falsedesktopAAPL2019-12-28000032019320000010{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Title of each class\tTrading symbol(s) Name of each exchange on which registered\nCommon Stock $0.00001 par value per share\tAAPL The Nasdaq Stock Market LLC\n1.000% Notes due 2022-The Nasdaq Stock Market LLC\t\n1.375% Notes due 2024-The Nasdaq Stock Market LLC\t\n0.000% Notes due 2025-The Nasdaq Stock Market LLC\t\n0.875% Notes due 2025-The Nasdaq Stock Market LLC\t\n1.625% Notes due 2026-The Nasdaq Stock Market LLC\t\n2.000% Notes due 2027-The Nasdaq Stock Market LLC\t\n1.375% Notes due 2029-The Nasdaq Stock Market LLC\t\n3.050% Notes due 2029-The Nasdaq Stock Market LLC\t\n0.500% Notes due 2031-The Nasdaq Stock Market LLC\t\n3.600% Notes due 2042-The Nasdaq Stock Market LLC\t\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\t24\nItem 3.\tQuantitative and Qualitative Disclosures About Market Risk\t31\nItem 4.\tControls and Procedures\t31\nPart II\t\t\nItem 1.\tLegal Proceedings\t32\nItem 1A.\tRisk Factors\t32\nItem 2.\tUnregistered Sales of Equity Securities and Use of Proceeds\t33\nItem 3.\tDefaults Upon Senior Securities\t33\nItem 4.\tMine Safety Disclosures\t33\nItem 5.\tOther Information\t33\nItem 6.\tExhibits\t34\n", "q10k_tbl_3": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nNet sales:\t\t\nProducts\t79104\t73435\nServices\t12715\t10875\nTotal net sales\t91819\t84310\nCost of sales:\t\t\nProducts\t52075\t48238\nServices\t4527\t4041\nTotal cost of sales\t56602\t52279\nGross margin\t35217\t32031\nOperating expenses:\t\t\nResearch and development\t4451\t3902\nSelling general and administrative\t5197\t4783\nTotal operating expenses\t9648\t8685\nOperating income\t25569\t23346\nOther income/(expense) net\t349\t560\nIncome before provision for income taxes\t25918\t23906\nProvision for income taxes\t3682\t3941\nNet income\t22236\t19965\nEarnings per share:\t\t\nBasic\t5.04\t4.22\nDiluted\t4.99\t4.18\nShares used in computing earnings per share:\t\t\nBasic\t4415040\t4735820\nDiluted\t4454604\t4773252\n", "q10k_tbl_4": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nNet income\t22236\t19965\nOther comprehensive income/(loss):\t\t\nChange in foreign currency translation net of tax\t202\t(78)\nChange in unrealized gains/losses on derivative instruments net of tax:\t\t\nChange in fair value of derivatives\t111\t(334)\nAdjustment for net (gains)/losses realized and included in net income\t(398)\t42\nTotal change in unrealized gains/losses on derivative instruments\t(287)\t(292)\nChange in unrealized gains/losses on marketable securities net of tax:\t\t\nChange in fair value of marketable securities\t125\t110\nAdjustment for net (gains)/losses realized and included in net income\t(10)\t37\nTotal change in unrealized gains/losses on marketable securities\t115\t147\nTotal other comprehensive income/(loss)\t30\t(223)\nTotal comprehensive income\t22266\t19742\n", "q10k_tbl_5": "\tDecember 28 2019\tSeptember 28 2019\nASSETS:\t\t\nCurrent assets:\t\t\nCash and cash equivalents\t39771\t48844\nMarketable securities\t67391\t51713\nAccounts receivable net\t20970\t22926\nInventories\t4097\t4106\nVendor non-trade receivables\t18976\t22878\nOther current assets\t12026\t12352\nTotal current assets\t163231\t162819\nNon-current assets:\t\t\nMarketable securities\t99899\t105341\nProperty plant and equipment net\t37031\t37378\nOther non-current assets\t40457\t32978\nTotal non-current assets\t177387\t175697\nTotal assets\t340618\t338516\nLIABILITIES AND SHAREHOLDERS' EQUITY:\t\t\nCurrent liabilities:\t\t\nAccounts payable\t45111\t46236\nOther current liabilities\t36263\t37720\nDeferred revenue\t5573\t5522\nCommercial paper\t4990\t5980\nTerm debt\t10224\t10260\nTotal current liabilities\t102161\t105718\nNon-current liabilities:\t\t\nTerm debt\t93078\t91807\nOther non-current liabilities\t55848\t50503\nTotal non-current liabilities\t148926\t142310\nTotal liabilities\t251087\t248028\nCommitments and contingencies\t\t\nShareholders' equity:\t\t\nCommon stock and additional paid-in capital $0.00001 par value: 12600000 shares authorized; 4384959 and 4443236 shares issued and outstanding respectively\t45972\t45174\nRetained earnings\t43977\t45898\nAccumulated other