	$	150.23
RSUs vested	RSUs vested	(47,298)	$	84.46			RSUs vested	(96,681)	$	95.97
RSUs canceled	RSUs canceled	(2,958)	$	120.26			RSUs canceled	(7,000)	$	126.48
Balance as of December 31, 2022		233,368	$	128.62	$	30,322
Balance as of July 1, 2023							Balance as of July 1, 2023	184,716	$	135.08	$	35,829

The fair value as of the respective vesting dates of RSUs was ~~$6.8~~$7.0 billion and ~~$8.5~~$14.9 billion for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023, respectively, and was $7.8 billion and $17.3 billion for the three- and nine-month periods ended June 25, 2022, ~~and December 25, 2021,~~ respectively.

Share-Based Compensation

The following table shows share-based compensation expense and the related income tax benefit included in the Condensed Consolidated Statements of Operations for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023 and June 25, 2022 ~~and December 25, 2021~~ (in millions):


		Three Months Ended				Three Months Ended				Nine Months Ended
		December 31, 2022		December 25, 2021				July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Share-based compensation expense	Share-based compensation expense	$	2,905	$	2,265		Share-based compensation expense	$	2,617	$	2,243	$	8,208	$	6,760
Income tax benefit related to share-based compensation expense	Income tax benefit related to share-based compensation expense	$	(1,178)	$	(1,536)		Income tax benefit related to share-based compensation expense	$	(993)	$	(1,231)	$	(2,791)	$	(3,416)

As of ~~December 31, 2022,~~July 1, 2023, the total unrecognized compensation cost related to outstanding RSUs and stock options was ~~$25.5~~$20.9 billion, which the Company expects to recognize over a weighted-average period of ~~3.0~~2.7 years.

~~Apple Inc. | Q1 2023 Form 10-Q | 12~~

Note 89 – Commitments and Contingencies

Unconditional Purchase Obligations

The Company has entered into certain off–balance sheet commitments that require the future purchase of goods or services (“unconditional purchase obligations”). The Company’s unconditional purchase obligations primarily consist of supplier arrangements, licensed intellectual property and content, and distribution rights. Future payments under noncancelable unconditional purchase obligations with a remaining term in excess of one year as of ~~December 31, 2022,~~July 1, 2023, are as follows (in millions):


2023 (remaining nine months)		$	2,899
2023 (remaining three months)				2023 (remaining three months)	$	1,260
2024	2024	2,897		2024	3,417
2025	2025	1,584		2025	1,990
2026	2026	6,554		2026	3,079
2027	2027	348		2027	1,013
Thereafter	Thereafter	444		Thereafter	8,198
Total	Total	$	14,726	Total	$	18,957

Contingencies

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully resolved. The outcome of litigation is inherently uncertain. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss greater than a recorded accrual, concerning loss contingencies for asserted legal and other claims.

Apple Inc. | Q3 2023 Form 10-Q | 12

Note 910 – Segment Information and Geographic Data

The following table shows information by reportable segment for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023 and June 25, 2022 ~~and December 25, 2021~~ (in millions):

Three Months Ended
December 31,
2022 December 25,
2021
Americas:
Net sales $ 49,278 $ 51,496
Operating income $ 17,864 $ 19,585
Europe:
Net sales $ 27,681 $ 29,749
Operating income $ 10,017 $ 11,545
Greater China:
Net sales $ 23,905 $ 25,783
Operating income $ 10,437 $ 11,183
Japan:
Net sales $ 6,755 $ 7,107
Operating income $ 3,236 $ 3,349
Rest of Asia Pacific:
Net sales $ 9,535 $ 9,810
Operating income $ 3,851 $ 3,995

~~Apple Inc. | Q1 2023 Form 10-Q | 13~~


	Three Months Ended				Nine Months Ended
	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Americas:
Net sales	$	35,383	$	37,472	$	122,445	$	129,850
Operating income	$	13,117	$	13,914	$	44,908	$	48,778

