CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) September 30, 2017 September 24, 2016 September 26, 2015 Years ended Cash and cash equivalents, beginning of the year $ $ $ 20,484 21,120 13,844 Operating activities: Net income 48,351 45,687 53,394 Adjustments to reconcile net income to cash generated by operating activities: 10,157 10,505 11,257 Depreciation and amortization Share-based compensation expense 4,840 4,210 3,586 Deferred income tax expense 5,966 4,938 1,382 Other (166) 486 385 Changes in operating assets and liabilities: Accounts receivable, net (2,093) 527 417 Inventories (2,723) 217 (238) (51) Vendor non-trade receivables (4,254) (3,735) Other current and non-current assets 1,055 (283) (5,318) Accounts payable 9,618 1,837 5,001 Deferred revenue 1,042 (626) (1,554) Other current and non-current liabilities (2,033) 9,058 (154) Cash generated by operating activities 63,598 65,824 81,266 Investing activities: Purchases of marketable securities (159,486) (142,428) (166,402) Proceeds from maturities of marketable securities 31,775 21,258 14,538 Proceeds from sales of marketable securities 94,564 90,536 107,447 Payments made in connection with business acquisitions, net (329) (297) (343) Payments for acquisition of property, plant and equipment (12,451) (12,734) (11,247) (344) (241) Payments for acquisition of intangible assets (814) (395) Payments for strategic investments, net (1,388) Other 220 (110) (26) Cash used in investing activities (46,446) (45,977) (56,274) Financing activities: Proceeds from issuance of common stock 555 495 543 Excess tax benefits from equity awards 627 407 749 (1,570) Payments for taxes related to net share settlement of equity awards (1,874) (1,499) Payments for dividends and dividend equivalents (12,769) (12,150) (11,561) Repurchases of common stock (32,900) (29,722) (35,253) Proceeds from issuance of term debt, net 28,662 24,954 27,114 Repayments of term debt (3,500) (2,500) Change in commercial paper, net (397) 3,852 2,191 Cash used in financing activities (17,347) (20,483) (17,716) Increase (decrease) in cash and cash equivalents 7,276 (195) (636) Cash and cash equivalents, end of the year $ $ $ 20,289 20,484 21,120 Supplemental cash flow disclosure Cash paid for income taxes, net $ 11,591 $ $ 10,444 13,252 2,092 $ $ $ Cash paid for interest 514 1,316 See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) September 24, 2016 September 26, 2015 Years ended September 30, 2017 Net sales $ $ $ 229,234 215,639 233,715 Cost of sales 141,048 88,186 140,089 93,626 131,376 84,263 Gross margin Operating expenses Research and development 8,067 11,581 10,045 Selling, general and administrative Total operating expenses 14,194 15,261 26,842 14,329 22,396 24,239 Operating income Other income (expense), net 61,344 2,745 60,024 1,348 71,230 1,285 Income before provision for income taxes Provision for income taxes 64,089 15,738 61,372 15,685 72,515 19,121 $ $ Net income 48,351 45,687 53,394 Earnings per share: Basic $ $ $ $ $ $ 9.27 8.35 9.28 Diluted 9.21 8.31 9.22 Shares used in computing earnings per share: 5,217,242 5,470,820 5,753,421 Basic 5,500,281 Diluted 5,793,069 5,251,692 Cash dividends declared per share $ $ $ 2.40 2.18 1.98 See accompanying Notes to Consolidated Financial Statements Apple Inc CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions September 30, 2017 September 24, 2016 Years ended September 26, 2015 Net income $ $ $ 48,351 45,687 53,394 Other comprehensive income (loss): Change in foreign currency translation, net of tax effects of $(77), $8 and $201, respectively 224 75 (411) Change in unrealized gains/losses on derivative instruments: Change in fair value of derivatives, net of tax benefit (expense) of $(478), $(7) and $(441), respectively 2,905 1,315 7 Adjustment for net (gains) losses realized and included in net income, net of tax expense (benefit) of $475, $131 and $630, respectively (1,477) (3,497) (741) Total change in unrealized gains/losses on derivative instruments, net of tax (162 (734) (592) Change in unrealized gains/losses on marketable securities: Change in fair value of marketable securities, net of tax benefit (expense) of $425, $(863) and $264, respectively (782) 