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 ~~25, 2021~~31, 2022

☐ 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~~
~~1.000% Notes due 2022~~	—	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 ☒

~~16,319,441,000~~15,821,946,000 shares of common stock were issued and outstanding as of January ~~14, 2022~~20, 2023.

Apple Inc.

Form 10-Q

For the Fiscal Quarter Ended December ~~25, 2021~~31, 2022

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
		December 25, 2021		December 26, 2020				December 31, 2022		December 25, 2021
Net sales:	Net sales:						Net sales:
Products	Products	$	104,429	$	95,678		Products	$	96,388	$	104,429
Services	Services	19,516		15,761			Services	20,766		19,516
Total net sales	Total net sales	123,945		111,439			Total net sales	117,154		123,945

Cost of sales:	Cost of sales:						Cost of sales:
Products	Products	64,309		62,130			Products	60,765		64,309
Services	Services	5,393		4,981			Services	6,057		5,393
Total cost of sales	Total cost of sales	69,702		67,111			Total cost of sales	66,822		69,702
Gross margin	Gross margin	54,243		44,328			Gross margin	50,332		54,243

Operating expenses:	Operating expenses:						Operating expenses:
Research and development	Research and development	6,306		5,163			Research and development	7,709		6,306
Selling, general and administrative	Selling, general and administrative	6,449		5,631			Selling, general and administrative	6,607		6,449
Total operating expenses	Total operating expenses	12,755		10,794			Total operating expenses	14,316		12,755

Operating income	Operating income	41,488		33,534			Operating income	36,016		41,488
Other income/(expense), net	Other income/(expense), net	(247)		45			Other income/(expense), net	(393)		(247)
Income before provision for income taxes	Income before provision for income taxes	41,241		33,579			Income before provision for income taxes	35,623		41,241
Provision for income taxes	Provision for income taxes	6,611		4,824			Provision for income taxes	5,625		6,611
Net income	Net income	$	34,630	$	28,755		Net income	$	29,998	$	34,630

Earnings per share:	Earnings per share:						Earnings per share:
Basic	Basic	$	2.11	$	1.70		Basic	$	1.89	$	2.11
Diluted	Diluted	$	2.10	$	1.68		Diluted	$	1.88	$	2.10

Shares used in computing earnings per share:	Shares used in computing earnings per share:						Shares used in computing earnings per share:
Basic	Basic	16,391,724		16,935,119			Basic	15,892,723		16,391,724
Diluted	Diluted	16,519,291		17,113,688			Diluted	15,955,718		16,519,291

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q1 ~~2022~~2023 Form 10-Q | 1

Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In millions)


		Three Months Ended				Three Months Ended
		December 25, 2021		December 26, 2020				December 31, 2022		December 25, 2021
Net income	Net income	$	34,630	$	28,755		Net income	$	29,998	$	34,630
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	(360)		549			Change in foreign currency translation, net of tax	(14)		(360)

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	362		(304)			Change in fair value of derivative instruments	(988)		362
Adjustment for net (gains)/losses realized and included in net income	Adjustment for net (gains)/losses realized and included in net income	93		(183)			Adjustment for net (gains)/losses realized and included in net income	(1,766)		93
Total change in unrealized gains/losses on derivative instruments	Total change in unrealized gains/losses on derivative instruments	455		(487)			Total change in unrealized gains/losses on derivative instruments	(2,754)		455

Change in unrealized gains/losses on marketable debt securities, net of tax:	Change in 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	(1,176)		628			Change in fair value of marketable debt securities	900		(1,176)
Adjustment for net (gains)/losses realized and included in net income	Adjustment for net (gains)/losses realized and included in net income	(9)		(105)			Adjustment for net (gains)/losses realized and included in net income	65		(9)
Total change in unrealized gains/losses on marketable debt securities	Total change in unrealized gains/losses on marketable debt securities	(1,185)		523			Total change in unrealized gains/losses on marketable debt securities	965		(1,185)

Total other comprehensive income/(loss)	Total other comprehensive income/(loss)	(1,090)		585			Total other comprehensive income/(loss)	(1,803)		(1,090)
Total comprehensive income	Total comprehensive income	$	33,540	$	29,340		Total comprehensive income	$	28,195	$	33,540

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q1 ~~2022~~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 25, 2021		September 25, 2021			December 31, 2022		September 24, 2022
ASSETS:	ASSETS:					ASSETS:
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	37,119	$	34,940	Cash and cash equivalents	$	20,535	$	23,646
Marketable securities	Marketable securities	26,794		27,699		Marketable securities	30,820		24,658
Accounts receivable, net	Accounts receivable, net	30,213		26,278		Accounts receivable, net	23,752		28,184
Inventories	Inventories	5,876		6,580		Inventories	6,820		4,946
Vendor non-trade receivables	Vendor non-trade receivables	35,040		25,228		Vendor non-trade receivables	30,428		32,748
Other current assets	Other current assets	18,112		14,111		Other current assets	16,422		21,223
Total current assets	Total current assets	153,154		134,836		Total current assets	128,777		135,405

Non-current assets:	Non-current assets:					Non-current assets:
Marketable securities	Marketable securities	138,683		127,877		Marketable securities	114,095		120,805
Property, plant and equipment, net	Property, plant and equipment, net	39,245		39,440		Property, plant and equipment, net	42,951		42,117
Other non-current assets	Other non-current assets	50,109		48,849		Other non-current assets	60,924		54,428
Total non-current assets	Total non-current assets	228,037		216,166		Total non-current assets	217,970		217,350
Total assets	Total assets	$	381,191	$	351,002	Total assets	$	346,747	$	352,755

LIABILITIES AND SHAREHOLDERS’ EQUITY:	LIABILITIES AND SHAREHOLDERS’ EQUITY:					LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	74,362	$	54,763	Accounts payable	$	57,918	$	64,115
Other current liabilities	Other current liabilities	49,167		47,493		Other current liabilities	59,893		60,845
Deferred revenue	Deferred revenue	7,876		7,612		Deferred revenue	7,992		7,912
Commercial paper	Commercial paper	5,000		6,000		Commercial paper	1,743		9,982
Term debt	Term debt	11,169		9,613		Term debt	9,740		11,128
Total current liabilities	Total current liabilities	147,574		125,481		Total current liabilities	137,286		153,982

Non-current liabilities:	Non-current liabilities:					Non-current liabilities:
Term debt	Term debt	106,629		109,106		Term debt	99,627		98,959
Other non-current liabilities	Other non-current liabilities	55,056		53,325		Other non-current liabilities	53,107		49,142
Total non-current liabilities	Total non-current liabilities	161,685		162,431		Total non-current liabilities	152,734		148,101
Total liabilities	Total liabilities	309,259		287,912		Total liabilities	290,020		302,083

