falsedesktopAAPL2020-06-27000032019320000062{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Title of each class\tTrading symbol(s)\tName of each exchange on which registered\nCommon Stock $0.00001 par value per share\tAAPL\tThe Nasdaq Stock Market LLC\n1.000% Notes due 2022\t0\tThe Nasdaq Stock Market LLC\n1.375% Notes due 2024\t0\tThe Nasdaq Stock Market LLC\n0.000% Notes due 2025\t0\tThe Nasdaq Stock Market LLC\n0.875% Notes due 2025\t0\tThe Nasdaq Stock Market LLC\n1.625% Notes due 2026\t0\tThe Nasdaq Stock Market LLC\n2.000% Notes due 2027\t0\tThe Nasdaq Stock Market LLC\n1.375% Notes due 2029\t0\tThe Nasdaq Stock Market LLC\n3.050% Notes due 2029\t0\tThe Nasdaq Stock Market LLC\n0.500% Notes due 2031\t0\tThe Nasdaq Stock Market LLC\n3.600% Notes due 2042\t0\tThe Nasdaq Stock Market LLC\n", "q10k_tbl_1": "Large accelerated filer\t☒\tAccelerated filer\t☐\nNon-accelerated filer\t☐\tSmaller reporting company\t☐\n\t\tEmerging growth company\t☐\n", "q10k_tbl_2": "\t\t\tPage\nPart I\t\t\t\t\t\t\nItem 1.\tFinancial Statements\t1\nItem 2.\tManagement's Discussion and Analysis of Financial Condition and Results of Operations\t25\nItem 3.\tQuantitative and Qualitative Disclosures About Market Risk\t32\nItem 4.\tControls and Procedures\t33\nPart II\t\t\t\t\t\t\nItem 1.\tLegal Proceedings\t33\nItem 1A.\tRisk Factors\t33\nItem 2.\tUnregistered Sales of Equity Securities and Use of Proceeds\t34\nItem 3.\tDefaults Upon Senior Securities\t34\nItem 4.\tMine Safety Disclosures\t34\nItem 5.\tOther Information\t34\nItem 6.\tExhibits\t35\n", "q10k_tbl_3": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nNet sales:\t\t\t\t\nProducts\t46529\t42354\t170598\t162354\nServices\t13156\t11455\t39219\t33780\nTotal net sales\t59685\t53809\t209817\t196134\nCost of sales:\t\t\t\t\nProducts\t32693\t29473\t116089\t109758\nServices\t4312\t4109\t13461\t12297\nTotal cost of sales\t37005\t33582\t129550\t122055\nGross margin\t22680\t20227\t80267\t74079\nOperating expenses:\t\t\t\t\nResearch and development\t4758\t4257\t13774\t12107\nSelling general and administrative\t4831\t4426\t14980\t13667\nTotal operating expenses\t9589\t8683\t28754\t25774\nOperating income\t13091\t11544\t51513\t48305\nOther income/(expense) net\t46\t367\t677\t1305\nIncome before provision for income taxes\t13137\t11911\t52190\t49610\nProvision for income taxes\t1884\t1867\t7452\t8040\nNet income\t11253\t10044\t44738\t41570\nEarnings per share:\t\t\t\t\nBasic\t2.61\t2.20\t10.25\t8.92\nDiluted\t2.58\t2.18\t10.16\t8.86\nShares used in computing earnings per share:\t\t\t\t\nBasic\t4312573\t4570633\t4362571\t4660175\nDiluted\t4354788\t4601380\t4404695\t4691759\n", "q10k_tbl_4": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nNet income\t11253\t10044\t44738\t41570\nOther comprehensive income/(loss):\t\t\t\t\nChange in foreign currency translation net of tax\t194\t(219)\t(170)\t(123)\nChange in unrealized gains/losses on derivative instruments net of tax:\t\t\t\t\nChange in fair value of derivatives\t78\t(108)\t46\t(492)\nAdjustment for net (gains)/losses realized and included in net income\t(1120)\t(44)\t(884)\t(107)\nTotal change in unrealized gains/losses on derivative instruments\t(1042)\t(152)\t(838)\t(599)\nChange in unrealized gains/losses on marketable debt securities net of tax:\t\t\t\t\nChange in fair value of marketable debt securities\t3098\t1253\t898\t3405\nAdjustment for net (gains)/losses realized and included in net income\t(11)\t(22)\t8\t43\nTotal change in unrealized gains/losses on marketable debt securities\t3087\t1231\t906\t3448\nTotal other comprehensive income/(loss)\t2239\t860\t(102)\t2726\nTotal comprehensive income\t13492\t10904\t44636\t44296\n", "q10k_tbl_5": "\tJune 27 2020\tSeptember 28 2019\nASSETS:\t\t\t\t\t\t\t\t\t\t\t\nCurrent assets:\t\t\nCash and cash equivalents\t33383\t48844\nMarketable securities\t59642\t51713\nAccounts