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 July 1, 2023
or
☐ 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 (I.R.S. Employer Identification No.)
of incorporation or organization)

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  ☒

15,634,232,000 shares of common stock were issued and outstanding as of July 21, 2023.
 Apple Inc.

Form 10-Q
For the Fiscal Quarter Ended July 1, 2023
TABLE OF CONTENTS

Page
Part I
Item 1. Financial Statements 1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
Item 4. Controls and Procedures 19
Part II
Item 1. Legal Proceedings 20
Item 1A. Risk Factors 20
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Mine Safety Disclosures 21
Item 5. Other Information 21
Item 6. Exhibits 22
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 Nine Months Ended

July 1, June 25, July 1, June 25,
2023 2022 2023 2022
Net sales:
   Products $ 60,584  $ 63,355  $ 230,901  $ 245,241 
   Services 21,213  19,604  62,886  58,941 
Total net sales 81,797  82,959  293,787  304,182 

Cost of sales:
   Products 39,136  41,485  146,696  155,084 
   Services 6,248  5,589  18,370  16,411 
Total cost of sales 45,384  47,074  165,066  171,495 
Gross margin 36,413  35,885  128,721  132,687 

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

Operating income 22,998  23,076  87,332  94,543 

Other income/(expense), net (265) (10) (594) (97)
Income before provision for income taxes 22,733  23,066  86,738  94,446 
Provision for income taxes 2,852  3,624  12,699  15,364 
Net income $ 19,881  $ 19,442  $ 74,039  $ 79,082 

Earnings per share:

Basic $ 1.27  $ 1.20  $ 4.69  $ 4.86 
Diluted $ 1.26  $ 1.20  $ 4.67  $ 4.82 

Shares used in computing earnings per share:

Basic 15,697,614  16,162,945  15,792,497  16,277,824 
Diluted 15,775,021  16,262,203  15,859,263  16,394,937 

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q3 2023 Form 10-Q | 1

 Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In millions)

Three Months Ended Nine Months Ended

July 1, June 25, July 1, June 25,
2023 2022 2023 2022
Net income $ 19,881  $ 19,442  $ 74,039  $ 79,082 
Other comprehensive income/(loss):
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 fair value of derivative instruments 509  852  (492) 1,548 
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 612  973  (2,346) 1,461 

Change in unrealized gains/losses on marketable debt securities, net of tax:

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 58  95  185  140 
Total change in unrealized gains/losses on marketable debt
securities (282) (3,055) 2,148  (9,819)

Total other comprehensive income/(loss) (55) (2,803) (692) (9,460)

Total comprehensive income $ 19,826  $ 16,639  $ 73,347  $ 69,622 

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q3 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)

July 1, September 24,

2023 2022
ASSETS:
Current assets:
Cash and cash equivalents $ 28,408  $ 23,646 
Marketable securities 34,074  24,658 
Accounts receivable, net 19,549  28,184 
Inventories 7,351  4,946 
Vendor non-trade receivables 19,637  32,748 
Other current assets 13,640  21,223 
Total current assets 122,659  135,405 

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

LIABILITIES AND SHAREHOLDERS’ EQUITY:

Current liabilities:
Accounts payable $ 46,699  $ 64,115 
Other current liabilities 58,897  60,845 
Deferred revenue 8,158  7,912 
Commercial paper 3,993  9,982 
Term debt 7,216  11,128 
Total current liabilities 124,963  153,982 

Non-current liabilities:
Term debt 98,071  98,959 
Other non-current liabilities 51,730  49,142 
Total non-current liabilities 149,801  148,101 
Total liabilities 274,764  302,083 

Commitments and contingencies

Shareholders’ equity:
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) 1,408  (3,068)
Accumulated other comprehensive income/(loss) (11,801) (11,109)
Total shareholders’ equity 60,274  50,672 
Total liabilities and shareholders’ equity $ 335,038  $ 352,755 

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q3 2023 Form 10-Q | 3

 Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

(In millions, except per share amounts)