Commitments and contingencies	Commitments and contingencies	0		0		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; 16,340,851 and 16,426,786 shares issued and outstanding, respectively		58,424		57,365
Retained earnings		14,435		5,562
Common stock and additional paid-in capital, $0.00001 par value: 50,400,000 shares authorized; 15,842,407 and 15,943,425 shares issued and outstanding, respectively						Common stock and additional paid-in capital, $0.00001 par value: 50,400,000 shares authorized; 15,842,407 and 15,943,425 shares issued and outstanding, respectively	66,399		64,849
Retained earnings/(Accumulated deficit)						Retained earnings/(Accumulated deficit)	3,240		(3,068)
Accumulated other comprehensive income/(loss)	Accumulated other comprehensive income/(loss)	(927)		163		Accumulated other comprehensive income/(loss)	(12,912)		(11,109)
Total shareholders’ equity	Total shareholders’ equity	71,932		63,090		Total shareholders’ equity	56,727		50,672
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	381,191	$	351,002	Total liabilities and shareholders’ equity	$	346,747	$	352,755

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q1 ~~2022~~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
		December 25, 2021		December 26, 2020				December 31, 2022		December 25, 2021
Total shareholders’ equity, beginning balances	Total shareholders’ equity, beginning balances	$	63,090	$	65,339		Total shareholders’ equity, beginning balances	$	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	57,365		50,779			Beginning balances	64,849		57,365

Common stock withheld related to net share settlement of equity awards	Common stock withheld related to net share settlement of equity awards	(1,263)		(1,101)			Common stock withheld related to net share settlement of equity awards	(1,434)		(1,263)
Share-based compensation	Share-based compensation	2,322		2,066			Share-based compensation	2,984		2,322
Ending balances	Ending balances	58,424		51,744			Ending balances	66,399		58,424

Retained earnings:
Retained earnings/(Accumulated deficit):							Retained earnings/(Accumulated deficit):
Beginning balances	Beginning balances	5,562		14,966			Beginning balances	(3,068)		5,562
Net income	Net income	34,630		28,755			Net income	29,998		34,630
Dividends and dividend equivalents declared	Dividends and dividend equivalents declared	(3,665)		(3,547)			Dividends and dividend equivalents declared	(3,712)		(3,665)
Common stock withheld related to net share settlement of equity awards	Common stock withheld related to net share settlement of equity awards	(1,730)		(1,873)			Common stock withheld related to net share settlement of equity awards	(978)		(1,730)
Common stock repurchased	Common stock repurchased	(20,362)		(24,000)			Common stock repurchased	(19,000)		(20,362)
Ending balances	Ending balances	14,435		14,301			Ending balances	3,240		14,435

Accumulated other comprehensive income/(loss):	Accumulated other comprehensive income/(loss):						Accumulated other comprehensive income/(loss):
Beginning balances	Beginning balances	163		(406)			Beginning balances	(11,109)		163
Other comprehensive income/(loss)	Other comprehensive income/(loss)	(1,090)		585			Other comprehensive income/(loss)	(1,803)		(1,090)
Ending balances	Ending balances	(927)		179			Ending balances	(12,912)		(927)

Total shareholders’ equity, ending balances	Total shareholders’ equity, ending balances	$	71,932	$	66,224		Total shareholders’ equity, ending balances	$	56,727	$	71,932

Dividends and dividend equivalents declared per share or RSU	Dividends and dividend equivalents declared per share or RSU	$	0.22	$	0.205		Dividends and dividend equivalents declared per share or RSU	$	0.23	$	0.22

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q1 ~~2022~~2023 Form 10-Q | 4

Apple Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)


		Three Months Ended					Three Months Ended
		December 25, 2021		December 26, 2020			December 31, 2022		December 25, 2021
Cash, cash equivalents and restricted cash, beginning balances	Cash, cash equivalents and restricted cash, beginning balances	$	35,929	$	39,789	Cash, cash equivalents and restricted cash, beginning balances	$	24,977	$	35,929
Operating activities:	Operating activities:					Operating activities:
Net income	Net income	34,630		28,755		Net income	29,998		34,630
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	2,697		2,666		Depreciation and amortization	2,916		2,697
Share-based compensation expense	Share-based compensation expense	2,265		2,020		Share-based compensation expense	2,905		2,265
Deferred income tax expense/(benefit)		682		(58)

Other	Other	167		25		Other	(317)		849
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable, net	Accounts receivable, net	(3,934)		(10,945)		Accounts receivable, net	4,275		(3,934)
Inventories	Inventories	681		(950)		Inventories	(1,807)		681
Vendor non-trade receivables	Vendor non-trade receivables	(9,812)		(10,194)		Vendor non-trade receivables	2,320		(9,812)
Other current and non-current assets	Other current and non-current assets	(4,921)		(3,526)		Other current and non-current assets	(4,099)		(4,921)
Accounts payable	Accounts payable	19,813		21,670		Accounts payable	(6,075)		19,813
Deferred revenue	Deferred revenue	462		1,341		Deferred revenue	131		462
Other current and non-current liabilities	Other current and non-current liabilities	4,236		7,959		Other current and non-current liabilities	3,758		4,236
Cash generated by operating activities	Cash generated by operating activities	46,966		38,763		Cash generated by operating activities	34,005		46,966
Investing activities:	Investing activities:					Investing activities:
Purchases of marketable securities	Purchases of marketable securities	(34,913)		(39,800)		Purchases of marketable securities	(5,153)		(34,913)
Proceeds from maturities of marketable securities	Proceeds from maturities of marketable securities	11,309		25,177		Proceeds from maturities of marketable securities	7,127		11,309
Proceeds from sales of marketable securities	Proceeds from sales of marketable securities	10,675		9,344		Proceeds from sales of marketable securities	509		10,675
Payments for acquisition of property, plant and equipment	Payments for acquisition of property, plant and equipment	(2,803)		(3,500)		Payments for acquisition of property, plant and equipment	(3,787)		(2,803)

Other	Other	(374)		195		Other	(141)		(374)
Cash used in investing activities	Cash used in investing activities	(16,106)		(8,584)		Cash used in investing activities	(1,445)		(16,106)
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	(2,888)		(2,861)		Payments for taxes related to net share settlement of equity awards	(2,316)		(2,888)
Payments for dividends and dividend equivalents	Payments for dividends and dividend equivalents	(3,732)		(3,613)		Payments for dividends and dividend equivalents	(3,768)		(3,732)
Repurchases of common stock	Repurchases of common stock	(20,478)		(24,775)		Repurchases of common stock	(19,475)		(20,478)

Repayments of term debt	Repayments of term debt	—		(1,000)		Repayments of term debt	(1,401)		—
Proceeds from/(Repayments of) commercial paper, net		(1,000)		22
Repayments of commercial paper, net						Repayments of commercial paper, net	(8,214)		(1,000)
Other	Other	(61)		(22)		Other	(389)		(61)
Cash used in financing activities	Cash used in financing activities	(28,159)		(32,249)		Cash used in financing activities	(35,563)		(28,159)
Increase/(Decrease) in cash, cash equivalents and restricted cash	Increase/(Decrease) in cash, cash equivalents and restricted cash	2,701		(2,070)		Increase/(Decrease) in cash, cash equivalents and restricted cash	(3,003)		2,701
Cash, cash equivalents and restricted cash, ending balances	Cash, cash equivalents and restricted cash, ending balances	$	38,630	$	37,719	Cash, cash equivalents and restricted cash, ending balances	$	21,974	$	38,630
Supplemental cash flow disclosure:	Supplemental cash flow disclosure:					Supplemental cash flow disclosure:
Cash paid for income taxes, net	Cash paid for income taxes, net	$	5,235	$	1,787	Cash paid for income taxes, net	$	828	$	5,235
Cash paid for interest	Cash paid for interest	$	531	$	619	Cash paid for interest	$	703	$	531

See accompanying Notes to Condensed Consolidated Financial Statements.

