Apple AAPL · USD

Segment Information and Geographic DataThe Company manages its business primarily on a geographic basis. The Company’s CEO is its CODM.The Company’s reportable segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. Americas includes both North and South America. Europe includes European countries, as well as India, the Middle East and Africa. Greater China includes China mainland, Hong Kong and Taiwan. Rest of Asia Pacific includes Australia, New Zealand and those Asian countries not included in the Company’s other reportable segments. Although the reportable segments provide similar hardware and software products and similar services, each one is managed separately to better align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic region.The CODM uses segment net sales and operating income information to make certain decisions, such as product and service pricing, and to decide how to allocate resources related to sales activities and marketing investments. Net sales for geographic segments are generally based on the location of customers and sales through the Company’s retail stores located in those geographic locations. Operating income for each segment consists of net sales to third parties, related cost of sales, and operating expenses directly attributable to the segment. The information provided to the CODM for purposes of making decisions and assessing segment performance excludes asset information.

RevenueThe Company recognizes revenue at the amount to which it expects to be entitled when control of products or services is transferred to its customers. Control is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products or services are transferred to its customers. For most of the Company’s Products net sales, control transfers when products are shipped. For the Company’s Services net sales, control transfers over time as services are delivered. Payment for Products and Services net sales is collected within a short period following transfer of control or commencement of delivery of services, as applicable.The Company records reductions to Products net sales related to future product returns, price protection and other customer incentive programs based on the Company’s expectations and historical experience.For arrangements with multiple performance obligations, which represent promises within an arrangement that are distinct, the Company allocates revenue to all distinct performance obligations based on their relative stand-alone selling prices (“SSPs”). When available, the Company uses observable prices to determine SSPs. When observable prices are not available, SSPs are established that reflect the Company’s best estimates of what the selling prices of the performance obligations would be if they were sold regularly on a stand-alone basis. The Company’s process for estimating SSPs without observable prices considers multiple factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, where applicable, prices charged by the Company for similar offerings, market trends in the pricing for similar offerings, product-specific business objectives and the estimated cost to provide the performance obligation.The Company has identified the performance obligations regularly included in arrangements involving the sale of iPhone, Mac and iPad. The first material 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 material performance obligation is the right to receive certain product-related bundled services, which include iCloud®, Siri® and Maps. The Company allocates revenue and any related discounts to all of its performance obligations based on their relative SSPs.

Commitments, Contingencies and Supply ConcentrationsUnconditional Purchase ObligationsThe Company has entered into certain off–balance sheet commitments that require the future purchase of goods or services (“unconditional purchase obligations”). The Company’s unconditional purchase obligations primarily consist of supplier arrangements, licensed intellectual property and content, and distribution rights. Future payments under unconditional purchase obligations with a remaining term in excess of one year as of September 27, 2025, are as follows (in millions):2026$4,752 20273,708 20281,981 20291,306 2030788 Thereafter773 Total$13,308 ContingenciesThe Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully resolved. The outcome of litigation is inherently uncertain. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss greater than a recorded accrual, concerning loss contingencies for asserted legal and other claims.Concentrations in the Available Sources of Supply of Materials and ProductAlthough most components essential to the Company’s business are generally available from multiple sources, certain components are currently obtained from single or limited sources. The Company also competes for various components with other participants in the markets for smartphones, personal computers, tablets, wearables and accessories. Therefore, many components used by the Company, including those that are available from multiple sources, are at times subject to industry-wide shortage and significant commodity pricing fluctuations. Restrictions on international trade can increase the cost or limit the availability of the Company’s products and the components and rare earths and other raw materials that go into them.The Company uses some custom components that are not commonly used by its competitors, and new products introduced by the Company often utilize custom components available from only one source. When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or their manufacturing capacities have increased.

