Apple Earnings 2018-06-30
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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 June 30, 2018
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)
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).
Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 | ☐ (Do not check if a smaller reporting company) | 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 ☒
4,829,926,000 shares of common stock, par value $0.00001 per share, issued and outstanding as of July 20, 2018
Apple Inc.
Form 10-Q
For the Fiscal Quarter Ended June 30, 2018
TABLE OF CONTENTS
Page | ||
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except number of shares which are reflected in thousands and per share amounts)
Three Months Ended | Nine Months Ended | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
Net sales | $ | 53,265 | $ | 45,408 | $ | 202,695 | $ | 176,655 | |||||||
Cost of sales | 32,844 | 27,920 | 124,940 | 108,400 | |||||||||||
Gross margin | 20,421 | 17,488 | 77,755 | 68,255 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 3,701 | 2,937 | 10,486 | 8,584 | |||||||||||
Selling, general and administrative | 4,108 | 3,783 | 12,489 | 11,447 | |||||||||||
Total operating expenses | 7,809 | 6,720 | 22,975 | 20,031 | |||||||||||
Operating income | 12,612 | 10,768 | 54,780 | 48,224 | |||||||||||
Other income/(expense), net | 672 | 540 | 1,702 | 1,948 | |||||||||||
Income before provision for income taxes | 13,284 | 11,308 | 56,482 | 50,172 | |||||||||||
Provision for income taxes | 1,765 | 2,591 | 11,076 | 12,535 | |||||||||||
Net income | $ | 11,519 | $ | 8,717 | $ | 45,406 | $ | 37,637 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 2.36 | $ | 1.68 | $ | 9.07 | $ | 7.18 | |||||||
Diluted | $ | 2.34 | $ | 1.67 | $ | 8.99 | $ | 7.14 | |||||||
Shares used in computing earnings per share: | |||||||||||||||
Basic | 4,882,167 | 5,195,088 | 5,006,640 | 5,239,847 | |||||||||||
Diluted | 4,926,609 | 5,233,499 | 5,050,963 | 5,274,394 | |||||||||||
Cash dividends declared per share | $ | 0.73 | $ | 0.63 | $ | 1.99 | $ | 1.77 | |||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q3 2018 Form 10-Q | 1
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions)
Three Months Ended | Nine Months Ended | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
Net income | $ | 11,519 | $ | 8,717 | $ | 45,406 | $ | 37,637 | |||||||
Other comprehensive income/(loss): | |||||||||||||||
Change in foreign currency translation, net of tax effects of $(3), $(35), $4 and $(3), respectively | (590 | ) | 120 | (287 | ) | (41 | ) | ||||||||
Change in unrealized gains/losses on derivative instruments: | |||||||||||||||
Change in fair value of derivatives, net of tax benefit/(expense) of $70, $(16), $(60) and $(269), respectively | 109 | (166 | ) | 170 | 1,002 | ||||||||||
Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $(254), $176, $(198) and $276, respectively | 978 | (409 | ) | 873 | (1,135 | ) | |||||||||
Total change in unrealized gains/losses on derivative instruments, net of tax | 1,087 | (575 | ) | 1,043 | (133 | ) | |||||||||
Change in unrealized gains/losses on marketable securities: | |||||||||||||||
Change in fair value of marketable securities, net of tax benefit/(expense) of $154, $(197), $1,159 and $536, respectively | (568 | ) | 364 | (3,417 | ) | (980 | ) | ||||||||
Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $(7), $16, $27 and $12, respectively | 24 | (32 | ) | (22 | ) | (25 | ) | ||||||||
Total change in unrealized gains/losses on marketable securities, net of tax | (544 | ) | 332 | (3,439 | ) | (1,005 | ) | ||||||||
Total other comprehensive income/(loss) | (47 | ) | (123 | ) | (2,683 | ) | (1,179 | ) | |||||||
Total comprehensive income | $ | 11,472 | $ | 8,594 | $ | 42,723 | $ | 36,458 | |||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q3 2018 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)
June 30, 2018 | September 30, 2017 | ||||||
ASSETS: | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 31,971 | $ | 20,289 | |||
Short-term marketable securities | 38,999 | 53,892 | |||||
Accounts receivable, net | 14,104 | 17,874 | |||||
Inventories | 5,936 | 4,855 | |||||
Vendor non-trade receivables | 12,263 | 17,799 | |||||
Other current assets | 12,488 | 13,936 | |||||
Total current assets | 115,761 | 128,645 | |||||
Long-term marketable securities | 172,773 | 194,714 | |||||
Property, plant and equipment, net | 38,117 | 33,783 | |||||
Other non-current assets | 22,546 | 18,177 | |||||
Total assets | $ | 349,197 | $ | 375,319 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 38,489 | $ | 49,049 | |||
Accrued expenses | 25,184 | 25,744 | |||||
Deferred revenue | 7,403 | 7,548 | |||||
Commercial paper | 11,974 | 11,977 | |||||