comprehensive income/(loss)\t(418)\t(584)\nTotal shareholders' equity\t89531\t90488\nTotal liabilities and shareholders' equity\t340618\t338516\n", "q10k_tbl_6": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nTotal shareholders' equity beginning balances\t90488\t107147\nCommon stock and additional paid-in capital:\t\t\nBeginning balances\t45174\t40201\nCommon stock issued\t2\t0\nCommon stock withheld related to net share settlement of equity awards\t(951)\t(822)\nShare-based compensation\t1747\t1591\nEnding balances\t45972\t40970\nRetained earnings:\t\t\nBeginning balances\t45898\t70400\nNet income\t22236\t19965\nDividends and dividend equivalents declared\t(3485)\t(3526)\nCommon stock withheld related to net share settlement of equity awards\t(536)\t(594)\nCommon stock repurchased\t(20000)\t(8236)\nCumulative effects of changes in accounting principles\t(136)\t2501\nEnding balances\t43977\t80510\nAccumulated other comprehensive income/(loss):\t\t\nBeginning balances\t(584)\t(3454)\nOther comprehensive income/(loss)\t30\t(223)\nCumulative effects of changes in accounting principles\t136\t89\nEnding balances\t(418)\t(3588)\nTotal shareholders' equity ending balances\t89531\t117892\nDividends and dividend equivalents declared per share or RSU\t0.77\t0.73\n", "q10k_tbl_7": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nCash cash equivalents and restricted cash beginning balances\t50224\t25913\nOperating activities:\t\t\nNet income\t22236\t19965\nAdjustments to reconcile net income to cash generated by operating activities:\t\t\nDepreciation and amortization\t2816\t3395\nShare-based compensation expense\t1710\t1559\nDeferred income tax expense/(benefit)\t(349)\t53\nOther\t(142)\t(54)\nChanges in operating assets and liabilities:\t\t\nAccounts receivable net\t2015\t5130\nInventories\t(28)\t(1076)\nVendor non-trade receivables\t3902\t6905\nOther current and non-current assets\t(7054)\t(886)\nAccounts payable\t(1089)\t(8501)\nDeferred revenue\t985\t(370)\nOther current and non-current liabilities\t5514\t570\nCash generated by operating activities\t30516\t26690\nInvesting activities:\t\t\nPurchases of marketable securities\t(37416)\t(7077)\nProceeds from maturities of marketable securities\t19740\t7203\nProceeds from sales of marketable securities\t7280\t9723\nPayments for acquisition of property plant and equipment\t(2107)\t(3355)\nPayments made in connection with business acquisitions net\t(958)\t(167)\nPurchases of non-marketable securities\t(77)\t(427)\nOther\t(130)\t(56)\nCash generated by/(used in) investing activities\t(13668)\t5844\nFinancing activities:\t\t\nProceeds from issuance of common stock\t2\t0\nPayments for taxes related to net share settlement of equity awards\t(1379)\t(1318)\nPayments for dividends and dividend equivalents\t(3539)\t(3568)\nRepurchases of common stock\t(20706)\t(8796)\nProceeds from issuance of term debt net\t2210\t0\nRepayments of term debt\t(1000)\t0\nProceeds from/(Repayments of) commercial paper net\t(979)\t6\nOther\t(16)\t0\nCash used in financing activities\t(25407)\t(13676)\nIncrease/(Decrease) in cash cash equivalents and restricted cash\t(8559)\t18858\nCash cash equivalents and restricted cash ending balances\t41665\t44771\nSupplemental cash flow disclosure:\t\t\nCash paid for income taxes net\t4393\t4916\nCash paid for interest\t771\t836\n", "q10k_tbl_8": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nNumerator:\t\t\nNet income\t22236\t19965\nDenominator:\t\t\nWeighted-average basic shares outstanding\t4415040\t4735820\nEffect of dilutive securities\t39564\t37432\nWeighted-average diluted shares\t4454604\t4773252\nBasic earnings per share\t5.04\t4.22\nDiluted earnings per share\t4.99\t4.18\n", "q10k_tbl_9": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\niPhone (1)\t55957\t51982\nMac (1)\t7160\t7416\niPad (1)\t5977\t6729\nWearables Home and Accessories (1)(2)\t10010\t7308\nServices (3)\t12715\t10875\nTotal net sales (4)\t91819\t84310\n", "q10k_tbl_10": "\tDecember 28 2019\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\t11383\t0\t0\t11383\t11383\t0\t0\nLevel 1 (1):\t\t\t\t\t\t\t\nMoney market funds\t11535\t0\t0\t11535\t11535\t0\t0\nSubtotal\t11535\t0\t0\t11535\t11535\t0\t0\nLevel 2 (2):\t\t\t\t\t\t\t\nU.S. Treasury securities\t28600\t29\t(40)\t28589\t3950\t11069\t13570\nU.S. agency securities\t8302\t2\t(1)\t8303\t3703\t4095\t505\nNon-U.S. government securities\t18978\t324\t(92)\t19210\t289\t2637\t16284\nCertificates of deposit and time deposits\t12916\t0\t0\t12916\t4595\t6777\t1544\nCommercial paper\t17823\t0\t0\t17823\t4254\t13569\t0\nCorporate debt securities\t82007\t876\t(37)\t82846\t62\t27894\t54890\nMunicipal securities\t971\t11\t0\t982\t0\t35\t947\nMortgage- and asset-backed securities\t13475\t68\t(69)\t13474\t0\t1315\t12159\nSubtotal\t183072\t1310\t(239)\t184143\t16853\t67391\t99899\nTotal (3)\t205990\t1310\t(239)\t207061\t39771\t67391\t99899\n", "q10k_tbl_11": "\tSeptember 28 2019\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\t12204\t0\t0\t12204\t12204\t0\t0\nLevel 1 (1):\t\t\t\t\t\t\t\nMoney market funds\t15897\t0\t0\t15897\t15897\t0\t0\nSubtotal\t15897\t0\t0\t15897\t15897\t0\t0\nLevel 2 (2):\t\t\t\t\t\t\t\nU.S. Treasury securities\t30293\t33\t(62)\t30264\t6165\t9817\t14282\nU.S. agency securities\t9767\t1\t(3)\t9765\t6489\t2249\t1027\nNon-U.S. government securities\t19821\t337\t(50)\t20108\t749\t3168\t16191\nCertificates of deposit and time deposits\t4041\t0\t0\t4041\t2024\t1922\t95\nCommercial paper\t12433\t0\t0\t12433\t5193\t7240\t0\nCorporate debt securities\t85383\t756\t(92)\t86047\t123\t26127\t59797\nMunicipal securities\t958\t8\t(1)\t965\t0\t68\t897\nMortgage- and asset-backed securities\t14180\t67\t(73)\t14174\t0\t1122\t13052\nSubtotal\t176876\t1202\t(281)\t177797\t20743\t51713\t105341\nTotal (3)\t204977\t1202\t(281)\t205898\t48844\t51713\t105341\n", "q10k_tbl_12": "\tDecember 28 2019\tSeptember 28 2019\nCash and cash equivalents\t39771\t48844\nRestricted cash included in other current assets\t68\t23\nRestricted cash included in other non-current assets\t1826\t1357\nCash cash equivalents and restricted cash\t41665\t50224\n", "q10k_tbl_13": "\tDecember 28 2019\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\t1625\t327\t1952\nInterest rate contracts\t475\t0\t475\nDerivative liabilities (2):\t\t\t\nForeign exchange contracts\t964\t494\t1458\nInterest rate contracts\t57\t0\t57\n", "q10k_tbl_14": "\tSeptember 28 2019\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\t1798\t323\t2121\nInterest rate contracts\t685\t0\t685\nDerivative liabilities (2):\t\t\t\nForeign exchange contracts\t1341\t160\t1501\nInterest rate contracts\t105\t0\t105\n", "q10k_tbl_15": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nGains/(Losses) recognized in OCI - included in effectiveness assessment:\t\t\nCash flow hedges:\t\t\nForeign exchange contracts\t271\t(478)\nNet investment hedges:\t\t\nForeign currency debt\t24\t(16)\nGains/(Losses) reclassified from AOCI into net income - included in effectiveness assessment:\t\t\nCash flow hedges:\t\t\nForeign exchange contracts\t491\t(118)\nInterest rate contracts\t(2)\t(1)\nTotal\t489\t(119)\n", "q10k_tbl_16": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nGains/(Losses) on derivative instruments (1):\t\t\nForeign exchange contracts\t(183)\t402\nInterest rate contracts\t(162)\t657\nTotal\t(345)\t1059\nGains/(Losses) related to hedged items (1):\t\t\nMarketable securities\t183\t(402)\nFixed-rate debt\t162\t(657)\nTotal\t345\t(1059)\n", "q10k_tbl_17": "\tDecember 28 2019\nCarrying amounts of hedged assets/(liabilities):\t\nMarketable securities (2)\t15544\nFixed-rate debt (3)\t(28631)\nCumulative hedging adjustments included in the carrying amounts of hedged items:\t\nMarketable securities carrying amount increases/(decreases)\t(594)\nFixed-rate debt carrying amount (increases)/decreases\t(418)\n", "q10k_tbl_18": "\tDecember 28 2019\t\tSeptember 28 2019\t\n\tNotional Amount\tCredit Risk Amount\tNotional Amount\tCredit Risk Amount\nInstruments designated as accounting hedges:\t\t\t\t\nForeign exchange contracts\t54215\t1625\t61795\t1798\nInterest rate contracts\t28250\t475\t31250\t685\nInstruments not designated as accounting hedges:\t\t\t\t\nForeign exchange contracts\t96470\t327\t76868\t323\n", "q10k_tbl_19": "\tDecember 28 2019\tSeptember 28 2019\nLand and buildings\t17754\t17085\nMachinery equipment and internal-use software\t70841\t69797\nLeasehold improvements\t9395\t9075\nGross