# LongBench v2 / 66f53ab2821e116aacb33299

task_id: 70225d19-476f-5bf9-9097-f77ac103d6b5
task_key: train--66f53ab2821e116aacb33299
task_revision_id: 3

{"choice_A":"Apple, 10% to 15%","choice_B":"Samsung, 10% to 15%","choice_C":"Apple, 5% to 10%","choice_D":"Samsung, 5% to 10%","context":"UNITED STATES\nSECURITIES AND EXCHANGE COMMISSION\nWashington, D.C. 20549\nFORM 10-K\n(Mark One)\n☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934\nFor the fiscal year ended September 30, 2023\nor\n☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934\nFor the transition period from              to             .\nCommission File Number: 001-36743\nApple Inc.\n(Exact name of Registrant as specified in its charter)\nCalifornia\n94-2404110\n(State or other jurisdiction\nof incorporation or organization)\n(I.R.S. Employer Identification No.)\nOne Apple Park Way\nCupertino, California\n95014\n(Address of principal executive offices)\n(Zip Code)\n(408) 996-1010\n(Registrant’s telephone number, including area code)\nSecurities registered pursuant to Section 12(b) of the Act:\nTitle of each class\nTrading symbol(s)\nName of each exchange on which registered\nCommon Stock, $0.00001 par value per share\nAAPL\nThe Nasdaq Stock Market LLC\n1.375% Notes due 2024\n—\nThe Nasdaq Stock Market LLC\n0.000% Notes due 2025\n—\nThe Nasdaq Stock Market LLC\n0.875% Notes due 2025\n—\nThe Nasdaq Stock Market LLC\n1.625% Notes due 2026\n—\nThe Nasdaq Stock Market LLC\n2.000% Notes due 2027\n—\nThe Nasdaq Stock Market LLC\n1.375% Notes due 2029\n—\nThe Nasdaq Stock Market LLC\n3.050% Notes due 2029\n—\nThe Nasdaq Stock Market LLC\n0.500% Notes due 2031\n—\nThe Nasdaq Stock Market LLC\n3.600% Notes due 2042\n—\nThe Nasdaq Stock Market LLC\nSecurities registered pursuant to Section 12(g) of the Act: None\nIndicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.\nYes  ☒     No  ☐\nIndicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.\nYes  ☐     No  ☒\nIndicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12\nmonths (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.\nYes  ☒     No  ☐\nIndicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of\nthis chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).\nYes  ☒     No  ☐\n\n\nIndicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.\nSee the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.\nLarge accelerated filer\n☒\nAccelerated filer\n☐\nNon-accelerated filer\n☐\nSmaller reporting company\n☐\nEmerging growth company\n☐\nIf an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial\naccounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐\nIndicate 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\nunder 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. ☒\nIf securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of\nan error to previously issued financial statements. ☐\nIndicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s\nexecutive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐\nIndicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).\nYes  ☐     No  ☒\nThe aggregate market value of the voting and non-voting stock held by non-affiliates of the Registrant, as of March 31, 2023, the last business day of the Registrant’s most recently\ncompleted second fiscal quarter, was approximately $2,591,165,000,000. Solely for purposes of this disclosure, shares of common stock held by executive officers and directors of\nthe Registrant as of such date have been excluded because such persons may be deemed to be affiliates. This determination of executive officers and directors as affiliates is not\nnecessarily a conclusive determination for any other purposes.\n15,552,752,000 shares of common stock were issued and outstanding as of October 20, 2023.\nDOCUMENTS INCORPORATED BY REFERENCE\nPortions of the Registrant’s definitive proxy statement relating to its 2024 annual meeting of shareholders are incorporated by reference into Part III of this Annual Report on Form\n10-K where indicated. The Registrant’s definitive proxy statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to\nwhich this report relates.\n\n\nApple Inc.\nForm 10-K\nFor the Fiscal Year Ended September 30, 2023\nTABLE OF CONTENTS\nPage\nPart I\nItem 1.\nBusiness\n1\nItem 1A.\nRisk Factors\n5\nItem 1B.\nUnresolved Staff Comments\n16\nItem 1C.\nCybersecurity\n16\nItem 2.\nProperties\n17\nItem 3.\nLegal Proceedings\n17\nItem 4.\nMine Safety Disclosures\n17\nPart II\nItem 5.\nMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities\n18\nItem 6.\n[Reserved]\n19\nItem 7.\nManagement’s Discussion and Analysis of Financial Condition and Results of Operations\n20\nItem 7A.\nQuantitative and Qualitative Disclosures About Market Risk\n26\nItem 8.\nFinancial Statements and Supplementary Data\n27\nItem 9.\nChanges in and Disagreements with Accountants on Accounting and Financial Disclosure\n52\nItem 9A.\nControls and Procedures\n52\nItem 9B.\nOther Information\n53\nItem 9C.\nDisclosure Regarding Foreign Jurisdictions that Prevent Inspections\n53\nPart III\nItem 10.\nDirectors, Executive Officers and Corporate Governance\n53\nItem 11.\nExecutive Compensation\n53\nItem 12.\nSecurity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters\n53\nItem 13.\nCertain Relationships and Related Transactions, and Director Independence\n53\nItem 14.\nPrincipal Accountant Fees and Services\n53\nPart IV\nItem 15.\nExhibit and Financial Statement Schedules\n54\nItem 16.\nForm 10-K Summary\n57\n\n\nThis Annual Report on Form 10-K (“Form 10-K”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995,\nthat involve risks and uncertainties. Many of the forward-looking statements are located in Part I, Item 1 of this Form 10-K under the heading “Business” and Part\nII, Item 7 of this Form 10-K under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking\nstatements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical\nor current fact. For example, statements in this Form 10-K regarding the potential future impact of macroeconomic conditions on the Company’s business and\nresults of operations are forward-looking statements. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,”\n“estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of\nfuture performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might\ncause 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.” The Company\nassumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.\nUnless otherwise stated, all information presented herein is based on the Company’s fiscal calendar, and references to particular years, quarters, months or\nperiods 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\n“Company” and “Apple” as used herein refers collectively to Apple Inc. and its wholly owned subsidiaries, unless otherwise stated.\nPART I\nItem 1.    Business\nCompany Background\nThe Company designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related\nservices. The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September.\nProducts\niPhone\niPhone  is the Company’s line of smartphones based on its iOS operating system. The iPhone line includes iPhone 15 Pro, iPhone 15, iPhone 14, iPhone 13\nand iPhone SE .\nMac\nMac  is the Company’s line of personal computers based on its macOS  operating system. The Mac line includes laptops MacBook Air  and MacBook Pro , as\nwell as desktops iMac , Mac mini , Mac Studio  and Mac Pro .\niPad\niPad  is the Company’s line of multipurpose tablets based on its iPadOS  operating system. The iPad line includes iPad Pro , iPad Air , iPad and iPad mini .\nWearables, Home and Accessories\nWearables includes smartwatches and wireless headphones. The Company’s line of smartwatches, based on its watchOS  operating system, includes Apple\nWatch Ultra™ 2, Apple Watch  Series 9 and Apple Watch SE . The Company’s line of wireless headphones includes AirPods , AirPods Pro , AirPods Max™\nand Beats  products.\nHome includes Apple TV , the Company’s media streaming and gaming device based on its tvOS  operating system, and HomePod  and HomePod mini ,\nhigh-fidelity wireless smart speakers.\nAccessories includes Apple-branded and third-party accessories.\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\n®\nApple Inc. | 2023 Form 10-K | 1\n\n\nServices\nAdvertising\nThe Company’s advertising services include third-party licensing arrangements and the Company’s own advertising platforms.\nAppleCare\nThe Company offers a portfolio of fee-based service and support products under the AppleCare  brand. The offerings provide priority access to Apple technical\nsupport, access to the global Apple authorized service network for repair and replacement services, and in many cases additional coverage for instances of\naccidental damage or theft and loss, depending on the country and type of product.