AAPL 10-K & 10-Q changes, risk factors and insider trading

The Company’s operations and performance depend significantly on global and regional economic conditions and adverse economic conditions can materially adversely affect the Company’s business, results of operationsoperations, financial condition and financialstock condition.price.

In addition to an adverse impact on demand for the Company’s products and services, uncertaintyUncertainty about, or a decline in, global or regional economic conditions can also have a significant impact on the Company’s suppliers, contract manufacturers, logistics providers, distributors, cellular network carriers and other channel partners, and developers. Potential outcomes include financial instability; inability to obtain credit to finance business operations; and insolvency.

The Company has a large, global business with sales outside the U.S. representing a majority of the Company’s total net sales, and the Company believes that it generally benefits from growth in international trade. SubstantiallyA allsignificant majority of the Company’s manufacturing is performed in whole or in part by outsourcing partners located primarily in China mainland, India, Japan, South Korea, Taiwan and Vietnam.Vietnam, in addition to sourcing from partners and facilities located in the U.S. Restrictions on international trade, such as tariffs and other controls on imports or exports of goods, technology or data, can materially adversely affect the Company’s business and supply chain. The impact can be particularly significant if these restrictive measures apply to countries and regions where the Company derives a significant portion of its revenues and/or has significant supply chain operations. Restrictive measures 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,them. andRestrictive measures can also require the Company to take various actions, including changingchange suppliers, restructuringrestructure business relationships and operations, refrain from offering and ceasingdistributing or cease to offer and distribute affected products, services and third-party applications to its customers.customers, and increase the prices of its products and services. Changing the Company’s business and supply chain in accordance with new or changed restrictions on international trade can be expensive, time-consuming and disruptive to the Company’s business and results of operations. Trade and other international disputes can also have an adverse impact on the overall macroeconomic environment and result in shifts and reductions in consumer spending and negative consumer sentiment for the Company’s products and services, all of which can further adversely affect the Company’s business and results of operations. Such restrictions can be announced with little or no advance notice, which can create uncertainty, and the Company may not be able to effectively mitigate any or all adverse impacts from such measures. ForGlobal example,supply chains can be highly concentrated, and an escalation of geopolitical tensions betweenor governments,conflict could result in significant disruptions. Beginning in the second quarter of 2025, new tariffs were announced on imports to the U.S. (“U.S. Tariffs”), including additional tariffs on imports from China, India, Japan, South Korea, Taiwan, Vietnam and the European Union (“EU”), among others. In response, several countries have imposed, or threatened to impose, reciprocal tariffs on imports from the U.S. and China,other retaliatory measures. Various modifications to the U.S. Tariffs have been announced and further changes could be made in the pastfuture, ledwhich may include additional sector-based tariffs or other measures. For example, the U.S. Department of Commerce has initiated an investigation under Section 232 of the Trade Expansion Act of 1962, as amended, into, among other things, imports of semiconductors, semiconductor manufacturing equipment, and their derivative products, including downstream products that contain semiconductors. The ultimate impact remains uncertain and will depend on several factors, including whether additional or incremental U.S. Tariffs or other measures are announced or imposed, to what extent other countries implement tariffs or other retaliatory measures in response, and other restrictions affecting the Company’soverall business.magnitude and duration of these measures. If disputes and conflicts further escalate in the future,escalate, actions by governments in response could be significantly more severe and restrictive and could materially adversely affect the Company’s business.restrictive.

Many of the Company’s operationsoperations, retail stores and facilities, as well as critical business operations of the Company’s suppliers and contract manufacturers, are in locations that are prone to earthquakes and other natural disasters. Global climate change is resulting in certain types of natural disasters and extreme weather occurring more frequently or with more intense effects. In addition, the Company’s and its suppliers’ operationsoperations, retail stores 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, ransomware and other cybersecurity attacks, labor disputes, public health issues and other events beyond the Company’s control. For example, global supply chains can be highly concentrated and geopolitical tensions or conflict could result in significant disruptions.

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

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 designs and develops nearly the entire solution for its products, including the hardware, operating system, numerous software applications and related services. As a result, the Company must make significant investments in R&D. There can be no assurance theseThese investments willmay not achieve expected returns, and the Company may not be able to develop and market new products and services successfully.

The CompanyCompany’s has a minority market share in the global smartphone, personal computerproducts and tabletservices markets. The Company facesface substantial competition in these markets from companies that have significant technical, marketing, distribution and other resources, as well as established hardware, software and digitalservice content supplier relationships.offerings. In addition, somethe Company faces significant competition as competitors imitate the Company’s product features and applications within their products to offer more competitive solutions. The Company also expects competition to intensify as competitors imitate the Company’s approach to providing components seamlessly within their offerings or work collaboratively to offer integrated solutions. Some of the Company’s competitors have broaderbroad product lines, lower-pricedlow-priced productsproducts, and a largerlarge installed basebases of active devices.devices, and large customer bases. Competition has been particularly intense as competitors have aggressively cut prices and lowered product margins. Certain competitors have the resources, experience or cost structures to provide products and services at little or no profit or even at a loss. SomeThe Company has a minority market share in the global smartphone, personal computer, tablet and wearables markets, and some of the markets in which the Company competes have from time to time experienced little to no growth or contracted overall.