property plant and equipment\t97990\t95957\nAccumulated depreciation and amortization\t(60959)\t(58579)\nTotal property plant and equipment net\t37031\t37378\n", "q10k_tbl_20": "\tDecember 28 2019\tSeptember 28 2019\nLong-term taxes payable\t28198\t29545\nOther non-current liabilities\t27650\t20958\nTotal other non-current liabilities\t55848\t50503\n", "q10k_tbl_21": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nInterest and dividend income\t1045\t1307\nInterest expense\t(785)\t(890)\nOther income net\t89\t143\nTotal other income/(expense) net\t349\t560\n", "q10k_tbl_22": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nMaturities 90 days or less:\t\t\nProceeds from/(Repayments of) commercial paper net\t(175)\t2011\nMaturities greater than 90 days:\t\t\nProceeds from commercial paper\t1317\t2166\nRepayments of commercial paper\t(2121)\t(4171)\nRepayments of commercial paper net\t(804)\t(2005)\nTotal proceeds from/(repayments of) commercial paper net\t(979)\t6\n", "q10k_tbl_23": "\tMaturities (calendar year)\tDecember 28 2019\t\t\tSeptember 28 2019\t\t\n\tAmount (in millions)\tEffective Interest Rate\tAmount (in millions)\t\tEffective Interest Rate\n2013 - 2019 debt issuances:\t\t\t\t\t\t\t\nFloating-rate notes\t2020-2022\t4250\t1.97%-3.04\t%\t4250\t2.25%-3.28\t%\nFixed-rate 0.350% - 4.650% notes\t2020-2049\t96610\t0.28%-4.78\t%\t97429\t0.28%-4.78\t%\nFirst quarter 2020 debt issuance of €2.0 billion:\t\t\t\t\t\t\t\nFixed-rate 0.000% - 0.500% notes\t2025-2031\t2226\t0.03%-0.56\t%\t0\t\t-%\nTotal term debt\t\t103086\t\t\t101679\t\t\nUnamortized premium/(discount) and issuance costs net\t\t(229)\t\t\t(224)\t\t\nHedge accounting fair value adjustments\t\t445\t\t\t612\t\t\nLess: Current portion of term debt\t\t(10224)\t\t\t(10260)\t\t\nTotal non-current portion of term debt\t\t93078\t\t\t91807\t\t\n", "q10k_tbl_24": "\t\tThree Months Ended\t\nComprehensive Income Components\tFinancial Statement Line Items\tDecember 28 2019\tDecember 29 2018\nUnrealized (gains)/losses on derivative instruments:\t\t\t\nForeign exchange contracts\tTotal net sales\t(97)\t63\n\tTotal cost of sales\t(171)\t(375)\n\tOther income/(expense) net\t(223)\t396\nInterest rate contracts\tOther income/(expense) net\t2\t1\n\t\t(489)\t85\nUnrealized (gains)/losses on marketable securities\tOther income/(expense) net\t(13)\t47\nTotal amounts reclassified from AOCI\t\t(502)\t132\n", "q10k_tbl_25": "\tCumulative Foreign Currency Translation\tUnrealized Gains/Losses on Derivative Instruments\tUnrealized Gains/Losses on Marketable Securities\tTotal\nBalances as of September 28 2019\t(1463)\t172\t707\t(584)\nOther comprehensive income/(loss) before reclassifications\t207\t182\t163\t552\nAmounts reclassified from AOCI\t0\t(489)\t(13)\t(502)\nTax effect\t(5)\t20\t(35)\t(20)\nOther comprehensive income/(loss)\t202\t(287)\t115\t30\nCumulative effect of change in accounting principle (1)\t0\t136\t0\t136\nBalances as of December 28 2019\t(1261)\t21\t822\t(418)\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 28 2019\t81517\t169.18\t\nRSUs granted\t33775\t220.78\t\nRSUs vested\t(17837)\t150.42\t\nRSUs canceled\t(1435)\t184.51\t\nBalance as of December 28 2019\t96020\t190.59\t27827\n", "q10k_tbl_27": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nShare-based compensation expense\t1710\t1559\nIncome tax benefit related to share-based compensation expense\t(758)\t(750)\n", "q10k_tbl_28": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nBeginning accrued warranty and related costs\t3570\t3692\nCost of warranty claims\t(915)\t(996)\nAccruals for product warranty\t1218\t1123\nEnding accrued warranty and related costs\t3873\t3819\n", "q10k_tbl_29": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nAmericas:\t\t\nNet sales\t41367\t36940\nOperating income\t13092\t11200\nEurope:\t\t\nNet sales\t23273\t20363\nOperating income\t7719\t6658\nGreater China:\t\t\nNet sales\t13578\t13169\nOperating income\t5363\t5314\nJapan:\t\t\nNet sales\t6223\t6910\nOperating income\t2778\t3014\nRest of Asia Pacific:\t\t\nNet sales\t7378\t6928\nOperating income\t2731\t2560\n", "q10k_tbl_30": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nSegment operating income\t31683\t28746\nResearch and