falsedesktopAAPL2020-12-26000032019321000010{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Title of each class\tTrading symbol(s)\tName of each exchange on which registered\nCommon Stock $0.00001 par value per share\tAAPL\tThe Nasdaq Stock Market LLC\n1.000% Notes due 2022\t0\tThe Nasdaq Stock Market LLC\n1.375% Notes due 2024\t0\tThe Nasdaq Stock Market LLC\n0.000% Notes due 2025\t0\tThe Nasdaq Stock Market LLC\n0.875% Notes due 2025\t0\tThe Nasdaq Stock Market LLC\n1.625% Notes due 2026\t0\tThe Nasdaq Stock Market LLC\n2.000% Notes due 2027\t0\tThe Nasdaq Stock Market LLC\n1.375% Notes due 2029\t0\tThe Nasdaq Stock Market LLC\n3.050% Notes due 2029\t0\tThe Nasdaq Stock Market LLC\n0.500% Notes due 2031\t0\tThe Nasdaq Stock Market LLC\n3.600% Notes due 2042\t0\tThe Nasdaq Stock Market LLC\n", "q10k_tbl_1": "Large accelerated filer\t☒\tAccelerated filer\t☐\nNon-accelerated filer\t☐\tSmaller reporting company\t☐\n\t\tEmerging growth company\t☐\n", "q10k_tbl_2": "\t\tPage\nPart I\t\t\nItem 1.\tFinancial Statements\t1\nItem 2.\tManagement's Discussion and Analysis of Financial Condition and Results of Operations\t22\nItem 3.\tQuantitative and Qualitative Disclosures About Market Risk\t29\nItem 4.\tControls and Procedures\t29\nPart II\t\t\nItem 1.\tLegal Proceedings\t29\nItem 1A.\tRisk Factors\t29\nItem 2.\tUnregistered Sales of Equity Securities and Use of Proceeds\t30\nItem 3.\tDefaults Upon Senior Securities\t30\nItem 4.\tMine Safety Disclosures\t30\nItem 5.\tOther Information\t30\nItem 6.\tExhibits\t31\n", "q10k_tbl_3": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nNet sales:\t\t\t\t\t\t\t\t\nProducts\t95678\t79104\t\t\t\t\t\t\nServices\t15761\t12715\t\t\t\t\t\t\nTotal net sales\t111439\t91819\t\t\t\t\t\t\nCost of sales:\t\t\t\t\t\t\t\t\nProducts\t62130\t52075\t\t\t\t\t\t\nServices\t4981\t4527\t\t\t\t\t\t\nTotal cost of sales\t67111\t56602\t\t\t\t\t\t\nGross margin\t44328\t35217\t\t\t\t\t\t\nOperating expenses:\t\t\t\t\t\t\t\t\nResearch and development\t5163\t4451\t\t\t\t\t\t\nSelling general and administrative\t5631\t5197\t\t\t\t\t\t\nTotal operating expenses\t10794\t9648\t\t\t\t\t\t\nOperating income\t33534\t25569\t\t\t\t\t\t\nOther income/(expense) net\t45\t349\t\t\t\t\t\t\nIncome before provision for income taxes\t33579\t25918\t\t\t\t\t\t\nProvision for income taxes\t4824\t3682\t\t\t\t\t\t\nNet income\t28755\t22236\t\t\t\t\t\t\nEarnings per share:\t\t\t\t\t\t\t\t\nBasic\t1.70\t1.26\t\t\t\t\t\t\nDiluted\t1.68\t1.25\t\t\t\t\t\t\nShares used in computing earnings per share:\t\t\t\t\t\t\t\t\nBasic\t16935119\t17660160\t\t\t\t\t\t\nDiluted\t17113688\t17818417\t\t\t\t\t\t\n", "q10k_tbl_4": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nNet income\t28755\t22236\t\t\t\t\t\t\nOther comprehensive income/(loss):\t\t\t\t\t\t\t\t\nChange in foreign currency translation net of tax\t549\t202\t\t\t\t\t\t\nChange in unrealized gains/losses on derivative instruments net of tax:\t\t\t\t\t\t\t\t\nChange in fair value of derivatives\t(304)\t111\t\t\t\t\t\t\nAdjustment for net (gains)/losses realized and included in net income\t(183)\t(398)\t\t\t\t\t\t\nTotal change in unrealized gains/losses on derivative instruments\t(487)\t(287)\t\t\t\t\t\t\nChange in unrealized gains/losses on marketable debt securities net of tax:\t\t\t\t\t\t\t\t\nChange in fair value of marketable debt securities\t628\t125\t\t\t\t\t\t\nAdjustment for net (gains)/losses realized and included in net income\t(105)\t(10)\t\t\t\t\t\t\nTotal change in unrealized gains/losses on marketable debt securities\t523\t115\t\t\t\t\t\t\nTotal other comprehensive income/(loss)\t585\t30\t\t\t\t\t\t\nTotal comprehensive income\t29340\t22266\t\t\t\t\t\t\n", "q10k_tbl_5": "\tDecember 26 2020\tSeptember 26 2020\nASSETS:\t\t\nCurrent assets:\t\t\nCash and cash equivalents\t36010\t38016\nMarketable securities\t40816\t52927\nAccounts receivable net\t27101\t16120\nInventories\t4973\t4061\nVendor non-trade receivables\t31519\t21325\nOther current assets\t13687\t11264\nTotal current assets\t154106\t143713\nNon-current assets:\t\t\nMarketable securities\t118745\t100887\nProperty plant and equipment net\t37933\t36766\nOther non-current assets\t43270\t42522\nTotal non-current assets\t199948\t180175\nTotal assets\t354054\t323888\nLIABILITIES AND SHAREHOLDERS' EQUITY:\t\t\nCurrent liabilities:\t\t\nAccounts payable\t63846\t42296\nOther current liabilities\t48504\t42684\nDeferred revenue\t7395\t6643\nCommercial paper\t5000\t4996\nTerm debt\t7762\t8773\nTotal current liabilities\t132507\t105392\nNon-current liabilities:\t\t\nTerm debt\t99281\t98667\nOther non-current liabilities\t56042\t54490\nTotal non-current liabilities\t155323\t153157\nTotal liabilities\t287830\t258549\nCommitments and contingencies\t\t\nShareholders' equity:\t\t\nCommon stock and additional paid-in capital $0.00001 par value: 50400000 shares authorized; 16823263 and 16976763 shares issued and outstanding respectively\t51744\t50779\nRetained earnings\t14301\t14966\nAccumulated other comprehensive income/(loss)\t179\t(406)\nTotal shareholders' equity\t66224\t65339\nTotal liabilities and shareholders' equity\t354054\t323888\n", "q10k_tbl_6": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nTotal shareholders' equity beginning balances\t65339\t90488\t\t\t\t\t\t\nCommon stock and additional paid-in capital:\t\t\t\t\t\t\t\t\nBeginning balances\t50779\t45174\t\t\t\t\t\t\nCommon stock issued\t0\t2\t\t\t\t\t\t\nCommon stock withheld related to net share settlement of equity awards\t(1101)\t(951)\t\t\t\t\t\t\nShare-based compensation\t2066\t1747\t\t\t\t\t\t\nEnding balances\t51744\t45972\t\t\t\t\t\t\nRetained earnings:\t\t\t\t\t\t\t\t\nBeginning balances\t14966\t45898\t\t\t\t\t\t\nNet income\t28755\t22236\t\t\t\t\t\t\nDividends and dividend equivalents declared\t(3547)\t(3485)\t\t\t\t\t\t\nCommon stock withheld related to net share settlement of equity awards\t(1873)\t(536)\t\t\t\t\t\t\nCommon stock repurchased\t(24000)\t(20000)\t\t\t\t\t\t\nCumulative effect of change in accounting principle\t0\t(136)\t\t\t\t\t\t\nEnding balances\t14301\t43977\t\t\t\t\t\t\nAccumulated other comprehensive income/(loss):\t\t\t\t\t\t\t\t\nBeginning