Due to the highly volatile and competitive nature of the markets and industries in which the Company competes, the Company must continually introduce new products, services and technologies, enhance existing products and services, effectively stimulate customer demand for new and upgraded products and services, navigate global regulatory requirements and barriers to market access, and successfully manage the transition to these new and upgraded products and services. The success of new product and service introductions depends on a number of factors, including the Company’s ability to recruit and retain highly skilled personnel to execute on its strategic initiatives, and the timely and successful development,development and market acceptance,acceptance of new products, services and technologies. Success also relies on the Company’s ability to manage the risks associated with new technologies and production ramp-up issues, the availabilityeffective integration of third-party services and technologies into the Company’s products and services, the availability, delivery and performance of application software or other third-party support for the Company’s products and services, the effective management of manufacturing and other purchase commitments and the management of inventory levels in line with anticipated product demand, and the availability of products in appropriate quantities and at expected costs to meet anticipated demand,demand. and the risk that new products and services may haveAdditionally, quality issues or other defects or deficiencies.deficiencies can adversely affect the success of new product and service introductions and market acceptance. New products, services and technologies may replace or supersede existing offerings and may produce lower revenues and lower profit margins,margins. whichThe canCompany materiallymay adversely impact the Company’s business, results of operations and financial condition. There cannot be noable assurance the Company willto successfully manage future introductions and transitions of products and services.services, which can materially adversely affect the Company’s business, reputation, results of operations, financial condition and stock price.

SubstantiallyA allsignificant majority of the Company’s manufacturing is performed in whole or in part by outsourcing partners located primarily in China mainland, India, Japan, South Korea, Taiwan and Vietnam, in addition to sourcing from partners and afacilities significantlocated concentrationin the U.S. The Company relies on single-source partners in the U.S., Asia and Europe to supply and manufacture many components, and on partners primarily located in Asia, for final assembly of thissubstantially manufacturing is currently performed by a small numberall of outsourcingthe partners,Company’s oftenhardware in single locations.products. The Company has also outsourced much of its transportation and logistics management. While these arrangements can lower operating costs, they also reduce the Company’s direct control over production and distribution. Such diminished control has from time to time had, and may in the future havehave, an adverse effect on the cost, quality or quantity of products manufactured or services provided, or adversely affect the Company’s flexibility to respond to changing conditions. Although arrangements with these partners may contain provisions for product defect expense reimbursement, the Company generally remains responsible to the consumer for warranty and out-of-warranty service in the event of product defects and experiences unanticipated product defect liabilities from time to time. While the Company relies on its partners to adhere to its supplier code of conduct, violations of the supplier code of conduct occur from time to time and can materially adversely affect the Company’s business, reputation, results of operationsoperations, financial condition and financialstock condition.price.

Because the Company currently obtains certain components from single or limited sources, the Company is subject to significant supply and pricing risks. Many components, including those that are available from multiple sources, are at times subject to industry-wide shortages and significant commodity pricing fluctuations that can materially adversely affect the Company’s business, results of operationsoperations, financial condition and financialstock condition.price. For example, the global semiconductor industry has in the past experienced high demand and shortages of supply, which adversely affected the Company’s ability to obtain sufficient quantities of components and products on commercially reasonable terms, or at all. Such disruptions could occur in the future. While the Company has entered into agreements for the supply of many components, there can be no assurance the Company will be able to extend or renew these agreements on similar terms, or at all. In addition, component suppliers may suffer from poor financial conditions, which can lead to business failure for the supplier or consolidation within a particular industry, further limiting the Company’s ability to obtain sufficient quantities of components on commercially reasonable terms, or at all. Therefore, the Company remains subject to significant risks of supply shortages and price increases that can materially adversely affect its business, results of operations and financial condition.

TheAdditionally, the Company’s new products 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. The continuedCompany availabilitymay not be able to extend or renew agreements for the supply of these components aton acceptablesimilar prices,terms, or at all, canand may not be affectedsuccessful forin anyobtaining numbersufficient ofquantities reasons,from including ifits suppliers in a timely manner, or in identifying and obtaining sufficient quantities from an alternative source. In addition, component suppliers may fail, be subject to consolidation within a particular industry, or decide to concentrate on the production of common components instead of components customized to meet the Company’s requirements.requirements, Whenfurther limiting the Company’s supply of components for a new or existing product has been delayed or constrained, or when an outsourcing partner has delayed shipments of completed products to the Company, the Company’s business, results of operations and financial condition have been adversely affected and future delays or constraints could materially adversely affect the Company’s business, results of operations and financial condition. The Company’s business and financial performance could also be materially adversely affected depending on the time requiredability to obtain sufficient quantities fromof components on commercially reasonable terms, or at all. Therefore, the source,Company orremains subject to identifysignificant risks of supply shortages and obtainprice sufficientincreases quantitiesthat fromcan anmaterially alternativeadversely source.affect its business, results of operations, financial condition and stock price.

The Company offers complex hardware and software products and services that can be affected by design and manufacturing defects. Sophisticated operating system software and applications, such as those offered by the Company, often have issues that can unexpectedly interfere with the intended operation of hardware or software products and services. Defects can also exist in components and products the Company purchases from third parties. Component defects could make the Company’s products unsafe and create a risk of environmental or property damage and personal injury. These risks may increase as the Company’s products are introduced into specialized applications, including health. In addition, the Company’s service offerings can have quality issues and from time to time experience outages, service slowdowns or errors. As a result, from time to time the Company’s services have not performed as anticipated and may not meet customer expectations. The introduction of new and complex technologies, such as artificial intelligence features, can increase these and other safety risks, including exposing users to harmful, inaccurate or other negative content and experiences. There can be no assurance theThe Company willmay not be able to detect and fix all issues and defects in the hardware, software and services it offers.offers, Failure to do sowhich can result in widespread technical and performance issues affecting the Company’s products and services. Errors, bugs and vulnerabilities can be exploited by third parties, compromising the safety and security of a user’s device. In addition, the Company can be exposed to product liability claims, recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment or intangible assets, and significant warranty and other expenses, including litigation costs and regulatory fines. Quality problems can adversely affect the experience for users of the Company’s products and services, and result in harm to the Company’s reputation, loss of competitive advantage, poor market acceptance, reduced demand for products and services, delay in new product and service introductions and lost sales.