Europe:
Net sales	$	20,205	$	19,287	$	71,831	$	72,323
Operating income	$	7,995	$	7,124	$	27,380	$	27,174

Greater China:
Net sales	$	15,758	$	14,604	$	57,475	$	58,730
Operating income	$	6,207	$	5,760	$	24,175	$	25,055

Japan:
Net sales	$	4,821	$	5,446	$	18,752	$	20,277
Operating income	$	2,443	$	2,418	$	9,073	$	9,263

Rest of Asia Pacific:
Net sales	$	5,630	$	6,150	$	23,284	$	23,002
Operating income	$	2,328	$	2,367	$	9,447	$	9,185

A reconciliation of the Company’s segment operating income to the Condensed Consolidated Statements of Operations for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023 and June 25, 2022 ~~and December 25, 2021~~ is as follows (in millions):


		Three Months Ended				Three Months Ended				Nine Months Ended
		December 31, 2022		December 25, 2021				July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Segment operating income	Segment operating income	$	45,405	$	49,657		Segment operating income	$	32,090	$	31,583	$	114,983	$	119,455
Research and development expense	Research and development expense	(7,709)		(6,306)			Research and development expense	(7,442)		(6,797)		(22,608)		(19,490)
Other corporate expenses, net	Other corporate expenses, net	(1,680)		(1,863)			Other corporate expenses, net	(1,650)		(1,710)		(5,043)		(5,422)
Total operating income	Total operating income	$	36,016	$	41,488		Total operating income	$	22,998	$	23,076	$	87,332	$	94,543

Apple Inc. | Q1Q3 2023 Form 10-Q | 1413

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

This section and other parts of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. For example, statements in this Form 10-Q regarding the potential future impact of ~~the COVID-19 pandemic~~macroeconomic conditions on the Company’s business and results of operations are forward-looking statements. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended September 24, 2022 (the “2022 Form 10-K”) under the heading “Risk Factors.” The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Unless otherwise stated, all information presented herein is based on the Company’s fiscal calendar, and references to particular years, quarters, months or periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years. Each of the terms the “Company” and “Apple” as used herein refers collectively to Apple Inc. and its wholly owned subsidiaries, unless otherwise stated.

The following discussion should be read in conjunction with the 2022 Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q.

Available Information

The Company periodically provides certain information for investors on its corporate website, www.apple.com, and its investor relations website, investor.apple.com. This includes press releases and other information about financial performance, information on environmental, social and governance matters, and details related to the Company’s annual meeting of shareholders. The information contained on the websites referenced in this Form 10-Q is not incorporated by reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.

Business Seasonality and Product Introductions

The Company has historically experienced higher net sales in its first quarter compared to other quarters in its fiscal year due in part to seasonal holiday demand. Additionally, new product and service introductions can significantly impact net sales, cost of sales and operating expenses. The timing of product introductions can also impact the Company’s net sales to its indirect distribution channels as these channels are filled with new inventory following a product launch, and channel inventory of an older product often declines as the launch of a newer product approaches. Net sales can also be affected when consumers and distributors anticipate a product introduction.

Fiscal Period

Quarterly Highlights

~~Total~~Weakness in foreign currencies relative to the U.S. dollar had an unfavorable impact on the Company’s total net sales, which decreased 5%1% or ~~$6.8~~$1.2 billion during the ~~first~~third quarter of 2023 compared to the same quarter in ~~2022 due to the weakness in foreign currencies relative to the U.S. dollar.~~2022. The ~~weakness in foreign currencies contributed to~~year-over-year net sales decrease consisted primarily of lower net sales of ~~iPhone~~iPad and ~~Mac, which was~~iPhone, partially offset by higher net sales of ~~iPad.~~Services.

During the ~~first~~third quarter of 2023, the Company announced athe following new ~~iPad, a~~products:

•15-inch MacBook Air®, powered by the M2 chip;

•Mac Studio™, powered by the M2 Max chip and the new ~~iPad~~M2 Ultra chip;

•Mac Pro®, powered by the new M2 Ultra chip; and

•Apple ~~M2 chip,~~Vision Pro™, the Company’s first spatial computer featuring its new visionOS™, expected to be available in early calendar year 2024.