receivable net\t17882\t22926\nInventories\t3978\t4106\nVendor non-trade receivables\t14193\t22878\nOther current assets\t10987\t12352\nTotal current assets\t140065\t162819\nNon-current assets:\t\t\nMarketable securities\t100592\t105341\nProperty plant and equipment net\t35687\t37378\nOther non-current assets\t41000\t32978\nTotal non-current assets\t177279\t175697\nTotal assets\t317344\t338516\nLIABILITIES AND SHAREHOLDERS' EQUITY:\t\t\t\t\t\t\t\t\t\t\t\nCurrent liabilities:\t\t\nAccounts payable\t35325\t46236\nOther current liabilities\t35005\t37720\nDeferred revenue\t6313\t5522\nCommercial paper and repurchase agreements\t11166\t5980\nTerm debt\t7509\t10260\nTotal current liabilities\t95318\t105718\nNon-current liabilities:\t\t\nTerm debt\t94048\t91807\nOther non-current liabilities\t55696\t50503\nTotal non-current liabilities\t149744\t142310\nTotal liabilities\t245062\t248028\nCommitments and contingencies\t\t\nShareholders' equity:\t\t\nCommon stock and additional paid-in capital $0.00001 par value: 12600000 shares authorized; 4283939 and 4443236 shares issued and outstanding respectively\t48696\t45174\nRetained earnings\t24136\t45898\nAccumulated other comprehensive income/(loss)\t(550)\t(584)\nTotal shareholders' equity\t72282\t90488\nTotal liabilities and shareholders' equity\t317344\t338516\n", "q10k_tbl_6": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nTotal shareholders' equity beginning balances\t78425\t105860\t90488\t107147\nCommon stock and additional paid-in capital:\t\t\t\t\nBeginning balances\t48032\t42801\t45174\t40201\nCommon stock issued\t0\t1\t430\t391\nCommon stock withheld related to net share settlement of equity awards\t(1071)\t(958)\t(2123)\t(1885)\nShare-based compensation\t1735\t1527\t5215\t4664\nEnding balances\t48696\t43371\t48696\t43371\nRetained earnings:\t\t\t\t\nBeginning balances\t33182\t64558\t45898\t70400\nNet income\t11253\t10044\t44738\t41570\nDividends and dividend equivalents declared\t(3611)\t(3580)\t(10528)\t(10605)\nCommon stock withheld related to net share settlement of equity awards\t(688)\t(336)\t(1320)\t(944)\nCommon stock repurchased\t(16000)\t(16962)\t(54516)\t(49198)\nCumulative effects of changes in accounting principles\t0\t0\t(136)\t2501\nEnding balances\t24136\t53724\t24136\t53724\nAccumulated other comprehensive income/(loss):\t\t\t\t\nBeginning balances\t(2789)\t(1499)\t(584)\t(3454)\nOther comprehensive income/(loss)\t2239\t860\t(102)\t2726\nCumulative effects of changes in accounting principles\t0\t0\t136\t89\nEnding balances\t(550)\t(639)\t(550)\t(639)\nTotal shareholders' equity ending balances\t72282\t96456\t72282\t96456\nDividends and dividend equivalents declared per share or RSU\t0.82\t0.77\t2.36\t2.23\n", "q10k_tbl_7": "\tNine Months Ended\t\n\tJune 27 2020\tJune 29 2019\nCash cash equivalents and restricted cash beginning balances\t50224\t25913\nOperating activities:\t\t\nNet income\t44738\t41570\nAdjustments to reconcile net income to cash generated by operating activities:\t\t\nDepreciation and amortization\t8354\t9368\nShare-based compensation expense\t5105\t4569\nDeferred income tax expense/(benefit)\t182\t(38)\nOther\t(94)\t(340)\nChanges in operating assets and liabilities:\t\t\nAccounts receivable net\t5149\t9013\nInventories\t10\t496\nVendor non-trade receivables\t8685\t13483\nOther current and non-current assets\t(6760)\t693\nAccounts payable\t(10787)\t(19804)\nDeferred revenue\t1649\t(776)\nOther current and non-current liabilities\t3867\t(8753)\nCash generated by operating activities\t60098\t49481\nInvesting activities:\t\t\nPurchases of marketable securities\t(96606)\t(21902)\nProceeds from maturities of marketable securities\t54865\t26783\nProceeds from sales of marketable securities\t39760\t49516\nPayments for acquisition of property plant and equipment\t(5525)\t(7718)\nPayments made in connection with business