balances\t(406)\t(584)\t\t\t\t\t\t\nOther comprehensive income/(loss)\t585\t30\t\t\t\t\t\t\nCumulative effect of change in accounting principle\t0\t136\t\t\t\t\t\t\nEnding balances\t179\t(418)\t\t\t\t\t\t\nTotal shareholders' equity ending balances\t66224\t89531\t\t\t\t\t\t\nDividends and dividend equivalents declared per share or RSU\t0.205\t0.1925\t\t\t\t\t\t\n", "q10k_tbl_7": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\nCash cash equivalents and restricted cash beginning balances\t39789\t50224\nOperating activities:\t\t\nNet income\t28755\t22236\nAdjustments to reconcile net income to cash generated by operating activities:\t\t\nDepreciation and amortization\t2666\t2816\nShare-based compensation expense\t2020\t1710\nDeferred income tax benefit\t(58)\t(349)\nOther\t25\t(142)\nChanges in operating assets and liabilities:\t\t\nAccounts receivable net\t(10945)\t2015\nInventories\t(950)\t(28)\nVendor non-trade receivables\t(10194)\t3902\nOther current and non-current assets\t(3526)\t(7054)\nAccounts payable\t21670\t(1089)\nDeferred revenue\t1341\t985\nOther current and non-current liabilities\t7959\t5514\nCash generated by operating activities\t38763\t30516\nInvesting activities:\t\t\nPurchases of marketable securities\t(39800)\t(37416)\nProceeds from maturities of marketable securities\t25177\t19740\nProceeds from sales of marketable securities\t9344\t7280\nPayments for acquisition of property plant and equipment\t(3500)\t(2107)\nPayments made in connection with business acquisitions net\t(9)\t(958)\nOther\t204\t(207)\nCash used in investing activities\t(8584)\t(13668)\nFinancing activities:\t\t\nProceeds from issuance of common stock\t0\t2\nPayments for taxes related to net share settlement of equity awards\t(2861)\t(1379)\nPayments for dividends and dividend equivalents\t(3613)\t(3539)\nRepurchases of common stock\t(24775)\t(20706)\nProceeds from issuance of term debt net\t0\t2210\nRepayments of term debt\t(1000)\t(1000)\nProceeds from/(Repayments of) commercial paper net\t22\t(979)\nOther\t(22)\t(16)\nCash used in financing activities\t(32249)\t(25407)\nDecrease in cash cash equivalents and restricted cash\t(2070)\t(8559)\nCash cash equivalents and restricted cash ending balances\t37719\t41665\nSupplemental cash flow disclosure:\t\t\nCash paid for income taxes net\t1787\t4393\nCash paid for interest\t619\t771\n", "q10k_tbl_8": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nNumerator:\t\t\t\t\t\t\t\t\nNet income\t28755\t22236\t\t\t\t\t\t\nDenominator:\t\t\t\t\t\t\t\t\nWeighted-average basic shares outstanding\t16935119\t17660160\t\t\t\t\t\t\nEffect of dilutive securities\t178569\t158257\t\t\t\t\t\t\nWeighted-average diluted shares\t17113688\t17818417\t\t\t\t\t\t\nBasic earnings per share\t1.70\t1.26\t\t\t\t\t\t\nDiluted earnings per share\t1.68\t1.25\t\t\t\t\t\t\n", "q10k_tbl_9": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\niPhone (1)\t65597\t55957\t\t\t\t\t\t\nMac (1)\t8675\t7160\t\t\t\t\t\t\niPad (1)\t8435\t5977\t\t\t\t\t\t\nWearables Home and Accessories (1)(2)\t12971\t10010\t\t\t\t\t\t\nServices (3)\t15761\t12715\t\t\t\t\t\t\nTotal net sales (4)\t111439\t91819\t\t\t\t\t\t\n", "q10k_tbl_10": "\tDecember 26 2020\t\t\t\t\t\t\n\tAdjusted Cost\tUnrealized Gains\tUnrealized Losses\tFair Value\tCash and Cash Equivalents\tCurrent Marketable Securities\tNon-Current Marketable Securities\nCash\t18729\t0\t0\t18729\t18729\t0\t0\nLevel 1 (1): Money market funds\t6312\t0\t0\t6312\t6312\t0\t0\nLevel 2 (2):\t\t\t\t\t\t\t\nU.S. Treasury securities\t21939\t270\t(6)\t22203\t3227\t8527\t10449\nU.S. agency securities\t8698\t9\t(1)\t8706\t1000\t3319\t4387\nNon-U.S. government securities\t20185\t395\t(67)\t20513\t100\t2874\t17539\nCertificates of deposit and time deposits\t8002\t0\t0\t8002\t5009\t2623\t370\nCommercial paper\t8620\t0\t0\t8620\t1632\t6988\t0\nCorporate debt securities\t83042\t2155\t(44)\t85153\t1\t16117\t69035\nMunicipal securities\t1004\t20\t0\t1024\t0\t94\t930\nMortgage- and asset-backed securities\t16051\t281\t(23)\t16309\t0\t274\t16035\nSubtotal\t167541\t3130\t(141)\t170530\t10969\t40816\t118745\nTotal (3)\t192582\t3130\t(141)\t195571\t36010\t40816\t118745\n", "q10k_tbl_11": "\tSeptember 26 2020\t\t\t\t\t\t\n\tAdjusted Cost\tUnrealized Gains\tUnrealized Losses\tFair Value\tCash and Cash Equivalents\tCurrent Marketable Securities\tNon-Current Marketable Securities\nCash\t17773\t0\t0\t17773\t17773\t0\t0\nLevel 1 (1): Money market funds\t2171\t0\t0\t2171\t2171\t0\t0\nLevel 2 (2):\t\t\t\t\t\t\t\nU.S. Treasury securities\t28439\t331\t0\t28770\t8580\t11972\t8218\nU.S. agency securities\t8604\t8\t0\t8612\t2009\t3078\t3525\nNon-U.S. government securities\t19361\t275\t(186)\t19450\t255\t3329\t15866\nCertificates of deposit and time deposits\t10399\t0\t0\t10399\t4043\t6246\t110\nCommercial paper\t11226\t0\t0\t11226\t3185\t8041\t0\nCorporate debt securities\t76937\t1834\t(175)\t78596\t0\t19687\t58909\nMunicipal securities\t1001\t22\t0\t1023\t0\t139\t884\nMortgage- and asset-backed securities\t13520\t314\t(24)\t13810\t0\t435\t13375\nSubtotal\t169487\t2784\t(385)\t171886\t18072\t52927\t100887\nTotal (3)\t189431\t2784\t(385)\t191830\t38016\t52927\t100887\n", "q10k_tbl_12": "\tDecember 26 2020\tSeptember 26 2020\nCash and cash equivalents\t36010\t38016\nRestricted cash\t1709\t1773\nCash cash equivalents and restricted cash\t37719\t39789\n", "q10k_tbl_13": "\tDecember 26 2020\t\t\n\tFair Value of Derivatives Designated as Hedge Instruments\tFair Value of Derivatives Not Designated as Hedge Instruments\tTotal Fair Value\nDerivative assets (1):\t\t\t\nForeign exchange contracts\t524\t780\t1304\nInterest rate contracts\t1443\t0\t1443\nDerivative liabilities (2):\t\t\t\nForeign exchange contracts\t2332\t1314\t3646\n", "q10k_tbl_14": "\tSeptember 26 2020\t\t\n\tFair Value of Derivatives Designated as Hedge Instruments\tFair Value of Derivatives Not Designated as Hedge Instruments\tTotal Fair Value\nDerivative assets (1):\t\t\t\nForeign exchange contracts\t749\t303\t1052\nInterest rate contracts\t1557\t0\t1557\nDerivative liabilities (2):\t\t\t\nForeign exchange contracts\t1561\t485\t2046\n", "q10k_tbl_15": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nGains/(Losses) recognized