1,582 (483) Adjustment for net (gains) losses realized and included in net income, net of tax expense (benefit) of $35, $(31), and $(32), respectively (64) 56 59 Total change in unrealized gains/losses on marketable securities, (846) (424) net of tax 1,638 Total other comprehensive income (loss) 979 (1,427) (784) $ $ $ Total comprehensive income 47,567 46,666 51,967 See accompanying Notes to Consolidated Financial Statements Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) Accumulated Other Common Stock and Comprehensive Total Additional Paid-In Capital Shareholders Equity Retained Income Amount Shares Earnings (Loss) $ $ Balances as of September 27, 2014 5,866,161 $ 23,313 87,152 1,082 111,547 53,394 Net income 53,394 Other comprehensive income (loss) (1,427) (1,427) Dividends and dividend equivalents declared (11,627) (11,627) Repurchase of common stock Share-based compensation (325,032) (36,026) (36,026) 3,586 3,586 Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments 37,624 (231) (609) (840) 748 748 Balances as of September 26, 2015 5,578,753 $ 27,416 $ $ 92,284 (345) $ 119,355 Net income 45,687 45,687 Other comprehensive income (loss) 979 979 Dividends and dividend equivalents declared (12,188) (12,188) Repurchase of common stock Share-based compensation (279,609) (29,000) (29,000) 4,262 4,262 Common stock issued, net of shares withheld for employee taxes (1,225) 37,022 (806) (419) Tax benefit from equity awards, including transfer pricing adjustments 379 379 5,336,166 $ 31,251 $ $ 128,249 Balances as of September 24, 2016 96,364 634 $ Net income 48,351 48,351 (784) Other comprehensive income (loss) (784) Dividends and dividend equivalents declared (12,803) (12,803) Repurchase of common stock Share-based compensation (33,001) (246,496) (33,001) 4,909 4,909 Common stock issued, net of shares withheld (1,494) for employee taxes Tax benefit from equity awards, including transfer pricing adjustments 36,531 (913) (581) 620 620 98,330$ Balances as of September 30, 2017 $ 35,867$ 5,126,201 (150) $ 134,047 See accompanying Notes to Consolidated Financial Statements CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) September 30, 2017 September 24, 2016 September 26, 2015 Years ended Cash and cash equivalents, beginning of the year $ $ $ 20,484 21,120 13,844 Operating activities: Net income 48,351 45,687 53,394 Adjustments to reconcile net income to cash generated by operating activities: 10,157 10,505 11,257 Depreciation and amortization Share-based compensation expense 4,840 4,210 3,586 Deferred income tax expense 5,966 4,938 1,382 Other (166) 486 385 Changes in operating assets and liabilities: Accounts receivable, net (2,093) 527 417 Inventories (2,723) 217 (238) (51) Vendor non-trade receivables (4,254) (3,735) Other current and non-current assets 1,055 (283) (5,318) Accounts payable 9,618 1,837 5,001 Deferred revenue 1,042 (626) (1,554) Other current and non-current liabilities (2,033) 9,058 (154) Cash generated by operating activities 63,598 65,824 81,266 Investing activities: Purchases of marketable securities (159,486) (142,428) (166,402) Proceeds from maturities of marketable securities 31,775 21,258 14,538 Proceeds from sales of marketable securities 94,564 90,536 107,447 Payments made in connection with business acquisitions, net (329) (297) (343) Payments for acquisition of property, plant and equipment (12,451) (12,734) (11,247) (344) (241) Payments for acquisition of intangible assets (814) (395) Payments for strategic investments, net (1,388) Other 220 (110) (26) Cash used in investing activities (46,446) (45,977) (56,274) Financing activities: Proceeds from issuance of common stock 555 495 543 Excess tax benefits from equity awards 627 407 749 (1,570) Payments for taxes related to net share settlement of equity awards (1,874) (1,499) Payments for dividends and dividend equivalents (12,769) (12,150) (11,561) Repurchases of common stock (32,900) (29,722) (35,253) Proceeds from issuance of term debt, net 28,662 24,954 27,114 Repayments of term debt (3,500) (2,500) Change in commercial paper, net (397) 3,852 2,191 Cash used in financing activities (17,347) (20,483) (17,716) Increase (decrease) in cash and cash equivalents 