acquisitions net\t(1473)\t(611)\nPurchases of non-marketable securities\t(210)\t(632)\nProceeds from non-marketable securities\t58\t1526\nOther\t(689)\t(268)\nCash generated by/(used in) investing activities\t(9820)\t46694\nFinancing activities:\t\t\nProceeds from issuance of common stock\t430\t391\nPayments for taxes related to net share settlement of equity awards\t(3234)\t(2626)\nPayments for dividends and dividend equivalents\t(10570)\t(10640)\nRepurchases of common stock\t(55171)\t(49453)\nProceeds from issuance of term debt net\t10635\t0\nRepayments of term debt\t(12629)\t(5500)\nProceeds from/(Repayments of) commercial paper net\t31\t(2026)\nProceeds from repurchase agreements\t5165\t0\nOther\t(120)\t(83)\nCash used in financing activities\t(65463)\t(69937)\nIncrease/(Decrease) in cash cash equivalents and restricted cash\t(15185)\t26238\nCash cash equivalents and restricted cash ending balances\t35039\t52151\nSupplemental cash flow disclosure:\t\t\nCash paid for income taxes net\t8410\t11795\nCash paid for interest\t2275\t2563\n", "q10k_tbl_8": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nNumerator:\t\t\t\t\nNet income\t11253\t10044\t44738\t41570\nDenominator:\t\t\t\t\nWeighted-average basic shares outstanding\t4312573\t4570633\t4362571\t4660175\nEffect of dilutive securities\t42215\t30747\t42124\t31584\nWeighted-average diluted shares\t4354788\t4601380\t4404695\t4691759\nBasic earnings per share\t2.61\t2.20\t10.25\t8.92\nDiluted earnings per share\t2.58\t2.18\t10.16\t8.86\n", "q10k_tbl_9": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\niPhone (1)\t26418\t25986\t111337\t109019\nMac (1)\t7079\t5820\t19590\t18749\niPad (1)\t6582\t5023\t16927\t16624\nWearables Home and Accessories (1)(2)\t6450\t5525\t22744\t17962\nServices (3)\t13156\t11455\t39219\t33780\nTotal net sales (4)\t59685\t53809\t209817\t196134\n", "q10k_tbl_10": "\tJune 27 2020\t\t\t\t\t\t\n\tAdjusted Cost\tUnrealized Gains\tUnrealized Losses\tFair Value\tCash and Cash Equivalents\tCurrent Marketable Securities\tNon-Current
Marketable
Securities\nCash\t20253\t0\t0\t20253\t20253\t0\t0\nLevel 1 (1):\t\t\t\t\t\t\t\nMoney market funds\t7013\t0\t0\t7013\t7013\t0\t0\nSubtotal\t7013\t0\t0\t7013\t7013\t0\t0\nLevel 2 (2):\t\t\t\t\t\t\t\nU.S. Treasury securities\t23207\t394\t0\t23601\t1767\t11346\t10488\nU.S. agency securities\t7129\t9\t(2)\t7136\t59\t2737\t4340\nNon-U.S. government securities\t19324\t255\t(272)\t19307\t1\t4062\t15244\nCertificates of deposit and time deposits\t10247\t0\t0\t10247\t3324\t6787\t136\nCommercial paper\t12105\t0\t0\t12105\t936\t11169\t0\nCorporate debt securities\t78747\t1672\t(280)\t80139\t30\t22581\t57528\nMunicipal securities\t964\t20\t0\t984\t0\t43\t941\nMortgage- and asset-backed securities\t12530\t322\t(20)\t12832\t0\t917\t11915\nSubtotal\t164253\t2672\t(574)\t166351\t6117\t59642\t100592\nTotal (3)\t191519\t2672\t(574)\t193617\t33383\t59642\t100592\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": "\tJune 27 2020\tSeptember 28 2019\nCash and cash equivalents\t33383\t48844\nRestricted cash included in other current assets\t29\t23\nRestricted cash included in other non-current assets\t1627\t1357\nCash cash equivalents and restricted cash\t35039\t50224\n", "q10k_tbl_13": "\tJune 27 2020\t\t\n\tFair Value of Derivatives Designated as Hedge Instruments\tFair Value of Derivatives Not Designated as Hedge Instruments\tTotal Fair Value\nDerivative assets (1):\t\t\t\nForeign exchange contracts\t1247\t172\t1419\nInterest rate contracts\t1612\t0\t1612\nDerivative liabilities (2):\t\t\t\nForeign exchange contracts\t1757\t277\t2034\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\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nGains/(Losses) recognized in OCI - included in effectiveness assessment:\t\t\t\t\nCash flow hedges:\t\t\t\t\nForeign exchange contracts\t366\t(147)\t175\t(689)\nInterest