Current portion of long-term debt | 5,498 | 6,496 | |||||
Total current liabilities | 88,548 | 100,814 | |||||
Deferred revenue, non-current | 2,878 | 2,836 | |||||
Long-term debt | 97,128 | 97,207 | |||||
Other non-current liabilities | 45,694 | 40,415 | |||||
Total liabilities | 234,248 | 241,272 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,842,917 and 5,126,201 shares issued and outstanding, respectively | 38,624 | 35,867 | |||||
Retained earnings | 79,436 | 98,330 | |||||
Accumulated other comprehensive income/(loss) | (3,111 | ) | (150 | ) | |||
Total shareholders’ equity | 114,949 | 134,047 | |||||
Total liabilities and shareholders’ equity | $ | 349,197 | $ | 375,319 | |||
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q3 2018 Form 10-Q | 3
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Nine Months Ended | |||||||
June 30, 2018 | July 1, 2017 | ||||||
Cash and cash equivalents, beginning of the period | $ | 20,289 | $ | 20,484 | |||
Operating activities: | |||||||
Net income | 45,406 | 37,637 | |||||
Adjustments to reconcile net income to cash generated by operating activities: | |||||||
Depreciation and amortization | 8,149 | 7,673 | |||||
Share-based compensation expense | 3,995 | 3,666 | |||||
Deferred income tax expense/(benefit) | (33,109 | ) | 4,764 | ||||
Other | (410 | ) | (142 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | 3,756 | 3,381 | |||||
Inventories | (1,114 | ) | (1,014 | ) | |||
Vendor non-trade receivables | 5,536 | 3,312 | |||||
Other current and non-current assets | (65 | ) | (3,229 | ) | |||
Accounts payable | (11,139 | ) | (5,212 | ) | |||
Deferred revenue | (103 | ) | (418 | ) | |||
Other current and non-current liabilities | 37,009 | (1,942 | ) | ||||
Cash generated by operating activities | 57,911 | 48,476 | |||||
Investing activities: | |||||||
Purchases of marketable securities | (56,133 | ) | (123,781 | ) | |||
Proceeds from maturities of marketable securities | 46,290 | 19,347 | |||||
Proceeds from sales of marketable securities | 41,614 | 76,747 | |||||
Payments for acquisition of property, plant and equipment | (10,272 | ) | (8,586 | ) | |||
Payments made in connection with business acquisitions, net | (431 | ) | (248 | ) | |||
Purchases of non-marketable securities | (1,788 | ) | (213 | ) | |||
Proceeds from non-marketable securities | 310 | 126 | |||||
Other | (523 | ) | 104 | ||||
Cash generated by/(used in) investing activities | 19,067 | (36,504 | ) | ||||
Financing activities: | |||||||
Proceeds from issuance of common stock | 328 | 274 | |||||
Payments for taxes related to net share settlement of equity awards | (2,267 | ) | (1,646 | ) | |||
Payments for dividends and dividend equivalents | (10,182 | ) | (9,499 | ) | |||
Repurchases of common stock | (53,634 | ) | (25,105 | ) | |||
Proceeds from issuance of term debt, net | 6,969 | 21,725 | |||||
Repayments of term debt | (6,500 | ) | (3,500 | ) | |||
Change in commercial paper, net | (10 | ) | 3,866 | ||||
Cash used in financing activities | (65,296 | ) | (13,885 | ) | |||
Increase/(Decrease) in cash and cash equivalents | 11,682 | (1,913 | ) | ||||
Cash and cash equivalents, end of the period | $ | 31,971 | $ | 18,571 | |||
Supplemental cash flow disclosure: | |||||||
Cash paid for income taxes, net | $ | 8,819 | $ | 9,752 | |||
Cash paid for interest | $ | 2,120 | $ | 1,456 | |||
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q3 2018 Form 10-Q | 4
Apple Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 – Summary of Significant Accounting Policies
Apple Inc. and its wholly-owned subsidiaries (collectively “Apple” or the “Company”) designs, manufactures and markets mobile communication and media devices and personal computers, and sells a variety of related software, services, accessories and third-party digital content and applications. The Company’s products and services include iPhone®, iPad®, Mac®, Apple Watch®, AirPods®, Apple TV®, HomePod™, a portfolio of consumer and professional software applications, iOS, macOS®, watchOS® and tvOS™ operating systems, iCloud®, Apple Pay® and a variety of other accessory, service and support offerings. The Company sells and delivers digital content and applications through the iTunes Store®, App Store®, Mac App Store, TV App Store, iBooks Store® and Apple Music® (collectively “Digital Content and Services”). The Company sells its products worldwide through its retail stores, online stores and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers and resellers. In addition, the Company sells a variety of third-party Apple-compatible products, including application software and various accessories through its retail and online stores. The Company sells to consumers, small and mid-sized businesses and education, enterprise and government customers.