Apple Inc. | Q1 ~~2022~~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 ~~25, 2021 (the “2021 Form 10-K”).~~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.~~quarters, which occurred in the first fiscal quarter of 2023. The Company’s fiscal years 2023 and 2022 span 53 and ~~2021 span~~ 52 weeks, ~~each.~~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 ended December ~~25, 2021~~31, 2022 and December ~~26, 2020~~25, 2021 (net income in millions and shares in thousands):


		Three Months Ended				Three Months Ended
		December 25, 2021		December 26, 2020				December 31, 2022		December 25, 2021
Numerator:	Numerator:						Numerator:
Net income	Net income	$	34,630	$	28,755		Net income	$	29,998	$	34,630

Denominator:	Denominator:						Denominator:
Weighted-average basic shares outstanding	Weighted-average basic shares outstanding	16,391,724		16,935,119			Weighted-average basic shares outstanding	15,892,723		16,391,724
Effect of dilutive securities	Effect of dilutive securities	127,567		178,569			Effect of dilutive securities	62,995		127,567
Weighted-average diluted shares	Weighted-average diluted shares	16,519,291		17,113,688			Weighted-average diluted shares	15,955,718		16,519,291

Basic earnings per share	Basic earnings per share	$	2.11	$	1.70		Basic earnings per share	$	1.89	$	2.11
Diluted earnings per share	Diluted earnings per share	$	2.10	$	1.68		Diluted earnings per share	$	1.88	$	2.10

Approximately 89 million restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share for the three months ended December 31, 2022 because their effect would have been antidilutive.

Apple Inc. | Q1 ~~2022~~2023 Form 10-Q | 6

Note 2 – Revenue

Net sales disaggregated by significant products and services for the three months ended December ~~25, 2021~~31, 2022 and December ~~26, 2020~~25, 2021 were as follows (in millions):


		Three Months Ended				Three Months Ended
		December 25, 2021		December 26, 2020				December 31, 2022		December 25, 2021
iPhone® (1)	iPhone® (1)	$	71,628	$	65,597		iPhone® (1)	$	65,775	$	71,628
Mac® (1)	Mac® (1)	10,852		8,675			Mac® (1)	7,735		10,852
iPad® (1)	iPad® (1)	7,248		8,435			iPad® (1)	9,396		7,248
Wearables, Home and Accessories (1)(2)	Wearables, Home and Accessories (1)(2)	14,701		12,971			Wearables, Home and Accessories (1)(2)	13,482		14,701
Services (3)	Services (3)	19,516		15,761			Services (3)	20,766		19,516
Total net sales (4)	Total net sales (4)	$	123,945	$	111,439		Total net sales (4)	$	117,154	$	123,945

(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®~~, iPod touch~~® 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 billion of revenue recognized in the three months ended December 31, 2022 that was included in deferred revenue as of September 24, 2022 and $3.0 billion of revenue recognized in the three months ended December 25, 2021 that was included in deferred revenue as of September 25, ~~2021 and $2.5 billion of revenue recognized in the three months ended December 26, 2020 that was included in deferred revenue as of September 26, 2020.~~2021.

The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 9, “Segment Information and Geographic Data” for the three months ended December ~~25, 2021~~31, 2022 and December ~~26, 2020,~~25, 2021, except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales.

As of December ~~25, 2021~~31, 2022 and September ~~25, 2021,~~24, 2022, the Company had total deferred revenue of ~~$12.4~~$12.6 billion and ~~$11.9~~$12.4 billion, respectively. As of December ~~25, 2021,~~31, 2022, the Company expects ~~64%~~63% of total deferred revenue to be realized in less than a year, 27% within one-to-two years, 8% within two-to-three years and 1%2% in greater than three years.

Apple Inc. | Q1 ~~2022~~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 ~~25, 2021~~31, 2022 and September ~~25, 2021~~24, 2022 (in millions):


		December 25, 2021															December 31, 2022
		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	$	17,992	$	—	$	—	$	17,992	$	17,992	$	—	$	—	Cash	$	17,908	$	—	$	—	$	17,908	$	17,908	$	—	$	—
Level 1 (1):	Level 1 (1):															Level 1 (1):
Money market funds	Money market funds	11,356		—		—		11,356		11,356		—		—		Money market funds	818		—		—		818		818		—		—
Mutual funds	Mutual funds	215		16		(2)		229		—		229		—		Mutual funds	330		2		(40)		292		—		292		—
Subtotal	Subtotal	11,571		16		(2)		11,585		11,356		229		—		Subtotal	1,148		2		(40)		1,110		818		292		—
Level 2 (2):	Level 2 (2):															Level 2 (2):
Equity securities		1,527		—		(850)		677		—		677		—
U.S. Treasury securities	U.S. Treasury securities	29,221		64		(171)		29,114		3,247		5,775		20,092		U.S. Treasury securities	24,128		1		(1,576)		22,553		13		9,105		13,435
U.S. agency securities	U.S. agency securities	7,934		1		(116)		7,819		1,066		1,581		5,172		U.S. agency securities	5,743		—		(643)		5,100		—		310		4,790
Non-U.S. government securities	Non-U.S. government securities	18,983		160		(177)		18,966		200		3,279		15,487		Non-U.S. government securities	17,778		14		(1,029)		16,763		—		9,907		6,856
Certificates of deposit and time deposits	Certificates of deposit and time deposits	3,648		—		—		3,648		2,527		1,121		—		Certificates of deposit and time deposits	2,025		—		—		2,025		1,795		230		—
Commercial paper	Commercial paper	2,261		—		—		2,261		702		1,559		—		Commercial paper	237		—		—		237		—		237		—
Corporate debt securities	Corporate debt securities	88,617		718		(754)		88,581		29		11,665		76,887		Corporate debt securities	85,895		14		(7,039)		78,870		1		10,377		68,492
Municipal securities	Municipal securities	993		10		(1)		1,002		—		150		852		Municipal securities	864		—		(26)		838		—		278		560
Mortgage- and asset-backed securities	Mortgage- and asset-backed securities	21,072		102		(223)		20,951		—		758		20,193		Mortgage- and asset-backed securities	22,448		3		(2,405)		20,046		—		84		19,962
Subtotal	Subtotal	174,256		1,055		(2,292)		173,019		7,771		26,565		138,683		Subtotal	159,118		32		(12,718)		146,432		1,809		30,528		114,095
Total (3)	Total (3)	$	203,819	$	1,071	$	(2,294)	$	202,596	$	37,119	$	26,794	$	138,683	Total (3)	$	178,174	$	34	$	(12,758)	$	165,450	$	20,535	$	30,820	$	114,095