DebtCommercial PaperThe Company issues unsecured short-term promissory notes pursuant to a commercial paper program. The Company uses net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases. As of September 27, 2025 and September 28, 2024, the Company had $8.0 billion and $10.0 billion of commercial paper outstanding, respectively, with maturities generally less than nine months. The weighted-average interest rate of the Company’s commercial paper was 4.19% and 5.00% as of September 27, 2025 and September 28, 2024, respectively. The following table provides a summary of cash flows associated with commercial paper for 2025, 2024 and 2023 (in millions):202520242023Maturities 90 days or less:Proceeds from/(Repayments of) commercial paper, net$(5,820)$3,960 $(1,333)Maturities greater than 90 days:Proceeds from commercial paper5,836 — — Repayments of commercial paper(2,048)— (2,645)Proceeds from/(Repayments of) commercial paper, net3,788 — (2,645)Total proceeds from/(repayments of) commercial paper, net$(2,032)$3,960 $(3,978)Term DebtThe Company has outstanding Notes, which are senior unsecured obligations with interest payable in arrears. The following table provides a summary of the Company’s term debt as of September 27, 2025 and September 28, 2024:Maturities(calendar year)20252024Amount(in millions)EffectiveInterest RateAmount(in millions)EffectiveInterest Rate2013 – 2023 debt issuances:Fixed-rate 0.000% – 4.850% notes2025 – 2062$86,781 0.03% – 5.75%$97,341 0.03% – 6.65%2025 debt issuance:Fixed-rate 4.000% – 4.750% notes2028 – 20354,500 4.07% – 4.83%— Total term debt principal91,281 97,341 Unamortized premium/(discount) and issuance costs, net(309)(321)Hedge accounting fair value adjustments(294)(358)Total term debt90,678 96,662 Less: Current portion of term debt(12,350)(10,912)Total non-current portion of term debt$78,328 $85,750 To manage interest rate risk on certain of its U.S. dollar–denominated fixed-rate notes, the Company uses interest rate swaps to effectively convert the fixed interest rates to floating interest rates on a portion of these notes. Additionally, to manage foreign exchange rate risk on certain of its foreign currency–denominated notes, the Company uses cross-currency swaps to effectively convert these notes to U.S. dollar–denominated notes.

Income TaxesEuropean Commission State Aid DecisionOn August 30, 2016, the Commission announced its decision that Ireland granted state aid to the Company by providing tax opinions in 1991 and 2007 concerning the tax allocation of profits of the Irish branches of two subsidiaries of the Company (“State Aid Decision”). The State Aid Decision ordered Ireland to calculate and recover additional taxes from the Company for the period June 2003 through December 2014. Irish legislative changes, effective as of January 2015, eliminated the application of the tax opinions from that date forward.The Company and Ireland appealed the State Aid Decision to the General Court of the Court of Justice of the European Union (“General Court”). On July 15, 2020, the General Court annulled the State Aid Decision. On September 25, 2020, the Commission appealed the General Court’s decision to the European Court of Justice (“ECJ”). On September 10, 2024, the ECJ announced that it had set aside the 2020 judgment of the General Court and confirmed the Commission’s 2016 State Aid Decision. As a result, during the fourth quarter of 2024 the Company recorded a one-time income tax charge of $10.2 billion, net, which represented $15.8 billion payable to Ireland via release of amounts held in escrow, partially offset by a U.S. foreign tax credit of $4.8 billion and a decrease in unrecognized tax benefits of $823 million.Provision for Income Taxes and Effective Tax RateThe provision for income taxes for 2025, 2024 and 2023, consisted of the following (in millions):202520242023Federal:Current$11,487 $5,571 $9,445 Deferred(1,804)(3,080)(3,644)Total9,683 2,491 5,801 State:Current1,680 1,726 1,570 Deferred(139)(298)(49)Total1,541 1,428 1,521 Foreign:Current8,891 25,483 8,750 Deferred604 347 669 Total9,495 25,830 9,419 Provision for income taxes$20,719 $29,749 $16,741 Foreign pretax earnings were $82.0 billion, $77.3 billion and $72.9 billion in 2025, 2024 and 2023, respectively.

Share-Based Compensation2022 Employee Stock PlanThe Apple Inc. 2022 Employee Stock Plan (“2022 Plan”) is a shareholder-approved plan that provides for broad-based equity grants to employees, including executive officers, and permits the granting of RSUs, stock grants, performance-based awards, stock options and stock appreciation rights. RSUs granted under the 2022 Plan generally vest over four years, based on continued employment, and are settled upon vesting in shares of the Company’s common stock on a one-for-one basis. All RSUs granted under the 2022 Plan have dividend equivalent rights, which entitle holders of RSUs to the same dividend value per share as holders of common stock. A maximum of approximately 1.3 billion shares were authorized for issuance pursuant to 2022 Plan awards at the time the plan was approved on March 4, 2022.Restricted Stock UnitsA summary of the Company’s RSU activity and related information for 2025 is as follows:Number ofRSUs(in thousands)Weighted-AverageGrant-Date FairValue Per RSUBalance as of September 28, 2024163,326 $158.73 RSUs granted73,466 $226.68 RSUs vested(76,845)$159.85 RSUs forfeited(8,373)$183.03 Balance as of September 27, 2025151,574 $189.75 The weighted-average grant-date fair value of RSUs granted in 2024 and 2023 was $173.78 and $150.87, respectively. The Company estimates the grant-date fair value of RSUs based on the closing price of the Company’s common stock on the date of grant.The total vesting-date fair value of RSUs was $17.1 billion, $15.8 billion and $15.9 billion for 2025, 2024 and 2023, respectively. The majority of RSUs that vested in 2025, 2024 and 2023 were net share settled such that the Company withheld shares with a value equivalent to the employees’ obligation for the applicable income and other employment taxes, and remitted cash to the appropriate taxing authorities. Total payments to taxing authorities for employees’ tax obligations were $6.1 billion in 2025 and $5.6 billion in both 2024 and 2023.Share-Based CompensationThe following table shows share-based compensation expense and the related income tax benefit included in the Consolidated Statements of Operations for 2025, 2024 and 2023 (in millions):202520242023Share-based compensation expense$12,863 $11,688 $10,833 Income tax benefit related to share-based compensation expense$(3,602)$(3,350)$(3,421)As of September 27, 2025, the total unrecognized compensation cost related to outstanding RSUs was $21.