Basis of Presentation and Preparation
The accompanying condensed consolidated financial statements include the accounts of 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 in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. 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 the notes thereto included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2017 (the “2017 Form 10-K”).
The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. The first quarter of 2018 spanned 13 weeks, whereas a 14th week was added to the first fiscal quarter of 2017, as is done every five or six years, to realign the Company’s fiscal quarters with calendar quarters. 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.
Share-Based Compensation
During the first quarter of 2018, the Company adopted the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which modified certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification in the statement of cash flows. Historically, excess tax benefits or deficiencies from the Company’s equity awards were recorded as additional paid-in capital in its Condensed Consolidated Balance Sheets and were classified as a financing activity in its Condensed Consolidated Statements of Cash Flows. Beginning in 2018, the Company records any excess tax benefits or deficiencies from its equity awards as part of the provision for income taxes in its Condensed Consolidated Statements of Operations in the reporting periods in which equity vesting occurs. The Company elected to apply the cash flow classification requirements related to excess tax benefits retrospectively to all periods presented, which resulted in an increase to cash generated by operating activities in the Condensed Consolidated Statements of Cash Flows of $534 million for the nine months ended July 1, 2017.
Apple Inc. | Q3 2018 Form 10-Q | 5
Earnings Per Share
The following table shows the computation of basic and diluted earnings per share for the three- and nine-month periods ended June 30, 2018 and July 1, 2017 (net income in millions and shares in thousands):
Three Months Ended | Nine Months Ended | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
Numerator: | |||||||||||||||
Net income | $ | 11,519 | $ | 8,717 | $ | 45,406 | $ | 37,637 | |||||||
Denominator: | |||||||||||||||
Weighted-average basic shares outstanding | 4,882,167 | 5,195,088 | 5,006,640 | 5,239,847 | |||||||||||
Effect of dilutive securities | 44,442 | 38,411 | 44,323 | 34,547 | |||||||||||
Weighted-average diluted shares | 4,926,609 | 5,233,499 | 5,050,963 | 5,274,394 | |||||||||||
Basic earnings per share | $ | 2.36 | $ | 1.68 | $ | 9.07 | $ | 7.18 | |||||||
Diluted earnings per share | $ | 2.34 | $ | 1.67 | $ | 8.99 | $ | 7.14 | |||||||
Note 2 – Financial Instruments
Cash, Cash Equivalents and Marketable Securities
The following tables show the Company’s cash and available-for-sale securities by significant investment category as of June 30, 2018 and September 30, 2017 (in millions):
June 30, 2018 | |||||||||||||||||||||||||||
Adjusted Cost | Unrealized Gains | Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-Term Marketable Securities | Long-Term Marketable Securities | |||||||||||||||||||||
Cash | $ | 9,973 | $ | — | $ | — | $ | 9,973 | $ | 9,973 | $ | — | $ | — | |||||||||||||
Level 1 (1): | |||||||||||||||||||||||||||
Money market funds | 7,722 | — | — | 7,722 | 7,722 | — | — | ||||||||||||||||||||
Mutual funds | 799 | — | (112 | ) | 687 | — | 687 | — | |||||||||||||||||||
Subtotal | 8,521 | — | (112 | ) | 8,409 | 7,722 | 687 | — | |||||||||||||||||||
Level 2 (2): | |||||||||||||||||||||||||||
U.S. Treasury securities | 47,056 | 1 | (1,055 | ) | 46,002 | 350 | 7,262 | 38,390 | |||||||||||||||||||
U.S. agency securities | 6,994 | — | (44 | ) | 6,950 | 4,477 | 483 | 1,990 | |||||||||||||||||||
Non-U.S. government securities | 11,774 | 40 | (282 | ) | 11,532 | — | 1,124 | 10,408 | |||||||||||||||||||
Certificates of deposit and time deposits | 5,662 | — | — | 5,662 | 3,649 | 1,412 | 601 | ||||||||||||||||||||
Commercial paper | 7,064 | — | — | 7,064 | 5,653 | 1,411 | — | ||||||||||||||||||||
Corporate securities | 130,945 | 129 | (2,246 | ) | 128,828 | 147 | 25,874 | 102,807 | |||||||||||||||||||
Municipal securities | 956 | — | (8 | ) | 948 | — | 172 | 776 | |||||||||||||||||||
Mortgage- and asset-backed securities | 18,919 | 9 | (553 | ) | 18,375 | — | 574 | 17,801 | |||||||||||||||||||
Subtotal | 229,370 | 179 | (4,188 | ) | 225,361 | 14,276 | 38,312 | 172,773 | |||||||||||||||||||
Total (3) | $ | 247,864 | $ | 179 | $ | (4,300 | ) | $ | 243,743 | $ | 31,971 | $ | 38,999 | $ | 172,773 | ||||||||||||
Apple Inc. | Q3 2018 Form 10-Q | 6
September 30, 2017 | |||||||||||||||||||||||||||
Adjusted Cost | Unrealized Gains | Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-Term Marketable Securities | Long-Term Marketable Securities | |||||||||||||||||||||
Cash | $ | 7,982 | $ | — | $ | — | $ | 7,982 | $ | 7,982 | $ | — | $ | — | |||||||||||||
Level 1 (1): | |||||||||||||||||||||||||||