in OCI - included in effectiveness assessment:\t\t\t\t\t\t\t\t\nCash flow hedges:\t\t\t\t\t\t\t\t\nForeign exchange contracts\t(191)\t271\t\t\t\t\t\t\nInterest rate contracts\t54\t0\t\t\t\t\t\t\nTotal\t(137)\t271\t\t\t\t\t\t\nNet investment hedges:\t\t\t\t\t\t\t\t\nForeign currency debt\t0\t24\t\t\t\t\t\t\nGains/(Losses) reclassified from AOCI into net income - included in effectiveness assessment:\t\t\t\t\t\t\t\t\nCash flow hedges:\t\t\t\t\t\t\t\t\nForeign exchange contracts\t314\t491\t\t\t\t\t\t\nInterest rate contracts\t(3)\t(2)\t\t\t\t\t\t\nTotal\t311\t489\t\t\t\t\t\t\n", "q10k_tbl_16": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nGains/(Losses) on derivative instruments (1):\t\t\t\t\t\t\t\t\nForeign exchange contracts\t(753)\t(183)\t\t\t\t\t\t\nInterest rate contracts\t(167)\t(162)\t\t\t\t\t\t\nTotal\t(920)\t(345)\t\t\t\t\t\t\nGains/(Losses) related to hedged items (1):\t\t\t\t\t\t\t\t\nMarketable securities\t752\t183\t\t\t\t\t\t\nFixed-rate debt\t167\t162\t\t\t\t\t\t\nTotal\t919\t345\t\t\t\t\t\t\n", "q10k_tbl_17": "\tDecember 26 2020\tSeptember 26 2020\nCarrying amounts of hedged assets/(liabilities):\t\t\nMarketable securities (2)\t17009\t16270\nFixed-rate debt (3)\t(20866)\t(21033)\nCumulative hedging adjustments included in the carrying amounts of hedged items:\t\t\nMarketable securities carrying amount increases/(decreases)\t956\t493\nFixed-rate debt carrying amount (increases)/decreases\t(1374)\t(1541)\n", "q10k_tbl_18": "\tDecember 26 2020\t\tSeptember 26 2020\t\n\tNotional Amount\tCredit Risk Amount\tNotional Amount\tCredit Risk Amount\nInstruments designated as accounting hedges:\t\t\t\t\nForeign exchange contracts\t71191\t524\t57410\t749\nInterest rate contracts\t20900\t1443\t20700\t1557\nInstruments not designated as accounting hedges:\t\t\t\t\nForeign exchange contracts\t123267\t780\t88636\t303\n", "q10k_tbl_19": "\tDecember 26 2020\tSeptember 26 2020\nLand and buildings\t18885\t17952\nMachinery equipment and internal-use software\t76224\t75291\nLeasehold improvements\t10384\t10283\nGross property plant and equipment\t105493\t103526\nAccumulated depreciation and amortization\t(67560)\t(66760)\nTotal property plant and equipment net\t37933\t36766\n", "q10k_tbl_20": "\tDecember 26 2020\tSeptember 26 2020\nLong-term taxes payable\t28170\t28170\nOther non-current liabilities\t27872\t26320\nTotal other non-current liabilities\t56042\t54490\n", "q10k_tbl_21": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nInterest and dividend income\t747\t1045\t\t\t\t\t\t\nInterest expense\t(638)\t(785)\t\t\t\t\t\t\nOther income/(expense) net\t(64)\t89\t\t\t\t\t\t\nTotal other income/(expense) net\t45\t349\t\t\t\t\t\t\n", "q10k_tbl_22": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\nMaturities 90 days or less:\t\t\nProceeds from/(Repayments of) commercial paper net\t1439\t(175)\nMaturities greater than 90 days:\t\t\nProceeds from commercial paper\t780\t1317\nRepayments of commercial paper\t(2197)\t(2121)\nRepayments of commercial paper net\t(1417)\t(804)\nTotal proceeds from/(repayments of) commercial paper net\t22\t(979)\n", "q10k_tbl_23": "\tMaturities (calendar year)\tDecember 26 2020\t\tSeptember 26 2020\t\n\tAmount (in millions)\tEffective Interest Rate\tAmount (in millions)\tEffective Interest Rate\n2013 - 2020 debt issuances:\t\t\t\t\t\nFloating-rate notes\t2021 - 2022\t2250\t0.56% - 1.34%\t2250\t0.60% - 1.39%\nFixed-rate 0.000% - 4.650% notes\t2021 - 2060\t103613\t0.03% - 4.78%\t103828\t0.03% - 4.78%\nTotal term debt\t\t105863\t\t106078\t\nUnamortized premium/(discount) and issuance costs net\t\t(305)\t\t(314)\t\nHedge accounting fair value adjustments\t\t1485\t\t1676\t\nLess: Current portion of term debt\t\t(7762)\t\t(8773)\t\nTotal non-current portion of term debt\t\t99281\t\t98667\t\n", "q10k_tbl_24": "\t\tThree Months Ended\t\nComprehensive Income Components\tFinancial Statement Line Items\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nUnrealized (gains)/losses on derivative instruments:\t\t\t\t\t\t\t\t\t\nForeign exchange contracts\tTotal net sales\t104\t(97)\t\t\t\t\t\t\n\tTotal cost of sales\t245\t(171)\t\t\t\t\t\t\n\tOther income/(expense) net\t(628)\t(223)\t\t\t\t\t\t\nInterest rate contracts\tOther income/(expense) net\t3\t2\t\t\t\t\t\t\n\t\t(276)\t(489)\t\t\t\t\t\t\nUnrealized (gains)/losses on marketable debt securities\tOther income/(expense) net\t(118)\t(13)\t\t\t\t\t\t\nTotal amounts reclassified from AOCI\t\t(394)\t(502)\t\t\t\t\t\t\n", "q10k_tbl_25": "\tCumulative Foreign Currency Translation\tUnrealized Gains/Losses on Derivative Instruments\tUnrealized Gains/Losses on Marketable Debt Securities\tTotal\nBalances as of September 26 2020\t(1375)\t(877)\t1846\t(406)\nOther comprehensive income/(loss) before reclassifications\t549\t(294)\t708\t963\nAmounts reclassified from AOCI\t0\t(276)\t(118)\t(394)\nTax effect\t0\t83\t(67)\t16\nOther comprehensive income/(loss)\t549\t(487)\t523\t585\nBalances as of December 26 2020\t(826)\t(1364)\t2369\t179\n", "q10k_tbl_26": "\tNumber of RSUs (in thousands)\tWeighted-Average Grant Date Fair Value Per RSU\tAggregate Fair Value (in millions)\nBalance as of September 26 2020\t310778\t51.58\t\nRSUs granted\t75959\t112.75\t\nRSUs vested\t(68565)\t44.91\t\nRSUs canceled\t(2819)\t61.05\t\nBalance as of December 26 2020\t315353\t67.68\t41617\n", "q10k_tbl_27": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nShare-based compensation expense\t2020\t1710\t\t\t\t\t\t\nIncome tax benefit related to share-based compensation expense\t(1624)\t(758)\t\t\t\t\t\t\n", "q10k_tbl_28": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nBeginning accrued warranty and related costs\t3354\t3570\t\t\t\t\t\t\nCost of warranty claims\t(723)\t(915)\t\t\t\t\t\t\nAccruals for product warranty\t1493\t1218\t\t\t\t\t\t\nEnding accrued warranty and related costs\t4124\t3873\t\t\t\t\t\t\n", "q10k_tbl_29": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nAmericas:\t\t\t\t\t\t\t\t\nNet sales\t46310\t41367\t\t\t\t\t\t\nOperating income\t15785\t13092\t\t\t\t\t\t\nEurope:\t\t\t\t\t\t\t\t\nNet sales\t27306\t23273\t\t\t\t\t\t\nOperating income\t9589\t7719\t\t\t\t\t\t\nGreater