The Company records a write-down for product and component inventories that have become obsolete or exceed anticipated demand, or for whichif cost exceeds net realizable value. The Company also accrues necessary cancellation fee reserves for orders of excess products and components. The Company reviews long-livedother assets, including capital assets held at its suppliers’ facilitiesfacilities, inventory prepayments and inventoryother prepayments,long-lived assets, for impairment whenever events or circumstances indicate the assets may not be recoverable. If the Company determines that an impairment has occurred, it records a write-down equal to the amount by which the carrying value of the asset exceeds its fair value. Although the Company believes its inventory, capital assets, inventory prepayments and other assets and purchase commitments are currently recoverable, there can be no assurance the Company will notmay incur write-downs, fees, impairments and other charges given the rapid and unpredictable pace of product obsolescence in the industries in which the Company competes.

The Company orders components for its products and builds inventory in advance of product announcements and shipments. Manufacturing purchase obligations cover the Company’s forecasted component and manufacturing requirements, typically for periods up to 150 days. Because the Company’s markets are volatile, competitive and subject to rapid technology and price changes, there is a risk the Company will forecast incorrectly and order or produce excess or insufficient amounts of components or products, or not fully utilize firm purchase commitments. The Company accrues necessary cancellation fee reserves for orders of excess products and components.

The Company’s products and services areinclude designedtechnology to includeor intellectual property ownedthat bymust thirdbe parties, which requires licenseslicensed from those third parties. In addition, because of technological changes in the industries in which the Company currently competes or in the future may compete, current extensive patentintellectual property coverage and the rapid rate of issuance of new patents,intellectual property rights generation, the Company’s products and services canmay unknowinglybe alleged to infringe existing patents or intellectual property rights of others. This risk may be exacerbated by the use of new and emerging technologies, including machine learning and artificial intelligence, which can involve, among other things, the acquisition and use of copyrighted materials for training as well as the potential reproduction of copyrighted materials in their outputs. From time to time, the Company has been notified that it may be infringing certain patents or other intellectual property rights of third parties. Based on experience and industry practice, theThe Company believesis not always able to obtain all necessary licenses to such third-party intellectual property can generally be obtained on commercially reasonable terms. However, there can be no assurance the necessary licenses can be obtainedrights on commercially reasonable terms or at all. Failure to obtain the right to use third-party intellectual property, or to use such intellectual property on commercially reasonable terms, can require the Company to modify certain products, services or features or preclude the Company from selling certain products or services,services orand otherwiseexpose havethe aCompany materialto adversesignificant impactlicensing oncosts, all of which can materially adversely affect the Company’s business, reputation, results of operationsoperations, financial condition and financialstock condition.price.

The Company believes decisions by customers to purchase its hardware products depend in part on the availability of third-party software applications and services. There can be no assurance third-partyThird-party developers willmay continuediscontinue tothe developdevelopment and maintainmaintenance of software applications and services for the Company’s products. If third-party software applications and services cease to be developed and maintained for the Company’s products, customers may choose not to buy the Company’s products.products, adversely impacting the Company’s business, results of operations, financial condition and stock price.

The Company believes the availability ofthat third-party softwaredeveloper applications and services for its productssupport depends in part on the developers’ perception and analysis of the relativeperceived benefits of developing, maintaining and upgrading suchcreating software and services for the Company’s products compared to competitors’ platforms, such as Android for smartphones and tablets, Windows for personal computers and tablets, and PlayStation, Nintendo and Xbox for gaming platforms. This analysis may be based on factors such as the market position of the Company and its products, the anticipated revenue that may be generated, expected future growth of product sales, and the costs of developing such applications and services.

The Company’s minority market share in the global smartphone, personal computercomputer, tablet and tabletwearables markets can make developers less inclined to develop or upgrade software for the Company’s products and more inclined to devote their resources to developing and upgrading software for competitors’ products with larger market share. When developers focus their efforts on these competing platforms, the availability and quality of applications for the Company’s devices can suffer.

Much of the Company’s future success depends on the talents and efforts of its team members and the continued availability and service of key personnel, including its Chief Executive Officer, executive team and other highly skilled employees. Experienced personnel in the technology industry are in high demand and competition for their talents is intense, especially in Silicon Valley, where most of the Company’s key personnel are located. Periods of intense competition for talent in particular fields can lead to increased costs as the Company seeks to offer competitive compensation to recruit and retain highly skilled employees. In addition to intense competition for talent, workforce dynamics are constantly evolving.evolving and the Company must navigate changes effectively in order to achieve its strategic initiatives. Laws and regulations, including immigration, labor and employment laws and export controls, among others, can materially adversely affect the Company’s ability to recruit and retain a highly skilled, global workforce. If the Company does not effectively manage changing workforce dynamics effectively,and regulatory requirements, it could materially adversely affect the Company’s culture, reputationoperational flexibility, strategy and operationalcosts, flexibility.all of which can materially adversely affect the Company’s business, reputation, results of operations, financial condition and stock price.