LeasesThe Company has lease arrangements for certain equipment and facilities, including corporate, data center, manufacturing and retail space. These leases typically have original terms not exceeding 10 years and generally contain multiyear renewal options, some of which are reasonably certain of exercise.Payments under the Company’s lease arrangements may be fixed or variable, and variable lease payments are primarily based on purchases of output of the underlying leased assets. Lease costs associated with fixed payments on the Company’s operating leases were $2.1 billion for 2025 and $2.0 billion for both 2024 and 2023. Lease costs associated with variable payments on the Company’s leases were $16.1 billion, $13.8 billion and $13.9 billion for 2025, 2024 and 2023, respectively.The Company made fixed cash payments related to operating leases of $2.1 billion in 2025 and $1.9 billion in both 2024 and 2023. Noncash activities involving right-of-use (“ROU”) assets obtained in exchange for lease liabilities were $2.8 billion, $1.0 billion and $2.1 billion for 2025, 2024 and 2023, respectively.The following table shows ROU assets and lease liabilities, and the associated financial statement line items, as of September 27, 2025 and September 28, 2024 (in millions):Lease-Related Assets and LiabilitiesFinancial Statement Line Items20252024Right-of-use assets:Operating leasesOther non-current assets$11,205 $10,234 Finance leasesProperty, plant and equipment, net1,033 1,069 Total right-of-use assets$12,238 $11,303 Lease liabilities:Operating leasesOther current liabilities$1,579 $1,488 Other non-current liabilities10,911 10,046 Finance leasesOther current liabilities538 144 Other non-current liabilities692 752 Total lease liabilities$13,720 $12,430 Lease liability maturities as of September 27, 2025, are as follows (in millions):OperatingLeasesFinanceLeasesTotal2026$1,967 $563 $2,530 20271,988 73 2,061 20281,848 51 1,899 20291,585 48 1,633 20301,381 43 1,424 Thereafter5,956 801 6,757 Total undiscounted liabilities14,725 1,579 16,304 Less: Imputed interest(2,235)(349)(2,584)Total lease liabilities$12,490 $1,230 $13,720 The weighted-average remaining lease term related to the Company’s lease liabilities as of September 27, 2025 and September 28, 2024 was 9.8 years and 10.3 years, respectively. The discount rate related to the Company’s lease liabilities as of September 27, 2025 and September 28, 2024 was 3.4% and 3.1%, respectively.

The Company’s management, led by its Head of Corporate Information Security, has overall responsibility for identifying, assessing and managing any material risks from cybersecurity threats. The Company’s Head of Corporate Information Security leads a dedicated Information Security team of highly skilled individuals with experience across industries that, among other things, develops and distributes information security policies, standards and procedures; engages in employee cybersecurity training; implements security controls; assesses security risk and compliance posture; monitors and responds to security events; and executes security testing and assessments. The Company’s Head of Corporate Information Security has extensive knowledge and skills gained from over 25 years of experience in the cybersecurity industry, including serving in leadership positions at other large technology companies and leading the Company’s Information Security team since 2016.The Company’s Information Security team coordinates with teams across the Company to prevent, respond to and manage security incidents, and engages third parties, as appropriate, to assess, test or otherwise assist with aspects of its security processes and incident response. A dedicated Supplier Trust team manages information security risks the Company is exposed to through its supplier relationships. The Company has processes to log, track, address, and escalate for further assessment and report, as appropriate, cybersecurity incidents across the Company and its suppliers to senior management and the Audit and Finance Committee (“Audit Committee”) of the Board. The Company’s enterprise risk management program is designed to identify, assess, and monitor the Company’s business risks, including financial, operational, compliance and reputational risks, and reflects management’s assessment of cybersecurity risks.The Audit Committee assists the Board in the oversight and monitoring of cybersecurity matters. The Audit Committee regularly reviews and discusses the Company’s cybersecurity risks with management, including the Company’s Head of Corporate Information Security, its General Counsel and the Heads of Compliance and Business Conduct, Business Assurance, and Internal Audit, and receives updates, as necessary, regarding cybersecurity incidents.