rate contracts\t(6)\t0\t(72)\t0\nTotal\t360\t(147)\t103\t(689)\nNet investment hedges:\t\t\t\t\nForeign currency debt\t(20)\t(32)\t15\t(55)\nGains/(Losses) reclassified from AOCI into net income - included in effectiveness assessment:\t\t\t\t\nCash flow hedges:\t\t\t\t\nForeign exchange contracts\t1389\t53\t1063\t69\nInterest rate contracts\t(3)\t(2)\t(6)\t(5)\nTotal\t1386\t51\t1057\t64\n", "q10k_tbl_16": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nGains/(Losses) on derivative instruments (1):\t\t\t\t\nForeign exchange contracts\t(675)\t(136)\t(422)\t509\nInterest rate contracts\t57\t671\t1185\t1793\nTotal\t(618)\t535\t763\t2302\nGains/(Losses) related to hedged items (1):\t\t\t\t\nMarketable securities\t675\t136\t422\t(508)\nFixed-rate debt\t(57)\t(671)\t(1185)\t(1793)\nTotal\t618\t(535)\t(763)\t(2301)\n", "q10k_tbl_17": "\tJune 27 2020\nCarrying amounts of hedged assets/(liabilities):\t\nMarketable securities (2)\t15736\nFixed-rate debt (3)\t(21104)\nCumulative hedging adjustments included in the carrying amounts of hedged items:\t\nMarketable securities carrying amount increases/(decreases)\t(146)\nFixed-rate debt carrying amount (increases)/decreases\t(1612)\n", "q10k_tbl_18": "\tJune 27 2020\t\t\tSeptember 28 2019\n\tNotional Amount\tCredit Risk Amount\tNotional Amount\tCredit Risk Amount\nInstruments designated as accounting hedges:\t\t\t\t\nForeign exchange contracts\t52845\t1247\t61795\t1798\nInterest rate contracts\t19500\t1612\t31250\t685\nInstruments not designated as accounting hedges:\t\t\t\t\nForeign exchange contracts\t50208\t172\t76868\t323\n", "q10k_tbl_19": "\tJune 27 2020\tSeptember 28 2019\nLand and buildings\t18068\t17085\nMachinery equipment and internal-use software\t72982\t69797\nLeasehold improvements\t9867\t9075\nGross property plant and equipment\t100917\t95957\nAccumulated depreciation and amortization\t(65230)\t(58579)\nTotal property plant and equipment net\t35687\t37378\n", "q10k_tbl_20": "\tJune 27 2020\tSeptember 28 2019\nLong-term taxes payable\t28188\t29545\nOther non-current liabilities\t27508\t20958\nTotal other non-current liabilities\t55696\t50503\n", "q10k_tbl_21": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nInterest and dividend income\t901\t1190\t2995\t3855\nInterest expense\t(697)\t(866)\t(2239)\t(2766)\nOther income/(expense) net\t(158)\t43\t(79)\t216\nTotal other income/(expense) net\t46\t367\t677\t1305\n", "q10k_tbl_22": "\tNine Months Ended\t\n\tJune 27 2020\tJune 29 2019\nMaturities 90 days or less:\t\t\nProceeds from/(Repayments of) commercial paper net\t401\t(3720)\nMaturities greater than 90 days:\t\t\nProceeds from commercial paper\t5373\t12977\nRepayments of commercial paper\t(5743)\t(11283)\nProceeds from/(Repayments of) commercial paper net\t(370)\t1694\nTotal proceeds from/(repayments of) commercial paper net\t31\t(2026)\n", "q10k_tbl_23": "\tMaturities (calendar year)\tJune 27 2020\t\t\tSeptember 28 2019\n\t\tAmount (in millions)\tEffective Interest Rate\tAmount (in millions)\tEffective Interest Rate\n2013 - 2019 debt issuances:\t\t\t\t\t\nFloating-rate notes\t2021 - 2022\t2250\t0.80% - 1.49%\t4250\t2.25% - 3.28%\nFixed-rate 0.375% - 4.650% notes\t2020 - 2049\t87055\t0.28% - 4.78%\t97429\t0.28% - 4.78%\nFirst quarter 2020 debt issuance of €2.0 billion:\t\t\t\t\t\nFixed-rate 0.000% - 0.500% notes\t2025 - 2031\t2260\t0.03% - 0.56%\t0\t-%\nThird quarter 2020 debt issuance of $8.5 billion:\t\t\t\t\t\nFixed-rate 0.750% - 2.650% notes\t2023 - 2050\t8500\t0.84% - 2.72%\t0\t-%\nTotal term debt\t\t100065\t\t101679\t\nUnamortized premium/(discount) and issuance costs net\t\t(279)\t\t(224)\t\nHedge accounting fair value adjustments\t\t1771\t\t612\t\nLess: Current portion of term debt\t\t(7509)\t\t(10260)\t\nTotal non-current portion of term debt\t\t94048\t\t91807\t\n", "q10k_tbl_24": "\t\tThree Months Ended\t\t\tNine Months