The Company also announced iOS 17, macOS®Sonoma, iPadOS® 17, tvOS® 17 and ~~a new~~ watchOS® 10, updates to its operating systems that are expected to be available in the fall of 2023.

Apple ~~TV 4K.~~Inc. | Q3 2023 Form 10-Q | 14

The Company repurchased ~~$19.0~~$18.0 billion of its common stock and paid dividends and dividend equivalents of $3.8 billion during the ~~first~~third quarter of 2023.

~~Apple Inc. | Q1 2023 Form 10-Q | 15~~

~~COVID-19~~

The COVID-19 pandemic has had, and continues to have, a significant impact around the world, prompting governments and businesses to take unprecedented measures, such as restrictions on travel and business operations, temporary closures of businesses, and quarantine and shelter-in-place orders. The COVID-19 pandemic has at times significantly curtailed global economic activity and caused significant volatility and disruption in global financial markets. The COVID-19 pandemic and the measures taken by many countries in response have affected and could in the future materially impact the Company’s business, results of operations and financial condition.

Certain of the Company’s outsourcing partners, component suppliers and logistical service providers have experienced, and could in the future experience, disruptions related to the COVID-19 pandemic, resulting in supply shortages. During the first quarter of 2023, COVID-related impacts temporarily affected the Company’s primary iPhone 14 Pro and iPhone 14 Pro Max assembly facility located in Zhengzhou, China. The facility operated at significantly reduced capacity, impacting iPhone 14 Pro and iPhone Pro Max shipments.

Macroeconomic Conditions

Macroeconomic conditions, including inflation, ~~rising~~changes in interest rates, and currency fluctuations, have ~~direct~~directly and ~~indirect impacts on the Company’s business. The Company believes these factors have~~indirectly impacted, and could in the future materially impact, the Company’s results of operations and financial condition.

Segment Operating Performance

The Company manages its business primarily on a geographic basis. The Company’s reportable segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. Americas includes both North and South America. Europe includes European countries, as well as India, the Middle East and Africa. Greater China includes China mainland, Hong Kong and Taiwan. Rest of Asia Pacific includes Australia and those Asian countries not included in the Company’s other reportable segments. Although the reportable segments provide similar hardware and software products and similar services, each one is managed separately to better align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic region. Further information regarding the Company’s reportable segments can be found in Part I, Item 1 of this Form 10-Q in the Notes to Condensed Consolidated Financial Statements in Note 9, “Segment Information and Geographic Data.”

~~The~~ following table shows net sales by reportable segment for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023 and June 25, 2022 ~~and December 25, 2021~~ (dollars in millions):


		Three Months Ended						Three Months Ended				Nine Months Ended
		December 31, 2022		December 25, 2021		Change				July 1, 2023		June 25, 2022		Change		July 1, 2023		June 25, 2022		Change
Net sales by reportable segment:	Net sales by reportable segment:								Net sales by reportable segment:
Americas	Americas	$	49,278	$	51,496	(4)	%		Americas	$	35,383	$	37,472	(6)	%	$	122,445	$	129,850	(6)	%
Europe	Europe	27,681		29,749		(7)	%		Europe	20,205		19,287		5	%	71,831		72,323		(1)	%
Greater China	Greater China	23,905		25,783		(7)	%		Greater China	15,758		14,604		8	%	57,475		58,730		(2)	%
Japan	Japan	6,755		7,107		(5)	%		Japan	4,821		5,446		(11)	%	18,752		20,277		(8)	%
Rest of Asia Pacific	Rest of Asia Pacific	9,535		9,810		(3)	%		Rest of Asia Pacific	5,630		6,150		(8)	%	23,284		23,002		1	%
Total net sales	Total net sales	$	117,154	$	123,945	(5)	%		Total net sales	$	81,797	$	82,959	(1)	%	$	293,787	$	304,182	(3)	%

Americas

Americas net sales decreased during the third quarter and first ~~quarter~~nine months of 2023 compared to the same ~~quarter~~periods in 2022 due primarily to lower net sales of iPhone and Mac, partially offset by higher net sales of ~~Services and iPad.~~ Services.