China:\t\t\t\t\t\t\t\t\nNet sales\t21313\t13578\t\t\t\t\t\t\nOperating income\t8530\t5363\t\t\t\t\t\t\nJapan:\t\t\t\t\t\t\t\t\nNet sales\t8285\t6223\t\t\t\t\t\t\nOperating income\t3503\t2778\t\t\t\t\t\t\nRest of Asia Pacific:\t\t\t\t\t\t\t\t\nNet sales\t8225\t7378\t\t\t\t\t\t\nOperating income\t2953\t2731\t\t\t\t\t\t\n", "q10k_tbl_30": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nSegment operating income\t40360\t31683\t\t\t\t\t\t\nResearch and development expense\t(5163)\t(4451)\t\t\t\t\t\t\nOther corporate expenses net\t(1663)\t(1663)\t\t\t\t\t\t\nTotal operating income\t33534\t25569\t\t\t\t\t\t\n", "q10k_tbl_31": "\tThree Months Ended\t\t\n\tDecember 26 2020\tDecember 28 2019\tChange\t\t\t\t\t\t\t\t\t\t\t\t\nNet sales by category:\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\niPhone (1)\t65597\t55957\t17%\t\t\t\t\t\t\t\t\t\t\t\t\nMac (1)\t8675\t7160\t21%\t\t\t\t\t\t\t\t\t\t\t\t\niPad (1)\t8435\t5977\t41%\t\t\t\t\t\t\t\t\t\t\t\t\nWearables Home and Accessories (1)(2)\t12971\t10010\t30%\t\t\t\t\t\t\t\t\t\t\t\t\nServices (3)\t15761\t12715\t24%\t\t\t\t\t\t\t\t\t\t\t\t\nTotal net sales\t111439\t91819\t21%\t\t\t\t\t\t\t\t\t\t\t\t\n", "q10k_tbl_32": "\tThree Months Ended\t\t\n\tDecember 26 2020\tDecember 28 2019\tChange\t\t\t\t\t\t\t\t\t\t\t\t\nNet sales by reportable segment:\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\nAmericas\t46310\t41367\t12%\t\t\t\t\t\t\t\t\t\t\t\t\nEurope\t27306\t23273\t17%\t\t\t\t\t\t\t\t\t\t\t\t\nGreater China\t21313\t13578\t57%\t\t\t\t\t\t\t\t\t\t\t\t\nJapan\t8285\t6223\t33%\t\t\t\t\t\t\t\t\t\t\t\t\nRest of Asia Pacific\t8225\t7378\t11%\t\t\t\t\t\t\t\t\t\t\t\t\nTotal net sales\t111439\t91819\t21%\t\t\t\t\t\t\t\t\t\t\t\t\n", "q10k_tbl_33": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nGross margin:\t\t\t\t\t\t\t\t\nProducts\t33548\t27029\t\t\t\t\t\t\nServices\t10780\t8188\t\t\t\t\t\t\nTotal gross margin\t44328\t35217\t\t\t\t\t\t\n", "q10k_tbl_34": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nResearch and development\t5163\t4451\t\t\t\t\t\t\nPercentage of total net sales\t5%\t5%\t\t\t\t\t\t\nSelling general and administrative\t5631\t5197\t\t\t\t\t\t\nPercentage of total net sales\t5%\t6%\t\t\t\t\t\t\nTotal operating expenses\t10794\t9648\t\t\t\t\t\t\nPercentage of total net sales\t10%\t11%\t\t\t\t\t\t\n", "q10k_tbl_35": "\tThree Months Ended\t\t\n\tDecember 26 2020\tDecember 28 2019\tChange\t\t\t\t\t\t\t\t\t\t\t\t\nInterest and dividend income\t747\t1045\t\t\t\t\t\t\t\t\t\t\t\t\t\nInterest expense\t(638)\t(785)\t\t\t\t\t\t\t\t\t\t\t\t\t\nOther income/(expense) net\t(64)\t89\t\t\t\t\t\t\t\t\t\t\t\t\t\nTotal other income/(expense) net\t45\t349\t(87)%\t\t\t\t\t\t\t\t\t\t\t\t\n", "q10k_tbl_36": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\t\t\t\t\t\t\nProvision for income taxes\t4824\t3682\t\t\t\t\t\t\nEffective tax rate\t14.4%\t14.2%\t\t\t\t\t\t\nStatutory federal income tax rate\t21%\t21%\t\t\t\t\t\t\n", "q10k_tbl_37": "\tDecember 26 2020\tSeptember 26 2020\nCash cash equivalents and marketable securities (1)\t195571\t191830\nProperty plant and equipment net\t37933\t36766\nCommercial paper\t5000\t4996\nTotal term debt\t107043\t107440\nWorking capital\t21599\t38321\n", "q10k_tbl_38": "\tThree Months Ended\t\n\tDecember 26 2020\tDecember 28 2019\nCash generated by operating activities\t38763\t30516\nCash used in investing activities\t(8584)\t(13668)\nCash used in financing activities\t(32249)\t(25407)\n", "q10k_tbl_39": "Periods\tTotal Number of Shares Purchased\tAverage Price Paid Per Share\tTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs\tApproximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)\nSeptember 27 2020 to October 31 2020:\t\t\t\t\nOpen market and privately negotiated purchases\t25810\t116.23\t25810\t\nNovember 1 2020 to November 28 2020:\t\t\t\t\nOpen market and privately negotiated purchases\t87247\t117.48\t87247\t\nNovember 29 2020 to December 26 2020:\t\t\t\t\nOpen market and privately negotiated purchases\t86632\t124.09\t86632\t\nTotal\t199689\t\t\t32353\n", "q10k_tbl_40": "\t\tIncorporated by Reference\t\t\nExhibit Number\tExhibit Description\tForm\tExhibit\tFiling Date/ Period End Date\n10.1*\tForm of CEO Restricted Stock Unit Award Agreement under 2014 Employee Stock Plan effective as of September 27 2020.\t\t\t\n10.2*\tForm of CEO Performance Award Agreement under 2014 Employee Stock Plan effective as of September 27 2020.\t\t\t\n31.1*\tRule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.\t\t\t\n31.2*\tRule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.\t\t\t\n32.1**\tSection 1350 Certifications of Chief Executive Officer and Chief Financial Officer.\t\t\t\n101*\tInline 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.\t\t\t\n104*\tInline XBRL for the cover page of this Quarterly Report on Form 10-Q included in the Exhibit 101 Inline XBRL Document Set.\t\t\t\n"}{"bs": "q10k_tbl_5", "is": "q10k_tbl_3", "cf": "q10k_tbl_7"}None
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 26, 2020
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number: 001-36743
Apple Inc.
(Exact name of Registrant as specified in its charter)
California
94-2404110
(State or other jurisdiction 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 ☒
16,788,096,000 shares of common stock were issued and outstanding as of January 15, 2021.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except number of shares which are reflected in thousands and per share amounts)
Three Months Ended
December 26, 2020
December 28, 2019
Net sales:
Products
$
95,678
$
79,104
Services
15,761
12,715
Total net sales
111,439
91,819
Cost of sales:
Products
62,130
52,075
Services
4,981
4,527
Total cost of sales
67,111
56,602
Gross margin
44,328
35,217
Operating expenses:
Research and development
5,163
4,451
Selling, general and administrative
5,631
5,197
Total operating expenses
10,794
9,648
Operating income
33,534
25,569
Other income/(expense), net
45
349
Income before provision for income taxes
33,579
25,918
Provision for income taxes
4,824
3,682
Net income
$
28,755
$
22,236
Earnings per share:
Basic
$
1.70
$
1.26
Diluted
$
1.68
$
1.25
Shares used in computing earnings per share:
Basic
16,935,119
17,660,160
Diluted
17,113,688
17,818,417
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2021 Form 10-Q | 1
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions)
Three Months Ended
December 26, 2020
December 28, 2019
Net income
$
28,755
$
22,236
Other comprehensive income/(loss):
Change in foreign currency translation, net of tax
549
202
Change in unrealized gains/losses on derivative instruments, net of tax:
Change in fair value of derivatives
(304)
111
Adjustment for net (gains)/losses realized and included in net income
(183)
(398)
Total change in unrealized gains/losses on derivative instruments
(487)
(287)
Change in unrealized gains/losses on marketable debt securities, net of tax:
Change in fair value of marketable debt securities
628
125
Adjustment for net (gains)/losses realized and included in net income
(105)
(10)
Total change in unrealized gains/losses on marketable debt securities
523
115
Total other comprehensive income/(loss)
585
30
Total comprehensive income
$
29,340
$
22,266
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2021 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 26, 2020
September 26, 2020
ASSETS:
Current assets:
Cash and cash equivalents
$
36,010
$
38,016
Marketable securities
40,816
52,927
Accounts receivable, net
27,101
16,120
Inventories
4,973
4,061
Vendor non-trade receivables
31,519
21,325
Other current assets
13,687
11,264
Total current assets
154,106
143,713
Non-current assets:
Marketable securities
118,745
100,887
Property, plant and equipment, net
37,933
36,766
Other non-current assets
43,270
42,522
Total non-current assets
199,948
180,175
Total assets
$
354,054
$
323,888
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable
$
63,846
$
42,296
Other current liabilities
48,504
42,684
Deferred revenue
7,395
6,643
Commercial paper
5,000
4,996
Term debt
7,762
8,773
Total current liabilities
132,507
105,392
Non-current liabilities:
Term debt
99,281
98,667
Other non-current liabilities
56,042
54,490
Total non-current liabilities
155,323
153,157
Total liabilities
287,830
258,549
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value: 50,400,000 shares authorized; 16,823,263 and 16,976,763 shares issued and outstanding, respectively
51,744
50,779
Retained earnings
14,301
14,966
Accumulated other comprehensive income/(loss)
179
(406)
Total shareholders’ equity
66,224
65,339
Total liabilities and shareholders’ equity
$
354,054
$
323,888
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2021 Form 10-Q | 3
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)
(In millions, except per share amounts)
Three Months Ended
December 26, 2020
December 28, 2019
Total shareholders’ equity, beginning balances
$
65,339
$
90,488
Common stock and additional paid-in capital:
Beginning balances
50,779
45,174
Common stock issued
—
2
Common stock withheld related to net share settlement of equity awards
(1,101)
(951)
Share-based compensation
2,066
1,747
Ending balances
51,744
45,972
Retained earnings:
Beginning balances
14,966
45,898
Net income
28,755
22,236
Dividends and dividend equivalents declared
(3,547)
(3,485)
Common stock withheld related to net share settlement of equity awards
(1,873)
(536)
Common stock repurchased
(24,000)
(20,000)
Cumulative effect of change in accounting principle
—
(136)
Ending balances
14,301
43,977
Accumulated other comprehensive income/(loss):
Beginning balances
(406)
(584)
Other comprehensive income/(loss)
585
30
Cumulative effect of change in accounting principle
—
136
Ending balances
179
(418)
Total shareholders’ equity, ending balances
$
66,224
$
89,531
Dividends and dividend equivalents declared per share or RSU
$
0.205
$
0.1925
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2021 Form 10-Q | 4
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Three Months Ended
December 26, 2020
December 28, 2019
Cash, cash equivalents and restricted cash, beginning balances
$
39,789
$
50,224
Operating activities:
Net income
28,755
22,236
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization
2,666
2,816
Share-based compensation expense
2,020
1,710
Deferred income tax benefit
(58)
(349)
Other
25
(142)
Changes in operating assets and liabilities:
Accounts receivable, net
(10,945)
2,015
Inventories
(950)
(28)
Vendor non-trade receivables
(10,194)
3,902
Other current and non-current assets
(3,526)
(7,054)
Accounts payable
21,670
(1,089)
Deferred revenue
1,341
985
Other current and non-current liabilities
7,959
5,514
Cash generated by operating activities
38,763
30,516
Investing activities:
Purchases of marketable securities
(39,800)
(37,416)
Proceeds from maturities of marketable securities
25,177
19,740
Proceeds from sales of marketable securities
9,344
7,280
Payments for acquisition of property, plant and equipment
(3,500)
(2,107)
Payments made in connection with business acquisitions, net
(9)
(958)
Other
204
(207)
Cash used in investing activities
(8,584)
(13,668)
Financing activities:
Proceeds from issuance of common stock
—
2
Payments for taxes related to net share settlement of equity awards
(2,861)
(1,379)
Payments for dividends and dividend equivalents
(3,613)
(3,539)
Repurchases of common stock
(24,775)
(20,706)
Proceeds from issuance of term debt, net
—
2,210
Repayments of term debt
(1,000)
(1,000)
Proceeds from/(Repayments of) commercial paper, net
22
(979)
Other
(22)
(16)
Cash used in financing activities
(32,249)
(25,407)
Decrease in cash, cash equivalents and restricted cash
(2,070)
(8,559)
Cash, cash equivalents and restricted cash, ending balances
$
37,719
$
41,665
Supplemental cash flow disclosure:
Cash paid for income taxes, net
$
1,787
$
4,393
Cash paid for interest
$
619
$
771
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2021 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 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 26, 2020 (the “2020 Form 10-K”).
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. The Company’s fiscal years 2021 and 2020 span 52 weeks each. 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.
Common Stock Split