Three Months Ended Nine Months Ended

July 1, June 25, July 1, June 25,
2023 2022 2023 2022
Total shareholders’ equity, beginning balances $ 62,158  $ 67,399  $ 50,672  $ 63,090 

Common stock and additional paid-in capital:

Beginning balances 69,568  61,181  64,849  57,365 
Common stock issued —  —  690  593 
Common stock withheld related to net share settlement of equity
awards (1,595) (1,371) (3,310) (2,783)
Share-based compensation 2,694  2,305  8,438  6,940 
Ending balances 70,667  62,115  70,667  62,115 

Retained earnings/(Accumulated deficit):

Beginning balances 4,336  12,712  (3,068) 5,562 
Net income 19,881  19,442  74,039  79,082 
Dividends and dividend equivalents declared (3,811) (3,760) (11,207) (11,058)
Common stock withheld related to net share settlement of equity
awards (858) (1,403) (1,988) (3,323)
Common stock repurchased (18,140) (21,702) (56,368) (64,974)
Ending balances 1,408  5,289  1,408  5,289 

Accumulated other comprehensive income/(loss):

Beginning balances (11,746) (6,494) (11,109) 163 
Other comprehensive income/(loss) (55) (2,803) (692) (9,460)
Ending balances (11,801) (9,297) (11,801) (9,297)

Total shareholders’ equity, ending balances $ 60,274  $ 58,107  $ 60,274  $ 58,107 

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. | Q3 2023 Form 10-Q | 4

 Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)

Nine Months Ended

July 1, June 25,
2023 2022
Cash, cash equivalents and restricted cash, beginning balances $ 24,977  $ 35,929 

Operating activities:
Net income 74,039  79,082 
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization 8,866  8,239 
Share-based compensation expense 8,208  6,760 
Other (1,651) 2,695 
Changes in operating assets and liabilities:
Accounts receivable, net 7,609  4,561 
Inventories (2,570) 1,049 
Vendor non-trade receivables 13,111  4,789 
Other current and non-current assets (4,863) (3,289)
Accounts payable (16,790) (6,108)
Other current and non-current liabilities 2,986  246 
Cash generated by operating activities 88,945  98,024 

Investing activities:
Purchases of marketable securities (20,956) (70,178)
Proceeds from maturities of marketable securities 27,857  24,203 
Proceeds from sales of marketable securities 3,959  33,609 
Payments for acquisition of property, plant and equipment (8,796) (7,419)
Other (753) (1,352)
Cash generated by/(used in) investing activities 1,311  (21,137)

Financing activities:
Payments for taxes related to net share settlement of equity awards (5,119) (5,915)
Payments for dividends and dividend equivalents (11,267) (11,138)
Repurchases of common stock (56,547) (64,974)
Proceeds from issuance of term debt, net 5,228  — 
Repayments of term debt (11,151) (6,750)
Proceeds from/(Repayments of) commercial paper, net (5,971) 4,970 
Other (508) (148)
Cash used in financing activities (85,335) (83,955)

Increase/(Decrease) in cash, cash equivalents and restricted cash 4,921  (7,068)

Cash, cash equivalents and restricted cash, ending balances $ 29,898  $ 28,861 

Supplemental cash flow disclosure:

Cash paid for income taxes, net $ 7,020  $ 12,251 
Cash paid for interest $ 2,590  $ 1,910 

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q3 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- and nine-month periods ended July 1, 2023 and June 25, 2022
(net income in millions and shares in thousands):
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
2023 2022 2023 2022
Numerator:
Net income $ 19,881  $ 19,442  $ 74,039  $ 79,082 

Denominator:
Weighted-average basic shares outstanding 15,697,614  16,162,945  15,792,497  16,277,824 
Effect of dilutive securities 77,407  99,258  66,766  117,113 
Weighted-average diluted shares 15,775,021  16,262,203  15,859,263  16,394,937 

Basic earnings per share $ 1.27  $ 1.20  $ 4.69  $ 4.86 

Diluted earnings per share $ 1.26  $ 1.20  $ 4.67  $ 4.82 

Approximately 32 million restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share for the nine months ended July 1,
2023 because their effect would have been antidilutive.