Europe

The weakness in foreign currencies relative to the U.S. dollar had a net unfavorable year-over-year impact on Europe net sales during the third quarter and first nine months of 2023. During the ~~Canadian dollar~~third quarter of 2023, the Europe net sales increase consisted primarily of higher net sales of iPhone. During the first nine months of 2023, the Europe net sales decrease consisted primarily of lower net sales of Mac, partially offset by higher net sales of iPhone.

Greater China

The weakness in the renminbi relative to the U.S. dollar had an unfavorable year-over-year impact on ~~Americas~~Greater China net sales during the third quarter and first ~~quarter~~nine months of 2023.

~~Europe~~

~~Europe net sales decreased during~~ During the ~~first~~third quarter of 2023, ~~compared~~the Greater China net sales increase consisted primarily of higher net sales of iPhone. During the first nine months of 2023, the Greater China net sales decrease consisted primarily of lower net sales of iPhone.

Japan

The weakness in the yen relative to the ~~same~~U.S. dollar had an unfavorable year-over-year impact on Japan net sales during the third quarter ~~in 2022 due to~~and first nine months of 2023. During the third quarter of 2023, the Japan net sales decrease consisted primarily of lower net sales of iPhone. During the first nine months of 2023, the Japan net sales decrease consisted primarily of lower net sales of iPhone, Services and Wearables, Home and Accessories.

Rest of Asia Pacific

The weakness in foreign currencies relative to the U.S. dollar ~~which contributed to~~had a net unfavorable year-over-year impact on Rest of Asia Pacific net sales during the third quarter and first nine months of 2023. During the third quarter of 2023, the Rest of Asia Pacific net sales decrease consisted primarily of lower net sales of iPhone and ~~Mac.~~

~~Apple Inc. | Q1 2023 Form 10-Q | 16~~

~~Greater China~~

~~Greater China net sales decreased during~~iPad. During the first ~~quarter~~nine months of 2023, ~~compared to~~ the same quarter in 2022 due to the weakness of the renminbi relative to the U.S. dollar. The weakness of the renminbi contributed to lower net sales of iPhone, which was partially offset by higher net sales of iPad.

~~Japan~~

Japan net sales decreased during the first quarter of 2023 compared to the same quarter in 2022 due to the weakness of the yen relative to the U.S. dollar, which contributed to lower net sales of Services and Mac.

~~Rest of Asia Pacific~~

Rest of Asia Pacific net sales ~~decreased during the first quarter~~increase consisted primarily of ~~2023 compared to the same quarter in 2022 due to the weakness in foreign currencies relative to the U.S. dollar. The weakness in foreign currencies contributed to~~higher net sales of iPhone, partially offset by lower net sales of ~~iPhone and Mac, which was partially offset by higher net sales of Services and iPad.~~Mac.

Apple Inc. | Q3 2023 Form 10-Q | 15

Products and Services Performance

The following table shows net sales by category for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023 and June 25, 2022 ~~and December 25, 2021~~ (dollars in millions):

Three Months Ended
December 31,
2022 December 25,
2021 Change
Net sales by category:
iPhone (1)
$ 65,775 $ 71,628 (8) %
Mac (1)
7,735 10,852 (29) %
iPad (1)
9,396 7,248 30 %
Wearables, Home and Accessories (1)(2)
13,482 14,701 (8) %
Services (3)
20,766 19,516 6 %
Total net sales $ 117,154 $ 123,945 (5) %

~~(1)Products net sales include amortization of the deferred value of unspecified software upgrade rights, which are bundled in the sales price of the respective product.~~

~~(2)Wearables, Home and Accessories net sales include sales of AirPods, Apple TV, Apple Watch, Beats products, HomePod mini and accessories.~~

~~(3)~~Services net sales include sales from the Company’s advertising, AppleCare, cloud, digital content, payment and other services. Services net sales also include amortization of the deferred value of services bundled in the sales price of certain products.