The Company believes that its distinctive and inclusive culture is a significant driver of its success. If the Company is unable to nurture its culture, it could materially adversely affect the Company’s ability to recruit and retain the highly skilled employees who are critical to its success, and could otherwise materially adversely affect the Company’s business, reputation, results of operationsoperations, financial condition and financialstock condition.price.

The Company depends on the performance of carriers, wholesalers, retailerscarriers and other resellers.

SomeThe carriersCompany providingdistributes its products and certain of its services through cellular network servicecarriers forand theother Company’sresellers, many of which distribute products and services from competitors. Resellers offer financing, installment payment plans or subsidies for users’ purchases of thedevices, device.and Theresuch canplans may be no assurance such offers will be continued at alldiscontinued or inmodified theany same amounts.time.

The Company has invested and will continue to invest in programs to enhance reseller sales, including staffing selected resellers’ stores with Company employees and contractors, and improving product placement displays.displays, and developing and making digital marketing assets available to resellers. These programs can require a substantial investment while not assuring return or incremental sales. TheFor example, the purchasing preferences and behaviors of consumers may change, the financial condition of these resellers could weaken, these resellers could stop distributing the Company’s products, or uncertainty regarding demand for some or all of the Company’s products could cause resellers to reduce their ordering and marketing of the Company’s products.products, all of which could materially adversely impact the Company’s business, results of operations, financial condition and stock price.

The Company and its global supply chain are dependent on complex information technology systems and are exposed to information technology system failures or network disruptions caused by natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, ransomware or other cybersecurity incidents, or other events or disruptions. System upgrades, redundancy and other continuity measures may be ineffective or inadequate, and the Company’s or its vendors’ business continuity and disaster recovery planning may not be sufficient for all eventualities. Such failures or disruptions can adversely impact the Company’s business by, among other things, preventing access to the Company’s online services, interfering with customer transactions or impeding the manufacturing and shipping of the Company’s products. These events could materially adversely affect the Company’s business, reputation, results of operationsoperations, financial condition and financialstock condition.price.

The Company’s business requires it to use and store confidential information, including personal and sensitive health and financial information with respect to the Company’s customers and employees. The Company devotes significant resources to systems and data security, including through the use of encryption and other security measures intended to protect its systems and data. But these measures cannot provide absolute security, and losses or unauthorized access to or releases of confidential information occur and could materially adversely affect the Company’s business, reputation, results of operationsoperations, financial condition and financialstock condition.price.

The Company’s business also requires it to share confidential information with suppliers and other third parties. The Company relies on global suppliers that are also exposed to ransomware and other malicious attacks that can disrupt business operations. Although the Company takes steps to secure confidential information that is provided to or accessible by third parties working on the Company’s behalf, such measures are not always effective and losses or unauthorized access to, or releases of, confidential information occur. Such incidents and other malicious attacks could materially adversely affect the Company’s business, reputation, results of operationsoperations, financial condition and financialstock condition.price.

The Company experiences malicious attacks and other attempts to gain unauthorized access to its systems on a regular basis. These attacks seek to compromisetarget the confidentiality, integrity or availability of confidential information orand may disrupt normal business operations,operations. andAttacks can, among other things,can impair the Company’s ability to attract and retain customers for its products and services, impactaffect the Company’sits stock price, materially damage commercial relationships, and expose the Company to litigation or government investigations, whichpotentially can resultresulting in penalties, fines or judgments against the Company.judgments. Globally, attacks are expected to continue accelerating in both frequency and sophistication with increasing use by actors of tools and techniques that are designed to circumvent controls, avoid detection, and remove or obfuscate forensic evidence, all of which hinders the Company’s ability to identify, investigate and recover from incidents. In addition, attacks against the Company and its customers can escalate during periods of geopolitical tensions or conflict.

The Company has implemented systems and processes intended to secure its information technology systems and prevent unauthorized access to or loss of sensitive data, and mitigate the impact of unauthorized access, including through the use of encryption and authentication technologies. As with all companies, thesethe security measuresthe Company has implemented may not be sufficient for all eventualities and are vulnerable to hacking, ransomware attacks, employee error, malfeasance, system error, faulty password management or other irregularities. For example, third parties can fraudulently induce the Company’s or its suppliers’ and other third parties’ employees or customers into disclosing usernames, passwords or other sensitive information, which can, in turn, be used for unauthorized access to the Company’s or such suppliers’ or third parties’ systems and services. To help protect customers and the Company, the Company deploys and makes available technologies like multifactor authentication, monitors its services and systems for unusual activity and may freeze accounts under suspicious circumstances, which, among other things, can result in the delay or loss of customer orders or impede customer access to the Company’s products and services.

Investment in new business strategiesstrategies, commercial relationships and acquisitions could disrupt the Company’s ongoing business, present risks not originally contemplatedcontemplated, and materially adversely affect the Company’s business, reputation, results of operations and financial condition.