		September 25, 2021															September 24, 2022
		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	$	17,305	$	—	$	—	$	17,305	$	17,305	$	—	$	—	Cash	$	18,546	$	—	$	—	$	18,546	$	18,546	$	—	$	—
Level 1 (1):	Level 1 (1):															Level 1 (1):
Money market funds	Money market funds	9,608		—		—		9,608		9,608		—		—		Money market funds	2,929		—		—		2,929		2,929		—		—
Mutual funds	Mutual funds	175		11		(1)		185		—		185		—		Mutual funds	274		—		(47)		227		—		227		—
Subtotal	Subtotal	9,783		11		(1)		9,793		9,608		185		—		Subtotal	3,203		—		(47)		3,156		2,929		227		—
Level 2 (2):	Level 2 (2):															Level 2 (2):
Equity securities		1,527		—		(564)		963		—		963		—
U.S. Treasury securities	U.S. Treasury securities	22,878		102		(77)		22,903		3,596		6,625		12,682		U.S. Treasury securities	25,134		—		(1,725)		23,409		338		5,091		17,980
U.S. agency securities	U.S. agency securities	8,949		2		(64)		8,887		1,775		1,930		5,182		U.S. agency securities	5,823		—		(655)		5,168		—		240		4,928
Non-U.S. government securities	Non-U.S. government securities	20,201		211		(101)		20,311		390		3,091		16,830		Non-U.S. government securities	16,948		2		(1,201)		15,749		—		8,806		6,943
Certificates of deposit and time deposits	Certificates of deposit and time deposits	1,300		—		—		1,300		490		810		—		Certificates of deposit and time deposits	2,067		—		—		2,067		1,805		262		—
Commercial paper	Commercial paper	2,639		—		—		2,639		1,776		863		—		Commercial paper	718		—		—		718		28		690		—
Corporate debt securities	Corporate debt securities	83,883		1,242		(267)		84,858		—		12,327		72,531		Corporate debt securities	87,148		9		(7,707)		79,450		—		9,023		70,427
Municipal securities	Municipal securities	967		14		—		981		—		130		851		Municipal securities	921		—		(35)		886		—		266		620
Mortgage- and asset-backed securities	Mortgage- and asset-backed securities	20,529		171		(124)		20,576		—		775		19,801		Mortgage- and asset-backed securities	22,553		—		(2,593)		19,960		—		53		19,907
Subtotal	Subtotal	162,873		1,742		(1,197)		163,418		8,027		27,514		127,877		Subtotal	161,312		11		(13,916)		147,407		2,171		24,431		120,805
Total (3)	Total (3)	$	189,961	$	1,753	$	(1,198)	$	190,516	$	34,940	$	27,699	$	127,877	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 ~~25, 2021~~31, 2022 and September ~~25, 2021,~~24, 2022, total marketable securities included ~~$16.8~~$13.6 billion and ~~$17.9~~$12.7 billion, respectively, that ~~was~~were restricted from general use, related to the European Commission decision finding that Ireland granted state aid to the Company, and other agreements.

Apple Inc. | Q1 ~~2022~~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 ~~25, 2021~~31, 2022 (in millions):


Due after 1 year through 5 years	$	~~93,206~~82,497
Due after 5 years through 10 years	~~25,183~~14,243
Due after 10 years	~~20,294~~17,355
Total fair value	$	~~138,683~~114,095

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 ~~25, 2021,~~31, 2022, the ~~Company’s hedged~~maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for term debt– ~~and marketable securities–~~related foreign currency transactions ~~are expected to be recognized within 21~~is 20 years.

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.

~~0Interest~~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 ~~25, 2021~~31, 2022 and September ~~25, 2021~~24, 2022 were as follows (in millions):


		December 25, 2021		September 25, 2021			December 31, 2022		September 24, 2022
Derivative instruments designated as accounting hedges:	Derivative instruments designated as accounting hedges:					Derivative instruments designated as accounting hedges:
Foreign exchange contracts	Foreign exchange contracts	$	77,009	$	76,475	Foreign exchange contracts	$	66,054	$	102,670
Interest rate contracts	Interest rate contracts	$	16,875	$	16,875	Interest rate contracts	$	20,125	$	20,125

Derivative instruments not designated as accounting hedges:	Derivative instruments not designated as accounting hedges:					Derivative instruments not designated as accounting hedges:
Foreign exchange contracts	Foreign exchange contracts	$	176,268	$	126,918	Foreign exchange contracts	$	134,971	$	185,381

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

The gross fair values of the Company’s derivative assets and liabilities ~~were not material~~ as of ~~December 25, 2021~~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 ~~September 25, 2021.~~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 ~~gains and losses recognized in other comprehensive income and amounts reclassified~~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 ~~accumulated other comprehensive income~~contractually established thresholds. To further limit credit risk, the Company generally enters into master netting arrangements with the respective counterparties to ~~net income for~~ the Company’s derivative ~~instruments designated as cash flow hedges were not material~~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 ~~the three months ended December 25, 2021 and December 26, 2020.~~

~~Apple Inc. | Q1 2022 Form 10-Q | 9~~

a net derivative asset of $412 million.

The carrying amounts of the Company’s hedged items in fair value hedges as of December ~~25, 2021~~31, 2022 and September ~~25, 2021~~24, 2022 were as follows (in millions):

December 25, 2021 September 25, 2021
Hedged assets/(liabilities):
Current and non-current marketable securities $ 15,322 $ 15,954
Current and non-current term debt $ (17,444) $ (17,857)

The gains and losses on the Company’s derivative instruments designated as fair value hedges and the related hedged item adjustments were not material in the three months ended December 25, 2021 and December 26, 2020.


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

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 ~~45%~~43% and ~~42%~~44% of total trade receivables as of December ~~25, 2021~~31, 2022 and September ~~25, 2021,~~24, 2022, respectively.

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 ~~25, 2021,~~31, 2022, the Company had 3two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 54%~~, 13%~~ and ~~12%~~16%. As of September ~~25, 2021,~~24, 2022, the Company had 3two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for ~~52%, 11%~~54% and ~~11%~~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 ~~25, 2021~~31, 2022 and September ~~25, 2021~~24, 2022 (in millions):

Inventories


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

Property, Plant and Equipment, Net

December 25,
2021 September 25,
2021
Gross property, plant and equipment $ 107,699 $ 109,723
Accumulated depreciation and amortization (68,454) (70,283)
Total property, plant and equipment, net $ 39,245 $ 39,440

~~Other Non-Current Liabilities~~

December 25,
2021 September 25,
2021
Long-term taxes payable $ 24,689 $ 24,689
Other non-current liabilities 30,367 28,636
Total other non-current liabilities $ 55,056 $ 53,325

~~Apple Inc. | Q1 2022 Form 10-Q | 10~~


	December 31, 2022		September 24, 2022
Gross property, plant and equipment	$	110,995	$	114,457
Accumulated depreciation and amortization	(68,044)		(72,340)
Total property, plant and equipment, net	$	42,951	$	42,117