	Three Months Ended						Nine Months Ended
	July 1, 2023		June 25, 2022		Change		July 1, 2023		June 25, 2022		Change
Net sales by category:
iPhone	$	39,669	$	40,665	(2)	%	$	156,778	$	162,863	(4)	%
Mac	6,840		7,382		(7)	%	21,743		28,669		(24)	%
iPad	5,791		7,224		(20)	%	21,857		22,118		(1)	%
Wearables, Home and Accessories	8,284		8,084		2	%	30,523		31,591		(3)	%
Services	21,213		19,604		8	%	62,886		58,941		7	%
Total net sales	$	81,797	$	82,959	(1)	%	$	293,787	$	304,182	(3)	%

iPhone

iPhone net sales decreased during the third quarter and first ~~quarter~~nine months of 2023 compared to the same ~~quarter~~periods in 2022 due primarily to lower net sales from ~~the Company’s new~~certain iPhone models, ~~launched in the fourth quarter~~partially offset by higher net sales of ~~2022.~~iPhone 14 Pro models.

Mac

Mac net sales decreased during the third quarter and first ~~quarter~~nine months of 2023 compared to the same ~~quarter~~periods in 2022 due primarily to lower net sales of ~~MacBook Pro~~®.laptops.

iPad

iPad net sales ~~increased~~decreased during the ~~first~~third quarter of 2023 compared to the ~~same~~third quarter inof 2022 due primarily to lower net sales across most iPad models. Year-over-year iPad net sales were relatively flat during the first nine months of 2023.

Wearables, Home and Accessories

Wearables, Home and Accessories net sales increased during the third quarter of 2023 compared to the third quarter of 2022 due primarily to higher net sales of ~~iPad and iPad Air~~Wearables, which includes AirPods®.

, Apple ~~Inc. | Q1 2023 Form 10-Q | 17~~

Watch
®

~~Wearables, Home~~ and ~~Accessories~~

Beats® products, partially offset by lower net sales of accessories. Year-over-year Wearables, Home and Accessories net sales decreased during the first ~~quarter~~nine months of 2023 ~~compared to the same quarter in 2022~~ due primarily to lower net sales of ~~AirPods, partially offset by higher net sales of Watch.~~Wearables and accessories.

Services

Services net sales increased during the ~~first~~third quarter of 2023 compared to the ~~same~~third quarter inof 2022 due primarily to higher net sales from advertising, cloud services and the App Store®. Year-over-year Services net sales increased during the first nine months of 2023 due primarily to higher net sales from cloud services, ~~the App Store~~®advertising and music.

Apple Inc. | Q3 2023 Form 10-Q | 16

Gross Margin

Products and Services gross margin and gross margin percentage for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023 and June 25, 2022 ~~and December 25, 2021~~ were as follows (dollars in millions):


		Three Months Ended				Three Months Ended				Nine Months Ended
		December 31, 2022		December 25, 2021				July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Gross margin:	Gross margin:						Gross margin:
Products	Products	$	35,623	$	40,120		Products	$	21,448	$	21,870	$	84,205	$	90,157
Services	Services	14,709		14,123			Services	14,965		14,015		44,516		42,530
Total gross margin	Total gross margin	$	50,332	$	54,243		Total gross margin	$	36,413	$	35,885	$	128,721	$	132,687


Gross margin percentage:	Gross margin percentage:					Gross margin percentage:
Products	Products	37.0	%	38.4	%	Products	35.4	%	34.5	%	36.5	%	36.8	%
Services	Services	70.8	%	72.4	%	Services	70.5	%	71.5	%	70.8	%	72.2	%
Total gross margin percentage	Total gross margin percentage	43.0	%	43.8	%	Total gross margin percentage	44.5	%	43.3	%	43.8	%	43.6	%

Products Gross Margin

Products gross margin decreased during the third quarter and first ~~quarter~~nine months of 2023 compared to the same ~~quarter~~periods in 2022 due primarily to the weakness in foreign currencies relative to the U.S. dollar and lower Products ~~volume.~~volume, partially offset by cost savings and a different Products mix.