\nCloud Services\nThe Company’s cloud services store and keep customers’ content up-to-date and available across multiple Apple devices and Windows personal computers.\nDigital Content\nThe Company operates various platforms, including the App Store , that allow customers to discover and download applications and digital content, such as\nbooks, music, video, games and podcasts.\nThe Company also offers digital content through subscription-based services, including Apple Arcade , a game subscription service; Apple Fitness+\n, a\npersonalized fitness service; Apple Music , which offers users a curated listening experience with on-demand radio stations; Apple News+ , a subscription news\nand magazine service; and Apple TV+ , which offers exclusive original content and live sports.\nPayment Services\nThe Company offers payment services, including Apple Card , a co-branded credit card, and Apple Pay , a cashless payment service.\nSegments\nThe Company manages its business primarily on a geographic basis. The Company’s reportable segments consist of the Americas, Europe, Greater China,\nJapan and Rest of Asia Pacific. Americas includes both North and South America. Europe includes European countries, as well as India, the Middle East and\nAfrica. Greater China includes China mainland, Hong Kong and Taiwan. Rest of Asia Pacific includes Australia and those Asian countries not included in the\nCompany’s other reportable segments. Although the reportable segments provide similar hardware and software products and similar services, each one is\nmanaged separately to better align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic\nregion.\nMarkets and Distribution\nThe Company’s customers are primarily in the consumer, small and mid-sized business, education, enterprise and government markets. The Company sells its\nproducts and resells third-party products in most of its major markets directly to customers through its retail and online stores and its direct sales force. The\nCompany also employs a variety of indirect distribution channels, such as third-party cellular network carriers, wholesalers, retailers and resellers. During 2023,\nthe Company’s net sales through its direct and indirect distribution channels accounted for 37% and 63%, respectively, of total net sales.\nCompetition\nThe markets for the Company’s products and services are highly competitive, and are characterized by aggressive price competition and resulting downward\npressure on gross margins, frequent introduction of new products and services, short product life cycles, evolving industry standards, continual improvement in\nproduct price and performance characteristics, rapid adoption of technological advancements by competitors, and price sensitivity on the part of consumers and\nbusinesses. Many of the Company’s competitors seek to compete primarily through aggressive pricing and very low cost structures, and by imitating the\nCompany’s products and infringing on its intellectual property.\n®\n®\n®\nSM\n®\n®\n®\n®\n®\nApple Inc. | 2023 Form 10-K | 2\n\n\nThe Company’s ability to compete successfully depends heavily on ensuring the continuing and timely introduction of innovative new products, services and\ntechnologies to the marketplace. The Company designs and develops nearly the entire solution for its products, including the hardware, operating system,\nnumerous software applications and related services. Principal competitive factors important to the Company include price, product and service features\n(including security features), relative price and performance, product and service quality and reliability, design innovation, a strong third-party software and\naccessories ecosystem, marketing and distribution capability, service and support, and corporate reputation.\nThe Company is focused on expanding its market opportunities related to smartphones, personal computers, tablets, wearables and accessories, and services.\nThe Company faces substantial competition in these markets from companies that have significant technical, marketing, distribution and other resources, as well\nas established hardware, software, and service offerings with large customer bases. In addition, some of the Company’s competitors have broader product lines,\nlower-priced products and a larger installed base of active devices. Competition has been particularly intense as competitors have aggressively cut prices and\nlowered product margins. Certain competitors have the resources, experience or cost structures to provide products at little or no profit or even at a loss. The\nCompany’s services compete with business models that provide content to users for free and use illegitimate means to obtain third-party digital content and\napplications. The Company faces significant competition as competitors imitate the Company’s product features and applications within their products, or\ncollaborate to offer integrated solutions that are more competitive than those they currently offer.\nSupply of Components\nAlthough most components essential to the Company’s business are generally available from multiple sources, certain components are currently obtained from\nsingle or limited sources. The Company also competes for various components with other participants in the markets for smartphones, personal computers,\ntablets, wearables and accessories. Therefore, many components used by the Company, including those that are available from multiple sources, are at times\nsubject to industry-wide shortage and significant commodity pricing fluctuations.\nThe Company uses some custom components that are not commonly used by its competitors, and new products introduced by the Company often utilize\ncustom components available from only one source. When a component or product uses new technologies, initial capacity constraints may exist until the\nsuppliers’ yields have matured or their manufacturing capacities have increased. The continued availability of these components at acceptable prices, or at all,\nmay be affected if suppliers decide to concentrate on the production of common components instead of components customized to meet the Company’s\nrequirements.\nThe Company has entered into agreements for the supply of many components; however, there can be no guarantee that the Company will be able to extend or\nrenew these agreements on similar terms, or at all.\nResearch and Development\nBecause the industries in which the Company competes are characterized by rapid technological advances, the Company’s ability to compete successfully\ndepends heavily upon its ability to ensure a continual and timely flow of competitive products, services and technologies to the marketplace. The Company\ncontinues to develop new technologies to enhance existing products and services, and to expand the range of its offerings through research and development\n(“R&D”), licensing of intellectual property and acquisition of third-party businesses and technology.\nIntellectual Property\nThe Company currently holds a broad collection of intellectual property rights relating to certain aspects of its hardware devices, accessories, software and\nservices. This includes patents, designs, copyrights, trademarks and other forms of intellectual property rights in the U.S. and various foreign countries. Although\nthe Company believes the ownership of such intellectual property rights is an important factor in differentiating its business and that its success does depend in\npart on such ownership, the Company relies primarily on the innovative skills, technical competence and marketing abilities of its personnel.\nThe Company regularly files patent, design, copyright and trademark applications to protect innovations arising from its research, development, design and\nmarketing, and is currently pursuing thousands of applications around the world. Over time, the Company has accumulated a large portfolio of issued and\nregistered intellectual property rights around the world. No single intellectual property right is solely responsible for protecting the Company’s products and\nservices. The Company believes the duration of its intellectual property rights is adequate relative to the expected lives of its products and services.\nIn addition to Company-owned intellectual property, many of the Company’s products and services are designed to include intellectual property owned by third\nparties. It may be necessary in the future to seek or renew licenses relating to various aspects of the Company’s products, processes and services. While the\nCompany has generally been able to obtain such licenses on commercially reasonable terms in the past, there is no guarantee that such licenses could be\nobtained in the future on reasonable terms or at all.