Apple Inc. | Q3 2023 Form 10-Q | 6

Note 2 – Revenue
Net sales disaggregated by significant products and services for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 were as follows (in
millions):
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
2023 2022 2023 2022
iPhone® $ 39,669  $ 40,665  $ 156,778  $ 162,863 
Mac® 6,840  7,382  21,743  28,669 
iPad® 5,791  7,224  21,857  22,118 
Wearables, Home and Accessories 8,284  8,084  30,523  31,591 
Services 21,213  19,604  62,886  58,941 
Total net sales $ 81,797  $ 82,959  $ 293,787  $ 304,182 

Total net sales include $3.3 billion of revenue recognized in the three months ended July 1, 2023 that was included in deferred revenue as of April 1, 2023, $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 $6.3 billion of revenue recognized in the
nine months ended June 25, 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 10, “Segment
Information and Geographic Data” for the three- and nine-month periods ended July 1, 2023 and June 25, 2022, except in Greater China, where iPhone revenue
represented a moderately higher proportion of net sales.

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

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 July  1, 2023 and
September 24, 2022 (in millions):
July 1, 2023
Cash and Current Non-Current
Adjusted Unrealized Unrealized Fair Cash Marketable Marketable
Cost Gains Losses Value Equivalents Securities Securities
Cash $ 25,337  $ —  $ —  $ 25,337  $ 25,337  $ —  $ — 
Level 1 (1):
Money market funds 1,108  —  —  1,108  1,108  —  — 
Mutual funds 366  15  (19) 362  —  362  — 
Subtotal 1,474  15  (19) 1,470  1,108  362  — 
Level 2 (2):
U.S. Treasury securities 22,274  —  (1,354) 20,920  —  8,076  12,844 
U.S. agency securities 5,709  —  (594) 5,115  3  272  4,840 
Non-U.S. government securities 17,588  19  (927) 16,680  —  11,262  5,418 
Certificates of deposit and time deposits 2,315  —  —  2,315  1,960  355  — 
Commercial paper 364  —  —  364  —  364  — 
Corporate debt securities 79,621  22  (6,079) 73,564  —  13,005  60,559 
Municipal securities 713  —  (23) 690  —  213  477 
Mortgage- and asset-backed securities 22,383  4  (2,299) 20,088  —  165  19,923 
Subtotal 150,967  45  (11,276) 139,736  1,963  33,712  104,061 
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
Cash and Current Non-Current
Adjusted Unrealized Unrealized Fair Cash Marketable Marketable
Cost Gains Losses Value Equivalents Securities 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 July 1, 2023 and September 24, 2022, total marketable securities included $14.1 billion and $12.7 billion, respectively, that were restricted from general
use, related to the State Aid Decision (refer to Note 5, “Income Taxes”) and other agreements.

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

Due after 1 year through 5 years $ 76,267 

Due after 5 years through 10 years 11,148 
Due after 10 years 16,646 
Total fair value $ 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 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 19 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 July 1, 2023 and September 24, 2022 were as follows (in millions):
July 1, September 24,
2023 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 Fair Value of
Derivatives Designated Derivatives Not Designated Total
as Accounting Hedges as Accounting Hedges 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 July 1, 2023 and September 24, 2022 were as follows (in millions):
July 1, September 24,
2023 2022
Hedged assets/(liabilities):
Current and non-current marketable securities $ 14,863  $ 13,378 
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 September 24, 2022, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 10%. The Company’s
cellular network carriers accounted for 44% of total trade receivables as of September 24, 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 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 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%.