Money market funds | 6,534 | — | — | 6,534 | 6,534 | — | — | ||||||||||||||||||||
Mutual funds | 799 | — | (88 | ) | 711 | — | 711 | — | |||||||||||||||||||
Subtotal | 7,333 | — | (88 | ) | 7,245 | 6,534 | 711 | — | |||||||||||||||||||
Level 2 (2): | |||||||||||||||||||||||||||
U.S. Treasury securities | 55,254 | 58 | (230 | ) | 55,082 | 865 | 17,228 | 36,989 | |||||||||||||||||||
U.S. agency securities | 5,162 | 2 | (9 | ) | 5,155 | 1,439 | 2,057 | 1,659 | |||||||||||||||||||
Non-U.S. government securities | 7,827 | 210 | (37 | ) | 8,000 | 9 | 123 | 7,868 | |||||||||||||||||||
Certificates of deposit and time deposits | 5,832 | — | — | 5,832 | 1,142 | 3,918 | 772 | ||||||||||||||||||||
Commercial paper | 3,640 | — | — | 3,640 | 2,146 | 1,494 | — | ||||||||||||||||||||
Corporate securities | 152,724 | 969 | (242 | ) | 153,451 | 172 | 27,591 | 125,688 | |||||||||||||||||||
Municipal securities | 961 | 4 | (1 | ) | 964 | — | 114 | 850 | |||||||||||||||||||
Mortgage- and asset-backed securities | 21,684 | 35 | (175 | ) | 21,544 | — | 656 | 20,888 | |||||||||||||||||||
Subtotal | 253,084 | 1,278 | (694 | ) | 253,668 | 5,773 | 53,181 | 194,714 | |||||||||||||||||||
Total | $ | 268,399 | $ | 1,278 | $ | (782 | ) | $ | 268,895 | $ | 20,289 | $ | 53,892 | $ | 194,714 | ||||||||||||
(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 June 30, 2018, total cash, cash equivalents and marketable securities included $8.8 billion, related to the State Aid Decision (see Note 4, “Income Taxes”) and other agreements, which was restricted from general use. |
The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration and duration management. The maturities of the Company’s long-term marketable securities generally range from one to five years.
The following tables show information about the Company’s marketable securities that had been in a continuous unrealized loss position for less than 12 months and for 12 months or greater as of June 30, 2018 and September 30, 2017 (in millions):
June 30, 2018 | |||||||||||
Continuous Unrealized Losses | |||||||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||
Fair value of marketable securities | $ | 150,468 | $ | 36,960 | $ | 187,428 | |||||
Unrealized losses | $ | (3,134 | ) | $ | (1,166 | ) | $ | (4,300 | ) | ||
September 30, 2017 | |||||||||||
Continuous Unrealized Losses | |||||||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||
Fair value of marketable securities | $ | 101,986 | $ | 8,290 | $ | 110,276 | |||||
Unrealized losses | $ | (596 | ) | $ | (186 | ) | $ | (782 | ) | ||
Apple Inc. | Q3 2018 Form 10-Q | 7
The Company typically invests in highly rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer. The policy generally requires securities to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and the Company’s intent to sell, or whether it is more likely than not it will be required to sell the investment before recovery of the investment’s cost basis. As of June 30, 2018, the Company does not consider any of its investments to be other-than-temporarily impaired.
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, on net investments in certain foreign subsidiaries and on 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 and 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 help 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 and who sell in local currencies 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 help protect the net investment in a foreign operation from adverse changes in foreign currency exchange rates, the Company may enter into foreign currency forward and option contracts to offset 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 economic hedges of its net investments in certain foreign subsidiaries. In both of these cases, the Company designates these instruments as net investment hedges.
To help 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 June 30, 2018, the Company’s hedged term debt– and marketable securities–related foreign currency transactions are expected to be recognized within 24 years.
The Company may also enter into non-designated foreign currency contracts to partially offset the foreign currency exchange gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies.
To help 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 June 30, 2018, the Company’s hedged interest rate transactions are expected to be recognized within 9 years.
Cash Flow Hedges
The effective portions of cash flow hedges are recorded 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 in the same period as the related income or expense is recognized. The ineffective portions and amounts excluded from the effectiveness testing of cash flow hedges are recognized in other income/(expense), net.
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 other income/(expense), net in the period of de-designation. Any subsequent changes in fair value of such derivative instruments are reflected in other income/(expense), net unless they are re-designated as hedges of other transactions.