Ended\t\nComprehensive Income Components\tFinancial Statement Line Items\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nUnrealized (gains)/losses on derivative instruments:\t\t\t\t\t\nForeign exchange contracts\tTotal net sales\t(270)\t(68)\t(333)\t(102)\n\tTotal cost of sales\t(362)\t13\t(521)\t(438)\n\tOther income/(expense) net\t(760)\t3\t(212)\t451\nInterest rate contracts\tOther income/(expense) net\t3\t2\t6\t5\n\t\t(1389)\t(50)\t(1060)\t(84)\nUnrealized (gains)/losses on marketable debt securities\tOther income/(expense) net\t(14)\t(28)\t10\t55\nTotal amounts reclassified from AOCI\t\t\t(1403)\t(78)\t(1050)\t(29)\n", "q10k_tbl_25": "\tCumulative Foreign Currency Translation\tUnrealized Gains/Losses on Derivative Instruments\tUnrealized Gains/Losses on Marketable Debt Securities\tTotal\nBalances as of September 28 2019\t(1463)\t172\t707\t(584)\nOther comprehensive income/(loss) before reclassifications\t(167)\t32\t1167\t1032\nAmounts reclassified from AOCI\t0\t(1060)\t10\t(1050)\nTax effect\t(3)\t190\t(271)\t(84)\nOther comprehensive income/(loss)\t(170)\t(838)\t906\t(102)\nCumulative effect of change in accounting principle (1)\t0\t136\t0\t136\nBalances as of June 27 2020\t(1633)\t(530)\t1613\t(550)\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\t37815\t229.58\t\nRSUs vested\t(37076)\t161.71\t\nRSUs canceled\t(3122)\t190.50\t\nBalance as of June 27 2020\t79134\t200.70\t27984\n", "q10k_tbl_27": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nShare-based compensation expense\t1698\t1496\t5105\t4569\nIncome tax benefit related to share-based compensation expense\t(740)\t(502)\t(1942)\t(1583)\n", "q10k_tbl_28": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nBeginning accrued warranty and related costs\t3923\t3487\t3570\t3692\nCost of warranty claims\t(576)\t(912)\t(2180)\t(2823)\nAccruals for product warranty\t557\t548\t2514\t2254\nEnding accrued warranty and related costs\t3904\t3123\t3904\t3123\n", "q10k_tbl_29": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nAmericas:\t\t\t\t\nNet sales\t27018\t25056\t93858\t87592\nOperating income\t7974\t7442\t28327\t26329\nEurope:\t\t\t\t\nNet sales\t14173\t11925\t51740\t45342\nOperating income\t4420\t3687\t16667\t14371\nGreater China:\t\t\t\t\nNet sales\t9329\t9157\t32362\t32544\nOperating income\t3414\t3221\t12535\t12142\nJapan:\t\t\t\t\nNet sales\t4966\t4082\t16395\t16524\nOperating income\t2114\t1795\t7128\t7199\nRest of Asia Pacific:\t\t\t\t\nNet sales\t4199\t3589\t15462\t14132\nOperating income\t1374\t1155\t5395\t4811\n", "q10k_tbl_30": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nSegment operating income\t19296\t17300\t70052\t64852\nResearch and development expense\t(4758)\t(4257)\t(13774)\t(12107)\nOther corporate expenses net\t(1447)\t(1499)\t(4765)\t(4440)\nTotal operating income\t13091\t11544\t51513\t48305\n", "q10k_tbl_31": "Lease-Related Assets and Liabilities\tFinancial Statement Line Items\tJune 27 2020\nRight-of-use assets:\t\t\nOperating leases\tOther non-current assets\t8164\nFinance leases\tProperty plant and equipment net\t625\nTotal right-of-use assets\t\t8789\nLease liabilities:\t\t\nOperating leases\tOther current liabilities\t1353\n\tOther non-current liabilities\t7460\nFinance leases\tOther current liabilities\t20\n\tOther non-current liabilities\t630\nTotal lease liabilities\t\t9463\n", "q10k_tbl_32": "\tOperating Leases\tFinance Leases\tTotal\n2020 (remaining three months)\t309\t5\t314\n2021\t1504\t41\t1545\n2022\t1356\t39\t1395\n2023\t1183\t50\t1233\n2024\t994\t27\t1021\nThereafter\t4511\t920\t5431\nTotal undiscounted liabilities\t9857\t1082\t10939\nLess: Imputed interest\t(1044)\t(432)\t(1476)\nTotal lease liabilities\t8813\t650\t9463\n", "q10k_tbl_33": "\tThree Months Ended\t\t\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tChange\tJune 27 2020\tJune 29 2019\tChange\nNet sales by