Products gross margin percentage increased during the third quarter of 2023 compared to the third quarter of 2022 due primarily to cost savings and a different Products mix, partially offset by the weakness in foreign currencies relative to the U.S. dollar and decreased leverage. Year-over-year Products gross margin percentage decreased during the first ~~quarter~~nine months of 2023 ~~compared to the same quarter in 2022~~ due primarily to the weakness in foreign currencies relative to the U.S. ~~dollar.~~dollar and decreased leverage, partially offset by cost savings and a different Products mix.

Services Gross Margin

Services gross margin increased during the third quarter and first ~~quarter~~nine months of 2023 compared to the same ~~quarter~~periods in 2022 due primarily to higher Services net sales, partially offset by the weakness in foreign currencies relative to the U.S. ~~dollar.~~dollar and higher Services costs.

Services gross margin percentage decreased during the ~~first~~third quarter of 2023 compared to the ~~same~~third quarter inof 2022 due primarily to higher Services costs, partially offset by improved leverage. Year-over-year Services gross margin percentage decreased during the first nine months of 2023 due primarily to higher Services costs and the weakness in foreign currencies relative to the U.S. dollar, ~~and higher Services costs,~~ partially offset by improved leverage.

The Company’s future gross margins can be impacted by a variety of factors, as discussed in Part I, Item 1A of the 2022 Form 10-K under the heading “Risk Factors.” As a result, the Company believes, in general, gross margins will be subject to volatility and downward pressure.

Apple Inc. | Q1Q3 2023 Form 10-Q | 1817

Operating Expenses

Operating expenses for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023 and June 25, 2022 ~~and December 25, 2021~~ were as follows (dollars in millions):


		Three Months Ended						Three Months Ended					Nine Months Ended
		December 31, 2022			December 25, 2021					July 1, 2023			June 25, 2022			July 1, 2023			June 25, 2022
Research and development	Research and development	$	7,709		$	6,306			Research and development	$	7,442		$	6,797		$	22,608		$	19,490
Percentage of total net sales	Percentage of total net sales	7		%	5		%		Percentage of total net sales	9		%	8		%	8		%	6		%
Selling, general and administrative	Selling, general and administrative	$	6,607		$	6,449			Selling, general and administrative	$	5,973		$	6,012		$	18,781		$	18,654
Percentage of total net sales	Percentage of total net sales	6		%	5		%		Percentage of total net sales	7		%	7		%	6		%	6		%
Total operating expenses	Total operating expenses	$	14,316		$	12,755			Total operating expenses	$	13,415		$	12,809		$	41,389		$	38,144
Percentage of total net sales	Percentage of total net sales	12		%	10		%		Percentage of total net sales	16		%	15		%	14		%	13		%

Research and Development

The growth in research and development (“R&D”) expense during the third quarter and first ~~quarter~~nine months of 2023 compared to the same ~~quarter~~periods in 2022 was driven primarily by increases in headcount-related expenses.

Selling, General and Administrative

~~The growth in selling,~~Selling, general and administrative expense was relatively flat during the third quarter and first ~~quarter~~nine months of 2023 compared to the same ~~quarter~~periods in ~~2022 was driven primarily by increases in headcount-related expenses.~~2022.

Provision for Income Taxes

Provision for income taxes, effective tax rate and statutory federal income tax rate for the ~~three months~~three- and nine-month periods ended ~~December 31,~~July 1, 2023 and June 25, 2022 ~~and December 25, 2021~~ were as follows (dollars in millions):


		Three Months Ended						Three Months Ended					Nine Months Ended
		December 31, 2022			December 25, 2021					July 1, 2023			June 25, 2022			July 1, 2023			June 25, 2022
Provision for income taxes	Provision for income taxes	$	5,625		$	6,611			Provision for income taxes	$	2,852		$	3,624		$	12,699		$	15,364
Effective tax rate	Effective tax rate	15.8		%	16.0		%		Effective tax rate	12.5		%	15.7		%	14.6		%	16.3		%
Statutory federal income tax rate	Statutory federal income tax rate	21		%	21		%		Statutory federal income tax rate	21		%	21		%	21		%	21		%

