Apple (AAPL) 10-K risk factor changes: FY2020 vs FY2019

Global and regional economic conditions could materially adversely affect the Company’s business, results of operations, financial condition and [removed: growth.][added: growth.]

Adverse macroeconomic conditions, including inflation, slower growth or recession, new or increased [removed: tariffs,] [added: tariffs and other barriers to trade,] changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment and currency fluctuations could materially adversely affect demand for the Company’s products and services.

The Company’s products and services are offered in highly competitive global markets characterized by aggressive price competition and resulting downward pressure on gross margins, frequent introduction of new products and services, short product life cycles, evolving industry standards, continual improvement in product [removed: price/performance] [added: price and performance] characteristics, rapid adoption of technological advancements by competitors, and price sensitivity on the part of consumers and businesses.

The Company’s ability to compete successfully depends heavily on [removed: its ability to ensure a] [added: ensuring the] continuing and timely introduction of innovative new products, services and technologies to the marketplace.

In contrast, many of the Company’s competitors seek to compete primarily through aggressive pricing and very low cost structures, and [added: by] emulating the Company’s products and infringing on its intellectual property.

Some of the markets in which the Company competes have from time to time experienced little to no growth or [removed: contracted.][added: contracted overall.]

The effects of global or regional economic conditions on the Company’s suppliers, described in [removed: *“Global] [added: “*Global] and regional economic conditions could materially adversely affect the Company’s business, results of operations, financial condition and [removed: growth,”*] [added: growth,*”] above, also could affect the Company’s ability to obtain components*.* Therefore, the Company remains subject to significant risks of supply shortages and price increases that could materially adversely affect its financial condition and operating results.

While these arrangements help ensure the supply of components and finished goods, if these outsourcing partners or suppliers experience severe financial problems or other disruptions in their business, such continued supply can be reduced or [removed: terminated] [added: terminated,] and the recoverability of manufacturing process equipment or prepayments can be negatively impacted.

The Company sells and delivers third-party applications for its products through the App [removed: Store, Mac App Store, TV App Store and Watch App] Store.

If developers reduce their use of [removed: these platforms to distribute their applications and offer] [added: the Company’s platforms, including] in-app [removed: purchases to customers,] [added: purchases,] then the volume of sales, and the commission that the Company earns on those sales, would decrease.

The Company is subject to various [added: claims,] legal proceedings and [removed: claims] [added: government investigations] that have arisen in the ordinary course of business and have not yet been fully resolved, and new [removed: claims] [added: matters] may arise in the future.

[removed: In particular, the] [added: The] Company has [removed: historically] faced [added: and continues to face] a significant number of patent claims relating to its cellular-enabled products, and new claims may arise in the future.

Regardless of the merit of particular claims, [added: defending against] litigation [added: or responding to government investigations] can be expensive, time-consuming, disruptive to the Company’s operations and distracting to management.

In recognition of these considerations, the Company may enter into [removed: licensing] agreements or other arrangements to settle litigation and resolve such [removed: disputes.][added: challenges.]

The outcome of litigation [added: or government investigations] is inherently uncertain.

Further, such an outcome could result in significant compensatory, punitive or trebled monetary damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief against the [added: Company, and could require the] Company [removed: that] [added: to change its business practices or limit the Company’s ability to offer certain products and services, all of which] could materially adversely affect its financial condition and operating results.

Changes to laws and regulations can adversely affect the Company’s business by increasing the Company’s costs, limiting the Company’s ability to offer a product or service to customers, requiring changes to the Company’s [added: supply chain and] business practices or otherwise making the Company’s products and services less attractive to customers.

For example, the Company is subject to antitrust investigations in various jurisdictions around the world, which can result in legal proceedings and claims against the Company that could, individually or in the aggregate, have a [removed: material] [added: materially adverse] impact on the Company’s financial condition and operating results.

There can be no assurance that the Company’s business will not be materially adversely affected, individually or in the aggregate, by the outcomes of such [removed: investigations] [added: investigations, litigation] or changes to laws and regulations in the future.

Due to the high cost structure associated with the Company’s retail stores, a decline in sales or the closure or poor performance of an individual store or multiple [removed: stores] [added: stores, including as a result of protective public safety measures in response to the COVID-19 pandemic,] could result in significant lease termination costs, write-offs of equipment and leasehold improvements and severance costs.

Investment in new business strategies and acquisitions could disrupt the Company’s ongoing [removed: business and] [added: business,] present risks not originally [removed: contemplated.][added: contemplated and adversely affect the Company’s reputation, financial condition and operating results.]

Such endeavors may involve significant risks and uncertainties, including distraction of management from current operations, greater-than-expected liabilities and expenses, [added: economic, political, legal and regulatory challenges associated with operating in new businesses, regions or countries,] inadequate return on capital, [added: potential impairment of tangible] and [removed: unidentified issues not discovered in the Company’s due diligence.][added: intangible assets, and significant write-offs.]

International trade disputes can result in [removed: tariffs] [added: tariffs, sanctions,] and other measures that [added: restrict international trade and] can adversely affect the Company’s business.

For example, [removed: trade] tensions [added: between the U.S. and China] have led to a series of tariffs [added: being] imposed by the U.S. on imports from [removed: China.][added: China mainland, as well as other business restrictions.]

Tariffs [added: may] increase the cost of the Company’s products and the components and raw materials that go into making them.

Countries may also adopt other [removed: measures] [added: measures, such as controls on imports or exports of goods, technology or data,] that could [added: adversely impact the Company’s operations and supply chain and] limit the Company’s ability to offer its products and [removed: services.][added: services as designed.]

Political uncertainty surrounding international trade disputes [removed: and measures] could also have a negative effect on consumer confidence and spending, which could adversely affect the Company’s business.

In addition, such operations and facilities are subject to the risk of interruption by fire, power shortages, nuclear power plant accidents and other industrial accidents, terrorist attacks and other hostile acts, labor disputes, public health [removed: issues] [added: issues, including pandemics such as the COVID-19 pandemic,] and other events beyond the Company’s control.

[removed: Should major] [added: Major] public health issues, including [removed: pandemics, arise,] [added: pandemics such as] the [removed: Company] [added: COVID-19 pandemic, have adversely affected, and] could [removed: be] [added: in the future] adversely [removed: affected by more] [added: affect, the Company due to their impact on the global economy and demand for consumer products; the imposition of protective public safety measures, such as] stringent employee travel [removed: restrictions, additional] [added: restrictions and] limitations [removed: in] [added: on] freight [removed: services, governmental actions limiting] [added: services and] the movement of products between [removed: regions, delays in production ramps of new products,] [added: regions;] and disruptions in the [removed: operations] [added: Company’s supply chain and sales and distribution channels, resulting in interruptions] of the [removed: Company’s suppliers] [added: supply of current products] and [removed: contract manufacturers.][added: delays in production ramps of new products.]

For example, [added: the] gross margins on the Company’s [removed: hardware] products [added: and services] vary [removed: across product lines] [added: significantly] and can change over time.

The Company’s gross margins are subject to volatility and downward pressure due to a variety of factors, including: continued industry-wide global product pricing pressures and product pricing actions that the Company may take in response to such pressures; increased competition; the Company’s ability to effectively stimulate demand for certain of its products and services; compressed product life cycles; potential increases in the cost of components, outside manufacturing services, and [added: developing,] acquiring and delivering content for the Company’s services; the Company’s ability to manage product quality and warranty costs effectively; shifts in the mix of products and services, or in the geographic, currency or channel mix; fluctuations in foreign exchange rates; and the introduction of new products or services, including new products or services with higher cost structures.

A substantial majority of the Company’s outstanding trade receivables are not covered by collateral, third-party bank support or financing arrangements, or credit [removed: insurance.][added: insurance, and a significant portion of the Company’s trade receivables can be concentrated within cellular network carriers or other resellers.]

As of September [removed: 28, 2019, a significant portion of] [added: 26, 2020,] the Company’s [removed: trade receivables was concentrated within cellular network carriers, and its] vendor non-trade receivables and prepayments related to long-term supply agreements were concentrated among a few individual vendors located primarily in Asia.

The Company’s effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, [added: the introduction of new taxes,] or changes in tax laws or their interpretation, including in the U.S. and Ireland.