Apple Inc. | Q3 2018 Form 10-Q | 8
Net Investment Hedges
The effective portions of net investment hedges are recorded in other comprehensive income/(loss) (“OCI”) as a part of the cumulative translation adjustment. The ineffective portions and amounts excluded from the effectiveness testing of net investment hedges are recognized in other income/(expense), net.
Fair Value Hedges
Gains and losses related to changes in fair value hedges are recognized in earnings along with a corresponding loss or gain related to the change in value of the underlying hedged item.
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. As a result, during the three- and nine-month periods ended June 30, 2018, respectively, the Company recognized a gain of $135 million and a loss of $7 million in net sales, a gain of $151 million and a loss of $61 million in cost of sales and a gain of $254 million and a loss of $119 million in other income/(expense), net. During the three- and nine-month periods ended July 1, 2017, respectively, the Company recognized a loss of $77 million and a gain of $129 million in net sales, gains of $12 million and $91 million in cost of sales and gains of $49 million and $481 million in other income/(expense), net.
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 June 30, 2018 and September 30, 2017 (in millions):
June 30, 2018 | |||||||||||
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 | $ | 850 | $ | 385 | $ | 1,235 | |||||
Interest rate contracts | $ | — | $ | — | $ | — | |||||
Derivative liabilities (2): | |||||||||||
Foreign exchange contracts | $ | 357 | $ | 221 | $ | 578 | |||||
Interest rate contracts | $ | 1,271 | $ | — | $ | 1,271 | |||||
September 30, 2017 | |||||||||||
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 | $ | 1,049 | $ | 363 | $ | 1,412 | |||||
Interest rate contracts | $ | 218 | $ | — | $ | 218 | |||||
Derivative liabilities (2): | |||||||||||
Foreign exchange contracts | $ | 759 | $ | 501 | $ | 1,260 | |||||
Interest rate contracts | $ | 303 | $ | — | $ | 303 | |||||
(1) | The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as 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 recorded as accrued expenses and other non-current liabilities in the Condensed Consolidated Balance Sheets. |
Apple Inc. | Q3 2018 Form 10-Q | 9
The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow, net investment and fair value hedges in OCI and the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended June 30, 2018 and July 1, 2017 (in millions):
Three Months Ended | Nine Months Ended | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
Gains/(Losses) recognized in OCI – effective portion: | |||||||||||||||
Cash flow hedges: | |||||||||||||||
Foreign exchange contracts | $ | 40 | $ | (143 | ) | $ | 230 | $ | 1,267 | ||||||
Interest rate contracts | — | (2 | ) | 1 | 7 | ||||||||||
Total | $ | 40 | $ | (145 | ) | $ | 231 | $ | 1,274 | ||||||
Net investment hedges: | |||||||||||||||
Foreign currency debt | $ | 13 | $ | 16 | $ | (18 | ) | $ | 53 | ||||||
Gains/(Losses) reclassified from AOCI into net income – effective portion: | |||||||||||||||
Cash flow hedges: | |||||||||||||||
Foreign exchange contracts | $ | (1,231 | ) | $ | 585 | $ | (1,068 | ) | $ | 1,418 | |||||
Interest rate contracts | — | — | 3 | (3 | ) | ||||||||||
Total | $ | (1,231 | ) | $ | 585 | $ | (1,065 | ) | $ | 1,415 | |||||
Gains/(Losses) on derivative instruments: | |||||||||||||||
Fair value hedges: | |||||||||||||||
Foreign exchange contracts | $ | 31 | $ | — | $ | 31 | $ | — | |||||||
Interest rate contracts | (230 | ) | 185 | (1,178 | ) | (737 | ) | ||||||||
Total | $ | (199 | ) | $ | 185 | $ | (1,147 | ) | $ | (737 | ) | ||||
Gains/(Losses) related to hedged items: | |||||||||||||||
Fair value hedges: | |||||||||||||||
Marketable securities | $ | (31 | ) | $ | — | $ | (31 | ) | $ | — | |||||
Fixed-rate debt | 230 | (185 | ) | 1,178 | 737 | ||||||||||
Total | $ | 199 | $ | (185 | ) | $ | 1,147 | $ | 737 | ||||||
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 June 30, 2018 and September 30, 2017 (in millions):
June 30, 2018 | September 30, 2017 | ||||||||||||||
Notional Amount | Credit Risk Amount | Notional Amount | Credit Risk Amount | ||||||||||||
Instruments designated as accounting hedges: | |||||||||||||||
Foreign exchange contracts | $ | 36,807 | $ | 850 | $ | 56,156 | $ | 1,049 | |||||||
Interest rate contracts | $ | 33,250 | $ | — | $ | 33,000 | $ | 218 | |||||||
Instruments not designated as accounting hedges: | |||||||||||||||
Foreign exchange contracts | $ | 50,936 | $ | 385 | $ | 69,774 | $ | 363 | |||||||
Apple Inc. | Q3 2018 Form 10-Q | 10
The notional amounts for outstanding derivative instruments provide one measure of the transaction volume outstanding and do not represent the amount of the Company’s exposure to credit or market loss. The credit risk amounts represent the Company’s gross exposure to potential accounting loss on derivative instruments that are outstanding or unsettled if all counterparties failed to perform according to the terms of the contract, based on then-current currency or interest rates at each respective date. The Company’s exposure to credit loss and market risk will vary over time as currency and interest rates change. Although the table above reflects the notional and credit risk amounts of the Company’s derivative instruments, it does not reflect the gains or losses associated with the exposures and transactions that the instruments are intended to hedge. The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments.