development expense\t(4451)\t(3902)\nOther corporate expenses net\t(1663)\t(1498)\nTotal operating income\t25569\t23346\n", "q10k_tbl_31": "Lease-Related Assets and Liabilities\tFinancial Statement Line Items\tDecember 28 2019\nRight-of-use assets:\t\t\nOperating leases\tOther non-current assets\t7262\nFinance leases\tProperty plant and equipment net\t629\nTotal right-of-use assets\t\t7891\nLease liabilities:\t\t\nOperating leases\tOther current liabilities\t1245\n\tOther non-current liabilities\t6573\nFinance leases\tOther current liabilities\t14\n\tOther non-current liabilities\t627\nTotal lease liabilities\t\t8459\n", "q10k_tbl_32": "\tOperating Leases\tFinance Leases\tTotal\n2020 (remaining nine months)\t1051\t23\t1074\n2021\t1398\t34\t1432\n2022\t1218\t35\t1253\n2023\t966\t46\t1012\n2024\t845\t25\t870\nThereafter\t3579\t921\t4500\nTotal undiscounted liabilities\t9057\t1084\t10141\nLess: Imputed interest\t(1239)\t(443)\t(1682)\nTotal lease liabilities\t7818\t641\t8459\n", "q10k_tbl_33": "\tThree Months Ended\t\t\n\tDecember 28 2019\tDecember 29 2018\tChange\nNet sales by category:\t\t\t\niPhone (1)\t55957\t51982\t8%\nMac (1)\t7160\t7416\t(3)%\niPad (1)\t5977\t6729\t(11)%\nWearables Home and Accessories (1)(2)\t10010\t7308\t37%\nServices (3)\t12715\t10875\t17%\nTotal net sales\t91819\t84310\t9%\n", "q10k_tbl_34": "\tThree Months Ended\t\t\n\tDecember 28 2019\tDecember 29 2018\tChange\nNet sales by reportable segment:\t\t\t\nAmericas\t41367\t36940\t12%\nEurope\t23273\t20363\t14%\nGreater China\t13578\t13169\t3%\nJapan\t6223\t6910\t(10)%\nRest of Asia Pacific\t7378\t6928\t6%\nTotal net sales\t91819\t84310\t9%\n", "q10k_tbl_35": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nGross margin:\t\t\nProducts\t27029\t25197\nServices\t8188\t6834\nTotal gross margin\t35217\t32031\nGross margin percentage:\t\t\nProducts\t34.2%\t34.3%\nServices\t64.4%\t62.8%\nTotal gross margin percentage\t38.4%\t38.0%\n", "q10k_tbl_36": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nResearch and development\t4451\t3902\nPercentage of total net sales\t5%\t5%\nSelling general and administrative\t5197\t4783\nPercentage of total net sales\t6%\t6%\nTotal operating expenses\t9648\t8685\nPercentage of total net sales\t11%\t10%\n", "q10k_tbl_37": "\tThree Months Ended\t\t\n\tDecember 28 2019\tDecember 29 2018\tChange\nInterest and dividend income\t1045\t1307\t\nInterest expense\t(785)\t(890)\t\nOther income net\t89\t143\t\nTotal other income/(expense) net\t349\t560\t(38)%\n", "q10k_tbl_38": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nProvision for income taxes\t3682\t3941\nEffective tax rate\t14.2%\t16.5%\nStatutory federal income tax rate\t21%\t21%\n", "q10k_tbl_39": "\tDecember 28 2019\tSeptember 28 2019\nCash cash equivalents and marketable securities (1)\t207061\t205898\nProperty plant and equipment net\t37031\t37378\nCommercial paper\t4990\t5980\nTotal term debt\t103302\t102067\nWorking capital\t61070\t57101\n", "q10k_tbl_40": "\tThree Months Ended\t\n\tDecember 28 2019\tDecember 29 2018\nCash generated by operating activities\t30516\t26690\nCash generated by/(used in) investing activities\t(13668)\t5844\nCash used in financing activities\t(25407)\t(13676)\n", "q10k_tbl_41": "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 29 2019 to November 2 2019:\t\t\t\t\nOpen market and privately negotiated purchases\t17988\t233.48\t17988\t\nNovember 3 2019 to November 30 2019:\t\t\t\t\nNovember 2019 ASR\t30396\t(2) (2)\t30396\t(2)\nOpen market and privately negotiated purchases\t16399\t262.21\t16399\t\nDecember 1 2019 to December 28 2019:\t\t\t\t\nOpen market and privately negotiated purchases\t5583\t268.68\t5583\t\nTotal\t70366\t\t\t58869\n", "q10k_tbl_42": "\t\tIncorporated by Reference\t\t\nExhibit Number\tExhibit Description\tForm\tExhibit\tFiling Date/ Period End Date\n4.1\tOfficer's Certificate of the Registrant dated as of November 15 2019 including forms of global notes representing the 0.000% Notes due 2025 and 0.500% Notes due 2031.\t8-K\t4.1\t11/15/19\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 28, 2019
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 ☒
4,375,480,000 shares of common stock were issued and outstanding as of January 17, 2020.