category:\t\t\t\t\t\t\niPhone (1)\t26418\t25986\t2%\t111337\t109019\t2%\nMac (1)\t7079\t5820\t22%\t19590\t18749\t4%\niPad (1)\t6582\t5023\t31%\t16927\t16624\t2%\nWearables Home and Accessories (1)(2)\t6450\t5525\t17%\t22744\t17962\t27%\nServices (3)\t13156\t11455\t15%\t39219\t33780\t16%\nTotal net sales\t59685\t53809\t11%\t209817\t196134\t7%\n", "q10k_tbl_34": "\tThree Months Ended\t\t\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tChange\tJune 27 2020\tJune 29 2019\tChange\nNet sales by reportable segment:\t\t\t\t\t\t\nAmericas\t27018\t25056\t8%\t93858\t87592\t7%\nEurope\t14173\t11925\t19%\t51740\t45342\t14%\nGreater China\t9329\t9157\t2%\t32362\t32544\t(1)%\nJapan\t4966\t4082\t22%\t16395\t16524\t(1)%\nRest of Asia Pacific\t4199\t3589\t17%\t15462\t14132\t9%\nTotal net sales\t59685\t53809\t11%\t209817\t196134\t7%\n", "q10k_tbl_35": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nGross margin:\t\t\t\t\nProducts\t13836\t12881\t54509\t52596\nServices\t8844\t7346\t25758\t21483\nTotal gross margin\t22680\t20227\t80267\t74079\n", "q10k_tbl_36": "Gross margin percentage:\t\t\t\t\nProducts\t29.7%\t30.4%\t32.0%\t32.4%\nServices\t67.2%\t64.1%\t65.7%\t63.6%\nTotal gross margin percentage\t38.0%\t37.6%\t38.3%\t37.8%\n", "q10k_tbl_37": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nResearch and development\t4758\t4257\t13774\t12107\nPercentage of total net sales\t8%\t8%\t7%\t6%\nSelling general and administrative\t4831\t4426\t14980\t13667\nPercentage of total net sales\t8%\t8%\t7%\t7%\nTotal operating expenses\t9589\t8683\t28754\t25774\nPercentage of total net sales\t16%\t16%\t14%\t13%\n", "q10k_tbl_38": "\tThree Months Ended\t\t\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tChange\tJune 27 2020\tJune 29 2019\tChange\nInterest and dividend income\t901\t1190\t\t2995\t3855\t\nInterest expense\t(697)\t(866)\t\t(2239)\t(2766)\t\nOther income/(expense) net\t(158)\t43\t\t(79)\t216\t\nTotal other income/(expense) net\t46\t367\t(87)%\t677\t1305\t(48)%\n", "q10k_tbl_39": "\tThree Months Ended\t\t\tNine Months Ended\n\tJune 27 2020\tJune 29 2019\tJune 27 2020\tJune 29 2019\nProvision for income taxes\t1884\t1867\t7452\t8040\nEffective tax rate\t14.3%\t15.7%\t14.3%\t16.2%\nStatutory federal income tax rate\t21%\t21%\t21%\t21%\n", "q10k_tbl_40": "\tJune 27 2020\tSeptember 28 2019\nCash cash equivalents and marketable securities (1)\t193617\t205898\nProperty plant and equipment net\t35687\t37378\nCommercial paper and repurchase agreements\t11166\t5980\nTotal term debt\t101557\t102067\nWorking capital\t44747\t57101\n", "q10k_tbl_41": "\tNine Months Ended\t\n\tJune 27 2020\tJune 29 2019\nCash generated by operating activities\t60098\t49481\nCash generated by/(used in) investing activities\t(9820)\t46694\nCash used in financing activities\t(65463)\t(69937)\n", "q10k_tbl_42": "Periods\tTotal Number of Shares Purchased\t\tAverage Price Paid Per Share\tTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs\t\tApproximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)\nMarch 29 2020 to May 2 2020:\t\t\t\t\t\t\nOpen market and privately negotiated purchases\t0\t\t0\t0\t\t\nMay 3 2020 to May 30 2020:\t\t\t\t\t\t\nNovember 2019 ASR\t4828\t\t(2)\t4828\t\t\nMay 2020 ASR\t15155\t(3)\t(3)\t15155\t(3)\t\nOpen market and privately negotiated purchases\t20953\t\t310.22\t20953\t\t\nMay 31 2020 to June 27 2020:\t\t\t\t\t\t\nOpen market and privately negotiated purchases\t10380\t\t337.20\t10380\t\t\nTotal\t51316\t\t\t\t\t74353\n", "q10k_tbl_43": "\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 May 11 2020 including forms of global notes representing the 0.750% Notes due 2023 1.125% Notes due 2025 1.650% Notes due 2030 and 2.650% Notes due 2050.\t8-K\t4.1\t5/11/20\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 June 27, 2020
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number: 001-36743
Apple Inc.