The Company generally enters into master netting arrangements, which are designed to reduce credit risk by permitting net settlement of transactions with the same counterparty. To further limit credit risk, the Company generally enters into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds. The Company presents its derivative assets and derivative liabilities at their gross fair values in its Condensed Consolidated Balance Sheets. As of June 30, 2018, the net cash collateral posted by the Company related to derivative instruments under its collateral security arrangements was $211 million, which was recorded as other current assets in the Condensed Consolidated Balance Sheet. As of September 30, 2017, the net cash collateral received by the Company related to derivative instruments under its collateral security arrangements was $35 million, which was recorded as accrued expenses in the Condensed Consolidated Balance Sheet.
Under master netting arrangements with the respective counterparties to the Company’s derivative contracts, the Company is allowed to net settle transactions with a single net amount payable by one party to the other. As of June 30, 2018 and September 30, 2017, 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 $1.5 billion and $1.4 billion, respectively, resulting in a net derivative liability of $403 million and a net derivative asset of $32 million, respectively.
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.
The Company had no customers that individually represented 10% or more of total trade receivables as of June 30, 2018. As of September 30, 2017, the Company had two customers that individually represented 10% or more of total trade receivables, each of which accounted for 10%. The Company’s cellular network carriers accounted for 45% and 59% of total trade receivables as of June 30, 2018 and September 30, 2017, 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 sub-assemblies or assemble final products for the Company. The Company purchases these components directly from suppliers. As of June 30, 2018, the Company had three vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 54%, 12% and 11%. As of September 30, 2017, the Company had three vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 42%, 19% and 10%.
Apple Inc. | Q3 2018 Form 10-Q | 11
Note 3 – Condensed Consolidated Financial Statement Details
The following tables show the Company’s condensed consolidated financial statement details as of June 30, 2018 and September 30, 2017 (in millions):
Inventories
June 30, 2018 | September 30, 2017 | ||||||
Components | $ | 4,287 | $ | 3,025 | |||
Finished goods | 1,649 | 1,830 | |||||
Total inventories | $ | 5,936 | $ | 4,855 | |||
Property, Plant and Equipment, Net
June 30, 2018 | September 30, 2017 | ||||||
Land and buildings | $ | 15,409 | $ | 13,587 | |||
Machinery, equipment and internal-use software | 62,060 | 54,210 | |||||
Leasehold improvements | 7,899 | 7,279 | |||||
Gross property, plant and equipment | 85,368 | 75,076 | |||||
Accumulated depreciation and amortization | (47,251 | ) | (41,293 | ) | |||
Total property, plant and equipment, net | $ | 38,117 | $ | 33,783 | |||
Other Non-Current Liabilities
June 30, 2018 | September 30, 2017 | ||||||
Long-term taxes payable | $ | 34,029 | $ | 257 | |||
Deferred tax liabilities | 398 | 31,504 | |||||
Other non-current liabilities | 11,267 | 8,654 | |||||
Total other non-current liabilities | $ | 45,694 | $ | 40,415 | |||
Other Income/(Expense), Net
The following table shows the detail of other income/(expense), net for the three- and nine-month periods ended June 30, 2018 and July 1, 2017 (in millions):
Three Months Ended | Nine Months Ended | ||||||||||||||
June 30, 2018 | July 1, 2017 | June 30, 2018 | July 1, 2017 | ||||||||||||
Interest and dividend income | $ | 1,418 | $ | 1,327 | $ | 4,375 | $ | 3,833 | |||||||
Interest expense | (846 | ) | (602 | ) | (2,372 | ) | (1,657 | ) | |||||||
Other income/(expense), net | 100 | (185 | ) | (301 | ) | (228 | ) | ||||||||
Total other income/(expense), net | $ | 672 | $ | 540 | $ | 1,702 | $ | 1,948 | |||||||
Apple Inc. | Q3 2018 Form 10-Q | 12
Note 4 – Income Taxes
U.S. Tax Cuts and Jobs Act and Provisional Estimates
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which significantly changed U.S. tax law. The Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on previously deferred foreign income. The Act also created a new minimum tax on certain future foreign earnings. During the first quarter of 2018, the Company’s income tax expense included a provisional estimate of $2.6 billion in accordance with the U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 118. This $2.6 billion provisional estimate included $1.8 billion related to the impact of remeasuring the Company’s deferred tax balances to reflect the new lower tax rate, and approximately $800 million associated with the net impact of the deemed repatriation tax. During the third quarter of 2018, the Company reduced its estimate of the deemed repatriation tax by $1.0 billion and adjusted the estimated impact of the deemed repatriation tax on unrecognized tax benefits by $700 million, resulting in the reduction of the Company’s provisional estimate from $2.6 billion to $900 million. The adjustments to the provisional estimate for the deemed repatriation tax and unrecognized tax benefits are discussed below and their impact was included in the Company’s income tax expense during the third quarter of 2018.
