AAPL — filing

Company Background

The Company designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related services. The Company's fiscal year is the 52- or 53-week period that ends on the last Saturday of September.

Products

iPhone

iPhone ® is the Company's line of smartphones based on its iOS operating system. The iPhone line includes iPhone 16 Pro, iPhone 16, iPhone 15, iPhone 14 and iPhone SE ® .

Mac

Mac ® is the Company's line of personal computers based on its macOS ® operating system. The Mac line includes laptops MacBook Air ® and MacBook Pro ® , as well as desktops iMac ® , Mac mini ® , Mac Studio ® and Mac Pro ® .

iPad

iPad ® is the Company's line of multipurpose tablets based on its iPadOS ® operating system. The iPad line includes iPad Pro ® , iPad Air ® , iPad and iPad mini ® .

Wearables, Home and Accessories

Wearables includes smartwatches, wireless headphones and spatial computers. The Company's line of smartwatches, based on its watchOS ® operating system, includes Apple Watch Ultra ® 2, Apple Watch ® Series 10 and Apple Watch SE ® . The Company's line of wireless headphones includes AirPods ® , AirPods Pro ® , AirPods Max ® and Beats ® products. Apple Vision Pro™ is the Company's first spatial computer based on its visionOS™ operating system.

Home includes Apple TV ® , the Company's media streaming and gaming device based on its tvOS ® operating system, and HomePod ® and HomePod mini ® , high-fidelity wireless smart speakers.

Accessories includes Apple-branded and third-party accessories.

Apple Inc. | 2024 Form 10-K | 1

Services

Advertising

The Company's advertising services include third-party licensing arrangements and the Company's own advertising platforms.

AppleCare

The Company offers a portfolio of fee-based service and support products under the AppleCare ® brand. The offerings provide priority access to Apple technical support, access to the global Apple authorized service network for repair and replacement services, and in many cases additional coverage for instances of accidental damage or theft and loss, depending on the country and type of product.

Cloud Services

The Company's cloud services store and keep customers' content up-to-date and available across multiple Apple devices and Windows personal computers.

Digital Content

The Company operates various platforms, including the App Store ® , that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts.

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 below. 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.

Because of the following factors, as well as other factors affecting the Company's results of operations and financial condition, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. This discussion of risk factors contains forward-looking statements.

This section should be read in conjunction with Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and accompanying notes in Part II, Item 8, "Financial Statements and Supplementary Data" of this Form 10-K.

Macroeconomic and Industry Risks

The Company's operations and performance depend significantly on global and regional economic conditions and adverse economic conditions can materially adversely affect the Company's business, results of operations and financial condition.

The Company has international operations with sales outside the U.S. representing a majority of the Company's total net sales. In addition, the Company's global supply chain is large and complex and a majority of the Company's supplier facilities, including manufacturing and assembly sites, are located outside the U.S. As a result, the Company's operations and performance depend significantly on global and regional economic conditions.

Adverse macroeconomic conditions, including slow growth or recession, high unemployment, inflation, tighter credit, higher interest rates, and currency fluctuations, can adversely impact consumer confidence and spending and materially adversely affect demand for the Company's products and services. In addition, consumer confidence and spending can be materially adversely affected in response to changes in fiscal and monetary policy, financial market volatility, declines in income or asset values, and other economic factors.

In addition to an adverse impact on demand for the Company's products and services, uncertainty about, or a decline in, global or regional economic conditions can have a significant impact on the Company's suppliers, contract manufacturers, logistics providers, distributors, cellular network carriers and other channel partners, and developers. Potential outcomes include financial instability; inability to obtain credit to finance business operations; and insolvency.

Digital Markets Act Investigations

On March 25, 2024, the Commission announced that it had opened two formal noncompliance investigations against the Company under the DMA. The Commission's investigations concern (1) Article 5(4) of the DMA, which relates to how developers may communicate and promote offers to end users for apps distributed through the App Store as well as how developers may conclude contracts with those end users; and (2) Article 6(3) of the DMA, which relates to default settings, uninstallation of apps, and a web browser choice screen on iOS. On June 24, 2024, the Commission announced its preliminary findings in the Article 5(4) investigation alleging that the Company's App Store rules are in breach of the DMA and announced that it had opened a third formal investigation against the Company regarding whether the Company's new contractual requirements for third-party app developers and app marketplaces may violate the DMA. If the Commission makes a final determination that there has been a violation, it can issue a cease and desist order and may impose fines up to 10% of the Company's annual worldwide net sales. Although any decision by the Commission can be appealed to the General Court of the EU, the effectiveness of the Commission's order would apply immediately while the appeal is pending, unless a stay of the order is granted. The Company believes that it complies with the DMA and has continued to make changes to its compliance plan in response to feedback and engagement with the Commission.