\nApple Inc. | 2023 Form 10-K | 3\n\n\nBusiness Seasonality and Product Introductions\nThe Company has historically experienced higher net sales in its first quarter compared to other quarters in its fiscal year due in part to seasonal holiday\ndemand. Additionally, new product and service introductions can significantly impact net sales, cost of sales and operating expenses. The timing of product\nintroductions can also impact the Company’s net sales to its indirect distribution channels as these channels are filled with new inventory following a product\nlaunch, and channel inventory of an older product often declines as the launch of a newer product approaches. Net sales can also be affected when consumers\nand distributors anticipate a product introduction.\nHuman Capital\nThe Company believes it has a talented, motivated and dedicated team, and works to create an inclusive, safe and supportive environment for all of its team\nmembers. As of September 30, 2023, the Company had approximately 161,000 full-time equivalent employees.\nWorkplace Practices and Policies\nThe Company is an equal opportunity employer committed to inclusion and diversity and to providing a workplace free of harassment or discrimination.\nCompensation and Benefits\nThe Company believes that compensation should be competitive and equitable, and should enable employees to share in the Company’s success. The\nCompany recognizes its people are most likely to thrive when they have the resources to meet their needs and the time and support to succeed in their\nprofessional and personal lives. In support of this, the Company offers a wide variety of benefits for employees around the world and invests in tools and\nresources that are designed to support employees’ individual growth and development.\nInclusion and Diversity\nThe Company is committed to its vision to build and sustain a more inclusive workforce that is representative of the communities it serves. The Company\ncontinues to work to increase diverse representation at every level, foster an inclusive culture, and support equitable pay and access to opportunity for all\nemployees.\nEngagement\nThe Company believes that open and honest communication among team members, managers and leaders helps create an open, collaborative work\nenvironment where everyone can contribute, grow and succeed. Team members are encouraged to come to their managers with questions, feedback or\nconcerns, and the Company conducts surveys that gauge employee sentiment in areas like career development, manager performance and inclusivity.\nHealth and Safety\nThe Company is committed to protecting its team members everywhere it operates. The Company identifies potential workplace risks in order to develop\nmeasures to mitigate possible hazards. The Company supports employees with general safety, security and crisis management training, and by putting specific\nprograms in place for those working in potentially high-hazard environments. Additionally, the Company works to protect the safety and security of its team\nmembers, visitors and customers through its global security team.\nAvailable Information\nThe Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to\nSections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the U.S. Securities and Exchange\nCommission (the “SEC”). Such reports and other information filed by the Company with the SEC are available free of charge at investor.apple.com/investor-\nrelations/sec-filings/default.aspx when such reports are available on the SEC’s website. The Company periodically provides certain information for investors on\nits corporate website, www.apple.com, and its investor relations website, investor.apple.com. This includes press releases and other information about financial\nperformance, information on environmental, social and governance matters, and details related to the Company’s annual meeting of shareholders. The\ninformation contained on the websites referenced in this Form 10-K is not incorporated by reference into this filing. Further, the Company’s references to website\nURLs are intended to be inactive textual references only.\nApple Inc. | 2023 Form 10-K | 4\n\n\nItem 1A.    Risk Factors\nThe Company’s business, reputation, results of operations, financial condition and stock price can be affected by a number of factors, whether currently known\nor unknown, including those described below. When any one or more of these risks materialize from time to time, the Company’s business, reputation, results of\noperations, financial condition and stock price can be materially and adversely affected.\nBecause of the following factors, as well as other factors affecting the Company’s results of operations and financial condition, past financial performance should\nnot be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.\nThis discussion of risk factors contains forward-looking statements.\nThis section should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the\nconsolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.\nMacroeconomic and Industry Risks\nThe Company’s operations and performance depend significantly on global and regional economic conditions and adverse economic conditions can\nmaterially adversely affect the Company’s business, results of operations and financial condition.\nThe Company has international operations with sales outside the U.S. representing a majority of the Company’s total net sales. In addition, the Company’s\nglobal supply chain is large and complex and a majority of the Company’s supplier facilities, including manufacturing and assembly sites, are located outside the\nU.S. As a result, the Company’s operations and performance depend significantly on global and regional economic conditions.\nAdverse macroeconomic conditions, including slow growth or recession, high unemployment, inflation, tighter credit, higher interest rates, and currency\nfluctuations, can adversely impact consumer confidence and spending and materially adversely affect demand for the Company’s products and services. In\naddition, consumer confidence and spending can be materially adversely affected in response to changes in fiscal and monetary policy, financial market volatility,\ndeclines in income or asset values, and other economic factors.\nIn addition to an adverse impact on demand for the Company’s products and services, uncertainty about, or a decline in, global or regional economic conditions\ncan have a significant impact on the Company’s suppliers, contract manufacturers, logistics providers, distributors, cellular network carriers and other channel\npartners, and developers. Potential outcomes include financial instability; inability to obtain credit to finance business operations; and insolvency.\nAdverse economic conditions can also lead to increased credit and collectibility risk on the Company’s trade receivables; the failure of derivative counterparties\nand other financial institutions; limitations on the Company’s ability to issue new debt; reduced liquidity; and declines in the fair values of the Company’s financial\ninstruments. These and other impacts can materially adversely affect the Company’s business, results of operations, financial condition and stock price.\nThe Company’s business can be impacted by political events, trade and other international disputes, war, terrorism, natural disasters, public health\nissues, industrial accidents and other business interruptions.\nPolitical events, trade and other international disputes, war, terrorism, natural disasters, public health issues, industrial accidents and other business\ninterruptions can harm or disrupt international commerce and the global economy, and could have a material adverse effect on the Company and its customers,\nsuppliers, contract manufacturers, logistics providers, distributors, cellular network carriers and other channel partners.