On August 28, 2020, the Company effected a four-for-one stock split to shareholders of record as of August 24, 2020. All share, restricted stock unit (“RSU”) and per share or per RSU information has been retroactively adjusted to reflect the stock split.
Recently Adopted Accounting Pronouncements
Financial Instruments – Credit Losses
At the beginning of the first quarter of 2021, the Company adopted the Financial Accounting Standards Board’s Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which modifies the measurement of expected credit losses on certain financial instruments. The Company adopted ASU 2016-13 utilizing the modified retrospective transition method. The adoption of ASU 2016-13 did not have a material impact on the Company’s condensed consolidated financial statements.
Earnings Per Share
The following table shows the computation of basic and diluted earnings per share for the three months ended December 26, 2020 and December 28, 2019 (net income in millions and shares in thousands):
Three Months Ended
December 26, 2020
December 28, 2019
Numerator:
Net income
$
28,755
$
22,236
Denominator:
Weighted-average basic shares outstanding
16,935,119
17,660,160
Effect of dilutive securities
178,569
158,257
Weighted-average diluted shares
17,113,688
17,818,417
Basic earnings per share
$
1.70
$
1.26
Diluted earnings per share
$
1.68
$
1.25
Apple Inc. | Q1 2021 Form 10-Q | 6
Note 2 – Revenue Recognition
Net sales consist of revenue from the sale of iPhone®, Mac®, iPad®, Services and other products. The Company recognizes revenue at the amount to which it expects to be entitled when control of the products or services is transferred to its customers. Control is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products or services are transferred to its customers. For most of the Company’s Products net sales, control transfers when products are shipped. For the Company’s Services net sales, control transfers over time as services are delivered. Payment for Products and Services net sales is collected within a short period following transfer of control or commencement of delivery of services, as applicable.
The Company records reductions to Products net sales related to future product returns, price protection and other customer incentive programs based on the Company’s expectations and historical experience.
For arrangements with multiple performance obligations, which represent promises within an arrangement that are distinct, the Company allocates revenue to all distinct performance obligations based on their relative stand-alone selling prices (“SSPs”). When available, the Company uses observable prices to determine SSPs. When observable prices are not available, SSPs are established that reflect the Company’s best estimates of what the selling prices of the performance obligations would be if they were sold regularly on a stand-alone basis. The Company’s process for estimating SSPs without observable prices considers multiple factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, where applicable, prices charged by the Company for similar offerings, market trends in the pricing for similar offerings, product-specific business objectives and the estimated cost to provide the performance obligation.
The Company has identified up to three performance obligations regularly included in arrangements involving the sale of iPhone, Mac, iPad and certain other products. The first performance obligation, which represents the substantial portion of the allocated sales price, is the hardware and bundled software delivered at the time of sale. The second performance obligation is the right to receive certain product-related bundled services, which include iCloud®, Siri® and Maps. The third performance obligation is the right to receive, on a when-and-if-available basis, future unspecified software upgrades relating to the software bundled with each device. The Company allocates revenue and any related discounts to these performance obligations based on their relative SSPs. Because the Company lacks observable prices for the undelivered performance obligations, the allocation of revenue is based on the Company’s estimated SSPs. Revenue allocated to the delivered hardware and bundled software is recognized when control has transferred to the customer, which generally occurs when the product is shipped. Revenue allocated to the product-related bundled services and unspecified software upgrade rights is deferred and recognized on a straight-line basis over the estimated period they are expected to be provided. Cost of sales related to delivered hardware and bundled software, including estimated warranty costs, are recognized at the time of sale. Costs incurred to provide product-related bundled services and unspecified software upgrade rights are recognized as cost of sales as incurred.
For certain long-term service arrangements, the Company has performance obligations for services it has not yet delivered. For these arrangements, the Company does not have a right to bill for the undelivered services. The Company has determined that any unbilled consideration relates entirely to the value of the undelivered services. Accordingly, the Company has not recognized revenue, and has elected not to disclose amounts, related to these undelivered services.
For the sale of third-party products where the Company obtains control of the product before transferring it to the customer, the Company recognizes revenue based on the gross amount billed to customers. The Company considers multiple factors when determining whether it obtains control of third-party products including, but not limited to, evaluating if it can establish the price of the product, retains inventory risk for tangible products or has the responsibility for ensuring acceptability of the product. For third-party applications sold through the App Store® and certain digital content sold through the Company’s other digital content stores, the Company does not obtain control of the product before transferring it to the customer. Therefore, the Company accounts for such sales on a net basis by recognizing in Services net sales only the commission it retains.