The Company has invested, and in the future may invest, in new business strategiesstrategies, orcommercial relationships and acquisitions. Such endeavors may involve significant risks and uncertainties, including distraction of management from current operations, greater-than-expected liabilities and expenses, economic, political, legal and regulatory challenges associated with operating in new businesses, regions or countries, inadequate return on capital, potential impairment of tangible and intangible assets, and significant write-offs. InvestmentSome transactions, including investments and acquisition transactionsacquisitions, are exposed to additional risks, including failing to obtain required regulatory approvals on a timely basis or at all, a counterparty’s failure to perform or deliver as anticipated, or the imposition of onerous conditions that could delay or prevent the Company from completing a transaction or otherwise limit the Company’s ability to fully realize the anticipated benefits of a transaction. TheseNew newbusiness strategies and ventures are inherently risky and may not be successful. The failureCompany’s ofbusiness anystrategies significantand investmentinvestments may not be successful, which could materially adversely affect the Company’s business, reputation, results of operationsoperations, financial condition and financialstock condition.price.

The Company is subject to various claims, legal proceedings and government investigations that have arisen in the ordinary course of business and have not yet been fully resolved, and new matters may arise in the future. In addition, agreements entered into by the Company sometimesenters into agreements that include indemnification provisions whichthat can subject the Company to costs and damages in the event of a claim against an indemnified third party. 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.

The Company has faced and continues to face a significant number of patent claims relating to its cellular-enabledstandards-enabled products, and new claims may arise in the future, including as a result of new legal or regulatory frameworks. For example, technologytechnology, data and other patent-holdingintellectual property asset–holding companies frequently assert their patentsintellectual property rights and seek royalties and often enter into litigation based on allegations of patent infringement or other violations of intellectual property rights. These risks, and the risks of novel claims being attempted, may be exacerbated as new and emerging technologies, including machine learning and artificial intelligence, are further integrated into the Company’s products and services. The Company is vigorously defending infringement actions in courts in several U.S. jurisdictions, as well as internationally in various countries. The plaintiffs in these actions frequently seek broad injunctive relief and substantial damages.

Regardless of the merit of particular claims, defending against litigation or responding to government investigations can be expensive, time-consuming and disruptive to the Company’s operations. In recognition of these considerations, the Company may enter into agreements or other arrangements to settle litigation and resolve such challenges. There can be no assuranceHowever, such agreements canmay not always be obtainedavailable on acceptable termsterms, or thatand litigation willmay notstill occur.arise. TheseSuch agreements can also significantly reduce the Company’s revenue and increase the Company’s cost of sales and operating expensesexpenses, materially adversely affecting the Company’s business, results of operations, financial condition and stock price. Additionally, such agreements may require the Company to change its business practices and limit the Company’s ability to offer certain products and services.

The outcome of litigation or government investigations is inherently uncertain. If one or more legal matters were resolved against the Company or an indemnified third party in a reporting period for amounts above management’s expectations, the Company’s results of operations andoperations, financial condition and stock price for that reporting period could be materially adversely affected. Further, such an outcome can result in significant monetary damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief against the Company,Company. andAdverse resolution of legal matters has from time to time required, and can in the future require, the Company to change its business practicespractices. andIt can also limit the Company’s ability to enjoin others from using, or to derive value from, its intellectual property rights, and to develop, manufacture, use, import or offer for sale certain products and services, all of which could materially adversely affect the Company’s business, reputation, results of operationsoperations, financial condition and financialstock condition.price.

The Company’s global operations are subject to complex and changing laws and regulations worldwide on subjects,subjects including antitrust; privacy, data security and data localization; online safety; age verification; consumer protection; advertising, sales, billing and e-commerce; financial services and technology; product liability; intellectual property ownership and infringement; digital platforms; machine learning and artificial intelligence; internet, telecommunications and mobile communications; media, television, film and digital content; availability of third-party software applications and services; labor and employment; anticorruption; import, export and trade; foreign exchange controls and cash repatriation restrictions; anti–money laundering; foreign ownership and investment; national security; tax; and environmental, health and safety, including electronic waste, recycling, product design and climate change.

•MacBook Pro 14-in.;

•iMac.Mac mini

•iPad Air;mini

FourthSecond Quarter 20242025:

•iPhone 16,17, iPhone 16 Plus,Air, iPhone 1617 Pro and iPhone 1617 Pro Max;

•Apple Watch Series 10;11, Apple Watch SE 3 and Apple Watch Ultra 3

•AirPods 4.Pro 3

Americas net sales increased during 20242025 compared to 20232024 primarily due primarily to higher net sales of iPhone and Services. The weakness in foreign currencies relative to the U.S. dollar had an unfavorable year-over-year impact on Americas net sales during 2025.

Europe net sales increased during 20242025 compared to 20232024 primarily due primarily to higher net sales of ServicesServices, iPhone and iPhone.Mac.

Greater China net sales decreased during 20242025 compared to 20232024 primarily due primarily to lower net sales of iPhoneiPhone, andpartially iPad.offset Theby weakness in the renminbi relative to the U.S. dollar had an unfavorable year-over-year impact on Greater Chinahigher net sales duringof 2024.Mac.

Japan net sales increased during 20242025 compared to 20232024 primarily due primarily to higher net sales of iPhone.iPhone, TheServices weaknessand in the yen relative to the U.S. dollar had an unfavorable year-over-year impact on Japan net sales during 2024.iPad.

Rest of Asia Pacific net sales increased during 20242025 compared to 20232024 primarily due primarily to higher net sales of Services.iPhone, TheServices weaknessand in foreign currencies relative to the U.S. dollar had a net unfavorable year-over-year impact on Rest of Asia Pacific net sales during 2024.Mac.

iPhone net sales were relatively flatincreased during 20242025 compared to 2023.2024 due to higher net sales of Pro models.