\nApple Inc. | 2023 Form 10-K | 5\n\n\nThe 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\ngenerally benefits from growth in international trade. Substantially all of the Company’s manufacturing is performed in whole or in part by outsourcing partners\nlocated primarily in China mainland, India, Japan, South Korea, Taiwan and Vietnam. Restrictions on international trade, such as tariffs and other controls on\nimports or exports of goods, technology or data, can materially adversely affect the Company’s operations and supply chain and limit the Company’s ability to\noffer and distribute its products and services to customers. The impact can be particularly significant if these restrictive measures apply to countries and regions\nwhere the Company derives a significant portion of its revenues and/or has significant supply chain operations. Restrictive measures can require the Company\nto take various actions, including changing suppliers, restructuring business relationships, and ceasing to offer third-party applications on its platforms. Changing\nthe Company’s operations in accordance with new or changed restrictions on international trade can be expensive, time-consuming and disruptive to the\nCompany’s operations. Such restrictions can be announced with little or no advance notice and the Company may not be able to effectively mitigate all adverse\nimpacts from such measures. For example, tensions between governments, including the U.S. and China, have in the past led to tariffs and other restrictions\nbeing imposed on the Company’s business. If disputes and conflicts further escalate in the future, actions by governments in response could be significantly\nmore severe and restrictive and could materially adversely affect the Company’s business. Political uncertainty surrounding trade and other international\ndisputes could also have a negative effect on consumer confidence and spending, which could adversely affect the Company’s business.\nMany of the Company’s operations and facilities, as well as critical business operations of the Company’s suppliers and contract manufacturers, are in locations\nthat are prone to earthquakes and other natural disasters. In addition, such operations and facilities are subject to the risk of interruption by fire, power\nshortages, nuclear power plant accidents and other industrial accidents, terrorist attacks and other hostile acts, ransomware and other cybersecurity attacks,\nlabor disputes, public health issues, including pandemics such as the COVID-19 pandemic, and other events beyond the Company’s control. Global climate\nchange is resulting in certain types of natural disasters, such as droughts, floods, hurricanes and wildfires, occurring more frequently or with more intense\neffects. Such events can make it difficult or impossible for the Company to manufacture and deliver products to its customers, create delays and inefficiencies in\nthe Company’s supply and manufacturing chain, and result in slowdowns and outages to the Company’s service offerings, and negatively impact consumer\nspending and demand in affected areas. Following an interruption to its business, the Company can require substantial recovery time, experience significant\nexpenditures to resume operations, and lose significant sales. Because the Company relies on single or limited sources for the supply and manufacture of many\ncritical components, a business interruption affecting such sources would exacerbate any negative consequences to the Company.\nThe Company’s operations are also subject to the risks of industrial accidents at its suppliers and contract manufacturers. While the Company’s suppliers are\nrequired to maintain safe working environments and operations, an industrial accident could occur and could result in serious injuries or loss of life, disruption to\nthe Company’s business, and harm to the Company’s reputation. Major public health issues, including pandemics such as the COVID-19 pandemic, have\nadversely affected, and could in the future materially adversely affect, the Company due to their impact on the global economy and demand for consumer\nproducts; the imposition of protective public safety measures, such as stringent employee travel restrictions and limitations on freight services and the movement\nof products between regions; and disruptions in the Company’s operations, supply chain and sales and distribution channels, resulting in interruptions to the\nsupply of current products and offering of existing services, and delays in production ramps of new products and development of new services.\nWhile the Company maintains insurance coverage for certain types of losses, such insurance coverage may be insufficient to cover all losses that may arise.\nGlobal markets for the Company’s products and services are highly competitive and subject to rapid technological change, and the Company may be\nunable to compete effectively in these markets.\nThe Company’s products and services are offered in highly competitive global markets characterized by aggressive price competition and resulting downward\npressure on gross margins, frequent introduction of new products and services, short product life cycles, evolving industry standards, continual improvement in\nproduct price and performance characteristics, rapid adoption of technological advancements by competitors, and price sensitivity on the part of consumers and\nbusinesses.\nThe Company’s ability to compete successfully depends heavily on ensuring the continuing and timely introduction of innovative new products, services and\ntechnologies to the marketplace. The Company designs and develops nearly the entire solution for its products, including the hardware, operating system,\nnumerous software applications and related services. As a result, the Company must make significant investments in R&D. There can be no assurance these\ninvestments will achieve expected returns, and the Company may not be able to develop and market new products and services successfully.\nApple Inc. | 2023 Form 10-K | 6\n\n\nThe Company currently holds a significant number of patents, trademarks and copyrights and has registered, and applied to register, additional patents,\ntrademarks and copyrights. In contrast, many of the Company’s competitors seek to compete primarily through aggressive pricing and very low cost structures,\nand by imitating the Company’s products and infringing on its intellectual property. Effective intellectual property protection is not consistently available in every\ncountry in which the Company operates. If the Company is unable to continue to develop and sell innovative new products with attractive margins or if\ncompetitors infringe on the Company’s intellectual property, the Company’s ability to maintain a competitive advantage could be materially adversely affected.\nThe Company has a minority market share in the global smartphone, personal computer and tablet markets. The Company faces substantial competition in\nthese markets from companies that have significant technical, marketing, distribution and other resources, as well as established hardware, software and digital\ncontent supplier relationships. In addition, some of the Company’s competitors have broader product lines, lower-priced products and a larger installed base of\nactive devices. Competition has been particularly intense as competitors have aggressively cut prices and lowered product margins. Certain competitors have\nthe resources, experience or cost structures to provide products at little or no profit or even at a loss. Some of the markets in which the Company competes have\nfrom time to time experienced little to no growth or contracted overall.\nAdditionally, the Company faces significant competition as competitors imitate the Company’s product features and applications within their products or\ncollaborate to offer solutions that are more competitive than those they currently offer. The Company also expects competition to intensify as competitors imitate\nthe Company’s approach to providing components seamlessly within their offerings or work collaboratively to offer integrated solutions.\nThe Company’s services also face substantial competition, including from companies that have significant resources and experience and have established\nservice offerings with large customer bases. The Company competes with business models that provide content to users for free. The Company also competes\nwith illegitimate means to obtain third-party digital content and applications.\nThe Company’s business, results of operations and financial condition depend substantially on the Company’s ability to continually improve its products and\nservices to maintain their functional and design advantages. There can be no assurance the Company will be able to continue to provide products and services\nthat compete effectively.\nBusiness Risks\nTo remain competitive and stimulate customer demand, the Company must successfully manage frequent introductions and transitions of products\nand services.