Note 4 – Condensed Consolidated Financial Statement Details

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

Inventories
July 1, September 24,
2023 2022
Components $ 3,788  $ 1,637 
Finished goods 3,563  3,309 
Total inventories $ 7,351  $ 4,946 

Property, Plant and Equipment, Net

July 1, September 24,
2023 2022
Gross property, plant and equipment $ 114,337  $ 114,457 
Accumulated depreciation and amortization (70,787) (72,340)
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- and nine-month periods ended July 1, 2023 and June 25, 2022 (in millions):
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
2023 2022 2023 2022
Interest and dividend income $ 980  $ 722  $ 2,766  $ 2,072 
Interest expense (998) (719) (2,931) (2,104)
Other expense, net (247) (13) (429) (65)
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 6 – 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 July 1, 2023 and September 24, 2022, the
Company had $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 nine months ended July 1, 2023 and June 25, 2022 (in millions):
Nine Months Ended
July 1, June 25,
2023 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 July 1, 2023 and September 24, 2022, the Company had outstanding fixed-rate notes with varying maturities for an aggregate carrying amount of $105.3
billion and $110.1 billion, respectively (collectively the “Notes”). As of July 1, 2023 and September 24, 2022, the fair value of the Company’s Notes, based on
Level 2 inputs, was $95.3 billion and $98.8 billion, respectively.

Note 7 – Shareholders’ Equity

Share Repurchase Program

During the nine months ended July 1, 2023, the Company repurchased 365 million shares of its common stock for $56.1 billion, excluding excise tax due under
the Inflation Reduction Act of 2022. The Company’s share repurchase programs do not obligate the Company to acquire a minimum amount of shares. Under
the programs, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the
Securities Exchange Act of 1934, as amended.

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

Note 8 – Benefit Plans

Restricted Stock Units

A summary of the Company’s RSU activity and related information for the nine months ended July 1, 2023 is as follows:
Number of Weighted-Average Aggregate
RSUs Grant Date Fair Fair Value
(in thousands) Value Per RSU (in millions)
Balance as of September 24, 2022 201,501  $ 109.48 
RSUs granted 86,896  $ 150.23 
RSUs vested (96,681) $ 95.97 
RSUs canceled (7,000) $ 126.48 
Balance as of July 1, 2023 184,716  $ 135.08  $ 35,829 

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

Share-Based Compensation
The following table shows share-based compensation expense and the related income tax benefit included in the Condensed Consolidated Statements of
Operations for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 (in millions):
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
2023 2022 2023 2022
Share-based compensation expense $ 2,617  $ 2,243  $ 8,208  $ 6,760 
Income tax benefit related to share-based compensation expense $ (993) $ (1,231) $ (2,791) $ (3,416)

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

Note 9 – 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 July 1, 2023, are
as follows (in millions):

2023 (remaining three months) $ 1,260 

2024 3,417 
2025 1,990 
2026 3,079 
2027 1,013 
Thereafter 8,198 
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 10 – Segment Information and Geographic Data
The following table shows information by reportable segment for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 (in millions):
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
2023 2022 2023 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- and nine-month periods
ended July 1, 2023 and June 25, 2022 is as follows (in millions):
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
2023 2022 2023 2022
Segment operating income $ 32,090  $ 31,583  $ 114,983  $ 119,455 
Research and development expense (7,442) (6,797) (22,608) (19,490)
Other corporate expenses, net (1,650) (1,710) (5,043) (5,422)
Total operating income $ 22,998  $ 23,076  $ 87,332  $ 94,543 

Apple Inc. | Q3 2023 Form 10-Q | 13

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 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
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 quarter of 2023. The Company’s fiscal years
2023 and 2022 span 53 and 52 weeks, respectively.

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

During the third quarter of 2023, the Company announced the following new products:
• 15-inch MacBook Air®, powered by the M2 chip;
• Mac Studio™, powered by the M2 Max chip and the new M2 Ultra chip;
• Mac Pro®, powered by the new M2 Ultra chip; and
• Apple 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 watchOS® 10, updates to its operating systems that are expected to be
available in the fall of 2023.

Apple Inc. | Q3 2023 Form 10-Q | 14

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

Macroeconomic Conditions
Macroeconomic conditions, including inflation, changes in interest rates, and currency fluctuations, have directly and indirectly impacted, and could in the future
materially impact, the Company’s results of operations and financial condition.