Other Income/(Expense), Net

The following table shows the detail of other income/(expense), net for the three months ended December ~~25, 2021~~31, 2022 and December ~~26, 2020~~25, 2021 (in millions):


		Three Months Ended				Three Months Ended
		December 25, 2021		December 26, 2020				December 31, 2022		December 25, 2021
Interest and dividend income	Interest and dividend income	$	650	$	747		Interest and dividend income	$	868	$	650
Interest expense	Interest expense	(694)		(638)			Interest expense	(1,003)		(694)
Other expense, net	Other expense, net	(203)		(64)			Other expense, net	(258)		(203)
Total other income/(expense), net	Total other income/(expense), net	$	(247)	$	45		Total other income/(expense), net	$	(393)	$	(247)

Note 5 – 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 ~~25, 2021~~31, 2022 and September ~~25, 2021,~~24, 2022, the Company had ~~$5.0~~$1.7 billion and ~~$6.0~~$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 months ended December ~~25, 2021~~31, 2022 and December ~~26, 2020~~25, 2021 (in millions):


		Three Months Ended					Three Months Ended
		December 25, 2021		December 26, 2020			December 31, 2022		December 25, 2021
Maturities 90 days or less:	Maturities 90 days or less:					Maturities 90 days or less:
Proceeds from commercial paper, net		$	1,339	$	1,439
Proceeds from/(Repayments of) commercial paper, net						Proceeds from/(Repayments of) commercial paper, net	$	(5,569)	$	1,339

Maturities greater than 90 days:	Maturities greater than 90 days:					Maturities greater than 90 days:
Proceeds from commercial paper	Proceeds from commercial paper	1,191		780		Proceeds from commercial paper	—		1,191
Repayments of commercial paper	Repayments of commercial paper	(3,530)		(2,197)		Repayments of commercial paper	(2,645)		(3,530)
Repayments of commercial paper, net	Repayments of commercial paper, net	(2,339)		(1,417)		Repayments of commercial paper, net	(2,645)		(2,339)

Total proceeds from/(repayments of) commercial paper, net		$	(1,000)	$	22
Total repayments of commercial paper, net						Total repayments of commercial paper, net	$	(8,214)	$	(1,000)

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

Term Debt

As of December ~~25, 2021~~31, 2022 and September ~~25, 2021,~~24, 2022, the Company had outstanding ~~floating- and~~ fixed-rate notes with varying maturities for an aggregate carrying amount of ~~$117.8~~$109.4 billion and ~~$118.7~~$110.1 billion, respectively (collectively the “Notes”). As of December ~~25, 2021~~31, 2022 and September ~~25, 2021,~~24, 2022, the fair value of the Company’s Notes, based on Level 2 inputs, was ~~$123.5~~$98.0 billion and ~~$125.3~~$98.8 billion, respectively.

Note 6 – Shareholders’ Equity

Share Repurchase Program

~~As of December 25, 2021, the Company was authorized to purchase up to $315 billion of the Company’s common stock under a share repurchase program (the “Program”).~~ During the three months ended December ~~25, 2021,~~31, 2022, the Company repurchased ~~124~~133 million shares of its common stock for ~~$20.4~~$19.0 billion ~~including 30 million shares initially delivered~~ under ~~accelerated~~a share repurchase ~~agreements (“ASRs”) entered into in November 2021, bringing~~program authorized by the ~~total utilization under the Program to $274.5 billion as~~Board of ~~December 25, 2021.~~Directors (the “Program”). The Program does not obligate the Company to acquire ~~any specific number~~a minimum amount of shares. Under the Program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

~~Apple Inc. | Q1 2022 Form 10-Q | 11~~

Under the terms of the Company’s ASRs, two financial institutions committed to deliver shares of the Company’s common stock during the purchase periods in exchange for up-front payments totaling $6.0 billion. The total number of shares ultimately delivered under the ASRs, and therefore the average repurchase price paid per share, is determined based on the volume-weighted average price of the Company’s common stock during the ASRs’ purchase periods, which end in the second quarter of 2022. The shares received are retired in the periods they are delivered, and the up-front payments are accounted for as a reduction to retained earnings in the Company’s Condensed Consolidated Statement of Shareholders’ Equity in the period the payments are made.

Note 7 – Benefit Plans

Restricted Stock Units

A summary of the Company’s ~~restricted stock unit (“RSU”)~~RSU activity and related information for the three months ended December ~~25, 2021~~31, 2022 is as follows:


		Number of RSUs (in thousands)	Weighted-Average Grant Date Fair Value Per RSU		Aggregate Fair Value (in millions)			Number of RSUs (in thousands)	Weighted-Average Grant Date Fair Value Per RSU		Aggregate Fair Value (in millions)
Balance as of September 25, 2021		240,427	$	75.16
Balance as of September 24, 2022							Balance as of September 24, 2022	201,501	$	109.48
RSUs granted	RSUs granted	67,645	$	147.33			RSUs granted	82,123	$	149.85
RSUs vested	RSUs vested	(56,649)	$	61.75			RSUs vested	(47,298)	$	84.46
RSUs canceled	RSUs canceled	(4,886)	$	93.21			RSUs canceled	(2,958)	$	120.26
Balance as of December 25, 2021		246,537	$	97.69	$	43,460
Balance as of December 31, 2022							Balance as of December 31, 2022	233,368	$	128.62	$	30,322

The fair value as of the respective vesting dates of RSUs was $6.8 billion and $8.5 billion for the three months ended ~~both~~December 31, 2022 and December 25, 2021, ~~and December 26, 2020.~~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 ended December ~~25, 2021~~31, 2022 and December ~~26, 2020~~25, 2021 (in millions):


		Three Months Ended				Three Months Ended
		December 25, 2021		December 26, 2020				December 31, 2022		December 25, 2021
Share-based compensation expense	Share-based compensation expense	$	2,265	$	2,020		Share-based compensation expense	$	2,905	$	2,265
Income tax benefit related to share-based compensation expense	Income tax benefit related to share-based compensation expense	$	(1,536)	$	(1,624)		Income tax benefit related to share-based compensation expense	$	(1,178)	$	(1,536)

As of December ~~25, 2021,~~31, 2022, the total unrecognized compensation cost related to outstanding RSUs and stock options was ~~$20.6~~$25.5 billion, which the Company expects to recognize over a weighted-average period of 3.0 years.

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

Note 8 – Commitments and Contingencies

~~Accrued Warranty~~Unconditional Purchase Obligations

The ~~following table shows changes~~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 content and distribution rights. Future payments under noncancelable unconditional purchase obligations with a remaining term in ~~the Company’s accrued warranties and related costs for the three months ended~~excess of one year as of December ~~25, 2021 and December 26, 2020~~31, 2022, are as follows (in millions):

Three Months Ended
December 25,
2021 December 26,
2020
Beginning accrued warranty and related costs $ 3,364 $ 3,354
Cost of warranty claims (672) (723)
Accruals for product warranty 838 1,493
Ending accrued warranty and related costs $ 3,530 $ 4,124

~~Apple Inc. | Q1 2022 Form 10-Q | 12~~


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

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.