The Company’s business, results of operations, financial condition and stock price have been adversely affected and could in the future be materially adversely affected by the COVID-19 pandemic.

COVID-19 has spread rapidly throughout the world, prompting governments and businesses to take unprecedented measures in response.

Such measures have included restrictions on travel and business operations, temporary closures of businesses, and quarantines and shelter-in-place orders.

The COVID-19 pandemic has significantly curtailed global economic activity and caused significant volatility and disruption in global financial markets.

The COVID-19 pandemic and the measures taken by many countries in response have adversely affected and could in the future materially adversely impact the Company’s business, results of operations, financial condition and stock price.

Following the initial outbreak of the virus, the Company experienced disruptions to its manufacturing, supply chain and logistical services provided by outsourcing partners, resulting in temporary iPhone supply shortages that affected sales worldwide.

During the course of the pandemic, the Company’s retail stores, as well as channel partner points of sale, have been temporarily closed at various times.

In many cases, where stores and points of sale have reopened they are subject to operating restrictions to protect public health and the health and safety of employees and customers.

The Company has at times required substantially all of its employees to work remotely.

The Company is continuing to monitor the situation and take appropriate actions in accordance with the recommendations and requirements of relevant authorities.

The full extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance is currently uncertain and will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and duration of the pandemic, the development and availability of effective treatments and vaccines, the imposition of and compliance with protective public safety measures, and the impact of the pandemic on the global economy and demand for consumer products.

Additional future impacts on the Company may include, but are not limited to, material adverse effects on: demand for the Company’s products and services; the Company’s supply chain and sales and distribution channels; the Company’s ability to execute its strategic plans; and the Company’s profitability and cost structure.

To the extent the COVID-19 pandemic adversely affects the Company’s business, results of operations, financial condition and stock price, it may also have the effect of heightening many of the other risks described in this Part I, Item 1A of this Form 10-K.

Effective intellectual property protection may not be consistently available in every country in which the Company operates.

For the vast majority of applications, developers keep all of the revenue they generate on the App Store.

The Company only retains a commission from sales of applications through its platforms and in situations where a developer offers purchases for digital features, services, or goods within an application.

If the rate of the commission that the Company retains on such sales is reduced, or if it is otherwise narrowed in scope or eliminated, the Company’s financial condition and operating results could be materially adversely affected.

The Company’s financial condition and operating results could be adversely impacted by unfavorable results of legal proceedings or government investigations.

The number of claims, legal proceedings and government investigations involving the Company, and the alleged magnitude of such claims, proceedings and government investigations, has generally increased over time and may continue to increase.

In addition, if enacted, legislative and other proposals to further regulate technology companies could result in changes to the Company’s business, including requiring the Company to modify its product and service offerings, limiting the Company’s ability to invest in strategic acquisitions, or affecting the Company’s business relationships with other technology companies, and could have a materially adverse impact on the Company’s financial condition and operating results.

Further, the Company’s business partners are or may become subject to litigation that, if resolved against them, could affect the Company’s relationships with these business partners and have a materially adverse impact on the Company’s financial condition and operating results.

The failure of any significant investment could adversely affect the Company’s reputation, financial condition and operating results.

The Company has a large, global business, and the Company believes that it generally benefits from growth in international trade.

These measures can require the Company to take various actions, including change suppliers, restructure business relationships, and stop offering third-party applications on its platforms.

Changing the Company’s operations in accordance with new or changed trade restrictions may be expensive, time-consuming, disruptive to the Company’s operations and distracting to management.

Trade restrictions may be announced with little or no advance notice and the Company may not be able to effectively mitigate all adverse impacts from such measures.

In addition, an increasing number of Internet-enabled devices that include software applications and are smaller, simpler and cheaper than traditional personal computers compete with some of the Company’s existing products.

The Company retains a commission from sales through these platforms.

The Company could be impacted by unfavorable results of legal proceedings, such as being found to have infringed on intellectual property rights.

Claims against the Company based on allegations of patent infringement or other violations of intellectual property rights have generally increased over time and may continue to increase.

| | |

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[removed: The] [added: *The] following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Form 10-K.

[removed: *This] [added: This] section of this Form 10-K generally [removed: discusses* *2019* *and* *2018* *items] [added: discusses 2020] and [added: 2019 items and] year-to-year comparisons [removed: between* *2019* *and* *2018.][added: between 2020 and 2019.]

Discussions [removed: of* *2017* *items] [added: of 2018 items] and year-to-year comparisons [removed: between* *2018* *and* *2017* *that] [added: between 2019 and 2018 that] are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year [removed: ended* *September 29, 2018.*][added: ended September 28, 2019.*]

[removed: Fiscal 2019 Highlights][added: Fiscal Year Highlights]

Total net sales [removed: decreased 2%] [added: increased 6%] or [removed: $5.4] [added: $14.3] billion during [removed: 2019] [added: 2020] compared to [removed: 2018,] [added: 2019, primarily] driven by [removed: lower net sales of iPhone, partially offset by] higher net sales of [added: Services and] Wearables, Home and [removed: Accessories and Services in all geographic operating segments.][added: Accessories.]

The weakness in foreign currencies had [removed: a significant] [added: an] unfavorable impact on net sales during [removed: 2019.][added: 2020.]

In April [removed: 2019,] [added: 2020,] the Company announced an increase to its current share repurchase program authorization from [removed: $100] [added: $175] billion to [removed: $175] [added: $225] billion and raised its quarterly dividend from [removed: $0.73] [added: $0.1925] to [removed: $0.77] [added: $0.205] per share beginning in May [removed: 2019.][added: 2020.]

During [removed: 2019,] [added: 2020,] the Company repurchased [removed: $67.1] [added: $72.5] billion of its common stock and paid dividends and dividend equivalents of $14.1 billion.

[removed: Beginning in the first quarter of 2019, the Company classified the] [added: Services net sales also include] amortization of the deferred value of Maps, [removed: Siri] [added: Siri,] and free [removed: iCloud] [added: iCloud® storage and Apple TV+] services, which are bundled in the sales price of [removed: iPhone, Mac, iPad and] certain [removed: other products, in Services net sales.][added: products.]

The following table shows net sales by category for [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] (dollars in millions):

| | [removed: 2019] | | [added: 2020] | | [added: | | | |] Change | | | [removed: 2018] | | | [added: 2019] | [added: | | | | |] Change | | | [removed: 2017] | | | [added: 2018 | | |]

| Net sales by category: | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| iPhone (1) | [added: | |] $ | [removed: 142,381] [added: 137,781] | | | [removed: (14] | [removed: )%] | [added: (3)] | [added: | % | | | |] $ | [removed: 164,888] [added: 142,381] | | | [removed: 18] | [added: | (14) | |] % | | [added: | |] $ | [removed: 139,337] [added: 164,888] | |

| Mac (1) | [removed: 25,740] | | [added: 28,622] | | [removed: 2] | [added: | | | 11 | |] % | | [removed: 25,198] | | [added: 25,740] | | [removed: (1] | [removed: )%] | | [removed: 25,569] | [added: 2] | | [added: % | | | | 25,198 | | |]

| iPad (1) | [removed: 21,280] | | [added: 23,724] | | [removed: 16] | [added: | | | 11 | |] % | | [removed: 18,380] | | [added: 21,280] | | [removed: (2] | [removed: )%] | | [removed: 18,802] | [added: 16] | | [added: % | | | | 18,380 | | |]

| Wearables, Home and Accessories (1)(2) | [removed: 24,482] | | [added: 30,620] | | [removed: 41] | [added: | | | 25 | |] % | | [removed: 17,381] | | [added: 24,482] | | [removed: 36] | [added: | | | 41 | |] % | | [removed: 12,826] | | [added: 17,381] | [added: | |]

| Services (3) | [removed: 46,291] | | [added: 53,768] | | [added: | | | |] 16 | [added: |] % | | [removed: 39,748] | | [added: 46,291] | | [removed: 22] | [added: | | | 16 | |] % | | [removed: 32,700] | | [added: 39,748] | [added: | |]

| Total net sales | [added: | |] $ | [removed: 260,174] [added: 274,515] | | | [removed: (2] | [removed: )%] | [added: 6] | [added: | % | | | |] $ | [removed: 265,595] [added: 260,174] | | | [removed: 16] | [added: | (2) | |] % | | [added: | |] $ | [removed: 229,234] [added: 265,595] | |

[removed: | (1) | Products] [added: (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. [removed: |]

[removed: | (2) | Wearables,] [added: (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. [removed: |]

[removed: | (3) | Services] [added: (3)Services] net sales include sales from the Company’s [added: advertising, AppleCare,] digital content [removed: stores] and [removed: streaming services, AppleCare, licensing and] other services. [removed: Services net sales also include amortization of the deferred value of Maps, Siri and free iCloud services, which are bundled in the sales price of certain products. |]

[removed: iPhone] [added: Greater China] net sales decreased during [removed: 2019] [added: 2020] compared to [removed: 2018] [added: 2019] due primarily to lower [removed: iPhone unit sales.][added: net sales of iPhone, partially offset by higher net sales of Services and iPad.]