\nDue to the highly volatile and competitive nature of the markets and industries in which the Company competes, the Company must continually introduce new\nproducts, services and technologies, enhance existing products and services, effectively stimulate customer demand for new and upgraded products and\nservices, and successfully manage the transition to these new and upgraded products and services. The success of new product and service introductions\ndepends on a number of factors, including timely and successful development, market acceptance, the Company’s ability to manage the risks associated with\nnew technologies and production ramp-up issues, the availability of application software for the Company’s products, the effective management of purchase\ncommitments and inventory levels in line with anticipated product demand, the availability of products in appropriate quantities and at expected costs to meet\nanticipated demand, and the risk that new products and services may have quality or other defects or deficiencies. There can be no assurance the Company will\nsuccessfully manage future introductions and transitions of products and services.\nThe Company depends on component and product manufacturing and logistical services provided by outsourcing partners, many of which are\nlocated outside of the U.S.\nSubstantially all of the Company’s manufacturing is performed in whole or in part by outsourcing partners located primarily in China mainland, India, Japan,\nSouth Korea, Taiwan and Vietnam, and a significant concentration of this manufacturing is currently performed by a small number of outsourcing partners, often\nin single locations. Changes or additions to the Company’s supply chain require considerable time and resources and involve significant risks and uncertainties.\nThe Company has also outsourced much of its transportation and logistics management. While these arrangements can lower operating costs, they also reduce\nthe Company’s direct control over production and distribution. Such diminished control has from time to time and may in the future have an adverse effect on the\nquality or quantity of products manufactured or services provided, or adversely affect the Company’s flexibility to respond to changing conditions. Although\narrangements with these partners may contain provisions for product defect expense reimbursement, the Company generally remains responsible to the\nconsumer for warranty and out-of-warranty service in the event of product defects and experiences unanticipated product defect liabilities from time to time.\nWhile 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\nmaterially adversely affect the Company’s business, reputation, results of operations and financial condition.\nApple Inc. | 2023 Form 10-K | 7\n\n\nThe Company relies on single-source outsourcing partners in the U.S., Asia and Europe to supply and manufacture many components, and on outsourcing\npartners primarily located in Asia, for final assembly of substantially all of the Company’s hardware products. Any failure of these partners to perform can have a\nnegative impact on the Company’s cost or supply of components or finished goods. In addition, manufacturing or logistics in these locations or transit to final\ndestinations can be disrupted for a variety of reasons, including natural and man-made disasters, information technology system failures, commercial disputes,\narmed conflict, economic, business, labor, environmental, public health or political issues, or international trade disputes.\nThe Company has invested in manufacturing process equipment, much of which is held at certain of its outsourcing partners, and has made prepayments to\ncertain of its suppliers associated with long-term supply agreements. While these arrangements help ensure the supply of components and finished goods, if\nthese outsourcing partners or suppliers experience severe financial problems or other disruptions in their business, such continued supply can be reduced or\nterminated, and the recoverability of manufacturing process equipment or prepayments can be negatively impacted.\nFuture operating results depend upon the Company’s ability to obtain components in sufficient quantities on commercially reasonable terms.\nBecause the Company currently obtains certain components from single or limited sources, the Company is subject to significant supply and pricing risks. Many\ncomponents, including those that are available from multiple sources, are at times subject to industry-wide shortages and significant commodity pricing\nfluctuations that can materially adversely affect the Company’s business, results of operations and financial condition. For example, the global semiconductor\nindustry has in the past experienced high demand and shortages of supply, which adversely affected the Company’s ability to obtain sufficient quantities of\ncomponents and products on commercially reasonable terms or at all. Such disruptions could occur in the future. While the Company has entered into\nagreements 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\nat all. Component suppliers may suffer from poor financial conditions, which can lead to business failure for the supplier or consolidation within a particular\nindustry, further limiting the Company’s ability to obtain sufficient quantities of components on commercially reasonable terms or at all. The effects of global or\nregional economic conditions on the Company’s suppliers, described in “The Company’s operations and performance depend significantly on global and regional\neconomic conditions and adverse economic conditions can materially adversely affect the Company’s business, results of operations and financial condition,”\nabove, can also affect the Company’s ability to obtain components. Therefore, the Company remains subject to significant risks of supply shortages and price\nincreases that can materially adversely affect its business, results of operations and financial condition.\nThe Company’s new products often utilize custom components available from only one source. When a component or product uses new technologies, initial\ncapacity constraints may exist until the suppliers’ yields have matured or their manufacturing capacities have increased. The continued availability of these\ncomponents at acceptable prices, or at all, can be affected for any number of reasons, including if suppliers decide to concentrate on the production of common\ncomponents instead of components customized to meet the Company’s requirements. When the Company’s supply of components for a new or existing product\nhas been delayed or constrained, or when an outsourcing partner has delayed shipments of completed products to the Company, the Company’s business,\nresults of operations and financial condition have been adversely affected and future delays or constraints could materially adversely affect the Company’s\nbusiness, results of operations and financial condition. The Company’s business and financial performance could also be materially adversely affected\ndepending on the time required to obtain sufficient quantities from the source, or to identify and obtain sufficient quantities from an alternative source.\nThe Company’s products and services may be affected from time to time by design and manufacturing defects that could materially adversely affect\nthe Company’s business and result in harm to the Company’s reputation.\nThe Company offers complex hardware and software products and services that can be affected by design and manufacturing defects. Sophisticated operating\nsystem software and applications, such as those offered by the Company, often have issues that can unexpectedly interfere with the intended operation of\nhardware or software products and services. Defects can also exist in components and products the Company purchases from third parties. Component defects\ncould make the Company’s products unsafe and create a risk of environmental or property damage and personal injury. These risks may increase as the\nCompany’s products are introduced into specialized applications, including health. In addition, the Company’s service offerings can have quality issues and from\ntime 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\nnot meet customer expectations. There can be no assurance the Company will be able to detect and fix all issues and defects in the hardware, software and\nservices it offers. Failure to do so can result in widespread technical and performance issues affecting the Company’s products and services. In addition, the\nCompany can be exposed to product liability claims, recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment or\nintangible assets, and significant warranty and other expenses, including litigation costs and regulatory fines. Quality problems can also adversely affect the\nexperience for users of the Company’s products and services, and result in harm to the Company’s reputation, loss of competitive advantage, poor market\nacceptance, reduced demand for products and services, delay in new product and service introductions and lost sales.\nApple Inc. | 2023 Form 10-K | 8\n\n\nThe Company is exposed to the risk of write-downs on the value of its inventory and other assets, in addition to purchase commitment cancellation\nrisk.