The Company has elected to record revenue net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded within other current liabilities until remitted to the relevant government authority.
Deferred Revenue
As of December 26, 2020 and September 26, 2020, the Company had total deferred revenue of $11.6 billion and $10.2 billion, respectively. As of December 26, 2020, the Company expects 64% of total deferred revenue to be realized in less than a year, 26% within one-to-two years, 8% within two-to-three years and 2% in greater than three years.
Apple Inc. | Q1 2021 Form 10-Q | 7
Disaggregated Revenue
Net sales disaggregated by significant products and services for the three months ended December 26, 2020 and December 28, 2019 were as follows (in millions):
Three Months Ended
December 26, 2020
December 28, 2019
iPhone (1)
$
65,597
$
55,957
Mac (1)
8,675
7,160
iPad (1)
8,435
5,977
Wearables, Home and Accessories (1)(2)
12,971
10,010
Services (3)
15,761
12,715
Total net sales (4)
$
111,439
$
91,819
(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®, iPod touch® and Apple-branded and third-party accessories.
(3)Services net sales include sales from the Company’s advertising, AppleCare®, digital content and other services. Services net sales also include amortization of the deferred value of Maps, Siri, and free iCloud storage and Apple TV+SM services, which are bundled in the sales price of certain products.
(4)Includes $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 and $1.9 billion of revenue recognized in the three months ended December 28, 2019 that was included in deferred revenue as of September 28, 2019.
The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 11, “Segment Information and Geographic Data” for the three months ended December 26, 2020 and December 28, 2019.
Note 3 – Financial Instruments
Cash, Cash Equivalents and Marketable Securities
The following tables show the Company’s cash and marketable securities by significant investment category as of December 26, 2020 and September 26, 2020 (in millions):
December 26, 2020
Adjusted Cost
Unrealized Gains
Unrealized Losses
Fair Value
Cash and Cash Equivalents
Current Marketable Securities
Non-Current Marketable Securities
Cash
$
18,729
$
—
$
—
$
18,729
$
18,729
$
—
$
—
Level 1 (1): Money market funds
6,312
—
—
6,312
6,312
—
—
Level 2 (2):
U.S. Treasury securities
21,939
270
(6)
22,203
3,227
8,527
10,449
U.S. agency securities
8,698
9
(1)
8,706
1,000
3,319
4,387
Non-U.S. government securities
20,185
395
(67)
20,513
100
2,874
17,539
Certificates of deposit and time deposits
8,002
—
—
8,002
5,009
2,623
370
Commercial paper
8,620
—
—
8,620
1,632
6,988
—
Corporate debt securities
83,042
2,155
(44)
85,153
1
16,117
69,035
Municipal securities
1,004
20
—
1,024
—
94
930
Mortgage- and asset-backed securities
16,051
281
(23)
16,309
—
274
16,035
Subtotal
167,541
3,130
(141)
170,530
10,969
40,816
118,745
Total (3)
$
192,582
$
3,130
$
(141)
$
195,571
$
36,010
$
40,816
$
118,745
Apple Inc. | Q1 2021 Form 10-Q | 8
September 26, 2020
Adjusted Cost
Unrealized Gains
Unrealized Losses
Fair Value
Cash and Cash Equivalents
Current Marketable Securities
Non-Current Marketable Securities
Cash
$
17,773
$
—
$
—
$
17,773
$
17,773
$
—
$
—
Level 1 (1): Money market funds
2,171
—
—
2,171
2,171
—
—
Level 2 (2):
U.S. Treasury securities
28,439
331
—
28,770
8,580
11,972
8,218
U.S. agency securities
8,604
8
—
8,612
2,009
3,078
3,525
Non-U.S. government securities
19,361
275
(186)
19,450
255
3,329
15,866
Certificates of deposit and time deposits
10,399
—
—
10,399
4,043
6,246
110
Commercial paper
11,226
—
—
11,226
3,185
8,041
—
Corporate debt securities
76,937
1,834
(175)
78,596
—
19,687
58,909
Municipal securities
1,001
22
—
1,023
—
139
884
Mortgage- and asset-backed securities
13,520
314
(24)
13,810
—
435
13,375
Subtotal
169,487
2,784
(385)
171,886
18,072
52,927
100,887
Total (3)
$
189,431
$
2,784
$
(385)
$
191,830
$
38,016
$
52,927
$
100,887
(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 26, 2020 and September 26, 2020, total marketable securities included $19.5 billion and $18.6 billion, respectively, that was restricted from general use, related to the State Aid Decision (refer to Note 5, “Income Taxes”) and other agreements.
The Company may sell certain of its marketable debt securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation. The maturities of the Company’s non-current marketable debt securities generally range from one to five years.
The Company typically invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer. Fair values were determined for each individual security in the investment portfolio.
Non-Marketable Securities
The Company holds non-marketable equity securities of certain privately held companies without readily determinable fair values. As of December 26, 2020 and September 26, 2020, the Company’s non-marketable equity securities had a carrying value of $2.5 billion and $2.8 billion, respectively.
Restricted Cash
A reconciliation of the Company’s cash and cash equivalents in the Condensed Consolidated Balance Sheets to cash, cash equivalents and restricted cash in the Condensed Consolidated Statements of Cash Flows as of December 26, 2020 and September 26, 2020 is as follows (in millions):
December 26, 2020
September 26, 2020
Cash and cash equivalents
$
36,010
$
38,016
Restricted cash
1,709
1,773
Cash, cash equivalents and restricted cash
$
37,719
$
39,789
The Company’s restricted cash primarily consisted of cash to support the Company’s iPhone Upgrade Program. Substantially all of the Company’s restricted cash was included in other non-current assets in the Condensed Consolidated Balance Sheets.
Apple Inc. | Q1 2021 Form 10-Q | 9
Derivative Financial Instruments
The Company may use derivatives to partially offset its business exposure to foreign currency and interest rate risk on expected future cash flows, net investments in certain foreign subsidiaries, and certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, 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 currency exchange or interest rates.
To protect gross margins from fluctuations in foreign currency exchange rates, certain of the Company’s subsidiaries whose functional currency is the U.S. dollar may hedge a portion of forecasted foreign currency revenue, and subsidiaries whose functional currency is not the U.S. dollar may hedge a portion of forecasted inventory purchases not denominated in the subsidiaries’ functional currencies. The Company may enter into forward contracts, option contracts or other instruments to manage this risk 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 net investment in a foreign operation from fluctuations in foreign currency exchange rates, the Company may enter into foreign currency forward and option contracts to offset a portion of the changes in the carrying amounts of these investments due to fluctuations in foreign currency exchange rates. In addition, the Company may use non-derivative financial instruments, such as its foreign currency–denominated debt, as hedges of its net investments in certain foreign subsidiaries. In both of these cases, the Company designates these instruments as net investment hedges.