Mac net sales increased during 20242025 compared to 20232024 primarily due primarily to higher net sales of laptops.laptops and desktops.

iPad net sales decreasedincreased during 20242025 compared to 20232024 primarily due primarilyto tohigher net sales of iPad Air, iPad mini and iPad, partially offset by lower net sales of iPad Pro and the entry-level iPad models, partially offset by higher net sales of iPad Air.Pro.

Wearables, Home and Accessories net sales decreased during 20242025 compared to 20232024 primarily due primarily to lower net sales of WearablesAccessories and Accessories.Wearables.

Services net sales increased during 20242025 compared to 20232024 primarily due primarily to higher net sales from advertising, the App Store® and cloud services.

Products gross margin and Products gross margin percentage increased during 20242025 compared to 20232024 primarily due to costfavorable savings,costs and a different mix of products, partially offset by atariff different Products mix and the weakness in foreign currencies relative to the U.S. dollar.costs.

Services gross margin increased during 20242025 compared to 20232024 primarily due primarily to higher Services net sales.sales and a different mix of services.

Services gross margin percentage increased during 20242025 compared to 20232024 primarily due to a different Servicesmix mix.of services, partially offset by higher costs.

The growth in R&D expense during 20242025 compared to 20232024 was primarily driven primarily by increases in headcount-related expenses.expenses and infrastructure-related costs.

Selling,The growth in selling, general and administrative expense increased $1.2 billion during 20242025 compared to 2023.2024 was primarily driven by increases in headcount-related expenses and variable selling expenses.

The Company’s effective tax rate for 20242025 was higherlower than the statutory federal income tax rate primarily due primarily to a one-time income tax charge of $10.2 billion, net, related to the State Aid Decision (refer to Note 7, “Income Taxes” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K) and state income taxes, partially offset by a lower effective tax rate on foreign earnings, including the impact of changes in unrecognized tax benefits, the impact of the U.S. federal R&D credit, and tax benefits from share-based compensation.compensation, partially offset by a change in valuation allowance and state income taxes.

The Company believes its balances of unrestricted cash, cash equivalents and marketable securities, which totaled $140.8$132.4 billion as of September 28,27, 2024,2025, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements and capital return program over the next 12 months and beyond.

The Company also issues unsecured short-term promissory notes pursuant to a commercial paper program. As of September 28,27, 2024,2025, the Company had $10.0$8.0 billion of commercial paper outstanding, all of which was payable within 12 months.

As of September 28,27, 2024,2025, the balance of the deemed repatriation tax payable imposed by the U.S. Tax Cuts and Jobs Act of 2017 (the “TCJA”) was $16.5$8.8 billion, withwhich $7.2was billion expected to be paidpayable within 12 months.

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company will adopt ASU 2023-09 in its fourth quarter of 2026 using a prospective transition method.

The Company is subject to various legal proceedings and claims that arise in the ordinary course of business, the outcomes of which are inherently uncertain. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable, the determination of which requires significant judgment. Resolution of legal matters in a manner inconsistent with management’s expectations could have a material impact on the Company’s financial condition and operating results.

The Company’s business, reputation, results of operations, financial condition and stock price can be materially and adversely affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the 2025 Form 10-K and Part II, Item 1A of the Form 10-Q for the quarter ended March 28, 2026 (the “second quarter 2026 Form 10-Q”), in each case under the heading “Risk Factors.” Except asfor the risk factors set forth below,below and those disclosed in Part II, Item 1A of the second quarter 2026 Form 10-Q, which are incorporated by reference herein, there have been no material changes to the Company’s risk factors since the 2025 Form 10-K.

From time to time, the Company has made changes to its business, including actions taken in response to litigation, competition, market conditions and legal and regulatory requirements. The Company expects to make further business changes in the future. For example, in the U.S., the Company has implemented changes to how developers communicate with consumers within apps on the U.S. storefront of the iOS and iPadOS® App Store regarding alternative purchasing mechanisms. The Company is also currently subject to a court order in the U.S. preventing it from imposing any commission or fee on certain purchases that consumers make. The Ninth Circuit Court has instructed the California District Court to further amend or modify its injunction to allow the Company to charge a commission. If the Company is ultimately unsuccessful in defending its commission structure or if similar restrictions are imposed or expanded in other jurisdictions, and as a result the Company’s commission is narrowed or eliminated, the Company’s business, results of operations, and financial condition could be materially and adversely affected.

Globally, several jurisdictions have adopted, or may in the future adopt, competition-related laws and regulations imposing wide-ranging obligations on technology companies and significant limitations on businesses, including the Company. For example, the Company has implemented changes to iOS, iPadOS, the App Store and Safari® in the EU as it seeks to comply with the DMA, including new business terms and alternative fee structures for iOS and iPadOS apps, alternative methods of distribution for iOS and iPadOS apps, alternative payment processing for apps across the Company’s operating systems, and additional tools and application programming interfaces for developers. TheIn addition, the DMA imposes interoperability obligations on the Company hasrequiring also continuedit to make changescertain of its technologies and features available to itsthird-party compliance plan in response to feedbackproducts and engagementservices withfor free, which increases security and privacy risks, requires significant engineering resources, and can adversely affect the Commission.functionality, Althoughcompetitiveness, and user experience of the Company’s complianceproducts. planInteroperability isand intendedother torequirements addresshave in the DMA’s obligations, it has been challenged by the Commissionpast, and may be challenged further by private litigants. The DMA provides for significant fines and penalties for noncompliance. Whilein the changesfuture, introduced bycause the Company in the EU are intended to reducenot newlaunch privacyor maintain products, services and securityfeatures, riskssuch thatas theSiri DMAAI, posesin tocertain EUjurisdictions. users,Any manyof risksthese willoutcomes remain.can Changeshave toa negative impact on the Company’s businesscompetitive in response to the DMA or other lawsadvantage and regulations could materially adversely affect the Company’sits business, reputation, results of operations, financial condition and stock price.