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 28, 2019
December 29, 2018
Net sales:
Products
$
79,104
$
73,435
Services
12,715
10,875
Total net sales
91,819
84,310
Cost of sales:
Products
52,075
48,238
Services
4,527
4,041
Total cost of sales
56,602
52,279
Gross margin
35,217
32,031
Operating expenses:
Research and development
4,451
3,902
Selling, general and administrative
5,197
4,783
Total operating expenses
9,648
8,685
Operating income
25,569
23,346
Other income/(expense), net
349
560
Income before provision for income taxes
25,918
23,906
Provision for income taxes
3,682
3,941
Net income
$
22,236
$
19,965
Earnings per share:
Basic
$
5.04
$
4.22
Diluted
$
4.99
$
4.18
Shares used in computing earnings per share:
Basic
4,415,040
4,735,820
Diluted
4,454,604
4,773,252
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2020 Form 10-Q | 1
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions)
Three Months Ended
December 28, 2019
December 29, 2018
Net income
$
22,236
$
19,965
Other comprehensive income/(loss):
Change in foreign currency translation, net of tax
202
(78
)
Change in unrealized gains/losses on derivative instruments, net of tax:
Change in fair value of derivatives
111
(334
)
Adjustment for net (gains)/losses realized and included in net income
(398
)
42
Total change in unrealized gains/losses on derivative instruments
(287
)
(292
)
Change in unrealized gains/losses on marketable securities, net of tax:
Change in fair value of marketable securities
125
110
Adjustment for net (gains)/losses realized and included in net income
(10
)
37
Total change in unrealized gains/losses on marketable securities
115
147
Total other comprehensive income/(loss)
30
(223
)
Total comprehensive income
$
22,266
$
19,742
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2020 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 28, 2019
September 28, 2019
ASSETS:
Current assets:
Cash and cash equivalents
$
39,771
$
48,844
Marketable securities
67,391
51,713
Accounts receivable, net
20,970
22,926
Inventories
4,097
4,106
Vendor non-trade receivables
18,976
22,878
Other current assets
12,026
12,352
Total current assets
163,231
162,819
Non-current assets:
Marketable securities
99,899
105,341
Property, plant and equipment, net
37,031
37,378
Other non-current assets
40,457
32,978
Total non-current assets
177,387
175,697
Total assets
$
340,618
$
338,516
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable
$
45,111
$
46,236
Other current liabilities
36,263
37,720
Deferred revenue
5,573
5,522
Commercial paper
4,990
5,980
Term debt
10,224
10,260
Total current liabilities
102,161
105,718
Non-current liabilities:
Term debt
93,078
91,807
Other non-current liabilities
55,848
50,503
Total non-current liabilities
148,926
142,310
Total liabilities
251,087
248,028
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,384,959 and 4,443,236 shares issued and outstanding, respectively
45,972
45,174
Retained earnings
43,977
45,898
Accumulated other comprehensive income/(loss)
(418
)
(584
)
Total shareholders’ equity
89,531
90,488
Total liabilities and shareholders’ equity
$
340,618
$
338,516
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2020 Form 10-Q | 3
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)
(In millions, except per share amounts)
Three Months Ended
December 28, 2019
December 29, 2018
Total shareholders’ equity, beginning balances
$
90,488
$
107,147
Common stock and additional paid-in capital:
Beginning balances
45,174
40,201
Common stock issued
2
—
Common stock withheld related to net share settlement of equity awards
(951
)
(822
)
Share-based compensation
1,747
1,591
Ending balances
45,972
40,970
Retained earnings:
Beginning balances
45,898
70,400
Net income
22,236
19,965
Dividends and dividend equivalents declared
(3,485
)
(3,526
)
Common stock withheld related to net share settlement of equity awards
(536
)
(594
)
Common stock repurchased
(20,000
)
(8,236
)
Cumulative effects of changes in accounting principles
(136
)
2,501
Ending balances
43,977
80,510
Accumulated other comprehensive income/(loss):
Beginning balances
(584
)
(3,454
)
Other comprehensive income/(loss)
30
(223
)
Cumulative effects of changes in accounting principles
136
89
Ending balances
(418
)
(3,588
)
Total shareholders’ equity, ending balances
$
89,531
$
117,892
Dividends and dividend equivalents declared per share or RSU
$
0.77
$
0.73
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2020 Form 10-Q | 4
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Three Months Ended
December 28, 2019
December 29, 2018
Cash, cash equivalents and restricted cash, beginning balances
$
50,224
$
25,913
Operating activities:
Net income
22,236
19,965
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization
2,816
3,395
Share-based compensation expense
1,710
1,559
Deferred income tax expense/(benefit)
(349
)
53
Other
(142
)
(54
)
Changes in operating assets and liabilities:
Accounts receivable, net
2,015
5,130
Inventories
(28
)
(1,076
)
Vendor non-trade receivables
3,902
6,905
Other current and non-current assets
(7,054
)
(886
)
Accounts payable
(1,089
)
(8,501
)
Deferred revenue
985
(370
)
Other current and non-current liabilities
5,514
570
Cash generated by operating activities
30,516
26,690
Investing activities:
Purchases of marketable securities
(37,416
)
(7,077
)
Proceeds from maturities of marketable securities
19,740
7,203
Proceeds from sales of marketable securities
7,280