Note 9 – Segment Information and Geographic Data

The following table shows information by reportable segment for the three months ended December ~~25, 2021~~31, 2022 and December ~~26, 2020~~25, 2021 (in millions):


		Three Months Ended				Three Months Ended
		December 25, 2021		December 26, 2020				December 31, 2022		December 25, 2021
Americas:	Americas:						Americas:
Net sales	Net sales	$	51,496	$	46,310		Net sales	$	49,278	$	51,496
Operating income	Operating income	$	19,585	$	15,785		Operating income	$	17,864	$	19,585

Europe:	Europe:						Europe:
Net sales	Net sales	$	29,749	$	27,306		Net sales	$	27,681	$	29,749
Operating income	Operating income	$	11,545	$	9,589		Operating income	$	10,017	$	11,545

Greater China:	Greater China:						Greater China:
Net sales	Net sales	$	25,783	$	21,313		Net sales	$	23,905	$	25,783
Operating income	Operating income	$	11,183	$	8,530		Operating income	$	10,437	$	11,183

Japan:	Japan:						Japan:
Net sales	Net sales	$	7,107	$	8,285		Net sales	$	6,755	$	7,107
Operating income	Operating income	$	3,349	$	3,503		Operating income	$	3,236	$	3,349

Rest of Asia Pacific:	Rest of Asia Pacific:						Rest of Asia Pacific:
Net sales	Net sales	$	9,810	$	8,225		Net sales	$	9,535	$	9,810
Operating income	Operating income	$	3,995	$	2,953		Operating income	$	3,851	$	3,995

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

A reconciliation of the Company’s segment operating income to the Condensed Consolidated Statements of Operations for the three months ended December ~~25, 2021~~31, 2022 and December ~~26, 2020~~25, 2021 is as follows (in millions):


		Three Months Ended				Three Months Ended
		December 25, 2021		December 26, 2020				December 31, 2022		December 25, 2021
Segment operating income	Segment operating income	$	49,657	$	40,360		Segment operating income	$	45,405	$	49,657
Research and development expense	Research and development expense	(6,306)		(5,163)			Research and development expense	(7,709)		(6,306)
Other corporate expenses, net	Other corporate expenses, net	(1,863)		(1,663)			Other corporate expenses, net	(1,680)		(1,863)
Total operating income	Total operating income	$	41,488	$	33,534		Total operating income	$	36,016	$	41,488

Apple Inc. | Q1 ~~2022~~2023 Form 10-Q | 1314

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 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 ~~25, 2021~~24, 2022 (the ~~“2021~~“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 ~~2021~~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 ~~corporate~~ 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.

~~Quarterly Highlights~~

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 net sales decreased 5% or $6.8 billion during the first quarter 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 lower net sales of iPhone and Mac, which was partially offset by higher net sales of iPad.

During the first quarter of 2023, the Company announced a new iPad, a new iPad Pro® powered by the Apple M2 chip, and a new Apple TV 4K.

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

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

COVID-19 ~~Update~~

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, as well as the price~~condition.

Certain of the Company’s ~~stock.~~

During the first quarter of 2022, aspects of the Company’s business continued to be affected by the COVID-19 pandemic, with a significant number of the Company’s employees working remotely and certain of the Company’s retail stores operating at limited capacity or temporarily closing at various times. The Company has reopened substantially all of its other facilities, subject to operating restrictions to protect public health and the health and safety of employees, and it continues to work on safely reopening the remainder of its facilities, subject to local rules and regulations. At times, certain of the Company’soutsourcing 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 that affected sales worldwide. Similar impacts or other disruptions could occur in the future.~~

~~Apple Inc. | Q1 2022 Form 10-Q | 14~~

The extent of the continuing impact of the COVID-19 pandemic on the Company’s operational and financial performance is uncertain and will depend on many factors outside the Company’s control, including the timing, extent, trajectory and duration of the pandemic, the emergence of new variants, the development, availability, distribution and effectiveness of vaccines and treatments, the imposition of protective public safety measures, and the impact of the pandemic on the global economy and demand for consumer products. Refer to Part I, Item 1A of the 2021 Form 10-K under the heading “Risk Factors” for more information.

~~First Quarter Fiscal 2022 Highlights~~

~~Total net sales increased 11% or $12.5 billion during the first quarter of 2022 compared to the same quarter in 2021, driven primarily by growth in iPhone, Services and Mac.~~

shortages. During the first quarter of ~~2022,~~2023, COVID-related impacts temporarily affected the ~~Company released~~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 interest rates and currency fluctuations, have direct and indirect impacts on the ~~following new products:~~

•~~MacBook Pro~~®~~, available in 14- and 16-inch models and powered by an Apple M1 Pro chip or an Apple M1 Max chip;~~

•~~Third generation of AirPods; and~~

•~~Apple Watch Series 7.~~

Company’s business. The Company ~~repurchased $20.4 billion of its common stock~~believes these factors have impacted, and ~~paid dividends and dividend equivalents of $3.7 billion during the first quarter of 2022.~~

~~Products and Services Performance~~

~~The following table shows net sales by category for the three months ended December 25, 2021 and December 26, 2020 (dollars in millions):~~

Three Months Ended
December 25,
2021 December 26,
2020 Change
Net sales by category:
iPhone (1)
$ 71,628 $ 65,597 9 %
Mac (1)
10,852 8,675 25 %
iPad (1)
7,248 8,435 (14) %
Wearables, Home and Accessories (1)(2)
14,701 12,971 13 %
Services (3)
19,516 15,761 24 %
Total net sales $ 123,945 $ 111,439 11 %

~~(1)Products net sales include amortization of the deferred value of unspecified software upgrade rights, which are bundled~~could 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, iPod touch and accessories.~~

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

~~iPhone~~

iPhone net sales increased during the first quarter of 2022 compared to the same quarter in 2021 due primarily to higher net sales from the Company’s new iPhone models launched in the fourth quarter of 2021 and a different mix of iPhone sales.

~~Mac~~

~~Mac net sales increased during the first quarter of 2022 compared to the same quarter in 2021 due primarily to higher net sales of MacBook Pro and MacBook Air~~®.