Mac net sales increased during [removed: 2019] [added: 2020] compared to [removed: 2018] [added: 2019] due primarily to higher net sales of MacBook [removed: Air, partially offset by lower net sales of MacBook® and MacBook Pro®.][added: Pro.]

iPad net sales increased during [removed: 2019] [added: 2020] compared to [removed: 2018] [added: 2019] due primarily to higher net sales of [added: 10-inch versions of iPad,] iPad [added: Air and iPad] Pro.

Wearables, Home and Accessories net sales increased during [removed: 2019] [added: 2020] compared to [removed: 2018] [added: 2019] due primarily to higher net sales of AirPods and Apple Watch.

Services net sales increased during [removed: 2019] [added: 2020] compared to [removed: 2018] [added: 2019] due primarily to higher net sales from the App Store, [removed: licensing] [added: advertising] and [removed: AppleCare.][added: cloud services.]

Greater China includes [removed: China,] [added: China mainland,] Hong Kong and Taiwan.

The following table shows net sales by reportable segment for [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] (dollars in millions):

| | [removed: 2019] | | [added: 2020] | | [added: | | | |] Change | | | [removed: 2018] | | | [added: 2019] | [added: | | | | |] Change | | | [removed: 2017] | | | [added: 2018 | | |]

| Net sales by reportable segment: | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Americas | [added: | |] $ | [removed: 116,914] [added: 124,556] | | | [removed: 4] | [added: | 7 | |] % | | [added: | |] $ | [removed: 112,093] [added: 116,914] | | | [removed: 16] | [added: | 4 | |] % | | [added: | |] $ | [removed: 96,600] [added: 112,093] | |

| Europe | [removed: 60,288] | | [added: 68,640] | | [removed: (3] | [removed: )%] | | [removed: 62,420] | [added: 14] | | [added: %] | [removed: 14] | [added: | | 60,288 | | | | | | (3) | |] % | | [removed: 54,938] | | [added: 62,420] | [added: | |]

| Greater China | [removed: 43,678] | | [added: 40,308] | | [removed: (16] | [removed: )%] | | [removed: 51,942] | [added: (8)] | | [added: %] | [removed: 16] | [added: | | 43,678 | | | | | | (16) | |] % | | [removed: 44,764] | | [added: 51,942] | [added: | |]

| Japan | [removed: 21,506] | | [added: 21,418] | | [removed: (1] | [removed: )%] | | [removed: 21,733] | [added: —] | | [added: %] | [removed: 23] | [added: | | 21,506 | | | | | | (1) | |] % | | [removed: 17,733] | | [added: 21,733] | [added: | |]

| Rest of Asia Pacific | [removed: 17,788] | | [added: 19,593] | | [removed: 2] | [added: | | | 10 | |] % | | [removed: 17,407] | | [added: 17,788] | | [removed: 15] | [added: | | | 2 | |] % | | [removed: 15,199] | | [added: 17,407] | [added: | |]

| Total net sales | [added: | |] $ | [removed: 260,174] [added: 274,515] | | | [removed: (2] | [removed: )%] | [added: 6] | [added: | % | | | |] $ | [removed: 265,595] [added: 260,174] | | | [removed: 16] | [added: | (2) | |] % | | [added: | |] $ | [removed: 229,234] [added: 265,595] | |

Americas net sales increased during [removed: 2019] [added: 2020] compared to [removed: 2018] [added: 2019] due primarily to higher [added: net sales of] Services and Wearables, Home and [removed: Accessories net sales, partially offset by lower iPhone net sales.][added: Accessories.]

The weakness in foreign currencies relative to the U.S. dollar had an unfavorable impact on Americas net sales during [removed: 2019.][added: 2020.]

Europe net sales [removed: decreased] [added: increased] during [removed: 2019] [added: 2020] compared to [removed: 2018] [added: 2019] due [added: primarily] to [removed: lower iPhone net sales, partially offset by] higher [added: net sales of iPhone,] Wearables, Home and Accessories and [removed: Services net sales.][added: Services.]

The weakness in foreign currencies relative to the U.S. dollar had [removed: a significant] [added: an] unfavorable impact on Europe net sales during [removed: 2019.][added: 2020.]

*COVID-19 Update*

COVID-19 has spread rapidly throughout the world, prompting governments and businesses to take unprecedented measures in response.

Such measures have included restrictions on travel and business operations, temporary closures of businesses, and quarantines and shelter-in-place orders.

The COVID-19 pandemic has significantly curtailed global economic activity and caused significant volatility and disruption in global financial markets.

The COVID-19 pandemic and the measures taken by many countries in response have adversely affected and could in the future materially adversely impact the Company’s business, results of operations, financial condition and stock price.

During 2020, aspects of the Company’s business were adversely affected by the COVID-19 pandemic, with many of the Company’s retail stores, as well as channel partner points of sale, temporarily closed at various times, and the vast majority of the Company’s employees working remotely.

The Company has reopened some of its offices and the majority of its retail stores, subject to operating restrictions to protect public health and the health and safety of employees and customers, and it continues to work on safely re-opening the remainder of its offices and retail stores, subject to local rules and regulations.

The full extent of the future impact of the COVID-19 pandemic on the Company’s operational and financial performance is currently uncertain and will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and duration of the pandemic, the development and availability of effective treatments and vaccines, the imposition of protective public safety measures, and the impact of the pandemic on the global economy and demand for consumer products.

Refer to Part I, Item 1A of this Form 10-K under the heading “Risk Factors,” for more information.

The Company believes its existing balances of cash, cash equivalents and marketable securities, along with commercial paper and other short-term liquidity arrangements, will be sufficient to satisfy its working capital needs, capital asset purchases, dividends, share repurchases, debt repayments and other liquidity requirements associated with its existing operations.

*Fiscal 2020 Highlights*

On August 28, 2020, the Company effected a four-for-one stock split to shareholders of record as of August 24, 2020.

All share, RSU and per share or per RSU information has been retroactively adjusted to reflect the stock split.

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iPhone net sales decreased during 2020 compared to 2019 due primarily to the absence of new iPhone models in the fourth quarter of 2020 and the weakness in foreign currencies relative to the U.S. dollar, partially offset by the introduction of iPhone SE in the third quarter of 2020.

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The Company’s effective tax rate for 2020 was lower compared to 2019 due primarily to a one-time adjustment of U.S. foreign tax credits in response to regulations issued by the U.S. Department of the Treasury in December 2019 in connection with the U.S. Tax Cuts and Jobs Act of 2017 (the “Act”) and higher tax benefits from share-based compensation.

The Company may enter into agreements to sell certain of its marketable securities with a promise to repurchase the securities at a specified time and amount as an additional short-term liquidity arrangement.

As of September 26, 2020, the Company was authorized to purchase up to $225 billion of the Company’s common stock under a share repurchase program, of which $168.6 billion had been utilized.

As of September 26, 2020, the Company’s quarterly cash dividend was $0.205 per share.