The Company’s effective tax rate for the third quarter and first ~~quarter~~nine months of 2023 was lower than the statutory federal income tax rate due primarily to a lower effective tax rate on foreign earnings, including the favorable impact of changes in unrecognized tax benefits, tax benefits from share-based compensation, and the U.S. federal R&D credit, partially offset by state income taxes.

The Company’s effective tax rate for the ~~first~~third quarter of 2023 was lower compared to the ~~same~~third quarter inof 2022 due primarily to ~~a higher U.S. federal R&D credit, lower state income taxes and~~ a lower effective tax rate on foreign earnings, ~~largely~~including the favorable impact of changes in unrecognized tax benefits, partially offset by lower tax benefits from share-based compensation. The Company’s effective tax rate for the first nine months of 2023 was lower compared to the same period in 2022 due primarily to a lower effective tax rate on foreign earnings and the impact of U.S. foreign tax credit regulations issued by the U.S. Department of the Treasury in 2022, partially offset by lower tax benefits from share-based compensation.

Apple Inc. | Q3 2023 Form 10-Q | 18

Liquidity and Capital Resources

The Company believes its balances of cash, cash equivalents and unrestricted marketable securities, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements and capital return program over the next 12 months and beyond.

The Company’s contractual cash requirements have not changed materially since the 2022 Form 10-K, except for ~~commercial paper and~~ manufacturing purchase obligations.

~~Commercial Paper~~

The Company issues unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program. As of December 31, 2022, the Company had $1.7 billion of Commercial Paper outstanding, all of which was payable within 12 months.

~~Apple Inc. | Q1 2023 Form 10-Q | 19~~

Manufacturing Purchase Obligations

The Company utilizes several outsourcing partners to manufacture subassemblies for the Company’s products and to perform final assembly and testing of finished products. 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. As of ~~December 31, 2022,~~July 1, 2023, the Company had manufacturing purchase obligations of ~~$55.1~~$38.4 billion, with ~~$54.8~~$38.1 billion payable within 12 months. The Company’s manufacturing purchase obligations are primarily noncancelable.

Capital Return Program

In addition to its contractual cash requirements, the Company ~~has a capital return program~~had authorized ~~by the Board of Directors. The~~ share repurchase ~~program (the “Program”) does~~programs as of July 1, 2023. The programs do not obligate the Company to acquire a minimum amount of shares. As of ~~December 31, 2022,~~July 1, 2023, the Company’s quarterly cash dividend was ~~$0.23~~$0.24 per share. The Company intends to increase its dividend on an annual basis, subject to declaration by the Board of Directors.

Critical Accounting 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. 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 2022 Form 10-K describe the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the 2022 Form 10-K.

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~~nine months of 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 2022 Form 10-K.

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 31, 2022~~July 1, 2023 to 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 Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the ~~first~~third quarter of 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. | Q1Q3 2023 Form 10-Q | 2019

PART II — OTHER INFORMATION

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~~“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.~~claim. 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.~~injunction enjoining the Company from prohibiting developers from including in their apps external links that direct customers to purchasing mechanisms other than Apple in-app purchasing. The injunction applies to apps on the U.S. storefront of the iOS and iPadOS App Store. On April 24, 2023, the U.S. Court of Appeals for the Ninth Circuit (the “Circuit Court”) affirmed the District Court’s ruling. On June 7, 2023, the Company and Epic filed petitions with the Circuit Court requesting further review of the decision. On June 30, 2023, the Circuit Court denied both petitions. On July 17, 2023, the Circuit Court granted Apple’s motion to stay enforcement of the injunction pending appeal to the U.S. Supreme Court. Epic has appealed the ~~decision. The Company filed a cross-appeal and has been granted a~~Circuit Court’s stay ~~pending~~of the ~~appeal.~~injunction. If the U.S. Supreme Court reverses the Circuit Court’s stay of the injunction or declines Apple’s petition, the injunction will take effect.

