Apple Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except number of shares which are reflected in thousands and per share amounts)

  Years ended
September 29, September 30, September 24,
  2018   2017   2016
Net sales $ 265,595   $ 229,234   $ 215,639
Cost of sales 163,756   141,048   131,376
Gross margin 101,839 88,186 84,263
         
Operating expenses:        
Research and development 14,236   11,581   10,045
Selling, general and administrative 16,705   15,261   14,194
Total operating expenses 30,941 26,842 24,239
         
Operating income 70,898   61,344   60,024
Other income/(expense), net 2,005   2,745   1,348
Income before provision for income taxes 72,903 64,089 61,372
Provision for income taxes 13,372   15,738   15,685
Net income $ 59,531 $ 48,351 $ 45,687
         
Earnings per share:        
Basic $ 12.01   $ 9.27   $ 8.35
Diluted $ 11.91   $ 9.21   $ 8.31
         
Shares used in computing earnings per share:        
Basic 4,955,377   5,217,242   5,470,820
Diluted 5,000,109   5,251,692   5,500,281

See accompanying Notes to Consolidated Financial Statements.

Apple Inc. | 2018 Form 10-K | 38

 Apple Inc.

CONSOLIDATED BALANCE SHEETS

(In millions, except number of shares which are reflected in thousands and par value)

September 29, September 30,

  2018   2017
ASSETS:
Current assets:     
Cash and cash equivalents $ 25,913   $ 20,289
Marketable securities 40,388   53,892
Accounts receivable, net 23,186   17,874
Inventories 3,956   4,855
Vendor non-trade receivables 25,809   17,799
Other current assets 12,087   13,936
Total current assets 131,339   128,645
      
Non-current assets:     
Marketable securities 170,799   194,714
Property, plant and equipment, net 41,304   33,783
Other non-current assets 22,283   18,177
Total non-current assets 234,386   246,674
Total assets $ 365,725   $ 375,319
      
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:     
Accounts payable $ 55,888   $ 44,242
Other current liabilities 32,687   30,551
Deferred revenue 7,543   7,548
Commercial paper 11,964   11,977
Term debt 8,784   6,496
Total current liabilities 116,866   100,814
      
Non-current liabilities:     
Deferred revenue 2,797   2,836
Term debt 93,735   97,207
Other non-current liabilities 45,180   40,415
Total non-current liabilities 141,712   140,458
Total liabilities 258,578   241,272
      
Commitments and contingencies  
      
Shareholders’ equity:     
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized;
4,754,986 and 5,126,201 shares issued and outstanding, respectively 40,201   35,867
Retained earnings 70,400   98,330
Accumulated other comprehensive income/(loss) (3,454)   (150)
Total shareholders’ equity 107,147   134,047
Total liabilities and shareholders’ equity $ 365,725 $ 375,319

See accompanying Notes to Consolidated Financial Statements.

Apple Inc. | 2018 Form 10-K | 40

 Apple Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

  Years ended
September 29, September 30, September 24,
  2018   2017   2016
Cash and cash equivalents, beginning of the year $ 20,289  $ 20,484  $ 21,120
Operating activities:        
Net income 59,531   48,351   45,687
Adjustments to reconcile net income to cash generated by operating activities:        
Depreciation and amortization 10,903   10,157   10,505
Share-based compensation expense 5,340   4,840   4,210
Deferred income tax expense/(benefit) (32,590)   5,966   4,938
Other (444)   (166)   486
Changes in operating assets and liabilities:        
Accounts receivable, net (5,322)   (2,093)   527
Inventories 828   (2,723)   217
Vendor non-trade receivables (8,010)   (4,254)   (51)
Other current and non-current assets (423)   (5,318)   1,055
Accounts payable 9,175   8,966   2,117
Deferred revenue (44)   (626)   (1,554)
Other current and non-current liabilities 38,490   1,125   (1,906)
Cash generated by operating activities 77,434 64,225 66,231
Investing activities:        
Purchases of marketable securities (71,356)   (159,486)   (142,428)
Proceeds from maturities of marketable securities 55,881   31,775   21,258
Proceeds from sales of marketable securities 47,838   94,564   90,536
Payments for acquisition of property, plant and equipment (13,313)   (12,451)   (12,734)
Payments made in connection with business acquisitions, net (721)   (329)   (297)
Purchases of non-marketable securities (1,871)   (521)   (1,388)
Proceeds from non-marketable securities 353   126   —
Other (745)   (124)   (924)
Cash generated by/(used in) investing activities 16,066 (46,446) (45,977)
Financing activities:        
Proceeds from issuance of common stock 669   555   495
Payments for taxes related to net share settlement of equity awards (2,527)   (1,874)   (1,570)
Payments for dividends and dividend equivalents (13,712)   (12,769)   (12,150)
Repurchases of common stock (72,738)   (32,900)   (29,722)
Proceeds from issuance of term debt, net 6,969   28,662   24,954
Repayments of term debt (6,500)   (3,500)   (2,500)
Change in commercial paper, net (37)   3,852   (397)
Cash used in financing activities (87,876) (17,974) (20,890)
Increase/(Decrease) in cash and cash equivalents 5,624   (195)   (636)
Cash and cash equivalents, end of the year $ 25,913 $ 20,289 $ 20,484

Supplemental cash flow disclosure:        

Cash paid for income taxes, net $ 10,417  $ 11,591  $ 10,444
Cash paid for interest $ 3,022  $ 2,092  $ 1,316

See accompanying Notes to Consolidated Financial Statements.

Apple Inc. | 2018 Form 10-K | 42