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| Term debt | | | $ | 8,750 | | | | | $ | 20,958 | | | | | $ | 21,029 | | | | | $ | 55,341 | | | | | $ | 106,078 | |

| Leases | | | 1,622 | | | | | | 3,097 | | | | | | 2,352 | | | | | | 5,888 | | | | | | 12,959 | | |

| Manufacturing purchase obligations (1) | | | 47,961 | | | | | | 1,849 | | | | | | 61 | | | | | | 40 | | | | | | 49,911 | | |

| Other purchase obligations | | | 6,178 | | | | | | 2,736 | | | | | | 400 | | | | | | 90 | | | | | | 9,404 | | |

| Deemed repatriation tax payable | | | 1,533 | | | | | | 5,923 | | | | | | 12,955 | | | | | | 9,254 | | | | | | 29,665 | | |

| Total | | | $ | 66,044 | | | | | $ | 34,563 | | | | | $ | 36,797 | | | | | $ | 70,613 | | | | | $ | 208,017 | |

The Company has lease arrangements for certain equipment and facilities, including retail, corporate, manufacturing and data center space.

The above contractual obligations table includes future payments under leases that had commenced as of September 26, 2020, and were therefore recorded on the Company’s Consolidated Balance Sheet, as well as leases that had been signed but not yet commenced as of September 26, 2020.

Further information regarding the Company’s leases can be found in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 12, “Leases.”

*This section and other parts of this Annual Report on Form 10-K (“Form 10-K”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties.

Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact.

Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms.

Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements.

Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors,” which are incorporated herein by reference.

Unless otherwise stated, all information presented herein is based on the Company’s fiscal calendar, and references to particular years, quarters, months or periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years.

Each of the terms the “Company” and “Apple” as used herein refers collectively to Apple Inc. and its wholly owned subsidiaries, unless otherwise stated.

The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.*

*Fiscal Period*

The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September.

The Company’s fiscal years 2019 and 2018 spanned 52 weeks each, whereas fiscal year 2017 included 53 weeks.

A 14th week was included in the first quarter of 2017, as is done every five or six years, to realign the Company’s fiscal quarters with calendar quarters.

Historically, the Company classified the amortization of these amounts in Products net sales consistent with its management reporting framework.

As a result, Products and Services net sales for 2018 and 2017 were reclassified to conform to the 2019 presentation.

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Rest of Asia Pacific net sales increased during 2019 compared to 2018 due primarily to higher Wearables, Home and Accessories and Services net sales, partially offset by lower iPhone net sales.

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Year-over-year Products gross margin percentage decreased during 2018 due primarily to higher product cost structures, partially offset by the strength in foreign currencies relative to the U.S. dollar.

As a result, the Company believes, in general, gross margins will be subject to volatility and remain under downward pressure.

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On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which significantly changed U.S. tax law.

The Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on previously deferred foreign income.

By operation of law, the Company applied a blended U.S. statutory federal income tax rate of 24.5% for 2018 (the “2018 blended U.S. tax rate”).

The Act also created a new minimum tax on certain foreign earnings.

The Company’s effective tax rate for 2018 was lower than the 2018 blended U.S. tax rate due primarily to the lower tax rate on foreign earnings, partially offset by the remeasurement of deferred tax assets and liabilities as a result of the Act.

The Company’s effective tax rate for 2019 was lower compared to 2018 due primarily to a lower statutory federal income tax rate in 2019 and the impact of the Act in 2018, partially offset by higher taxes on foreign earnings in 2019.

Based on investment positions as of September [removed: 28, 2019] [added: 26, 2020] and September [removed: 29, 2018,] [added: 28, 2019,] a hypothetical 100 basis point increase in interest rates across all maturities would result in a [removed: $2.8] [added: $3.1] billion and [removed: $4.9] [added: $2.8] billion incremental decline in the fair market value of the portfolio, respectively.

As of September [removed: 28, 2019] [added: 26, 2020] and September [removed: 29, 2018,] [added: 28, 2019,] the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate carrying amount of [removed: $102.1] [added: $107.4] billion and [removed: $102.5] [added: $102.1] billion, respectively.

A 100 basis point increase in market interest rates would cause interest expense on the Company’s debt as of September [removed: 28, 2019] [added: 26, 2020] and September [removed: 29, 2018] [added: 28, 2019] to increase by [removed: $325] [added: $218] million and [removed: $399] [added: $325] million on an annualized basis, respectively.

Based on the results of the model, the Company estimates with 95% confidence, a maximum one-day loss in fair value of [removed: $452] [added: $551] million as of September [removed: 28, 2019,] [added: 26, 2020,] compared to a maximum one-day loss in fair value of [removed: $592] [added: $452] million as of September [removed: 29, 2018.][added: 28, 2019.]

Actual future gains and losses associated with the Company’s investment portfolio, debt and derivative positions may differ materially from the sensitivity analyses performed as of September [removed: 28, 2019] [added: 26, 2020] due to the inherent limitations associated with predicting the timing and amount of changes in interest rates, foreign currency exchange rates and the Company’s actual exposures and positions.

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During [removed: 2019,] [added: 2020,] the Company released a new [removed: version of] [added: 16-inch] MacBook [removed: Air® and] [added: Pro®,] a [removed: new] [added: fully redesigned] Mac [removed: mini®,] [added: Pro®,] and [removed: introduced an] updated [removed: Mac Pro®, which is expected to be available in the fall] [added: versions] of [removed: 2019.][added: its MacBook Air®, 13-inch MacBook Pro and 27-inch iMac®.]

iPad® is the Company’s line of multi-purpose [removed: tablets.][added: tablets based on its iPadOS® operating system.]

Wearables, Home and Accessories includes AirPods®, Apple TV®, Apple Watch®, Beats® products, [removed: HomePod™,] [added: HomePod®,] iPod touch® and other Apple-branded and third-party accessories.

AirPods are the Company’s wireless headphones that interact with [removed: Siri.][added: Siri®.]

[removed: In October 2019,] [added: During 2020,] the Company [removed: introduced] [added: released] AirPods [removed: Pro™.][added: Pro®.]

In September [removed: 2019,] [added: 2020,] the Company [removed: introduced] [added: released] Apple Watch Series [removed: 5.][added: 6 and a new Apple Watch SE.]

The Company operates various [removed: platforms] [added: platforms, including the App Store®,] that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts.

The Company also offers [removed: subscription-based] digital content [removed: streaming] [added: through subscription-based] services, including Apple [added: ArcadeSM, a game subscription service; Apple] Music®, which offers users a curated listening experience with on-demand radio [removed: stations,] [added: stations; Apple News+SM, a subscription news] and [added: magazine service; and] Apple [removed: TV+,] [added: TV+SM,] which offers exclusive original [removed: content, and is expected to be available in November 2019.][added: content.]

[removed: iCloud® is the] [added: The] Company’s cloud [removed: service, which stores music, photos, contacts, calendars, mail, documents] [added: services store] and [removed: more, keeping them] [added: keep customers’ content] up-to-date and available across multiple Apple devices and Windows personal computers.

The Company [removed: delivers a variety of other services available in certain countries,] [added: offers payment services,] including Apple [removed: Arcade™, a game subscription service; Apple] Card™, a co-branded credit [removed: card; Apple News+, a subscription news and magazine service;] [added: card,] and Apple [removed: Pay,] [added: Pay®,] a cashless payment service.

During [removed: 2019,] [added: 2020,] the Company’s net sales through its direct and indirect distribution channels accounted for [removed: 31%] [added: 34%] and [removed: 69%,] [added: 66%,] respectively, of total net sales.

No single customer accounted for more than 10% of net sales in [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017.][added: 2018.]

Many of the Company’s competitors [removed: that sell mobile devices and personal computers based on other operating systems] seek to compete primarily through aggressive pricing and very low cost [removed: structures.][added: structures, and by emulating the Company’s products and infringing on its intellectual property.]

The Company is focused on expanding its market opportunities related to smartphones, personal computers, tablets and other electronic [removed: devices.][added: devices and services.]

The Company expects competition in these markets to intensify significantly as competitors imitate [removed: features of] the Company’s [removed: products] [added: product features] and applications within their products, or collaborate to offer [added: integrated] solutions that are more competitive than those they currently offer.

[removed: These] [added: The] markets [added: for the Company’s products and services] are [added: highly competitive, and are] characterized by aggressive price [removed: competition,] [added: competition and resulting downward pressure on gross margins,] frequent [added: introduction of new products and services, short] product [removed: introductions,] [added: life cycles,] evolving [removed: design approaches] [added: industry standards, continual improvement in product price] and [removed: technologies,] [added: performance characteristics,] rapid adoption of technological advancements by competitors, and price sensitivity on the part of consumers and businesses.