Department of Justice Lawsuit

On March 21, 2024, the U.S. Department of Justice (the "DOJ") and a number of state and district attorneys general filed a civil antitrust lawsuit in the U.S. District Court for the District of New Jersey against the Company alleging monopolization or attempted monopolization in the markets for "performance smartphones" and "smartphones" in violation of U.S. antitrust laws. The DOJ is seeking equitable relief to redress the alleged anticompetitive behavior. In addition, various civil litigation matters have been filed in state and federal courts in the U.S. alleging similar violations of U.S. antitrust laws and seeking monetary damages and other nonmonetary relief. The Company believes it has substantial defenses and intends to vigorously defend itself.

Epic Games

Epic Games, Inc. ("Epic") filed a lawsuit in the U.S. District Court for the Northern District of California (the "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 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 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 January 16, 2024, the Company implemented a plan to comply with the injunction and filed a statement of compliance with the California District Court. A motion by Epic disputing the Company's compliance plan and seeking to enforce the injunction, which the Company has opposed, is pending before the California District Court. On September 30, 2024, the Company filed a motion with the California District Court to narrow or vacate the injunction. The Company believes it has substantial defenses and intends to vigorously defend itself.

The Company's common stock is traded on The Nasdaq Stock Market LLC under the symbol AAPL.

Holders

As of October 18, 2024, there were 23,301 shareholders of record.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Share repurchase activity during the three months ended September 28, 2024 was as follows (in millions, except number of shares, which are reflected in thousands, and per-share amounts):

Periods Total Number

of Shares Purchased Average Price

Paid Per Share Total Number of Shares

Purchased as Part of Publicly

Announced Plans or Programs Approximate Dollar Value of

Shares That May Yet Be Purchased

Under the Plans or Programs (1)

June 30, 2024 to August 3, 2024:

Open market and privately negotiated purchases 35,697 $ 224.11 35,697

August 4, 2024 to August 31, 2024:

Open market and privately negotiated purchases 42,910 $ 221.39 42,910

September 1, 2024 to September 28, 2024:

Open market and privately negotiated purchases 33,653 $ 222.86 33,653

Total 112,260 $ 89,074

(1) As of September 28, 2024, the Company was authorized by the Board to purchase up to $110 billion of the Company's common stock under a share repurchase program announced on May 2, 2024, of which $20.9 billion had been utilized. During the fourth quarter of 2024, the Company also utilized the final $4.1 billion under its previous repurchase program, which was authorized in May 2023. 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.

Apple Inc. | 2024 Form 10-K | 19

Company Stock Performance

The following graph shows a comparison of five-year cumulative total shareholder return, calculated on a dividend-reinvested basis, for the Company, the S&P 500 Index and the Dow Jones U.S. Technology Supersector Index. The graph assumes $100 was invested in each of the Company's common stock, the S&P 500 Index and the Dow Jones U.S. Technology Supersector Index as of the market close on September 27, 2019. Past stock price performance is not necessarily indicative of future stock price performance.

September 2019 September 2020 September 2021 September 2022 September 2023 September 2024

Apple Inc. $ 100 $ 207 $ 273 $ 281 $ 322 $ 430

S&P 500 Index $ 100 $ 113 $ 156 $ 131 $ 155 $ 210

Dow Jones U.S. Technology Supersector Index $ 100 $ 146 $ 216 $ 156 $ 215 $ 322

Item 6. [Reserved]

Apple Inc. | 2024 Form 10-K | 20

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Form 10-K. This Item generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included, and can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

Product, Service and Software Announcements

The Company announces new product, service and software offerings at various times during the year. Significant announcements during fiscal year 2024 included the following:

First Quarter 2024:

• MacBook Pro 14-in.;

• MacBook Pro 16-in.; and

• iMac.

Second Quarter 2024:

• MacBook Air 13-in.; and

• MacBook Air 15-in.

Third Quarter 2024:

• iPad Air;

• iPad Pro;

• iOS 18, macOS Sequoia, iPadOS 18, watchOS 11, visionOS 2 and tvOS 18, updates to the Company's operating systems; and

• Apple Intelligence™, a personal intelligence system that uses generative models.

Fourth Quarter 2024:

• iPhone 16, iPhone 16 Plus, iPhone 16 Pro and iPhone 16 Pro Max;

• Apple Watch Series 10; and

• AirPods 4.

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 2024 and 2022 spanned 52 weeks each, whereas fiscal year 2023 spanned 53 weeks.

Macroeconomic Conditions

Macroeconomic conditions, including inflation, 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.

Apple Inc. | 2024 Form 10-K | 21

Segment Operating Performance

The following table shows net sales by reportable segment for 2024, 2023 and 2022 (dollars in millions):

2024 Change 2023 Change 2022

Americas $ 167,045 3 % $ 162,560 (4) % $ 169,658

Europe 101,328 7 % 94,294 (1) % 95,118

Greater China 66,952 (8) % 72,559 (2) % 74,200

Japan 25,052 3 % 24,257 (7) % 25,977

Rest of Asia Pacific 30,658 4 % 29,615 1 % 29,375

Total net sales $ 391,035 2 % $ 383,285 (3) % $ 394,328

Americas

Americas net sales increased during 2024 compared to 2023 due primarily to higher net sales of Services.