\nThe Company records a write-down for product and component inventories that have become obsolete or exceed anticipated demand, or for which cost exceeds\nnet realizable value. The Company also accrues necessary cancellation fee reserves for orders of excess products and components. The Company reviews\nlong-lived assets, including capital assets held at its suppliers’ facilities and inventory prepayments, for impairment whenever events or circumstances indicate\nthe 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\ncarrying value of the asset exceeds its fair value. Although the Company believes its inventory, capital assets, inventory prepayments and other assets and\npurchase commitments are currently recoverable, there can be no assurance the Company will not incur write-downs, fees, impairments and other charges\ngiven the rapid and unpredictable pace of product obsolescence in the industries in which the Company competes.\nThe Company orders components for its products and builds inventory in advance of product announcements and shipments. Manufacturing purchase\nobligations cover the Company’s forecasted component and manufacturing requirements, typically for periods up to 150 days. Because the Company’s markets\nare 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\ninsufficient amounts of components or products, or not fully utilize firm purchase commitments.\nThe Company relies on access to third-party intellectual property, which may not be available to the Company on commercially reasonable terms or\nat all.\nThe Company’s products and services are designed to include intellectual property owned by third parties, which requires licenses from those third parties. In\naddition, because of technological changes in the industries in which the Company currently competes or in the future may compete, current extensive patent\ncoverage and the rapid rate of issuance of new patents, the Company’s products and services can unknowingly infringe existing patents or intellectual property\nrights of others. From time to time, the Company has been notified that it may be infringing certain patents or other intellectual property rights of third parties.\nBased on experience and industry practice, the Company believes licenses to such third-party intellectual property can generally be obtained on commercially\nreasonable terms. However, there can be no assurance the necessary licenses can be obtained on commercially reasonable terms or at all. Failure to obtain the\nright to use third-party intellectual property, or to use such intellectual property on commercially reasonable terms, can preclude the Company from selling certain\nproducts or services, or otherwise have a material adverse impact on the Company’s business, results of operations and financial condition.\nThe Company’s future performance depends in part on support from third-party software developers.\nThe Company believes decisions by customers to purchase its hardware products depend in part on the availability of third-party software applications and\nservices. There can be no assurance third-party developers will continue to develop and maintain software applications and services for the Company’s\nproducts. If third-party software applications and services cease to be developed and maintained for the Company’s products, customers may choose not to buy\nthe Company’s products.\nThe Company believes the availability of third-party software applications and services for its products depends in part on the developers’ perception and\nanalysis of the relative benefits of developing, maintaining and upgrading such software and services for the Company’s products compared to competitors’\nplatforms, such as Android for smartphones and tablets, Windows for personal computers and tablets, and PlayStation, Nintendo and Xbox for gaming platforms.\nThis 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\nfuture growth of product sales, and the costs of developing such applications and services.\nThe Company’s minority market share in the global smartphone, personal computer and tablet markets can make developers less inclined to develop or upgrade\nsoftware for the Company’s products and more inclined to devote their resources to developing and upgrading software for competitors’ products with larger\nmarket share. When developers focus their efforts on these competing platforms, the availability and quality of applications for the Company’s devices can suffer.\nThe Company relies on the continued availability and development of compelling and innovative software applications for its products. The Company’s products\nand operating systems are subject to rapid technological change, and when third-party developers are unable to or choose not to keep up with this pace of\nchange, their applications can fail to take advantage of these changes to deliver improved customer experiences, can operate incorrectly, and can result in\ndissatisfied customers and lower customer demand for the Company’s products.\nApple Inc. | 2023 Form 10-K | 9\n\n\nThe Company distributes third-party applications for its products through the App Store. For the vast majority of applications, developers keep all of the revenue\nthey generate on the App Store. The Company retains a commission from sales of applications and sales of digital services or goods initiated within an\napplication. From time to time, the Company has made changes to its App Store, including actions taken in response to competition, market conditions and legal\nand regulatory requirements. The Company expects to make further business changes in the future, including as a result of legislative initiatives impacting the\nApp Store, such as the European Union (“EU”) Digital Markets Act, which the Company is required to comply with by March 2024. The Company is also subject\nto litigation and investigations relating to the App Store, which have resulted in changes to the Company’s business practices, and may in the future result in\nfurther changes. Changes have included how developers communicate with consumers outside the App Store regarding alternative purchasing mechanisms.\nFuture changes could also affect what the Company charges developers for access to its platforms, how it manages distribution of apps outside of the App\nStore, and how and to what extent it allows developers to communicate with consumers inside the App Store regarding alternative purchasing mechanisms. This\ncould reduce the volume of sales, and the commission that the Company earns on those sales, would decrease. If the rate of the commission that the Company\nretains on such sales is reduced, or if it is otherwise narrowed in scope or eliminated, the Company’s business, results of operations and financial condition\ncould be materially adversely affected.\nFailure to obtain or create digital content that appeals to the Company’s customers, or to make such content available on commercially reasonable\nterms, could have a material adverse impact on the Company’s business, results of operations and financial condition.\nThe Company contracts with numerous third parties to offer their digital content to customers. This includes the right to sell, or offer subscriptions to, third-party\ncontent, as well as the right to incorporate specific content into the Company’s own services. The licensing or other distribution arrangements for this content can\nbe for relatively short time periods and do not guarantee the continuation or renewal of these arrangements on commercially reasonable terms, or at all. Some\nthird-party content providers and distributors currently or in the future may offer competing products and services, and can take actions to make it difficult or\nimpossible for the Company to license or otherwise distribute their content. Other content owners, providers or distributors may seek to limit the Company’s\naccess to, or increase the cost of, such content. The Company may be unable to continue to offer a wide variety of content at commercially reasonable prices\nwith acceptable usage rules.\nThe Company also produces its own digital content, which can be costly to produce due to intense and increasing competition for talent, content and\nsubscribers, and may fail to appeal to the Company’s customers.\nSome third-party digital content providers require the Company to provide digital rights management and other security solutions. If requirements change, the\nCompany may have to develop or license new technology to provide these solutions. There can be no assurance the Company will be able to develop or license\nsuch solutions at a reasonable cost and in a timely manner.