(Exact name of Registrant as specified in its charter)
California
94-2404110
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
One Apple Park Way
Cupertino, California
95014
(Address of principal executive offices)
(Zip Code)
(408) 996-1010
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock, $0.00001 par value per share
AAPL
The Nasdaq Stock Market LLC
1.000% Notes due 2022
—
The Nasdaq Stock Market LLC
1.375% Notes due 2024
—
The Nasdaq Stock Market LLC
0.000% Notes due 2025
—
The Nasdaq Stock Market LLC
0.875% Notes due 2025
—
The Nasdaq Stock Market LLC
1.625% Notes due 2026
—
The Nasdaq Stock Market LLC
2.000% Notes due 2027
—
The Nasdaq Stock Market LLC
1.375% Notes due 2029
—
The Nasdaq Stock Market LLC
3.050% Notes due 2029
—
The Nasdaq Stock Market LLC
0.500% Notes due 2031
—
The Nasdaq Stock Market LLC
3.600% Notes due 2042
—
The Nasdaq Stock Market LLC
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Yes☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
4,275,634,000 shares of common stock were issued and outstanding as of July 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
Nine Months Ended
June 27, 2020
June 29, 2019
June 27, 2020
June 29, 2019
Net sales:
Products
$
46,529
$
42,354
$
170,598
$
162,354
Services
13,156
11,455
39,219
33,780
Total net sales
59,685
53,809
209,817
196,134
Cost of sales:
Products
32,693
29,473
116,089
109,758
Services
4,312
4,109
13,461
12,297
Total cost of sales
37,005
33,582
129,550
122,055
Gross margin
22,680
20,227
80,267
74,079
Operating expenses:
Research and development
4,758
4,257
13,774
12,107
Selling, general and administrative
4,831
4,426
14,980
13,667
Total operating expenses
9,589
8,683
28,754
25,774
Operating income
13,091
11,544
51,513
48,305
Other income/(expense), net
46
367
677
1,305
Income before provision for income taxes
13,137
11,911
52,190
49,610
Provision for income taxes
1,884
1,867
7,452
8,040
Net income
$
11,253
$
10,044
$
44,738
$
41,570
Earnings per share:
Basic
$
2.61
$
2.20
$
10.25
$
8.92
Diluted
$
2.58
$
2.18
$
10.16
$
8.86
Shares used in computing earnings per share:
Basic
4,312,573
4,570,633
4,362,571
4,660,175
Diluted
4,354,788
4,601,380
4,404,695
4,691,759
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q3 2020 Form 10-Q | 1
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions)
Three Months Ended
Nine Months Ended
June 27, 2020
June 29, 2019
June 27, 2020
June 29, 2019
Net income
$
11,253
$
10,044
$
44,738
$
41,570
Other comprehensive income/(loss):
Change in foreign currency translation, net of tax
194
(219)
(170)
(123)
Change in unrealized gains/losses on derivative instruments, net of tax:
Change in fair value of derivatives
78
(108)
46
(492)
Adjustment for net (gains)/losses realized and included in net income
(1,120)
(44)
(884)
(107)
Total change in unrealized gains/losses on derivative instruments
(1,042)
(152)
(838)
(599)
Change in unrealized gains/losses on marketable debt securities, net of tax:
Change in fair value of marketable debt securities
3,098
1,253
898
3,405
Adjustment for net (gains)/losses realized and included in net income
(11)
(22)
8
43
Total change in unrealized gains/losses on marketable debt securities
3,087
1,231
906
3,448
Total other comprehensive income/(loss)
2,239
860
(102)
2,726
Total comprehensive income
$
13,492
$
10,904
$
44,636
$
44,296
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q3 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)
June 27, 2020
September 28, 2019
ASSETS:
Current assets:
Cash and cash equivalents
$
33,383
$
48,844
Marketable securities
59,642
51,713
Accounts receivable, net
17,882
22,926
Inventories
3,978
4,106
Vendor non-trade receivables
14,193
22,878
Other current assets
10,987
12,352
Total current assets
140,065
162,819
Non-current assets:
Marketable securities
100,592
105,341
Property, plant and equipment, net
35,687
37,378
Other non-current assets
41,000
32,978
Total non-current assets
177,279
175,697
Total assets
$
317,344
$
338,516
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable
$
35,325
$
46,236
Other current liabilities
35,005
37,720
Deferred revenue
6,313
5,522
Commercial paper and repurchase agreements
11,166
5,980
Term debt
7,509
10,260
Total current liabilities
95,318
105,718
Non-current liabilities:
Term debt
94,048
91,807
Other non-current liabilities
55,696
50,503
Total non-current liabilities
149,744
142,310
Total liabilities
245,062
248,028
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,283,939 and 4,443,236 shares issued and outstanding, respectively
48,696
45,174
Retained earnings
24,136
45,898
Accumulated other comprehensive income/(loss)
(550)
(584)
Total shareholders’ equity
72,282
90,488
Total liabilities and shareholders’ equity
$
317,344
$
338,516
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q3 2020 Form 10-Q | 3
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)
(In millions, except per share amounts)
Three Months Ended
Nine Months Ended
June 27, 2020
June 29, 2019
June 27, 2020
June 29, 2019