The Company is also subject to new and changing laws, regulations and other legal obligations regarding online safety, including enhanced protections for minors and mandatory age verification requirements. These obligations can increase regulatory risks by requiring complex compliance measures and significant modifications to the Company’s products, services and operations, and may lead to operational disruptions, heightened privacy and data security risks, and increased costs and potential liability and fines,costs, all of which can have a material adverse impact on the Company’s business, financial condition, results of operationsoperations, financial condition and stock price. Failure to comply with such changing laws, regulations and other legal obligations can also result in significant penalties and fines, and legal liability.

During the secondthird quarter of 2026, the Company announced theiOS following27, newmacOS® or27 updatedGolden products:Gate, iPadOS® 27, watchOS® 27, visionOS® 27 and tvOS® 27, and introduced Siri AI.

The Company is experiencing a period of supply constraints and increasing costs for components driven by factors such as industry supply-demand imbalances for components, including advanced semiconductors, storage (NAND) and memory (DRAM). The Company expects these trends to intensify, which, together with actions that may be taken by the Company in response to such trends,which may materially adversely affect demand for the Company’s products and negatively impact the Company’s revenue, costs, gross margin, results of operations and financial condition. Actions, such as price increases, that have been and may in the future be taken by the Company may not effectively mitigate these negative impacts, and may also reduce demand for the Company’s products and materially adversely affect the Company’s revenue, costs, gross margin, results of operations and financial condition.

Beginning in the second quarter of 2025, new tariffs were announced on imports to the U.S., including additional tariffs on imports from China, India, Japan, South Korea, Taiwan, Vietnam and the European Union (“EU”), among others. In response, several countries have imposed, or threatened to impose, reciprocal tariffs on imports from the U.S. and other retaliatory measures. On January 14, 2026, initial results were published of the previously announced U.S. Department of Commerce investigation under Section 232 of the Trade Expansion Act of 1962, as amended, into imports of semiconductors, semiconductor manufacturing equipment, and their derivative products, including downstream products that contain semiconductors. The announcement of the initial results of the investigation did not impose any additional tariffs affecting the Company’s products. Separately, on February 20, 2026, the U.S. Supreme Court (“Supreme Court”) issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act of 1977. The Company ishas applyingapplied for a refund of tariffs paid, following the processes established by U.S. Customs and Border Protection.Protection, and has recognized any refunds received as a reduction of products cost of sales. Various modifications to U.S. tariffs have been announced, including the recent imposition of tariffs under Section 122301 of the Trade Act of 1974, and further changes could be made in the future, which may include additional measures under the Section 232 semiconductor sector investigation, additional sector-based tariffs, further actions under Section 301 of the Trade Act of 1974,301, or other measures. Tariffs and other measures that are applied to the Company’s products or their components can have a material adverse impact on the Company’s business, results of operations and financial condition, including impacting the Company’s supply chain, the availability of rare earths and other raw materials and components, pricing and gross margin. The ultimate impact remains uncertain and will depend on several factors, including whether additional or incremental U.S. tariffs or other measures are announced or imposed, to what extent other countries implement tariffs or other retaliatory measures in response, and the overall magnitude and duration of these measures. Trade and other international disputes can have an adverse impact on the overall macroeconomic environment and result in shifts and reductions in consumer spending and negative consumer sentiment for the Company’s products and services, all of which can further adversely affect the Company’s business and results of operations.

The following table shows net sales by reportable segment for the three- and six-monthnine-month periods ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025 (dollars in millions):

Americas net sales increased during the secondthird quarter and first sixnine months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPhoneiPhone, Services and Services. The strength in foreign currencies relative to the U.S. dollar had a favorable year-over-year impact on Americas net sales during the second quarter of 2026.Mac.

Europe net sales increased during the secondthird quarter and first sixnine months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPhoneiPhone, Services and Services.Mac. The strength in foreign currencies relative to the U.S. dollar had a net favorable year-over-year impact on Europe net sales during the second quarter and first sixnine months of 2026.

Greater China net sales increased during the secondthird quarter and first sixnine months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPhone. The strength in the renminbi relative to the U.S. dollar had a favorable year-over-year impact on Greater China net sales during the secondthird quarter and first nine months of 2026.

Japan net sales increased during the secondthird quarter and first sixnine months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPhone. The weakness in the yen relative to the U.S. dollar had an unfavorable year-over-year impact on Japan net sales during the third quarter and first sixnine months of 2026.

Rest of Asia Pacific net sales increased during the secondthird quarter and first sixnine months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPhoneiPhone, Services and Services.Mac. The strength in foreign currencies relative to the U.S. dollar had a net favorable year-over-year impact on Rest of Asia Pacific net sales during the secondthird quarter of 2026.

The following table shows net sales by category for the three- and six-monthnine-month periods ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025 (dollars in millions):

iPhone net sales increased during the secondthird quarter and first sixnine months of 2026 compared to the same periods in 2025 primarily due to higher net sales of Pro models.