Deferred Tax Balances
As a result of the Act, the Company remeasured certain deferred tax assets and liabilities based on the revised rates at which they are expected to reverse, including items for which the related income tax effects were originally recognized in OCI. In addition, the Company elected to record certain deferred tax assets and liabilities related to the new minimum tax on certain future foreign earnings. The provisional estimate of $1.8 billion noted above incorporates assumptions based upon the best available interpretation of the Act and may change as the Company receives additional clarification and implementation guidance.
During the second quarter of 2018, the FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). ASU 2018-02 allows an entity to elect to reclassify the income tax effects of the Act on items within AOCI to retained earnings. The Company elected to apply the provision of ASU 2018-02 at the beginning of the second quarter of 2018 with a reclassification of net tax benefits related to cumulative foreign currency translation and unrealized gains/losses on derivative instruments and marketable securities, resulting in a $278 million decrease in AOCI and a corresponding increase in retained earnings in the Condensed Consolidated Balance Sheet.
Deemed Repatriation Tax
As of September 30, 2017, the Company had a U.S. deferred tax liability of $36.4 billion for deferred foreign income. During the first quarter of 2018 the Company replaced $36.1 billion of its U.S. deferred tax liability with a provisional deemed repatriation tax payable of $38.0 billion, which was based on the Company’s cumulative post-1986 deferred foreign income. The Company’s estimate of the deemed repatriation tax is based, in part, on the amount of cash and other specified assets anticipated to be held by the Company’s foreign subsidiaries as of September 29, 2018. Therefore, the provisional tax payable is subject to change as the asset amounts are finalized. During the third quarter of 2018, the Company reduced its provisional tax payable by $1.0 billion to $37.0 billion due, in part, to revised estimates of the amount of cash and other specified assets anticipated to be held by the Company’s foreign subsidiaries as of September 29, 2018. The Company plans to pay the tax in installments in accordance with the Act.
Unrecognized Tax Benefits
As of June 30, 2018, the Company had gross unrecognized tax benefits of $9.4 billion. These gross unrecognized tax benefits have been offset by certain tax deposits and reduced by the estimated impact of the deemed repatriation tax. As of December 30, 2017, the estimated impact of the deemed repatriation tax on unrecognized tax benefits was $1.1 billion. During the third quarter of 2018, the Company increased the estimated impact of the deemed repatriation tax on unrecognized tax benefits by $700 million, resulting in a revised total estimated impact of $1.8 billion. Upon recognition, $7.3 billion of the unrecognized tax benefits would impact the Company’s effective tax rate. The Company had accrued $1.3 billion of gross interest and penalties as of June 30, 2018. Both the net unrecognized tax benefits and the interest and penalties are classified as other non-current liabilities in the Condensed Consolidated Balance Sheet.
Apple Inc. | Q3 2018 Form 10-Q | 13
The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. The U.S. Internal Revenue Service concluded its review of the years 2013 through 2015 during the third quarter of 2018. All years prior to 2016 are now closed. The Company is also subject to audits by state, local and foreign tax authorities. In major states and major foreign jurisdictions, the years subsequent to 2003 generally remain open and could be subject to examination by the taxing authorities. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner inconsistent with its expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Although timing of resolution and/or closure of audits is not certain, the Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease (either by payment, release or a combination of both) in the next 12 months by as much as $500 million.
European Commission State Aid Decision
On August 30, 2016, the European Commission announced its decision that Ireland granted state aid to the Company by providing tax opinions in 1991 and 2007 concerning the tax allocation of profits of the Irish branches of two subsidiaries of the Company (the “State Aid Decision”). The State Aid Decision ordered Ireland to calculate and recover additional taxes from the Company for the period June 2003 through December 2014. The recovery amount was calculated to be €13 billion, plus interest of €1 billion. Irish legislative changes, effective as of January 2015, eliminated the application of the tax opinions from that date forward. The Company believes the State Aid Decision to be without merit and appealed to the General Court of the Court of Justice of the European Union. Ireland has also appealed the State Aid Decision. The Company believes that any incremental Irish corporate income taxes potentially due related to the State Aid Decision would be creditable against U.S. taxes, subject to any foreign tax credit limitations in the Act. During the third quarter of 2018, the Company began funding amounts into escrow, where they will remain pending conclusion of all appeals. As of June 30, 2018, €4.5 billion of the recovery amount was funded into escrow and was restricted from general use. Refer to Note 2, “Financial Instruments” for more information. Subsequent to June 30, 2018, the Company has funded an additional €4.5 billion of the recovery amount into escrow.