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. These instruments may offset a portion of the foreign currency remeasurement gains or losses, or changes in fair value. The Company may designate these instruments as either cash flow or fair value hedges. As of December 26, 2020, the Company’s hedged term debt– and marketable securities–related foreign currency transactions are expected to be recognized within 22 years.
The Company may also enter into non-designated foreign currency contracts 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.
To protect the Company’s foreign currency–denominated term debt or marketable securities from fluctuations in interest rates, the Company may enter into interest rate swaps, options or other instruments. These instruments may offset a portion of the changes in interest income or expense, or changes in fair value. The Company designates these instruments as either cash flow or fair value hedges. As of December 26, 2020, the Company’s hedged interest rate transactions are expected to be recognized within seven years.
Cash Flow Hedges
Cash flow hedge amounts that are included in the assessment of hedge effectiveness are deferred in accumulated other comprehensive income/(loss) (“AOCI”) until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of foreign currency revenue are recognized as a component of net sales in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of inventory purchases are recognized as a component of cost of sales in the same period as the related costs are recognized. Deferred gains and losses associated with cash flow hedges of interest income or expense are recognized in other income/(expense), net (“OI&E”) in the same period as the related income or expense is recognized. For options designated as cash flow hedges, the time value is excluded from the assessment of hedge effectiveness and recognized in the financial statement line item to which the hedge relates on a straight-line basis over the life of the hedge. Changes in the fair value of amounts excluded from the assessment of hedge effectiveness are recognized in other comprehensive income/(loss) (“OCI”).
Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified into OI&E in the period of de-designation. Any subsequent changes in fair value of such derivative instruments are reflected in OI&E unless they are re-designated as hedges of other transactions.
Net Investment Hedges
Net investment hedge amounts that are included in the assessment of hedge effectiveness are recorded in OCI as a part of the cumulative translation adjustment. For foreign exchange forward contracts designated as net investment hedges, the forward carry component is excluded from the assessment of hedge effectiveness and recognized in OCI on a straight-line basis over the life of the hedge. Changes in the fair value of amounts excluded from the assessment of hedge effectiveness are recognized in OCI.
Apple Inc. | Q1 2021 Form 10-Q | 10
Fair Value Hedges
Fair value hedge gains and losses related to amounts that are included in the assessment of hedge effectiveness are recognized in earnings along with a corresponding loss or gain related to the change in value of the hedged item in the same line in the Condensed Consolidated Statements of Operations. For foreign exchange forward contracts designated as fair value hedges, the forward carry component is excluded from the assessment of hedge effectiveness and recognized in OI&E on a straight-line basis over the life of the hedge. Amounts excluded from the effectiveness assessment of fair value hedges and recognized in OI&E were gains of $82 million and $128 million for the three months ended December 26, 2020 and December 28, 2019, respectively. Changes in the fair value of amounts excluded from the assessment of hedge effectiveness are recognized in OCI.
Non-Designated Derivatives
Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates.
The Company records all derivatives in the Condensed Consolidated Balance Sheets at fair value. The Company’s accounting treatment for these derivative instruments is based on its hedge designation.The following tables show the Company’s derivative instruments at gross fair value as of December 26, 2020 and September 26, 2020 (in millions):
December 26, 2020
Fair Value of Derivatives Designated as Hedge Instruments
Fair Value of Derivatives Not Designated as Hedge Instruments
Total Fair Value
Derivative assets (1):
Foreign exchange contracts
$
524
$
780
$
1,304
Interest rate contracts
$
1,443
$
—
$
1,443
Derivative liabilities (2):
Foreign exchange contracts
$
2,332
$
1,314
$
3,646
September 26, 2020
Fair Value of Derivatives Designated as Hedge Instruments
Fair Value of Derivatives Not Designated as Hedge Instruments
Total Fair Value
Derivative assets (1):
Foreign exchange contracts
$
749
$
303
$
1,052
Interest rate contracts
$
1,557
$
—
$
1,557
Derivative liabilities (2):
Foreign exchange contracts
$
1,561
$
485
$
2,046
(1)The fair value of derivative assets is measured using Level 2 fair value inputs and is included in other current assets and other non-current assets in the Condensed Consolidated Balance Sheets.
(2)The fair value of derivative liabilities is measured using Level 2 fair value inputs and is included in other current liabilities and other non-current liabilities in the Condensed Consolidated Balance Sheets.
The Company classifies cash flows related to derivative financial instruments as operating activities in its Condensed Consolidated Statements of Cash Flows.
Apple Inc. | Q1 2021 Form 10-Q | 11
The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow and net investment hedges in OCI and the Condensed Consolidated Statements of Operations for the three months ended December 26, 2020 and December 28, 2019 (in millions):
Three Months Ended
December 26, 2020
December 28, 2019
Gains/(Losses) recognized in OCI – included in effectiveness assessment:
Cash flow hedges:
Foreign exchange contracts
$
(191)
$
271
Interest rate contracts
54
—
Total
$
(137)
$
271
Net investment hedges:
Foreign currency debt
$
—
$
24
Gains/(Losses) reclassified from AOCI into net income – included in effectiveness assessment:
Cash flow hedges:
Foreign exchange contracts
$
314
$
491
Interest rate contracts
(3)
(2)
Total
$
311
$
489
Amounts excluded from the effectiveness assessment of the Company’s hedges and recognized in OCI were losses of $138 million and $89 million for the three months ended December 26, 2020 and December 28, 2019, respectively.
The following tables show information about the Company’s derivative instruments designated as fair value hedges and the related hedged items for the three months ended December 26, 2020 and December 28, 2019 and as of December 26, 2020 and September 26, 2020 (in millions):
Three Months Ended
December 26, 2020
December 28, 2019
Gains/(Losses) on derivative instruments (1):
Foreign exchange contracts
$
(753)
$
(183)
Interest rate contracts
(167)
(162)
Total
$
(920)
$
(345)
Gains/(Losses) related to hedged items (1):
Marketable securities
$
752
$
183
Fixed-rate debt
167
162
Total
$
919
$
345
Apple Inc. | Q1 2021 Form 10-Q | 12
December 26, 2020
September 26, 2020
Carrying amounts of hedged assets/(liabilities):
Marketable securities (2)
$
17,009
$
16,270
Fixed-rate debt (3)
$
(20,866)
$
(21,033)
Cumulative hedging adjustments included in the carrying amounts of hedged items:
(1)Gains and losses related to fair value hedges are included in OI&E in the Condensed Consolidated Statements of Operations.
(2)The carrying amounts of marketable securities that are designated as hedged items in fair value hedges are included in current marketable securities and non-current marketable securities in the Condensed Consolidated Balance Sheets
(3)The carrying amounts of fixed-rate debt instruments that are designated as hedged items in fair value hedges are included in current term debt and non-current term debt in the Condensed Consolidated Balance Sheets.
The following table shows the notional amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of December 26, 2020 and September 26, 2020 (in millions):