Mac net sales increased during the secondthird quarter and first nine months of 2026 compared to the secondsame quarterperiods ofin 2025 due to higher net sales of laptops. Year-over-year Mac net sales during the first six months of 2026 were relatively flat.

iPad net sales decreased during the third quarter of 2026 compared to the third quarter of 2025 primarily due to lower net sales of iPad mini® and iPad Air®. Year-over-year iPad net sales increased during the second quarter and first sixnine months of 2026 compared to the same periods in 2025 primarily due to higher net sales of iPad, partially offset by lower net sales of iPad mini®.mini.

Wearables, Home and Accessories net sales increased during the secondthird quarter and first nine months of 2026 compared to the secondsame quarterperiods ofin 2025 primarily due to higher net sales of Accessories and Wearables. Year-over-year Wearables, Home and Accessories net sales during the first six months of 2026 were relatively flat.

Services net sales increased during the secondthird quarter and first sixnine months of 2026 compared to the same periods in 2025 primarily due to higher net sales from advertising, the App Store®advertising and cloud services.

Products and Services gross margin and gross margin percentage for the three- and six-monthnine-month periods ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, were as follows (dollars in millions):

Products gross margin and gross margin percentage increased during the secondthird quarter and first sixnine months of 2026 compared to the same periods in 2025 primarily due to a different mix of products and strengthtariff in foreign currencies relative to the U.S. dollar,refunds, partially offset by higher costs.costs, including memory.

Services gross margin increased during the secondthird quarter and first sixnine months of 2026 compared to the same periods in 2025 primarily due to higher Services net sales and a different mix of services.services, partially offset by higher costs.

Services gross margin percentage was flat during the third quarter of 2026 compared to the third quarter of 2025. Year-over-year Services gross margin percentage increased during the second quarter and first sixnine months of 2026 compared to the same periods in 2025 primarily due to a different mix of services and strength in foreign currencies relative to the U.S. dollar,services, partially offset by higher costs.

Operating expenses for the three- and six-monthnine-month periods ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, were as follows (dollars in millions):

Research and development (“R&D”) expense increased during the secondthird quarter and first sixnine months of 2026 compared to the same periods in 2025 primarily due to higher infrastructure-related costscosts, including investments in artificial intelligence, and headcount-related expenses.

Selling, general and administrative expense increased during the secondthird quarter and first sixnine months of 2026 compared to the same periods in 20252025. primarilyThe dueincreases towere higherdriven headcount-relatedby expenses,various variablefactors, sellingnone expensesof andwhich professionalwere services.significant individually or in the aggregate.

Provision for income taxes, effective tax rate and statutory federal income tax rate for the three- and six-monthnine-month periods ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025, were as follows (dollars in millions):

The Company’s effective tax rate for the secondthird quarter of 2026 was lower than the statutory federal income tax rate primarily due to a lower effective tax rate on foreign earnings, the impact of the U.S. federal R&D credit, and a change in valuation allowance, partially offset by state income taxes. The Company’s effective tax rate for the first sixnine months of 2026 was lower than the statutory federal income tax rate primarily due to a lower effective tax rate on foreign earnings, including the impact of changes in unrecognized tax benefits, the impact of the U.S. federal R&D credit, and tax benefits from share-based compensation, partially offset by state income taxes.

The Company’s effective tax rate for the secondthird quarter of 2026 was higher compared to the secondthird quarter of 2025 primarily due to a higher effective tax rate on foreign earnings, partially offset by the impact of changes in unrecognized tax benefits,benefits partiallyand offsettax bybenefits afrom changeshare-based in valuation allowance.compensation. The Company’s effective tax rate for the first sixnine months of 2026 was higher compared to the same period in 2025 primarily due to a higher effective tax rate on foreign earnings, including the impact of changes in unrecognized tax benefits, the impact of foreign currency loss regulations issued by the U.S. Department of the Treasury in December 2024, and the tax impact from foreign currency revaluations in the first quarter of 2025 related to the State Aid Decision.

The Company utilizes several outsourcing partners to manufacture subassemblies for the Company’s products and to perform final assembly and testing of finished products. The Company also obtains individual components for its products from a wide variety of individual suppliers. As of MarchJune 28,27, 2026, the Company had manufacturing purchase obligations of $44.6$57.0 billion, with $43.9$56.2 billion payable within 12 months.

The Company’s other purchase obligations primarily consist of noncancelable obligations related to supplier arrangements, licensed intellectual property and content, distribution rights, and the acquisition of capital assets related to product manufacturing. As of MarchJune 28,27, 2026, the Company had other purchase obligations of $30.4$29.3 billion, with $9.3$9.2 billion payable within 12 months.

During the first sixnine months of 2026, the Company paid the remaining $8.8 billion balance of the deemed repatriation tax payable imposed by the U.S. Tax Cuts and Jobs Act of 2017.

OnIn Apriladdition 30,to 2026,its contractual cash requirements, the Company alsohas announcedauthorized share repurchase programs. The programs do not obligate the BoardCompany to acquire a minimum amount of Directorsshares. raisedAs of June 27, 2026, the Company’s quarterly cash dividend from $0.26 towas $0.27 per share, beginning with the dividend to be paid during the third quarter of 2026.share. The Company intends to increase its dividend on an annual basis, subject to declaration by the Board of Directors.

During the secondthird quarter of 2026, the Company repurchased $11.0$25.8 billion of its common stock and paid dividends and dividend equivalents of $3.8$4.0 billion.