Segment Operating Performance

The following table shows net sales by reportable segment for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 (dollars in millions):
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
2023 2022 Change 2023 2022 Change
Net sales by reportable segment:
Americas $ 35,383  $ 37,472  (6)% $ 122,445  $ 129,850  (6)%
Europe 20,205  19,287  5 % 71,831  72,323  (1)%
Greater China 15,758  14,604  8 % 57,475  58,730  (2)%
Japan 4,821  5,446  (11)% 18,752  20,277  (8)%
Rest of Asia Pacific 5,630  6,150  (8)% 23,284  23,002  1 %
Total net sales $ 81,797  $ 82,959  (1)% $ 293,787  $ 304,182  (3)%

Americas
Americas net sales decreased during the third quarter and first nine months of 2023 compared to the same periods in 2022 due primarily to lower net sales of
iPhone and Mac, partially offset by higher net sales of 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 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 Greater China net sales during the third quarter and first
nine months of 2023. During the third quarter of 2023, 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 U.S. dollar had an unfavorable year-over-year impact on Japan net sales during the third quarter 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 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 iPad. During the first nine months of 2023, the Rest of Asia Pacific net sales increase consisted primarily of higher net sales of iPhone, partially offset
by lower net sales of Mac.

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

Products and Services Performance
The following table shows net sales by category for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 (dollars in millions):
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
2023 2022 Change 2023 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 nine months of 2023 compared to the same periods in 2022 due primarily to lower net sales from
certain iPhone models, partially offset by higher net sales of iPhone 14 Pro models.

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

iPad
iPad net sales decreased during the third quarter of 2023 compared to the third quarter of 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
Wearables, which includes AirPods®, Apple Watch® and Beats® products, partially offset by lower net sales of accessories. Year-over-year Wearables, Home
and Accessories net sales decreased during the first nine months of 2023 due primarily to lower net sales of Wearables and accessories.

Services
Services net sales increased during the third quarter of 2023 compared to the third quarter of 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, 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- and nine-month periods ended July 1, 2023 and June 25, 2022 were as follows
(dollars in millions):
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
2023 2022 2023 2022
Gross margin:
Products $ 21,448  $ 21,870  $ 84,205  $ 90,157 
Services 14,965  14,015  44,516  42,530 
Total gross margin $ 36,413  $ 35,885  $ 128,721  $ 132,687 

Gross margin percentage:

Products 35.4 % 34.5 % 36.5 % 36.8 %
Services 70.5 % 71.5 % 70.8 % 72.2 %
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 nine months of 2023 compared to the same periods in 2022 due primarily to the weakness in
foreign currencies relative to the U.S. dollar and lower Products 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 nine months of 2023 due primarily to the weakness in foreign currencies relative to the U.S. 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 nine months of 2023 compared to the same periods in 2022 due primarily to higher Services
net sales, partially offset by the weakness in foreign currencies relative to the U.S. dollar and higher Services costs.

Services gross margin percentage decreased during the third quarter of 2023 compared to the third quarter of 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, 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. | Q3 2023 Form 10-Q | 17

Operating Expenses
Operating expenses for the three- and nine-month periods ended July 1, 2023 and June 25, 2022 were as follows (dollars in millions):
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
2023 2022 2023 2022
Research and development $ 7,442  $ 6,797  $ 22,608  $ 19,490 
Percentage of total net sales 9 % 8 % 8 % 6 %
Selling, general and administrative $ 5,973  $ 6,012  $ 18,781  $ 18,654 
Percentage of total net sales 7 % 7 % 6 % 6 %
Total operating expenses $ 13,415  $ 12,809  $ 41,389  $ 38,144 
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 nine months of 2023 compared to the same periods in 2022 was
driven primarily by increases in headcount-related expenses.

Selling, General and Administrative

Selling, general and administrative expense was relatively flat during the third quarter and first nine months of 2023 compared to the same periods in 2022.