9,723
Payments for acquisition of property, plant and equipment
(2,107
)
(3,355
)
Payments made in connection with business acquisitions, net
(958
)
(167
)
Purchases of non-marketable securities
(77
)
(427
)
Other
(130
)
(56
)
Cash generated by/(used in) investing activities
(13,668
)
5,844
Financing activities:
Proceeds from issuance of common stock
2
—
Payments for taxes related to net share settlement of equity awards
(1,379
)
(1,318
)
Payments for dividends and dividend equivalents
(3,539
)
(3,568
)
Repurchases of common stock
(20,706
)
(8,796
)
Proceeds from issuance of term debt, net
2,210
—
Repayments of term debt
(1,000
)
—
Proceeds from/(Repayments of) commercial paper, net
(979
)
6
Other
(16
)
—
Cash used in financing activities
(25,407
)
(13,676
)
Increase/(Decrease) in cash, cash equivalents and restricted cash
(8,559
)
18,858
Cash, cash equivalents and restricted cash, ending balances
$
41,665
$
44,771
Supplemental cash flow disclosure:
Cash paid for income taxes, net
$
4,393
$
4,916
Cash paid for interest
$
771
$
836
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q1 2020 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. 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 28, 2019 (the “2019 Form 10-K”).
The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. A 14th 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 2020 and 2019 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.
Recently Adopted Accounting Pronouncements
Leases
At the beginning of the first quarter of 2020, the Company adopted the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), and additional ASUs issued to clarify and update the guidance in ASU 2016-02 (collectively, the “new leases standard”), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements. The Company adopted the new leases standard utilizing the modified retrospective transition method, under which amounts in prior periods presented were not restated. For contracts existing at the time of adoption, the Company elected to not reassess (i) whether any are or contain leases, (ii) lease classification, and (iii) initial direct costs. Upon adoption, the Company recorded $7.5 billion of right-of-use (“ROU”) assets and $8.1 billion of lease liabilities on its Condensed Consolidated Balance Sheet.
Hedging
At the beginning of the first quarter of 2020, the Company adopted FASB ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). ASU 2017-12 expands component and fair value hedging, specifies the presentation of the effects of hedging instruments, eliminates the separate measurement and presentation of hedge ineffectiveness, and updates disclosure requirements related to hedging. The Company adopted ASU 2017-12 utilizing the modified retrospective transition method. Upon adoption, the Company recorded a $136 million increase in accumulated other comprehensive income/(loss) (“AOCI”) and a corresponding decrease in retained earnings in the Condensed Consolidated Statement of Shareholders’ Equity.
Apple Inc. | Q1 2020 Form 10-Q | 6
Earnings Per Share
The following table shows the computation of basic and diluted earnings per share for the three months ended December 28, 2019 and December 29, 2018 (net income in millions and shares in thousands):
Three Months Ended
December 28, 2019
December 29, 2018
Numerator:
Net income
$
22,236
$
19,965
Denominator:
Weighted-average basic shares outstanding
4,415,040
4,735,820
Effect of dilutive securities
39,564
37,432
Weighted-average diluted shares
4,454,604
4,773,252
Basic earnings per share
$
5.04
$
4.22
Diluted earnings per share
$
4.99
$
4.18
Potentially dilutive securities representing 28.8 million shares of common stock were excluded from the computation of diluted earnings per share for the three months ended December 29, 2018, because their effect would have been antidilutive.
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 capable of being 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.
Apple Inc. | Q1 2020 Form 10-Q | 7
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®, Mac App Store, TV App Store and Watch 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 28, 2019 and September 28, 2019, the Company had total deferred revenue of $9.1 billion and $8.1 billion, respectively. As of December 28, 2019, the Company expects 61% of total deferred revenue to be realized in less than a year, 29% within one-to-two years, 8% within two-to-three years and 2% in greater than three years.
Disaggregated Revenue
Net sales disaggregated by significant products and services for the three months ended December 28, 2019 and December 29, 2018 were as follows (in millions):
Three Months Ended
December 28, 2019
December 29, 2018
iPhone (1)
$
55,957
$
51,982
Mac (1)
7,160
7,416
iPad (1)
5,977
6,729
Wearables, Home and Accessories (1)(2)
10,010
7,308
Services (3)
12,715
10,875
Total net sales (4)
$
91,819
$
84,310
(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 digital content stores and streaming services, AppleCare®, licensing and other services. Services net sales also include amortization of the deferred value of Maps, Siri, and free iCloud and Apple TV+ services, which are bundled in the sales price of certain products.
(4)
Includes $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 and $2.4 billion of revenue recognized in the three months ended December 29, 2018 that was included in deferred revenue as of September 29, 2018.