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. The Company settled certain matters during the ~~first~~third quarter of 2023 that did not individually or in the aggregate have a material impact on the Company’s financial condition or operating results. The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, the Company’s 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 operations, financial condition and stock price can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the 2022 Form 10-K under the heading “Risk Factors.” When any one or more of these risks materialize from time to time, the Company’s business, reputation, results of operations, financial condition and stock price can be materially and adversely affected. There have been no material changes to the Company’s risk factors since the 2022 Form 10-K.

Apple Inc. | Q3 2023 Form 10-Q | 20

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

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Share repurchase activity during the three months ended ~~December 31, 2022~~July 1, 2023 was as follows (in millions, except number of shares, which are reflected in thousands, and per share amounts):


Periods	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)		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:
April 2, 2023 to May 6, 2023:								April 2, 2023 to May 6, 2023:
Open market and privately negotiated purchases	Open market and privately negotiated purchases	69,169	$	144.57	69,169			Open market and privately negotiated purchases	38,121	$	165.46	38,121

October 30, 2022 to November 26, 2022:
May 7, 2023 to June 3, 2023:								May 7, 2023 to June 3, 2023:
Open market and privately negotiated purchases	Open market and privately negotiated purchases	23,113	$	149.26	23,113			Open market and privately negotiated purchases	21,876	$	174.91	21,876

November 27, 2022 to December 31, 2022:
June 4, 2023 to July 1, 2023:								June 4, 2023 to July 1, 2023:
Open market and privately negotiated purchases	Open market and privately negotiated purchases	40,557	$	136.85	40,557			Open market and privately negotiated purchases	42,676	$	184.34	42,676
Total	Total	132,839				$	41,665	Total	102,673				$	94,569

(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.~~a share repurchase program. As of ~~December 31, 2022, total utilization~~July 1, 2023, remaining availability under the April 2022 authorization was ~~$48.3~~$4.6 billion. On May 4, 2023, the Board of Directors authorized an additional program to repurchase up to $90 billion of the Company’s common stock. The ~~Program does~~programs do not obligate the Company to acquire a minimum amount of shares. Under the ~~Program,~~programs, 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~~

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~Rule 10b5-1 Trading Plans~~None.

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.

Apple Inc. | Q3 2023 Form 10-Q | 21

Item 6. Exhibits

~~Incorporated by Reference~~

~~Exhibit~~

~~Number~~

~~Exhibit Description~~

~~Form~~

~~Exhibit~~

Filing Date/
Period End Date

10.1*

~~Form of CEO Restricted Stock Unit Award Agreement under 20~~2 2 ~~Employee Stock Plan effective as of September 2~~5 ~~, 202~~2 .

10.2*

~~Form of CEO Performance Award Agreement under 20~~2 2 ~~Employee Stock Plan effective as of September 2~~5 ~~, 202~~2 .

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*

~~Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.~~

104*

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

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing Date/
Period End Date

4.1

Officer’s C ertificate of the Registrant, dated as of May 10, 2023, including forms of global notes representing the 4.421% Notes due 2026, 4.000% Notes due 2028, 4.150% Notes due 2030, 4.300% Notes due 2033 and 4.850% Notes due 2053.

8-K

4.1

5/10/23

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*

Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.

104*

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.

Apple Inc. | Q1Q3 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,~~August 3, 2023	Apple Inc.

	By:	/s/ Luca Maestri
		Luca Maestri
		Senior Vice President, Chief Financial Officer

Apple Inc. | Q1Q3 2023 Form 10-Q | 23


		Page
Part I
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1514
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2019
Item 4.	Controls and Procedures	2019
Part II
Item 1.	Legal Proceedings	2120
Item 1A.	Risk Factors	2120
Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Disclosures	2221
Item 5.	Other Information	2221
Item 6.	Exhibits	22