CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) 12 Months Ended

shares in Thousands, $ in Millions Sep. 29, 2018

Income Statement [Abstract]
Net sales $ 265,595
Cost of sales 163,756
Gross margin 101,839 Net Sales - Cost of Sales
Operating expenses: 62%
Research and development 14,236
Selling, general and administrative 16,705
Total operating expenses 30,941 Gross Margin - Research and development -
Operating income 70,898 Gross Margin - Total Operating Expenses
Other income/(expense), net 2,005
Income before provision for income taxes 72,903 Operating Income - Income before provision
Provision for income taxes 13,372
Net income $ 59,531 Operating Income - Other income/(expense
Earnings per share:
Basic (in dollars per share) $ 12.01 Calculated as Net Income divided by the Sha
Diluted (in dollars per share) $ 11.91
Shares used in computing earnings per share: Basically, 59 Billion in Net Income and 4.95
Basic (in shares) 4,955,377
Diluted (in shares) 5,000,109
Earnings per share $ 12.01 (Net Income / Basic (in shares)) … multiplied
Diluted Earnings per share $ 11.91

Ignore lines with "Diluted"

Diluted shares are the extra number of shares reserved for top management and executives in the form of bonus pay.
s - Cost of Sales

argin - Research and development - Selling, general and administrative

argin - Total Operating Expenses

g Income - Income before provision for income taxes

g Income - Other income/(expense) - Income before provision for income taxes - Provision for income taxes

d as Net Income divided by the Shares used in computing earnings per share. Look at the formula below in red.

, 59 Billion in Net Income and 4.955 Billion shares outstanding

me / Basic (in shares)) … multiplied by 1000

utives in the form of bonus pay.

 CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions Sep. 29, 2018 Sep. 30, 2017
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 (Total current assets + Total non-current assets) 365,725 375,319

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
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value: 40,201 35,867
12,600,000 shares authorized; 4,754,986 and 5,126,201 shares issued
and outstanding, respectively

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
Cash or cash equivalents that Apple holds. A cash equivalent is a money-market account, which yields low interest.
These are SHORT-TERM equities/shares/bonds that Apple owns in other companies or governments
This is the amount they will receive in the future. Your phone contract is an account receivable to them.
Inventories of iPhones/iPads/etc.
This is the amount of COMPLETED iPhones they are expected to receive from their vendors. Basically,
these are "iPhones in progress" --> in the manufacturing process by their vendors like FoxConn, who will
ultimately give them the completed product back.
These include small short-term assets like computers, vehicles, IT infrastructure, etc.

These are LONG-TERM equities/shares/bonds that Apple owns in other companies or governments
This includes Apple's headquarters, which is large, and very valuable in California and other buildings it owns
These include patents, rights to music, rights to Dr. Dre's beats that it owns, etc. And long-term accounts receivables

This is the amount they will PAY in the future. This will go to their vast network of suppliers, etc, that manufacture
This is the amount they will PAY in the future for salaries, contract work, insurances, utilities, etc.
We will get into this later…..
This is a short-term loan that companies generally use to get cash ASAP and pay off a supplier who demands urgent money.
Short-term debt. Due within 12 months.

We will get into this later….. But note that it comes up twice in the same balance sheet! Don't worry about it now
Long-term debt. See that term debt comes up twice also. Because this is GOING TO BE DUE AFTER 12 MONTHS.

This is beyond the scope of this class. But it includes taxes that Apple has to pay and also retirements plans for its employees
long-term. If you're curious.. Go to the Financial Statements and Control+F: "Other non-current liabilities"

This is the amount of money investors have given directly to Apple Inc. Common Stock. As Apple gets money from investors,
into this EQUITY account. The investors have EQUITY in Apple Inc.
Retained earnings is the amount of profit that Apple has accumulated over the years and NOT paid out….. Some unprofitable
companies actually have negative retained earnings :(
This is beyond the scope of this class. Don't worry about it.

MOST IMPORTANT: THE SUM OF ASSETS EQUALS THE SUM OF LIABILITIES AND EQUITY
A = L + SE IS THE FUNDAMENTAL ACCOUNTING EQUATION. See Apple's Assets and compare the n
 yields low interest.

dings it owns
m accounts receivables

, that manufacture

who demands urgent money.

worry about it now

ER 12 MONTHS.

ments plans for its employees that are

nt liabilities"

e gets money from investors, it adds it

paid out….. Some unprofitable

S AND EQUITY
ssets and compare the numbers.
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in
Millions
Ending balances at Sep. 30, 2017
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of change in accounting principle
Net income
Other comprehensive income/(loss)
Dividends and dividend equivalents declared
Repurchase of common stock
Share-based compensation
Common stock issued, net of shares withheld for employee taxes
Ending balances at Sep. 29, 2018

Step 1: Take the balance of last period

Step 2: Add in Net Income
Step 3: Deduct Dividends and Buybacks of shares (This is what you pay out to your equity holders)
Step 4: Step 1 + Step 2 - Step 3
Total
$ 134,047 To calculate equity, you first start with last year's balance

0
59,531 Add how much money you made this year
$ (3,026) deduct this… ignore what it is
$ (13,735) Deduct how much you PAID OUT to investors by declaring dividends
$ (73,056) Deduct how much you PAID OUT to investors by buying back stock
5,443 add this… ignore what it is
$ (2,057) add this… ignore what it is
$ 107,147 This is your total equity left over. Basically, in steps

107,147
 CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions
Statement of Cash Flows [Abstract]
Cash and cash equivalents, beginning of the year
Operating activities:
Net income
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization
Share-based compensation expense
Deferred income tax expense/(benefit)
Other
Changes in operating assets and liabilities:
Accounts receivable, net
Inventories
Vendor non-trade receivables
Other current and non-current assets
Accounts payable
Deferred revenue
Other current and non-current liabilities
Cash generated by operating activities
Investing activities:
Purchases of marketable securities
Proceeds from maturities of marketable securities
Proceeds from sales of marketable securities
Payments for acquisition of property, plant and equipment
Payments made in connection with business acquisitions, net
Purchases of non-marketable securities
Proceeds from non-marketable securities
Other
Cash generated by/(used in) investing activities
Financing activities:
Proceeds from issuance of common stock
Payments for taxes related to net share settlement of equity awards
Payments for dividends and dividend equivalents
Repurchases of common stock
Proceeds from issuance of term debt, net
Repayments of term debt
Change in commercial paper, net
Cash used in financing activities
Increase/(Decrease) in cash and cash equivalents
Cash and cash equivalents, end of the year
Supplemental cash flow disclosure:
Cash paid for income taxes, net
Cash paid for interest
 12 Months Ended
Sep. 29, 2018 Sep. 30, 2017

$ 20,289 $ 20,484

59,531 48,351

10,903 10,157
5,340 4,840
(32,590) 5,966
(444) (166)

(5,322) (2,093)
828 (2,723)
(8,010) (4,254)
(423) (5,318)
9,175 8,966
(44) (626)
38,490 1,125
77,434 64,225

(71,356) (159,486)
55,881 31,775
47,838 94,564
(13,313) (12,451)
(721) (329)
(1,871) (521)
353 126
(745) (124)
16,066 (46,446)

669 555
(2,527) (1,874)
13,712 12,769
(72,738) (32,900)
6,969 28,662
(6,500) (3,500)
(37) 3,852
(87,876) (17,974)
5,624 (195)
25,913 20,289

10,417 11,591
$ 3,022 $ 2,092