~~iPad~~

~~iPad net sales decreased during the first quarter of 2022 compared to the same quarter in 2021 due primarily to lower net sales of the 10-inch version of iPad.~~

~~Apple Inc. | Q1 2022 Form 10-Q | 15~~

~~Wearables, Home and Accessories~~

~~Wearables, Home and Accessories net sales increased during the first quarter of 2022 compared to the same quarter in 2021 due primarily to higher net sales of AirPods, Apple Watch and accessories.~~

~~Services~~

~~Services net sales increased during the first quarter of 2022 compared to the same quarter in 2021 due primarily to higher net sales from advertising, the App Store~~® ~~and cloud services.~~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 ended December ~~25, 2021~~31, 2022 and December ~~26, 2020~~25, 2021 (dollars in millions):


		Three Months Ended						Three Months Ended
		December 25, 2021		December 26, 2020		Change				December 31, 2022		December 25, 2021		Change
Net sales by reportable segment:	Net sales by reportable segment:								Net sales by reportable segment:
Americas	Americas	$	51,496	$	46,310	11	%		Americas	$	49,278	$	51,496	(4)	%
Europe	Europe	29,749		27,306		9	%		Europe	27,681		29,749		(7)	%
Greater China	Greater China	25,783		21,313		21	%		Greater China	23,905		25,783		(7)	%
Japan	Japan	7,107		8,285		(14)	%		Japan	6,755		7,107		(5)	%
Rest of Asia Pacific	Rest of Asia Pacific	9,810		8,225		19	%		Rest of Asia Pacific	9,535		9,810		(3)	%
Total net sales	Total net sales	$	123,945	$	111,439	11	%		Total net sales	$	117,154	$	123,945	(5)	%

Americas

Americas net sales ~~increased~~decreased during the first quarter of ~~2022~~2023 compared to the same quarter in ~~2021~~2022 due primarily to lower net sales of iPhone and Mac, partially offset by higher net sales of Services ~~iPhone,~~ and ~~Wearables, Home and Accessories.~~

~~Europe~~

~~Europe net sales increased during~~iPad. The weakness of the ~~first quarter of 2022 compared to the same quarter in 2021 due primarily to higher net sales of Services, Mac and iPhone. The movement of foreign currencies in Europe~~Canadian dollar relative to the U.S. dollar had ~~a net favorable~~an unfavorable year-over-year impact on ~~Europe~~Americas net sales during the first quarter of ~~2022.~~2023.

Europe

Europe net sales decreased during the first quarter of 2023 compared to the same quarter in 2022 due to the weakness in foreign currencies relative to the U.S. dollar, which contributed to lower net sales of iPhone and Mac.

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

Greater China

Greater China net sales ~~increased~~decreased during the first quarter of ~~2022~~2023 compared to the same quarter in ~~2021~~2022 due ~~primarily~~ to ~~higher net sales of iPhone and Services. The strength~~the weakness of the ~~Chinese~~ renminbi relative to the U.S. ~~dollar had a favorable impact on Greater China~~dollar. The weakness of the renminbi contributed to lower net sales ~~during the first quarter~~ of ~~2022.~~iPhone, which was partially offset by higher net sales of iPad.

Japan

Japan net sales decreased during the first quarter of ~~2022~~2023 compared to the same quarter in ~~2021~~2022 due ~~primarily~~ to ~~lower net sales of iPhone and iPad, partially offset by higher net sales of Services. The~~the weakness of the ~~Japanese~~ yen relative to the U.S. dollar, ~~had an unfavorable impact on Japan~~which contributed to lower net sales ~~during the first quarter~~ of ~~2022.~~

~~Apple Inc. | Q1 2022 Form 10-Q | 16~~

Services and Mac.

Rest of Asia Pacific

Rest of Asia Pacific net sales decreased during the first quarter 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 lower net sales of iPhone and Mac, which was partially offset by higher net sales of Services and iPad.

Products and Services Performance

The following table shows net sales by category for the three months ended December 31, 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.

iPhone

iPhone net sales decreased during the first quarter of 2023 compared to the same quarter in 2022 due primarily to lower net sales from the Company’s new iPhone models launched in the fourth quarter of 2022.

Mac

Mac net sales decreased during the first quarter of 2023 compared to the same quarter in 2022 due primarily to lower net sales of MacBook Pro®.

iPad

iPad net sales increased during the first quarter of ~~2022~~2023 compared to the same quarter in ~~2021~~2022 due primarily to higher net sales of ~~iPhone,~~ iPad and iPad Air®.

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

Wearables, Home and Accessories

Wearables, Home and Accessories net sales decreased during the first quarter 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.

Services

Services net sales increased during the first quarter of 2023 compared to the same quarter in 2022 due primarily to higher net sales from cloud services, the App Store®and ~~Mac.~~music.

Gross Margin

Products and Services gross margin and gross margin percentage for the three months ended December ~~25, 2021~~31, 2022 and December ~~26, 2020~~25, 2021 were as follows (dollars in millions):


		Three Months Ended				Three Months Ended
		December 25, 2021		December 26, 2020				December 31, 2022		December 25, 2021
Gross margin:	Gross margin:						Gross margin:
Products	Products	$	40,120	$	33,548		Products	$	35,623	$	40,120
Services	Services	14,123		10,780			Services	14,709		14,123
Total gross margin	Total gross margin	$	54,243	$	44,328		Total gross margin	$	50,332	$	54,243


Gross margin percentage:	Gross margin percentage:					Gross margin percentage:
Products	Products	38.4	%	35.1	%	Products	37.0	%	38.4	%
Services	Services	72.4	%	68.4	%	Services	70.8	%	72.4	%
Total gross margin percentage	Total gross margin percentage	43.8	%	39.8	%	Total gross margin percentage	43.0	%	43.8	%

Products Gross Margin

Products gross margin ~~and Products gross margin percentage increased~~decreased during the first quarter of ~~2022~~2023 compared to the same quarter in ~~2021~~2022 due primarily to ~~a different~~the weakness in foreign currencies relative to the U.S. dollar and lower Products ~~mix and~~volume.

Products gross margin percentage decreased during the ~~strength~~first quarter of 2023 compared to the same quarter in 2022 due primarily to the weakness in foreign currencies relative to the U.S. dollar.

Services Gross Margin

Services gross margin increased during the first quarter of ~~2022~~2023 compared to the same quarter in ~~2021~~2022 due primarily to higher Services net sales, ~~and a different Services mix.~~ partially offset by the weakness in foreign currencies relative to the U.S. dollar.

Services gross margin percentage ~~increased~~decreased during the first quarter of ~~2022~~2023 compared to the same quarter in ~~2021~~2022 due primarily to ~~a different~~the weakness in foreign currencies relative to the U.S. dollar and higher Services ~~mix and leverage,~~costs, partially offset by ~~higher Services costs.~~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 ~~2021~~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. | Q1 2023 Form 10-Q | 18

Operating Expenses

Operating expenses for the three months ended December ~~25, 2021~~31, 2022 and December ~~26, 2020~~25, 2021 were as follows (dollars in millions):

Three Months Ended
December 25,
2021 December 26,
2020
Research and development $ 6,306 $ 5,163
Percentage of total net sales 5 % 5 %
Selling, general and administrative $ 6,449 $ 5,631
Percentage of total net sales 5 % 5 %
Total operating expenses $ 12,755 $ 10,794
Percentage of total net sales 10 % 10 %

~~Apple Inc. | Q1 2022 Form 10-Q | 17~~


	Three Months Ended
	December 31, 2022			December 25, 2021
Research and development	$	7,709		$	6,306
Percentage of total net sales	7		%	5		%
Selling, general and administrative	$	6,607		$	6,449
Percentage of total net sales	6		%	5		%
Total operating expenses	$	14,316		$	12,755
Percentage of total net sales	12		%	10		%

Research and Development

The growth in research and development (“R&D”) expense during the first quarter of ~~2022~~2023 compared to the same quarter in ~~2021~~2022 was driven primarily by increases in headcount-related expenses, engineering program costs and infrastructure-related costs. The Company continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace, and to the development of new and updated products and services that are central to the Company’s core business strategy.expenses.