\nThe Company’s success depends largely on the talents and efforts of its team members, the continued service and availability of highly skilled\nemployees, including key personnel, and the Company’s ability to nurture its distinctive and inclusive culture.\nMuch 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,\nincluding its Chief Executive Officer, executive team and other highly skilled employees. Experienced personnel in the technology industry are in high demand\nand competition for their talents is intense, especially in Silicon Valley, where most of the Company’s key personnel are located. In addition to intense\ncompetition for talent, workforce dynamics are constantly evolving. If the Company does not manage changing workforce dynamics effectively, it could materially\nadversely affect the Company’s culture, reputation and operational flexibility.\nThe 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\nmaterially adversely affect the Company’s ability to recruit and retain the highly skilled employees who are critical to its success, and could otherwise materially\nadversely affect the Company’s business, reputation, results of operations and financial condition.\nThe Company depends on the performance of carriers, wholesalers, retailers and other resellers.\nThe Company distributes its products and certain of its services through cellular network carriers, wholesalers, retailers and resellers, many of which distribute\nproducts and services from competitors. The Company also sells its products and services and resells third-party products in most of its major markets directly to\nconsumers, small and mid-sized businesses, and education, enterprise and government customers through its retail and online stores and its direct sales force.\nSome carriers providing cellular network service for the Company’s products offer financing, installment payment plans or subsidies for users’ purchases of the\ndevice. There can be no assurance such offers will be continued at all or in the same amounts.\nApple Inc. | 2023 Form 10-K | 10\n\n\nThe Company has invested and will continue to invest in programs to enhance reseller sales, including staffing selected resellers’ stores with Company\nemployees and contractors, and improving product placement displays. These programs can require a substantial investment while not assuring return or\nincremental sales. The financial condition of these resellers could weaken, these resellers could stop distributing the Company’s products, or uncertainty\nregarding demand for some or all of the Company’s products could cause resellers to reduce their ordering and marketing of the Company’s products.\nThe Company’s business and reputation are impacted by information technology system failures and network disruptions.\nThe Company and its global supply chain are dependent on complex information technology systems and are exposed to information technology system failures\nor network disruptions caused by natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses,\nphysical or electronic break-ins, ransomware or other cybersecurity incidents, or other events or disruptions. System upgrades, redundancy and other continuity\nmeasures may be ineffective or inadequate, and the Company’s or its vendors’ business continuity and disaster recovery planning may not be sufficient for all\neventualities. Such failures or disruptions can adversely impact the Company’s business by, among other things, preventing access to the Company’s online\nservices, interfering with customer transactions or impeding the manufacturing and shipping of the Company’s products. These events could materially adversely\naffect the Company’s business, reputation, results of operations and financial condition.\nLosses or unauthorized access to or releases of confidential information, including personal information, could subject the Company to significant\nreputational, financial, legal and operational consequences.\nThe Company’s business requires it to use and store confidential information, including personal information, with respect to the Company’s customers and\nemployees. The Company devotes significant resources to network and data security, including through the use of encryption and other security measures\nintended to protect its systems and data. But these measures cannot provide absolute security, and losses or unauthorized access to or releases of confidential\ninformation occur and could materially adversely affect the Company’s business, reputation, results of operations and financial condition.\nThe Company’s business also requires it to share confidential information with suppliers and other third parties. The Company relies on global suppliers that are\nalso exposed to ransomware and other malicious attacks that can disrupt business operations. Although the Company takes steps to secure confidential\ninformation that is provided to or accessible by third parties working on the Company’s behalf, such measures are not always effective and losses or\nunauthorized access to, or releases of, confidential information occur. Such incidents and other malicious attacks could materially adversely affect the\nCompany’s business, reputation, results of operations and financial condition.\nThe Company experiences malicious attacks and other attempts to gain unauthorized access to its systems on a regular basis. These attacks seek to\ncompromise the confidentiality, integrity or availability of confidential information or disrupt normal business operations, and can, among other things, impair the\nCompany’s ability to attract and retain customers for its products and services, impact the Company’s stock price, materially damage commercial relationships,\nand expose the Company to litigation or government investigations, which could result in penalties, fines or judgments against the Company. Globally, attacks\nare expected to continue accelerating in both frequency and sophistication with increasing use by actors of tools and techniques that are designed to circumvent\ncontrols, avoid detection, and remove or obfuscate forensic evidence, all of which hinders the Company’s ability to identify, investigate and recover from\nincidents. In addition, attacks against the Company and its customers can escalate during periods of severe diplomatic or armed conflict.\nAlthough malicious attacks perpetrated to gain access to confidential information, including personal information, affect many companies across various\nindustries, the Company is at a relatively greater risk of being targeted because of its high profile and the value of the confidential information it creates, owns,\nmanages, stores and processes.\nThe Company has implemented systems and processes intended to secure its information technology systems and prevent unauthorized access to or loss of\nsensitive data, and mitigate the impact of unauthorized access, including through the use of encryption and authentication technologies. As with all companies,\nthese security measures may not be sufficient for all eventualities and may be vulnerable to hacking, ransomware attacks, employee error, malfeasance, system\nerror, faulty password management or other irregularities. For example, third parties can fraudulently induce the Company’s or its vendors’ employees or\ncustomers into disclosing usernames, passwords or other sensitive information, which can, in turn, be used for unauthorized access to the Company’s or its\nvendors’ systems and services. To help protect customers and the Company, the Company deploys and makes available technologies like multifactor\nauthentication, monitors its services and systems for unusual activity and may freeze accounts under suspicious circumstances, which, among other things, can\nresult in the delay or loss of customer orders or impede customer access to the Company’s products and services.\nWhile the Company maintains insurance coverage that is intended to address certain aspects of data security risks, such insurance coverage may be insufficient\nto cover all losses or all types of claims that may arise.\nApple Inc. | 2023 Form 10-K | 11\n\n\nInvestment in new business strategies and acquisitions could disrupt the Company’s ongoing business, present risks not originally contemplated\nand materially adversely affect the Company’s business, reputation, results of operations and financial condition.