The [removed: Company’s services also face] [added: Company faces] substantial [removed: competition, including] [added: competition in these markets] from companies that have significant [removed: resources and experience] [added: technical, marketing, distribution] and [removed: have] [added: other resources, as well as] established [added: hardware, software, and] service offerings with large customer bases.

The [removed: Company competes] [added: Company’s services compete] with business models that provide content to users for [removed: free.][added: free and use illegitimate means to obtain third-party digital content and applications.]

As of September [removed: 28, 2019,] [added: 26, 2020,] the Company had approximately [removed: 137,000] [added: 147,000] full-time equivalent employees.

During 2020, the Company released a new iPhone SE.

In October 2020, the Company announced four new iPhone models with 5G technology: iPhone 12 and iPhone 12 Pro were available starting in October 2020, and iPhone 12 Pro Max and iPhone 12 mini are both expected to be available in November 2020.

During 2020, the Company released an updated iPad Pro®.

In September 2020, the Company released an eighth-generation iPad and introduced an all-new iPad Air®, which was available starting in October 2020.

Apple Watch is the Company’s line of smart watches based on its watchOS® operating system.

In October 2020, the Company announced HomePod mini™, which is expected to be available in November 2020.

*Advertising*

The Company’s advertising services include various third-party licensing arrangements and the Company’s own advertising platforms.

The Company offers a portfolio of fee-based service and support products under the AppleCare® brand.

The offerings provide priority access to Apple technical support, access to the global Apple authorized service network for repair and replacement services, and in many cases additional coverage for instances of accidental damage and/or theft and loss, depending on the country and type of product.

*Cloud Services*

*Digital Content*

In September 2020, the Company announced Apple Fitness+SM, a personalized fitness service built for Apple Watch, which is expected to be available before the end of calendar 2020.

*Payment Services*

The Company’s ability to compete successfully depends heavily on ensuring the continuing and timely introduction of innovative new products, services and technologies to the marketplace.

The Company believes it is unique in that it designs and develops nearly the entire solution for its products, including the hardware, operating system, numerous software applications and related services.

In addition, some of the Company’s competitors have broader product lines, lower-priced products and a larger installed base of active devices.

Competition has been particularly intense as competitors have aggressively cut prices and lowered product margins.

Certain competitors may have the resources, experience or cost structures to provide products at little or no profit or even at a loss.

In September 2019, the Company introduced three new iPhones: iPhone 11, iPhone 11 Pro and iPhone 11 Pro Max.

iPad is based on the Company’s iPadOS™ operating system, which was introduced during 2019.

Also during 2019, the Company released two new versions of iPad Pro®, an iPad Air®, an updated iPad mini® and a new 10.2-inch iPad.

Apple Watch is a personal electronic device that combines the watchOS® user interface and other technologies created specifically for a smaller device.

*Digital Content Stores and Streaming Services*

These platforms include the App Store®, available for iPhone and iPad, the Mac App Store, the TV App Store and the Watch App Store.

AppleCare® includes AppleCare \+ (“AC+”) and the AppleCare Protection Plan, which are fee-based services that extend the coverage of phone support eligibility and hardware repairs.

AC+ offers additional coverage for instances of accidental damage and is available in certain countries for certain products.

Additionally, AC+ with theft and loss protection is available for iPhone in the U.S.

*iCloud*

*Licensing*

The Company licenses the use of certain of its intellectual property, and provides other related services.

*Other Services*

The markets for the Company’s products and services are highly competitive and the Company is confronted by aggressive competition in all areas of its business.

These markets are characterized by frequent product introductions and rapid technological advances that have substantially increased the capabilities and use of smartphones, personal computers, tablets and other electronic devices.

These markets are highly competitive and include many large, well-funded and experienced participants.

The Company also competes with illegitimate means to obtain third-party digital content and applications.

The Company believes it offers superior innovation and integration of the entire solution, including hardware, software and services.

Some of the Company’s current and potential competitors have substantial resources and may be able to provide such products and services at little or no profit, or even at a loss, to compete with the Company’s offerings.

The Company is subject to the informational requirements of the Exchange Act and files or furnishes reports, proxy statements and other information with the SEC.

The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

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[removed: Except as] [added: The Company’s material legal proceedings are] described in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 10, “Commitments and Contingencies” under the heading [removed: “Contingencies,” 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.][added: “Contingencies.”]

[removed: Refer to the risk factor *“The Company could be impacted by unfavorable results of legal proceedings, such as being found to have infringed on intellectual property rights”* in Part I, Item 1A of this Form 10-K under the heading “Risk Factors.”] The Company settled certain matters during the fourth quarter of [removed: 2019] [added: 2020] that did not individually or in the aggregate have a material impact on the Company’s financial condition or operating results.

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[removed: FORM 10-K][added: Form 10-K]

For the fiscal year ended September [removed: 28, 2019][added: 26, 2020]

[removed: ][added: ]

| California | | | | [added: | |] 94-2404110 | [added: | |]

| (State or other jurisdiction of incorporation or organization) | | | | [added: | |] (I.R.S. Employer Identification No.) | [added: | |]

| One Apple Park Way | | | | | [added: | | | |]

| [removed: Cupertino] [added: Cupertino, California] | | [removed: California] | | [added: | |] 95014 | [added: | |]

| (Address of principal executive offices) | | | | [added: | |] (Zip Code) | [added: | |]

[removed: (408) 996-1010][added: (408) 996-1010]

| Title of each class | [added: | |] Trading symbol(s) | [added: | |] Name of each exchange on which registered | [added: | |]

| Common Stock, $0.00001 par value per share | [added: | |] AAPL | [added: | |] The Nasdaq Stock Market LLC | [added: | |]

| 1.000% Notes due 2022 | [added: | |] — | [added: | |] The Nasdaq Stock Market LLC | [added: | |]

| 1.375% Notes due 2024 | [added: | |] — | [added: | |] The Nasdaq Stock Market LLC | [added: | |]

| 0.875% Notes due 2025 | [added: | |] — | [added: | |] The Nasdaq Stock Market LLC | [added: | |]

| 1.625% Notes due 2026 | [added: | |] — | [added: | |] The Nasdaq Stock Market LLC | [added: | |]

| 2.000% Notes due 2027 | [added: | |] — | [added: | |] The Nasdaq Stock Market LLC | [added: | |]

| 1.375% Notes due 2029 | [added: | |] — | [added: | |] The Nasdaq Stock Market LLC | [added: | |]

| 3.050% Notes due 2029 | [added: | |] — | [added: | |] The Nasdaq Stock Market LLC | [added: | |]

| 3.600% Notes due 2042 | [added: | |] — | [added: | |] The Nasdaq Stock Market LLC | [added: | |]

| Large accelerated filer | | [added: | | | |] ☒ | | [added: | | | |] Accelerated filer | | [added: | | | |] ☐ | [added: | |]

| Non-accelerated filer | | [added: | | | |] ☐ | | [added: | | | |] Smaller reporting company | | [added: | | | |] ☐ | [added: | |]

| | | | | [added: | | | | | | | |] Emerging growth company | | [added: | | | |] ☐ | [added: | |]

The aggregate market value of the voting and non-voting stock held by non-affiliates of the Registrant, as of March [removed: 29, 2019,] [added: 27, 2020,] the last business day of the Registrant’s most recently completed second fiscal quarter, was approximately [removed: $874,698,000,000.][added: $1,070,633,000,000.]

[removed: 4,443,265,000] [added: 17,001,802,000] shares of common stock were issued and outstanding as of October [removed: 18, 2019.][added: 16, 2020.]

Portions of the Registrant’s definitive proxy statement relating to its [removed: 2020] [added: 2021] annual meeting of shareholders (the [removed: “2020] [added: “2021] Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated.