Selling, General and Administrative

The growth in selling, general and administrative expense during the first quarter of ~~2022~~2023 compared to the same quarter in ~~2021~~2022 was driven primarily by increases in headcount-related ~~expenses, variable selling expenses and professional services.~~

~~Other Income/(Expense), Net~~

~~Other income/(expense), net (“OI&E”) for the three months ended December 25, 2021 and December 26, 2020 was as follows (dollars in millions):~~

Three Months Ended
December 25,
2021 December 26,
2020 Change
Interest and dividend income $ 650 $ 747
Interest expense (694) (638)
Other expense, net (203) (64)
Total other income/(expense), net $ (247) $ 45 (649) %

~~OI&E decreased during the first quarter of 2022 compared to the same quarter in 2021 due primarily to higher net losses on marketable and non-marketable securities and lower interest income.~~expenses.

Provision for Income Taxes

Provision for income taxes, effective tax rate and statutory federal income tax rate for the three months ended December ~~25, 2021~~31, 2022 and December ~~26, 2020~~25, 2021 were as follows (dollars in millions):


		Three Months Ended						Three Months Ended
		December 25, 2021			December 26, 2020					December 31, 2022			December 25, 2021
Provision for income taxes	Provision for income taxes	$	6,611		$	4,824			Provision for income taxes	$	5,625		$	6,611
Effective tax rate	Effective tax rate	16.0		%	14.4		%		Effective tax rate	15.8		%	16.0		%
Statutory federal income tax rate	Statutory federal income tax rate	21		%	21		%		Statutory federal income tax rate	21		%	21		%

The Company’s effective tax rate for the first quarter of ~~2022~~2023 was lower than the statutory federal income tax rate due primarily to a lower effective tax rate on foreign earnings, ~~and~~ tax benefits from share-based ~~compensation.~~compensation, and the U.S. federal R&D credit, partially offset by state income taxes.

The Company’s effective tax rate for the first quarter of ~~2022~~2023 was ~~higher~~lower compared to the same quarter in ~~2021~~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 offset by lower tax benefits from share-based ~~compensation and a change in geographic mix of earnings.~~compensation.

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 ~~2021~~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 ~~2022~~2023 Form 10-Q | 1819

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 ~~25, 2021,~~31, 2022, the Company had manufacturing purchase obligations of ~~$47.6~~$55.1 billion, with ~~$47.5~~$54.8 billion payable within 12 months. The Company’s manufacturing purchase obligations are primarily noncancelable.

In addition to its contractual cash requirements, the Company has a capital return program authorized by the Board of Directors. The share repurchase program (the “Program”) does not obligate the Company to acquire ~~any specific number~~a minimum amount of shares. As of December ~~25, 2021,~~31, 2022, the Company’s quarterly cash dividend was ~~$0.22~~$0.23 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 ~~2021~~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 ~~2021~~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 months of ~~2022.~~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 ~~2021~~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 ~~25, 2021~~31, 2022 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 quarter of ~~2022,~~2023, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Apple Inc. | Q1 ~~2022~~2023 Form 10-Q | 1920

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

Other Legal Proceedings

The Company is subject to other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business. The Company settled certain matters during the first quarter of ~~2022~~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, ~~and~~ financial condition ~~as well as the~~and stock price ~~of the Company’s stock,~~ can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the ~~2021~~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, ~~and~~ financial condition ~~as well as the~~and stock price ~~of the Company’s stock,~~ can be materially and adversely affected. There have been no material changes to the Company’s risk factors since the ~~2021~~2022 Form 10-K.

~~Apple Inc. | Q1 2022 Form 10-Q | 20~~

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

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Share repurchase activity during the three months ended December ~~25, 2021~~31, 2022 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 26, 2021 to October 30, 2021:
September 25, 2022 to October 29, 2022:										September 25, 2022 to October 29, 2022:
Open market and privately negotiated purchases	Open market and privately negotiated purchases	41,416		$	144.87	41,416				Open market and privately negotiated purchases	69,169	$	144.57	69,169

October 31, 2021 to November 27, 2021:
November 2021 ASRs		30,405	(2)			30,405	(2)
October 30, 2022 to November 26, 2022:										October 30, 2022 to November 26, 2022:
Open market and privately negotiated purchases	Open market and privately negotiated purchases	27,770		$	153.08	27,770				Open market and privately negotiated purchases	23,113	$	149.26	23,113

November 28, 2021 to December 25, 2021:
November 27, 2022 to December 31, 2022:										November 27, 2022 to December 31, 2022:
Open market and privately negotiated purchases	Open market and privately negotiated purchases	24,218		$	169.76	24,218				Open market and privately negotiated purchases	40,557	$	136.85	40,557
Total	Total	123,809						$	40,489	Total	132,839				$	41,665

(1)AsOn April 28, 2022, the Board of ~~December 25, 2021,~~Directors authorized the ~~Company was authorized to~~ purchase ~~up to $315~~of an additional $90 billion of the Company’s common stock under the ~~Program, announced on April 28, 2021,~~Program. As of ~~which $274.5 billion had been utilized. The remaining $40.5 billion in the table represents the amount available to repurchase shares~~December 31, 2022, total utilization under the ~~Program as of December 25, 2021.~~April 2022 authorization was $48.3 billion. The Program does not obligate the Company to acquire ~~any specific number~~a minimum amount of shares. Under the Program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

~~(2)~~In November 2021, the Company entered into new accelerated share repurchase agreements (“ASRs”). Under the terms of the agreements, two financial institutions committed to deliver shares of the Company’s common stock during the purchase periods in exchange for up-front payments totaling $6.0 billion. The total number of shares ultimately delivered under the ASRs, and therefore the average repurchase price paid per share, is determined based on the volume-weighted average price of the Company’s common stock during the ASRs’ purchase periods, which end in the second quarter of 2022.

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

During the three months ended December ~~25, 2021,~~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. | Q1 2022 Form 10-Q | 21~~

Item 6. Exhibits

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing Date/
Period End Date

10.1*, **

~~Apple Inc. Non-Employee Director~~Form of CEO Restricted Stock Unit Award Agreement under 20 2 2 Employee Stock Plan effective as ~~amended November 9, 2021.~~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.

*~~Indicates management contract or compensatory plan or arrangement.~~

**Filed herewith.

***Furnished herewith.

Apple Inc. | Q1 ~~2022~~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.


~~January 27, 2022~~Date: February 2, 2023	Apple Inc.

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

Apple Inc. | Q1 ~~2022~~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	1415
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1920
Item 4.	Controls and Procedures	1920
Part II
Item 1.	Legal Proceedings	2021
Item 1A.	Risk Factors	2021
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Disclosures	2122
Item 5.	Other Information	2122
Item 6.	Exhibits	22


	December 25, 2021		September 25, 2021
Long-term taxes payable	$	24,689	$	24,689
Other non-current liabilities	30,367		28,636
Total other non-current liabilities	$	55,056	$	53,325