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 both June 30, 2018 and September 30, 2017, the Company had $12.0 billion of Commercial Paper outstanding with maturities generally less than nine months. The weighted-average interest rate of the Company’s Commercial Paper was 2.03% as of June 30, 2018 and 1.20% as of September 30, 2017. The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for the nine months ended June 30, 2018 and July 1, 2017 (in millions):
Nine Months Ended | |||||||
June 30, 2018 | July 1, 2017 | ||||||
Maturities 90 days or less: | |||||||
Proceeds from/(Repayments of) commercial paper, net | $ | 2,619 | $ | (143 | ) | ||
Maturities greater than 90 days: | |||||||
Proceeds from commercial paper | 9,782 | 12,633 | |||||
Repayments of commercial paper | (12,411 | ) | (8,624 | ) | |||
Proceeds from/(Repayments of) commercial paper, net | (2,629 | ) | 4,009 | ||||
Total change in commercial paper, net | $ | (10 | ) | $ | 3,866 | ||
Term Debt
As of June 30, 2018, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $104.1 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, quarterly for the U.S. dollar–denominated and Australian dollar–denominated floating-rate notes, semi-annually for the U.S. dollar–denominated, Australian dollar–denominated, British pound–denominated, Japanese yen–denominated and Canadian dollar–denominated fixed-rate notes and annually for the euro-denominated and Swiss franc–denominated fixed-rate notes.
Apple Inc. | Q3 2018 Form 10-Q | 14
The following table provides a summary of the Company’s term debt as of June 30, 2018 and September 30, 2017:
Maturities | June 30, 2018 | September 30, 2017 | |||||||||||||||||||||
Amount (in millions) | Effective Interest Rate | Amount (in millions) | Effective Interest Rate | ||||||||||||||||||||
2013 debt issuance of $17.0 billion: | |||||||||||||||||||||||
Floating-rate notes | — | $ | — | — | % | $ | 2,000 | 1.10% | 1.10 | % | |||||||||||||
Fixed-rate 2.400% – 3.850% notes | 2023 | – | 2043 | 8,500 | 2.44% | – | 3.91 | % | 12,500 | 1.08% | – | 3.91 | % | ||||||||||
2014 debt issuance of $12.0 billion: | |||||||||||||||||||||||
Floating-rate notes | 2019 | 2019 | 1,000 | 2.66% | 2.66 | % | 1,000 | 1.61% | 1.61 | % | |||||||||||||
Fixed-rate 2.100% – 4.450% notes | 2019 | – | 2044 | 8,500 | 2.66% | – | 4.48 | % | 8,500 | 1.61% | – | 4.48 | % | ||||||||||
2015 debt issuances of $27.3 billion: | |||||||||||||||||||||||
Floating-rate notes | 2019 | – | 2020 | 1,517 | 1.87% | – | 2.66 | % | 1,549 | 1.56% | – | 1.87 | % | ||||||||||
Fixed-rate 0.350% – 4.375% notes | 2019 | – | 2045 | 24,395 | 0.28% | – | 4.51 | % | 24,522 | 0.28% | – | 4.51 | % | ||||||||||
2016 debt issuances of $24.9 billion: | |||||||||||||||||||||||
Floating-rate notes | 2019 | – | 2021 | 1,350 | 2.50% | – | 3.46 | % | 1,350 | 1.45% | – | 2.44 | % | ||||||||||
Fixed-rate 1.100% – 4.650% notes | 2019 | – | 2046 | 23,079 | 1.13% | – | 4.78 | % | 23,645 | 1.13% | – | 4.78 | % | ||||||||||
2017 debt issuances of $28.7 billion: | |||||||||||||||||||||||
Floating-rate notes | 2019 | – | 2022 | 3,250 | 2.43% | – | 2.87 | % | 3,250 | 1.38% | – | 1.81 | % | ||||||||||
Fixed-rate 0.875% – 4.300% notes | 2019 | – | 2047 | 25,533 | 1.54% | – | 4.30 | % | 25,705 | 1.51% | – | 4.30 | % | ||||||||||
First quarter 2018 debt issuance of $7.0 billion: | |||||||||||||||||||||||
Fixed-rate 1.800% notes | 2019 | 1,000 | 1.83 | % | — | — | % | ||||||||||||||||
Fixed-rate 2.000% notes | 2020 | 1,000 | 2.03 | % | — | — | % | ||||||||||||||||
Fixed-rate 2.400% notes | 2023 | 750 | 2.66 | % | — | — | |||||||||||||||||