The [removed: 2020] [added: 2021] Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

For the Fiscal Year [removed: Ended September 28, 2019][added: Ended September 26, 2020]

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| 0.000% Notes due 2025 | | | — | | | The Nasdaq Stock Market LLC | | |

| 0.500% Notes due 2031 | | | — | | | The Nasdaq Stock Market LLC | | |

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Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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| [Part I](#ief781ab58e4f4fcaa872ddbd30da40e1_10) | | | | | | | | |

| [Part II](#ief781ab58e4f4fcaa872ddbd30da40e1_31) | | | | | | | | |

| [Part IV](#ief781ab58e4f4fcaa872ddbd30da40e1_190) | | | | | | | | |

For example, statements in this Form 10-K regarding the potential future impact of the COVID-19 pandemic on the Company’s business and results of operations are forward-looking statements.

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| [Part I](#sE45D95EC302C53F3999A16F238922716) | | |

| [Part II](#s441770BCD3195825A459C905D90A255A) | | |

| [Part IV](#s49498D0CD5C959CA84C417CEA46A6953) | | |

The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.*

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As of September [removed: 28, 2019,] [added: 26, 2020,] the Company owned or leased facilities and land for corporate functions, R&D, data centers, retail and other purposes at locations throughout the U.S. and in various places outside the U.S. The Company believes its existing facilities and equipment, which are used by all reportable segments, are in good operating condition and are suitable for the conduct of its business.

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As of October [removed: 18, 2019,] [added: 16, 2020,] there were [removed: 23,233] [added: 22,797] shareholders of record.

Share repurchase activity during the three months ended September [removed: 28, 2019] [added: 26, 2020] was as follows (in millions, except number of shares, which are reflected in thousands, and per share amounts):

| Periods | | [added: | | | |] Total [removed: Number of] [added: Number of] Shares Purchased | | | [added: | | |] Average Price Paid Per Share | | | | [added: | |] Total Number of [removed: Shares Purchased] [added: Shares Purchased] as Part of [removed: Publicly Announced] [added: Publicly Announced] Plans or Programs | | | [added: | | |] Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) | | |

| June [removed: 30, 2019] [added: 28, 2020] to August [removed: 3, 2019:] [added: 1, 2020:] | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Open market and privately negotiated purchases | | [removed: 23,860] | | | [added: | 67,990 | | | | | |] $ | [removed: 205.36] [added: 94.68] | | | [removed: 23,860] | | [added: 67,990] | | | | [added: | | | | |]

| Open market and privately negotiated purchases | | [removed: 34,705] | | | [added: | 40,004 | | | | | |] $ | [removed: 204.59] [added: 115.99] | | | [removed: 34,705] | | [added: 40,004] | | | | [added: | | | | |]

| Open market and privately negotiated purchases | | [removed: 27,178] | | | [added: | 60,725 | | | | | |] $ | [removed: 217.17] [added: 114.00] | | | [removed: 27,178] | | [added: 60,725] | | | | [added: | | | | |]

[removed: | (2) |] In [removed: February 2019, the Company entered into an accelerated share repurchase arrangement (“ASR”) to purchase up to $12.0 billion of the Company’s common stock. In] August [removed: 2019,] [added: 2020,] the purchase period for this ASR ended and an additional [removed: 6.9] [added: 3] million shares were delivered and retired. [removed: In total, 62.0 million shares were delivered under this ASR at an average repurchase price of $193.69. |]

The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend-reinvested basis, for the Company, the S&P 500 Index, the S&P Information Technology Index and the Dow Jones U.S. Technology Supersector Index for the five years ended September [removed: 28, 2019.][added: 26, 2020.]

The graph assumes $100 was invested in each of the Company’s common stock, the S&P 500 Index, the S&P Information Technology Index and the Dow Jones U.S. Technology Supersector Index as of the market close on September [removed: 26, 2014.][added: 25, 2015.]

Note that [removed: historic] [added: past] stock price performance is not necessarily indicative of future stock price performance.

[removed: ][added: ]

[removed: | * | $100 invested on September 26, 2014 in stock or index, including reinvestment of dividends.] Data points are the last day of each fiscal year for the Company’s common stock and September 30th for indexes. [removed: |]

Copyright© [removed: 2019] [added: 2020] Standard & Poor’s, a division of S&P Global.

Copyright© [removed: 2019] [added: 2020] S&P Dow Jones Indices LLC, a division of S&P Global.

| | | [removed: September 2014] | | | | September 2015 | | | | [added: | |] September 2016 | | | | [added: | |] September 2017 | | | | [added: | |] September 2018 | | | | [added: | |] September 2019 | | | [added: | | | September 2020 | | |]

| Dow Jones U.S. Technology Supersector Index | | [removed: $] | [removed: 100] | | | $ | 100 | | | [added: | |] $ | 122 | | | [added: | |] $ | 156 | | | [added: | |] $ | 205 | | | [added: | |] $ | 218 | | [added: | | | $ | 325 | |]

Common Stock Split

On August 28, 2020, the Company effected a four-for-one stock split to shareholders of record as of August 24, 2020.

All share, restricted stock unit (“RSU”) and per share or per RSU information has been retroactively adjusted to reflect the stock split.

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| August 2, 2020 to August 29, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | | |

| May 2020 ASR | | | | | | 3,115 | | | | | | (2) | | | | | | 3,115 | | | | | | | | |

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| August 30, 2020 to September 26, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total | | | | | | 171,834 | | | | | | | | | | | | | | | | | | $ | 56,353 | |

(1)As of September 26, 2020, the Company was authorized to purchase up to $225 billion of the Company’s common stock under a share repurchase program announced on April 30, 2020, of which $168.6 billion had been utilized.

The remaining $56.4 billion in the table represents the amount available to repurchase shares under the authorized repurchase program as of September 26, 2020.

The Company’s share repurchase program does not obligate it to acquire any specific number of shares.

Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

(2)In May 2020, the Company entered into an accelerated share repurchase arrangement (“ASR”) to purchase up to $6.0 billion of the Company’s common stock.

In total, 64 million shares were delivered under this ASR at an average repurchase price of $94.14.

*$100 invested on September 25, 2015 in stock or index, including reinvestment of dividends.

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| Apple Inc. | | | | | | $ | 100 | | | | | $ | 100 | | | | | $ | 140 | | | | | $ | 208 | | | | | $ | 204 | | | | | $ | 424 | |

| S&P 500 Index | | | | | | $ | 100 | | | | | $ | 115 | | | | | $ | 137 | | | | | $ | 161 | | | | | $ | 168 | | | | | $ | 194 | |

| S&P Information Technology Index | | | | | | $ | 100 | | | | | $ | 123 | | | | | $ | 158 | | | | | $ | 208 | | | | | $ | 226 | | | | | $ | 333 | |

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| August 4, 2019 to August 31, 2019: | | | | | | | | | | | | | | |

| February 2019 ASR | | 6,886 | | | (2) | | | | 6,886 | | | | | |

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| September 1, 2019 to September 28, 2019: | | | | | | | | | | | | | | |

| Total | | 92,629 | | | | | | | | | | $ | 78,869 | |

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| (1) | On April 30, 2019, the Company announced the Board of Directors increased the current share repurchase program authorization from $100 billion to $175 billion of the Company’s common stock, of which $96.1 billion had been utilized as of September 28, 2019. The remaining $78.9 billion in the table represents the amount available to repurchase shares under the authorized repurchase program as of September 28, 2019. The Company’s share repurchase program does not obligate it to acquire any specific number of shares. Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. |

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| Apple Inc. | | $ | 100 | | | $ | 116 | | | $ | 116 | | | $ | 162 | | | $ | 240 | | | $ | 237 | |

| S&P 500 Index | | $ | 100 | | | $ | 99 | | | $ | 115 | | | $ | 136 | | | $ | 160 | | | $ | 167 | |

| S&P Information Technology Index | | $ | 100 | | | $ | 102 | | | $ | 125 | | | $ | 162 | | | $ | 213 | | | $ | 231 | |

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The information set forth below for the five years ended September [removed: 28, 2019,] [added: 26, 2020,] is not necessarily indicative of results of future operations, and should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes [removed: thereto] included in Part II, Item 8 of this Form 10-K to fully understand factors that may affect the comparability of the information presented below (in millions, except number of shares, which are reflected in thousands, and per share amounts).

| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | |

| Total net sales | [added: | |] $ | [removed: 260,174] [added: 274,515] | | | [added: | |] $ | [removed: 265,595] [added: 260,174] | | | [added: | |] $ | [removed: 229,234] [added: 265,595] | | | [added: | |] $ | [removed: 215,639] [added: 229,234] | | | [added: | |] $ | [removed: 233,715] [added: 215,639] | |

| Net income | [added: | |] $ | [removed: 55,256] [added: 57,411] | | | [added: | |] $ | [removed: 59,531] [added: 55,256] | | | [added: | |] $ | [removed: 48,351] [added: 59,531] | | | [added: | |] $ | [removed: 45,687] [added: 48,351] | | | [added: | |] $ | [removed: 53,394] [added: 45,687] | |

| Earnings per share: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Shares used in computing earnings per share: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Total cash, cash equivalents and marketable securities | [added: | |] $ | [removed: 205,898] [added: 191,830] | | | [added: | |] $ | [removed: 237,100] [added: 205,898] | | | [added: | |] $ | [removed: 268,895] [added: 237,100] | | | [added: | |] $ | [removed: 237,585] [added: 268,895] | | | [added: | |] $ | [removed: 205,666] [added: 237,585] | |

| Total assets | [added: | |] $ | [removed: 338,516] [added: 323,888] | | | [added: | |] $ | [removed: 365,725] [added: 338,516] | | | [added: | |] $ | [removed: 375,319] [added: 365,725] | | | [added: | |] $ | [removed: 321,686] [added: 375,319] | | | [added: | |] $ | [removed: 290,345] [added: 321,686] | |

| Non-current portion of term debt | [added: | |] $ | [removed: 91,807] [added: 98,667] | | | [added: | |] $ | [removed: 93,735] [added: 91,807] | | | [added: | |] $ | [removed: 97,207] [added: 93,735] | | | [added: | |] $ | [removed: 75,427] [added: 97,207] | | | [added: | |] $ | [removed: 53,329] [added: 75,427] | |

| Other non-current liabilities | [added: | |] $ | [removed: 50,503] [added: 54,490] | | | [added: | |] $ | [removed: 48,914] [added: 50,503] | | | [added: | |] $ | [removed: 44,212] [added: 48,914] | | | [added: | |] $ | [removed: 39,986] [added: 44,212] | | | [added: | |] $ | [removed: 38,104] [added: 39,986] | |

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| Basic | | | $ | 3.31 | | | | | $ | 2.99 | | | | | $ | 3.00 | | | | | $ | 2.32 | | | | | $ | 2.09 | |

| Diluted | | | $ | 3.28 | | | | | $ | 2.97 | | | | | $ | 2.98 | | | | | $ | 2.30 | | | | | $ | 2.08 | |

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| Cash dividends declared per share | | | $ | 0.795 | | | | | $ | 0.75 | | | | | $ | 0.68 | | | | | $ | 0.60 | | | | | $ | 0.545 | |

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| Basic | | | 17,352,119 | | | | | | 18,471,336 | | | | | | 19,821,510 | | | | | | 20,868,968 | | | | | | 21,883,281 | | |

| Diluted | | | 17,528,214 | | | | | | 18,595,651 | | | | | | 20,000,435 | | | | | | 21,006,767 | | | | | | 22,001,126 | | |

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| Basic | $ | 11.97 | | | $ | 12.01 | | | $ | 9.27 | | | $ | 8.35 | | | $ | 9.28 | |

| Diluted | $ | 11.89 | | | $ | 11.91 | | | $ | 9.21 | | | $ | 8.31 | | | $ | 9.22 | |

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| Cash dividends declared per share | $ | 3.00 | | | $ | 2.72 | | | $ | 2.40 | | | $ | 2.18 | | | $ | 1.98 | |

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| Basic | 4,617,834 | | | | 4,955,377 | | | | 5,217,242 | | | | 5,470,820 | | | | 5,753,421 | | |

| Diluted | 4,648,913 | | | | 5,000,109 | | | | 5,251,692 | | | | 5,500,281 | | | | 5,793,069 | | |

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| Index to Consolidated Financial Statements | | [added: | | | |] Page | [added: | |]

| [Consolidated Statements of Operations for the years ended [removed: September 28, 2019, September 29, 2018 and September 30, 2017](#sD628584EE6B55393A4E35023D14120AE)] [added: September](#ief781ab58e4f4fcaa872ddbd30da40e1_85) [26](#ief781ab58e4f4fcaa872ddbd30da40e1_85)[, 20](#ief781ab58e4f4fcaa872ddbd30da40e1_85)[20](#ief781ab58e4f4fcaa872ddbd30da40e1_85)[, September](#ief781ab58e4f4fcaa872ddbd30da40e1_85) [28](#ief781ab58e4f4fcaa872ddbd30da40e1_85)[, 201](#ief781ab58e4f4fcaa872ddbd30da40e1_85)[9](#ief781ab58e4f4fcaa872ddbd30da40e1_85) [and September](#ief781ab58e4f4fcaa872ddbd30da40e1_85) [29](#ief781ab58e4f4fcaa872ddbd30da40e1_85)[, 201](#ief781ab58e4f4fcaa872ddbd30da40e1_85)[8](#ief781ab58e4f4fcaa872ddbd30da40e1_85)] | | [removed: [29](#sD628584EE6B55393A4E35023D14120AE)] | [added: | | | [31](#ief781ab58e4f4fcaa872ddbd30da40e1_85) | | |]

| [Consolidated Statements of Comprehensive Income for the years [removed: ended September] [added: ended](#ief781ab58e4f4fcaa872ddbd30da40e1_88) [September 26, 2020,](#ief781ab58e4f4fcaa872ddbd30da40e1_88) [September] 28, [removed: 2019, September] [added: 2019](#ief781ab58e4f4fcaa872ddbd30da40e1_88) [and](#ief781ab58e4f4fcaa872ddbd30da40e1_88) [September] 29, [removed: 2018 and September 30, 2017](#s43F41C0D88375104950641E5AD6BB17A)] [added: 2018](#ief781ab58e4f4fcaa872ddbd30da40e1_88)] | | [removed: [30](#s43F41C0D88375104950641E5AD6BB17A)] | [added: | | | [32](#ief781ab58e4f4fcaa872ddbd30da40e1_88) | | |]

| [Consolidated Balance Sheets as [removed: of September] [added: of](#ief781ab58e4f4fcaa872ddbd30da40e1_91) [Septe](#ief781ab58e4f4fcaa872ddbd30da40e1_91)[mber 26, 2020 and](#ief781ab58e4f4fcaa872ddbd30da40e1_91) [September] 28, [removed: 2019 and September 29, 2018](#s6D62EE50CBA95D4FB3E6485B01BAD719)] [added: 2019](#ief781ab58e4f4fcaa872ddbd30da40e1_91)] | | [removed: [31](#s6D62EE50CBA95D4FB3E6485B01BAD719)] | [added: | | | [33](#ief781ab58e4f4fcaa872ddbd30da40e1_91) | | |]

| [Consolidated Statements of Shareholders’ Equity for the years [removed: ended September] [added: ended](#ief781ab58e4f4fcaa872ddbd30da40e1_97) [S](#ief781ab58e4f4fcaa872ddbd30da40e1_97)[eptember 26, 2020,](#ief781ab58e4f4fcaa872ddbd30da40e1_97) [September] 28, [removed: 2019, September] [added: 2019](#ief781ab58e4f4fcaa872ddbd30da40e1_97) [and](#ief781ab58e4f4fcaa872ddbd30da40e1_97) [September] 29, [removed: 2018 and September 30, 2017](#s4B3C881CFFBD57FCA56006EDB8D567DC)] [added: 2018](#ief781ab58e4f4fcaa872ddbd30da40e1_97)] | | [removed: [32](#s4B3C881CFFBD57FCA56006EDB8D567DC)] | [added: | | | [34](#ief781ab58e4f4fcaa872ddbd30da40e1_97) | | |]

| [Consolidated Statements of Cash Flows for the years [removed: ended September] [added: ended](#ief781ab58e4f4fcaa872ddbd30da40e1_100) [S](#ief781ab58e4f4fcaa872ddbd30da40e1_100)[eptember 26, 2020,](#ief781ab58e4f4fcaa872ddbd30da40e1_100) [September] 28, [removed: 2019, September] [added: 2019](#ief781ab58e4f4fcaa872ddbd30da40e1_100) [and](#ief781ab58e4f4fcaa872ddbd30da40e1_100) [September] 29, [removed: 2018 and September 30, 2017](#s518AB031B05D5A74940A902D148B98B2)] [added: 2018](#ief781ab58e4f4fcaa872ddbd30da40e1_100)] | | [removed: [33](#s518AB031B05D5A74940A902D148B98B2)] | [added: | | | [35](#ief781ab58e4f4fcaa872ddbd30da40e1_100) | | |]

| [Notes to Consolidated Financial [removed: Statements](#s55F749F26A3D5A0395EE3A73708D295D)] [added: Statements](#ief781ab58e4f4fcaa872ddbd30da40e1_103)] | | [removed: [34](#s55F749F26A3D5A0395EE3A73708D295D)] | [added: | | | [36](#ief781ab58e4f4fcaa872ddbd30da40e1_103) | | |]