Total shareholders’ equity, beginning balances
$
78,425
$
105,860
$
90,488
$
107,147
Common stock and additional paid-in capital:
Beginning balances
48,032
42,801
45,174
40,201
Common stock issued
—
1
430
391
Common stock withheld related to net share settlement of equity awards
(1,071)
(958)
(2,123)
(1,885)
Share-based compensation
1,735
1,527
5,215
4,664
Ending balances
48,696
43,371
48,696
43,371
Retained earnings:
Beginning balances
33,182
64,558
45,898
70,400
Net income
11,253
10,044
44,738
41,570
Dividends and dividend equivalents declared
(3,611)
(3,580)
(10,528)
(10,605)
Common stock withheld related to net share settlement of equity awards
(688)
(336)
(1,320)
(944)
Common stock repurchased
(16,000)
(16,962)
(54,516)
(49,198)
Cumulative effects of changes in accounting principles
—
—
(136)
2,501
Ending balances
24,136
53,724
24,136
53,724
Accumulated other comprehensive income/(loss):
Beginning balances
(2,789)
(1,499)
(584)
(3,454)
Other comprehensive income/(loss)
2,239
860
(102)
2,726
Cumulative effects of changes in accounting principles
—
—
136
89
Ending balances
(550)
(639)
(550)
(639)
Total shareholders’ equity, ending balances
$
72,282
$
96,456
$
72,282
$
96,456
Dividends and dividend equivalents declared per share or RSU
$
0.82
$
0.77
$
2.36
$
2.23
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q3 2020 Form 10-Q | 4
Apple Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Nine Months Ended
June 27, 2020
June 29, 2019
Cash, cash equivalents and restricted cash, beginning balances
$
50,224
$
25,913
Operating activities:
Net income
44,738
41,570
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization
8,354
9,368
Share-based compensation expense
5,105
4,569
Deferred income tax expense/(benefit)
182
(38)
Other
(94)
(340)
Changes in operating assets and liabilities:
Accounts receivable, net
5,149
9,013
Inventories
10
496
Vendor non-trade receivables
8,685
13,483
Other current and non-current assets
(6,760)
693
Accounts payable
(10,787)
(19,804)
Deferred revenue
1,649
(776)
Other current and non-current liabilities
3,867
(8,753)
Cash generated by operating activities
60,098
49,481
Investing activities:
Purchases of marketable securities
(96,606)
(21,902)
Proceeds from maturities of marketable securities
54,865
26,783
Proceeds from sales of marketable securities
39,760
49,516
Payments for acquisition of property, plant and equipment
(5,525)
(7,718)
Payments made in connection with business acquisitions, net
(1,473)
(611)
Purchases of non-marketable securities
(210)
(632)
Proceeds from non-marketable securities
58
1,526
Other
(689)
(268)
Cash generated by/(used in) investing activities
(9,820)
46,694
Financing activities:
Proceeds from issuance of common stock
430
391
Payments for taxes related to net share settlement of equity awards
(3,234)
(2,626)
Payments for dividends and dividend equivalents
(10,570)
(10,640)
Repurchases of common stock
(55,171)
(49,453)
Proceeds from issuance of term debt, net
10,635
—
Repayments of term debt
(12,629)
(5,500)
Proceeds from/(Repayments of) commercial paper, net
31
(2,026)
Proceeds from repurchase agreements
5,165
—
Other
(120)
(83)
Cash used in financing activities
(65,463)
(69,937)
Increase/(Decrease) in cash, cash equivalents and restricted cash
(15,185)
26,238
Cash, cash equivalents and restricted cash, ending balances
$
35,039
$
52,151
Supplemental cash flow disclosure:
Cash paid for income taxes, net
$
8,410
$
11,795
Cash paid for interest
$
2,275
$
2,563
See accompanying Notes to Condensed Consolidated Financial Statements.
Apple Inc. | Q3 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. | Q3 2020 Form 10-Q | 6
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 27, 2020 and June 29, 2019 (net income in millions and shares in thousands):
Three Months Ended
Nine Months Ended
June 27, 2020
June 29, 2019
June 27, 2020
June 29, 2019
Numerator:
Net income
$
11,253
$
10,044
$
44,738
$
41,570
Denominator:
Weighted-average basic shares outstanding
4,312,573
4,570,633
4,362,571
4,660,175
Effect of dilutive securities
42,215
30,747
42,124
31,584
Weighted-average diluted shares
4,354,788
4,601,380
4,404,695
4,691,759
Basic earnings per share
$
2.61
$
2.20
$
10.25
$
8.92
Diluted earnings per share
$
2.58
$
2.18
$
10.16
$
8.86
Potentially dilutive securities representing 1.5 million and 20.5 million shares of common stock were excluded from the computation of diluted earnings per share for the three- and nine-month periods ended June 29, 2019, respectively, 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. | Q3 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 June 27, 2020 and September 28, 2019, the Company had total deferred revenue of $9.8 billion and $8.1 billion, respectively. As of June 27, 2020, the Company expects 65% of total deferred revenue to be realized in less than a year, 26% within one-to-two years, 7% 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- and nine-month periods ended June 27, 2020 and June 29, 2019 were as follows (in millions):