The Company is exposed to economic risk from interest rates and foreign exchange rates. The Company uses various strategies to manage these risks; however, they may still impact the Company's consolidated financial statements.

Interest Rate Risk

The Company is primarily exposed to fluctuations in U.S. interest rates and their impact on the Company's investment portfolio and term debt. Increases in interest rates will negatively affect the fair value of the Company's investment portfolio and increase the interest expense on the Company's term debt. To protect against interest rate risk, the Company may use derivative instruments, offset interest rate-sensitive assets and liabilities, or control duration of the investment and term debt portfolios.

The following table sets forth potential impacts on the Company's investment portfolio and term debt, including the effects of any associated derivatives, that would result from a hypothetical increase in relevant interest rates as of September 28, 2024 and September 30, 2023 (dollars in millions):

Interest Rate

Sensitive Instrument

Hypothetical Interest

Rate Increase

Potential Impact

2024 2023

Investment portfolio

100 basis points, all tenors

Decline in fair value

$ 2,755 $ 3,089

Term debt

100 basis points, all tenors

Increase in annual interest expense

$ 139 $ 194

Foreign Exchange Rate Risk

The Company's exposure to foreign exchange rate risk relates primarily to the Company being a net receiver of currencies other than the U.S. dollar. Changes in exchange rates, and in particular a strengthening of the U.S. dollar, will negatively affect the Company's net sales and gross margins as expressed in U.S. dollars. Fluctuations in exchange rates may also affect the fair values of certain of the Company's assets and liabilities. To protect against foreign exchange rate risk, the Company may use derivative instruments, offset exposures, or adjust local currency pricing of its products and services. However, the Company may choose to not hedge certain foreign currency exposures for a variety of reasons, including accounting considerations or prohibitive cost.

The Company applied a value-at-risk ("VAR") model to its foreign currency derivative positions to assess the potential impact of fluctuations in exchange rates. The VAR model used a Monte Carlo simulation. The VAR is the maximum expected loss in fair value, for a given confidence interval, to the Company's foreign currency derivative positions due to adverse movements in rates. Based on the results of the model, the Company estimates, with 95% confidence, a maximum one-day loss in fair value of $538 million and $669 million as of September 28, 2024 and September 30, 2023, respectively. Changes in the Company's underlying foreign currency exposures, which were excluded from the assessment, generally offset changes in the fair values of the Company's foreign currency derivatives.

Index to Consolidated Financial Statements Page

Consolidated Statements of Operations for the years ended September 28, 2024, September 30, 2023 and September 24, 2022

29

Consolidated Statements of Comprehensive Income for the years ended September 28, 2024, September 30, 2023 and September 24, 2022

30

Consolidated Balance Sheets as of September 28, 2024 and September 30, 2023

31

Consolidated Statements of Shareholders' Equity for the years ended September 28, 2024, September 30, 2023 and September 24, 2022

32

Consolidated Statements of Cash Flows for the years ended September 28, 2024, September 30, 2023 and September 24, 2022

33

Notes to Consolidated Financial Statements

34

Reports of Independent Registered Public Accounting Firm

48

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and accompanying notes.

Apple Inc. | 2024 Form 10-K | 28

Apple Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

Years ended

September 28,

2024 September 30,

2023 September 24,

2022

Net sales:

Products $ 294,866 $ 298,085 $ 316,199

Services 96,169 85,200 78,129

Total net sales 391,035 383,285 394,328

Cost of sales:

Products 185,233 189,282 201,471

Services 25,119 24,855 22,075

Total cost of sales 210,352 214,137 223,546

Gross margin 180,683 169,148 170,782

Operating expenses:

Research and development 31,370 29,915 26,251

Selling, general and administrative 26,097 24,932 25,094

Total operating expenses 57,467 54,847 51,345

Operating income 123,216 114,301 119,437

Other income/(expense), net 269 ( 565 ) ( 334 )

Income before provision for income taxes 123,485 113,736 119,103

Provision for income taxes 29,749 16,741 19,300

Net income $ 93,736 $ 96,995 $ 99,803

Earnings per share:

Basic $ 6.11 $ 6.16 $ 6.15

Diluted $ 6.08 $ 6.13 $ 6.11

Shares used in computing earnings per share:

Basic 15,343,783 15,744,231 16,215,963

Diluted 15,408,095 15,812,547 16,325,819

See accompanying Notes to Consolidated Financial Statements.

Apple Inc. | 2024 Form 10-K | 29

Apple Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

Years ended

September 28,

2024 September 30,

2023 September 24,

2022

Net income $ 93,736 $ 96,995 $ 99,803

Other comprehensive income/(loss):

Change in foreign currency translation, net of tax 395 ( 765 ) ( 1,511 )

Change in unrealized gains/losses on derivative instruments, net of tax:

Change in fair value of derivative instruments ( 832 ) 323 3,212