[removed: | [Selected] [added: Note 13 – Selected] Quarterly Financial Information [removed: (Unaudited)](#s7D3B610B0B9E50E2AD227A1A14EA70E6) | | [55](#s7D3B610B0B9E50E2AD227A1A14EA70E6) |][added: (Unaudited)]

| [Reports of Independent Registered Public Accounting [removed: Firm](#s9FD5F74E60ED59B798D9FFE366A57E96)] [added: Firm](#ief781ab58e4f4fcaa872ddbd30da40e1_160)] | | [removed: [56](#s9FD5F74E60ED59B798D9FFE366A57E96)] | [added: | | | [59](#ief781ab58e4f4fcaa872ddbd30da40e1_160) | | |]

| | [added: | |] Years ended | | | | | | | | | | | [added: | | | |]

| | [added: | |] September [removed: 28, 2019] [added: 26, 2020] | | | | [added: | |] September [removed: 29, 2018] [added: 28, 2019] | | | | [added: | |] September [removed: 30, 2017] [added: 29, 2018] | | |

| Net sales: | | | | | | | | | | | | [added: | | | | | |]

| Products | [added: | |] $ | [removed: 213,883] [added: 220,747] | | | [added: | |] $ | [removed: 225,847] [added: 213,883] | | | [added: | |] $ | [removed: 196,534] [added: 225,847] | |

| Services | [removed: 46,291] | | [added: 53,768] | | [removed: 39,748] | | | | [removed: 32,700] [added: 46,291] | | | [added: | | | 39,748 | | |]

| Total net sales | [removed: 260,174] | | [added: 274,515] | | [removed: 265,595] | | | | [removed: 229,234] [added: 260,174] | | | [added: | | | 265,595 | | |]

| Cost of sales: | | | | | | | | | | | | [added: | | | | | |]

| Products | [removed: 144,996] | | [added: 151,286] | | [removed: 148,164] | | | | [removed: 126,337] [added: 144,996] | | | [added: | | | 148,164 | | |]

| Services | [removed: 16,786] | | [added: 18,273] | | [removed: 15,592] | | | | [removed: 14,711] [added: 16,786] | | | [added: | | | 15,592 | | |]

| Total cost of sales | [removed: 161,782] | | [added: 169,559] | | [removed: 163,756] | | | | [removed: 141,048] [added: 161,782] | | | [added: | | | 163,756 | | |]

| Gross margin | [removed: 98,392] | | [added: 104,956] | | [removed: 101,839] | | | | [removed: 88,186] [added: 98,392] | | | [added: | | | 101,839 | | |]

| Operating expenses: | | | | | | | | | | | | [added: | | | | | |]

| Research and development | [removed: 16,217] | | [added: 18,752] | | [removed: 14,236] | | | | [removed: 11,581] [added: 16,217] | | | [added: | | | 14,236 | | |]

| Selling, general and administrative | [removed: 18,245] | | [added: 19,916] | | [removed: 16,705] | | | | [removed: 15,261] [added: 18,245] | | | [added: | | | 16,705 | | |]

| Total operating expenses | [removed: 34,462] | | [added: 38,668] | | [removed: 30,941] | | | | [removed: 26,842] [added: 34,462] | | | [added: | | | 30,941 | | |]

| Operating income | [removed: 63,930] | | [added: 66,288] | | [removed: 70,898] | | | | [removed: 61,344] [added: 63,930] | | | [added: | | | 70,898 | | |]

| Other income/(expense), net | [removed: 1,807] | | [added: 803] | | [removed: 2,005] | | | | [removed: 2,745] [added: 1,807] | | | [added: | | | 2,005 | | |]

| Income before provision for income taxes | [removed: 65,737] | | [added: 67,091] | | [removed: 72,903] | | | | [removed: 64,089] [added: 65,737] | | | [added: | | | 72,903 | | |]

| Provision for income taxes | [removed: 10,481] | | [added: 9,680] | | [removed: 13,372] | | | | [removed: 15,738] [added: 10,481] | | | [added: | | | 13,372 | | |]

| Net income | [added: | |] $ | [removed: 55,256] [added: 57,411] | | | [added: | |] $ | [removed: 59,531] [added: 55,256] | | | [added: | |] $ | [removed: 48,351] [added: 59,531] | |

| Earnings per share: | | | | | | | | | | | | [added: | | | | | |]

| Shares used in computing earnings per share: | | | | | | | | | | | | [added: | | | | | |]

| | [added: | |] Years ended | | | | | | | | | | | [added: | | | |]

| | [added: | |] September [removed: 28, 2019] [added: 26, 2020] | | | | [added: | |] September [removed: 29, 2018] [added: 28, 2019] | | | | [added: | |] September [removed: 30, 2017] [added: 29, 2018] | | |

| Net income | [added: | |] $ | [removed: 55,256] [added: 57,411] | | | [added: | |] $ | [removed: 59,531] [added: 55,256] | | | [added: | |] $ | [removed: 48,351] [added: 59,531] | |

| Other comprehensive income/(loss): | | | | | | | | | | | | [added: | | | | | |]

| Change in foreign currency translation, net of tax | [removed: (408] | | [removed: )] [added: 88] | | [removed: (525] | | [removed: )] | | [removed: 224] [added: (408)] | | | [added: | | | (525) | | |]

| Change in unrealized gains/losses on derivative instruments, net of tax: | | | | | | | | | | | | [added: | | | | | |]

| Change in fair value of derivatives | [removed: (661] | | [removed: )] [added: 79] | | [removed: 523] | | | | [removed: 1,315] [added: (661)] | | | [added: | | | 523 | | |]

| Adjustment for net (gains)/losses realized and included in net income | [removed: 23] | | [added: (1,264)] | | [removed: 382] | | | | [removed: (1,477] [added: 23] | | [removed: )] | [added: | | | 382 | | |]

| Total change in unrealized gains/losses on derivative instruments | [removed: (638] | | [removed: )] [added: (1,185)] | | [removed: 905] | | | | [removed: (162] [added: (638)] | | [removed: )] | [added: | | | 905 | | |]

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| Basic | | | $ | 3.31 | | | | | $ | 2.99 | | | | | $ | 3.00 | |

| Diluted | | | $ | 3.28 | | | | | $ | 2.97 | | | | | $ | 2.98 | |

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| Basic | | | 17,352,119 | | | | | | 18,471,336 | | | | | | 19,821,510 | | |

| Diluted | | | 17,528,214 | | | | | | 18,595,651 | | | | | | 20,000,435 | | |

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| Total shareholders’ equity | | | 65,339 | | | | | | 90,488 | | |

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Common Stock Split

On August 28, 2020, the Company effected a four-for-one stock split to shareholders of record as of August 24, 2020.

All share, restricted stock unit (“RSU”) and per share or per RSU information has been retroactively adjusted to reflect the stock split.

*Leases*

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.

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.

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| Basic | $ | 11.97 | | | $ | 12.01 | | | $ | 9.27 | |

| Diluted | $ | 11.89 | | | $ | 11.91 | | | $ | 9.21 | |

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| Basic | 4,617,834 | | | | 4,955,377 | | | | 5,217,242 | | |

| Diluted | 4,648,913 | | | | 5,000,109 | | | | 5,251,692 | | |

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| Tax benefit from equity awards, including transfer pricing adjustments | — | | | | — | | | | 620 | | |

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| Total shareholders’ equity, ending balances | $ | 90,488 | | | $ | 107,147 | | | $ | 134,047 | |

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