7,276 (195) (636) Cash and cash equivalents, end of the year $ $ $ 20,289 20,484 21,120 Supplemental cash flow disclosure Cash paid for income taxes, net $ 11,591 $ $ 10,444 13,252 2,092 $ $ $ Cash paid for interest 514 1,316 See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) September 24, 2016 September 26, 2015 Years ended September 30, 2017 Net sales $ $ $ 229,234 215,639 233,715 Cost of sales 141,048 88,186 140,089 93,626 131,376 84,263 Gross margin Operating expenses Research and development 8,067 11,581 10,045 Selling, general and administrative Total operating expenses 14,194 15,261 26,842 14,329 22,396 24,239 Operating income Other income (expense), net 61,344 2,745 60,024 1,348 71,230 1,285 Income before provision for income taxes Provision for income taxes 64,089 15,738 61,372 15,685 72,515 19,121 $ $ Net income 48,351 45,687 53,394 Earnings per share: Basic $ $ $ $ $ $ 9.27 8.35 9.28 Diluted 9.21 8.31 9.22 Shares used in computing earnings per share: 5,217,242 5,470,820 5,753,421 Basic 5,500,281 Diluted 5,793,069 5,251,692 Cash dividends declared per share $ $ $ 2.40 2.18 1.98 See accompanying Notes to Consolidated Financial Statements Apple Inc CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions September 30, 2017 September 24, 2016 Years ended September 26, 2015 Net income $ $ $ 48,351 45,687 53,394 Other comprehensive income (loss): Change in foreign currency translation, net of tax effects of $(77), $8 and $201, respectively 224 75 (411) Change in unrealized gains/losses on derivative instruments: Change in fair value of derivatives, net of tax benefit (expense) of $(478), $(7) and $(441), respectively 2,905 1,315 7 Adjustment for net (gains) losses realized and included in net income, net of tax expense (benefit) of $475, $131 and $630, respectively (1,477) (3,497) (741) Total change in unrealized gains/losses on derivative instruments, net of tax (162 (734) (592) Change in unrealized gains/losses on marketable securities: Change in fair value of marketable securities, net of tax benefit (expense) of $425, $(863) and $264, respectively (782) 1,582 (483) Adjustment for net (gains) losses realized and included in net income, net of tax expense (benefit) of $35, $(31), and $(32), respectively (64) 56 59 Total change in unrealized gains/losses on marketable securities, (846) (424) net of tax 1,638 Total other comprehensive income (loss) 979 (1,427) (784) $ $ $ Total comprehensive income 47,567 46,666 51,967 See accompanying Notes to Consolidated Financial Statements Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) Accumulated Other Common Stock and Comprehensive Total Additional Paid-In Capital Shareholders Equity Retained Income Amount Shares Earnings (Loss) $ $ Balances as of September 27, 2014 5,866,161 $ 23,313 87,152 1,082 111,547 53,394 Net income 53,394 Other comprehensive income (loss) (1,427) (1,427) Dividends and dividend equivalents declared (11,627) (11,627) Repurchase of common stock Share-based compensation (325,032) (36,026) (36,026) 3,586 3,586 Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments 37,624 (231) (609) (840) 748 748 Balances as of September 26, 2015 5,578,753 $ 27,416 $ $ 92,284 (345) $ 119,355 Net income 45,687 45,687 Other comprehensive income (loss) 979 979 Dividends and dividend equivalents declared (12,188) (12,188) Repurchase of common stock Share-based compensation (279,609) (29,000) (29,000) 4,262 4,262 Common stock issued, net of shares withheld for employee taxes (1,225) 37,022 (806) (419) Tax benefit from equity awards, including transfer pricing adjustments 379 379 5,336,166 $ 31,251 $ $ 128,249 Balances as of September 24, 2016 96,364 634 $ Net income 48,351 48,351 (784) Other comprehensive income (loss) (784) Dividends and dividend equivalents declared (12,803) (12,803) Repurchase of common stock Share-based compensation (33,001) (246,496) (33,001) 4,909 4,909 Common stock issued, net of shares withheld (1,494) for employee taxes Tax benefit from equity awards, including transfer pricing adjustments 36,531 (913) (581) 620 620 98,330$ Balances as of September 30, 2017 $ 35,867$ 5,126,201 (150) $ 134,047 See accompanying Notes to Consolidated Financial Statements