Provision for Income Taxes

Provision for income taxes, effective tax rate and statutory federal income tax rate for the three- and nine-month periods ended July 1, 2023 and June 25, 2022
were as follows (dollars in millions):
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
2023 2022 2023 2022
Provision for income taxes $ 2,852  $ 3,624  $ 12,699  $ 15,364 
Effective tax rate 12.5 % 15.7 % 14.6 % 16.3 %
Statutory federal income tax rate 21 % 21 % 21 % 21 %

The Company’s effective tax rate for the third quarter and first 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 third quarter of 2023 was lower compared to the third quarter of 2022 due primarily to a lower effective tax rate on
foreign earnings, 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 manufacturing purchase obligations.

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 July 1, 2023, the
Company had manufacturing purchase obligations of $38.4 billion, with $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 had authorized share repurchase programs as of July 1, 2023. The programs do not obligate the
Company to acquire a minimum amount of shares. As of July 1, 2023, the Company’s quarterly cash dividend was $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 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 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 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. | Q3 2023 Form 10-Q | 19

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 “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. On September 10,
2021, the District Court ruled in favor of the Company with respect to nine out of the ten counts included in Epic’s claim. The District Court found that certain
provisions of the Company’s App Store Review Guidelines violate California’s unfair competition law and issued an 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 Circuit Court’s stay of the 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 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, 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 July 1, 2023 was as follows (in millions, except number of shares, which are reflected in thousands,
and per share amounts):
Total Number of Approximate Dollar
Shares Value of
Purchased as Part Shares That May Yet Be
Total Number Average Price of Publicly Purchased
of Shares Paid Per Announced Plans or Under the Plans or
Periods Purchased Share Programs Programs (1)
April 2, 2023 to May 6, 2023:
Open market and privately negotiated purchases 38,121  $ 165.46  38,121 

May 7, 2023 to June 3, 2023:

Open market and privately negotiated purchases 21,876  $ 174.91  21,876 

June 4, 2023 to July 1, 2023:

Open market and privately negotiated purchases 42,676  $ 184.34  42,676 
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 a share repurchase
program. As of July 1, 2023, remaining availability under the April 2022 authorization was $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 programs do not obligate the Company to acquire a minimum amount
of shares. Under the programs, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule
10b5-1 under the Exchange Act.

Item 3.    Defaults Upon Senior Securities

None.

Item 4.    Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

None.

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

Item 6.    Exhibits
Incorporated by Reference

Filing Date/
Exhibit Period End
Number Exhibit Description Form Exhibit Date
4.1 Officer’s Certificate of the Registrant, dated as of May 10, 2023, including forms of global notes 8-K 4.1 5/10/23
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.
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. | Q3 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: August 3, 2023 Apple Inc.

By: /s/ Luca Maestri

Luca Maestri
Senior Vice President,
Chief Financial Officer

Apple Inc. | Q3 2023 Form 10-Q | 23

 Exhibit 31.1

CERTIFICATION

I, Timothy D. Cook, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Apple Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent
fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal
control over financial reporting.

Date: August 3, 2023

By: /s/ Timothy D. Cook

Timothy D. Cook
Chief Executive Officer
 Exhibit 31.2

CERTIFICATION

I, Luca Maestri, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Apple Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent
fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal
control over financial reporting.

Date: August 3, 2023

By: /s/ Luca Maestri

Luca Maestri
Senior Vice President,
Chief Financial Officer
 Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Timothy D. Cook, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that the Quarterly Report of Apple Inc. on Form 10-Q for the period ended July  1, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of
operations of Apple Inc. at the dates and for the periods indicated.

Date: August 3, 2023

By: /s/ Timothy D. Cook

Timothy D. Cook
Chief Executive Officer

I, Luca Maestri, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that
the Quarterly Report of Apple Inc. on Form 10-Q for the period ended July 1, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of
Apple Inc. at the dates and for the periods indicated.

Date: August 3, 2023

By: /s/ Luca Maestri

Luca Maestri
Senior Vice President,
Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Apple Inc. and will be retained by Apple Inc. and furnished to the
Securities and Exchange Commission or its staff upon request.