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 28, 2019 and December 29, 2018.
Apple Inc. | Q1 2020 Form 10-Q | 8
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 28, 2019 and September 28, 2019 (in millions):
December 28, 2019
Adjusted
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Cash and
Cash
Equivalents
Current
Marketable
Securities
Non-Current Marketable Securities
Cash
$
11,383
$
—
$
—
$
11,383
$
11,383
$
—
$
—
Level 1 (1):
Money market funds
11,535
—
—
11,535
11,535
—
—
Subtotal
11,535
—
—
11,535
11,535
—
—
Level 2 (2):
U.S. Treasury securities
28,600
29
(40
)
28,589
3,950
11,069
13,570
U.S. agency securities
8,302
2
(1
)
8,303
3,703
4,095
505
Non-U.S. government securities
18,978
324
(92
)
19,210
289
2,637
16,284
Certificates of deposit and time deposits
12,916
—
—
12,916
4,595
6,777
1,544
Commercial paper
17,823
—
—
17,823
4,254
13,569
—
Corporate debt securities
82,007
876
(37
)
82,846
62
27,894
54,890
Municipal securities
971
11
—
982
—
35
947
Mortgage- and asset-backed securities
13,475
68
(69
)
13,474
—
1,315
12,159
Subtotal
183,072
1,310
(239
)
184,143
16,853
67,391
99,899
Total (3)
$
205,990
$
1,310
$
(239
)
$
207,061
$
39,771
$
67,391
$
99,899
September 28, 2019
Adjusted
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Cash and
Cash
Equivalents
Current
Marketable
Securities
Non-Current Marketable Securities
Cash
$
12,204
$
—
$
—
$
12,204
$
12,204
$
—
$
—
Level 1 (1):
Money market funds
15,897
—
—
15,897
15,897
—
—
Subtotal
15,897
—
—
15,897
15,897
—
—
Level 2 (2):
U.S. Treasury securities
30,293
33
(62
)
30,264
6,165
9,817
14,282
U.S. agency securities
9,767
1
(3
)
9,765
6,489
2,249
1,027
Non-U.S. government securities
19,821
337
(50
)
20,108
749
3,168
16,191
Certificates of deposit and time deposits
4,041
—
—
4,041
2,024
1,922
95
Commercial paper
12,433
—
—
12,433
5,193
7,240
—
Corporate debt securities
85,383
756
(92
)
86,047
123
26,127
59,797
Municipal securities
958
8
(1
)
965
—
68
897
Mortgage- and asset-backed securities
14,180
67
(73
)
14,174
—
1,122
13,052
Subtotal
176,876
1,202
(281
)
177,797
20,743
51,713
105,341
Total (3)
$
204,977
$
1,202
$
(281
)
$
205,898
$
48,844
$
51,713
$
105,341
(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 28, 2019 and September 28, 2019, total marketable securities included $19.1 billion and $18.9 billion, respectively, that was restricted from general use, related to the State Aid Decision (refer to Note 5, “Income Taxes”) and other agreements.
Apple Inc. | Q1 2020 Form 10-Q | 9
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. When evaluating a marketable debt security for other-than-temporary impairment, the Company reviews factors such as the duration and extent to which the fair value of the security is less than its cost, the financial condition of the issuer and any changes thereto, and the Company’s intent to sell, or whether it will more likely than not be required to sell the security before recovery of its amortized cost basis. As of December 28, 2019, the Company does not consider any of its marketable debt securities to be other-than-temporarily impaired.
Non-Marketable Securities
The Company holds non-marketable equity securities of certain privately held companies without readily determinable fair values. As of both December 28, 2019 and September 28, 2019, the Company’s non-marketable equity securities had a carrying value of $2.9 billion.
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 28, 2019 and September 28, 2019 is as follows (in millions):
December 28, 2019
September 28, 2019
Cash and cash equivalents
$
39,771
$
48,844
Restricted cash included in other current assets
68
23
Restricted cash included in other non-current assets
1,826
1,357
Cash, cash equivalents and restricted cash
$
41,665
$
50,224
The Company’s restricted cash primarily consisted of cash required to be on deposit under a contractual agreement with a bank to support the Company’s iPhone Upgrade Program.
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.
Apple Inc. | Q1 2020 Form 10-Q | 10
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 28, 2019, the Company’s hedged term debt– and marketable securities–related foreign currency transactions are expected to be recognized within 23 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 28, 2019, the Company’s hedged interest rate transactions are expected to be recognized within 8 years.
Cash Flow Hedges
Cash flow hedge amounts that are included in the assessment of hedge effectiveness are deferred in 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.
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. Changes in the fair value of amounts excluded from the assessment of hedge effectiveness are recognized in OCI. The amount excluded from the effectiveness assessment of fair value hedges and recognized in OI&E was a gain of $128 million for the three months ended December 28, 2019.
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.
Apple Inc. | Q1 2020 Form 10-Q | 11
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 28, 2019 and September 28, 2019 (in millions):