\nThe Company has invested, and in the future may invest, in new business strategies or acquisitions. Such endeavors may involve significant risks and\nuncertainties, including distraction of management from current operations, greater-than-expected liabilities and expenses, economic, political, legal and\nregulatory challenges associated with operating in new businesses, regions or countries, inadequate return on capital, potential impairment of tangible and\nintangible assets, and significant write-offs. Investment and acquisition transactions are exposed to additional risks, including failing to obtain required regulatory\napprovals on a timely basis or at all, or the imposition of onerous conditions that could delay or prevent the Company from completing a transaction or otherwise\nlimit the Company’s ability to fully realize the anticipated benefits of a transaction. These new ventures are inherently risky and may not be successful. The\nfailure of any significant investment could materially adversely affect the Company’s business, reputation, results of operations and financial condition.\nThe Company’s retail stores are subject to numerous risks and uncertainties.\nThe Company’s retail operations are subject to many factors that pose risks and uncertainties and could adversely impact the Company’s business, results of\noperations and financial condition, including macroeconomic factors that could have an adverse effect on general retail activity. Other factors include the\nCompany’s ability to: manage costs associated with retail store construction and operation; manage relationships with existing retail partners; manage costs\nassociated with fluctuations in the value of retail inventory; and obtain and renew leases in quality retail locations at a reasonable cost.\nLegal and Regulatory Compliance Risks\nThe Company’s business, results of operations and financial condition could be adversely impacted by unfavorable results of legal proceedings or\ngovernment investigations.\nThe Company is subject to various claims, legal proceedings and government investigations that have arisen in the ordinary course of business and have not yet\nbeen fully resolved, and new matters may arise in the future. In addition, agreements entered into by the Company sometimes include indemnification provisions\nwhich 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\ngovernment investigations involving the Company, and the alleged magnitude of such claims, proceedings and government investigations, has generally\nincreased over time and may continue to increase.\nThe Company has faced and continues to face a significant number of patent claims relating to its cellular-enabled products, and new claims may arise in the\nfuture, including as a result of new legal or regulatory frameworks. For example, technology and other patent-holding companies frequently assert their patents\nand seek royalties and often enter into litigation based on allegations of patent infringement or other violations of intellectual property rights. The Company is\nvigorously defending infringement actions in courts in several U.S. jurisdictions, as well as internationally in various countries. The plaintiffs in these actions\nfrequently seek injunctions and substantial damages.\nRegardless of the merit of particular claims, defending against litigation or responding to government investigations can be expensive, time-consuming and\ndisruptive to the Company’s operations. In recognition of these considerations, the Company may enter into agreements or other arrangements to settle litigation\nand resolve such challenges. There can be no assurance such agreements can be obtained on acceptable terms or that litigation will not occur. These\nagreements can also significantly increase the Company’s cost of sales and operating expenses and require the Company to change its business practices and\nlimit the Company’s ability to offer certain products and services.\nExcept as described in Part I, Item 3 of this Form 10-K under the heading “Legal Proceedings” and in Part II, Item 8 of this Form 10-K in the Notes to\nConsolidated Financial Statements in Note 12, “Commitments, Contingencies and Supply Concentrations” under the heading “Contingencies,” in the opinion of\nmanagement, 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,\nconcerning loss contingencies for asserted legal and other claims.\nThe outcome of litigation or government investigations is inherently uncertain. If one or more legal matters were resolved against the Company or an indemnified\nthird party in a reporting period for amounts above management’s expectations, the Company’s results of operations and financial condition for that reporting\nperiod could be materially adversely affected. Further, such an outcome can result in significant compensatory, punitive or trebled monetary damages,\ndisgorgement of revenue or profits, remedial corporate measures or injunctive relief against the Company, and has from time to time required, and can in the\nfuture require, the Company to change its business practices and limit the Company’s ability to offer certain products and services, all of which could materially\nadversely affect the Company’s business, reputation, results of operations and financial condition.\nWhile the Company maintains insurance coverage for certain types of claims, such insurance coverage may be insufficient to cover all losses or all types of\nclaims that may arise.\nApple Inc. | 2023 Form 10-K | 12\n\n\nThe Company is subject to complex and changing laws and regulations worldwide, which exposes the Company to potential liabilities, increased\ncosts and other adverse effects on the Company’s business.\nThe Company’s global operations are subject to complex and changing laws and regulations on subjects, including antitrust; privacy, data security and data\nlocalization; consumer protection; advertising, sales, billing and e-commerce; financial services and technology; product liability; intellectual property ownership\nand infringement; digital platforms; machine learning and artificial intelligence; internet, telecommunications and mobile communications; media, television, film\nand digital content; availability of third-party software applications and services; labor and employment; anticorruption; import, export and trade; foreign\nexchange controls and cash repatriation restrictions; anti–money laundering; foreign ownership and investment; tax; and environmental, health and safety,\nincluding electronic waste, recycling, product design and climate change.\nCompliance with these laws and regulations is onerous and expensive. New and changing laws and regulations can adversely affect the Company’s business by\nincreasing the Company’s costs, limiting the Company’s ability to offer a product, service or feature to customers, imposing changes to the design of the\nCompany’s products and services, impacting customer demand for the Company’s products and services, and requiring changes to the Company’s supply chain\nand its business. New and changing laws and regulations can also create uncertainty about how such laws and regulations will be interpreted and applied.\nThese risks and costs may increase as the Company’s products and services are introduced into specialized applications, including health and financial\nservices. The Company has implemented policies and procedures designed to ensure compliance with applicable laws and regulations, but there can be no\nassurance the Company’s employees, contractors or agents will not violate such laws and regulations or the Company’s policies and procedures. If the\nCompany is found to have violated laws and regulations, it could materially adversely affect the Company’s business, reputation, results of operations and\nfinancial condition. Regulatory changes and other actions that materially adversely affect the Company’s business may be announced with little or no advance\nnotice and the Company may not be able to effectively mitigate all adverse impacts from such measures. For example, the Company is subject to changing\nregulations relating to the export and import of its products. Although the Company has programs, policies and procedures in place that are designed to satisfy\nregulatory requirements, there can be no assurance that such policies and procedures will be effective in preventing a violation or a claim of a violation. As a\nresult, the Company’s products could be banned, delayed or prohibited from importation, which could materially adversely affect the Company’s business,\nreputation, results of operations and financial condition.\nExpectations relating to environmental, social and governance considerations and related reporting obligations expose the Company to potential\nliabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.\nMany governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on environmental, social and governance\nconsiderations relating to businesses, including climate change and greenhouse gas emissions, human and civil rights, and diversity, equity and inclusion. In\naddition, the Company makes statements about its goals and initiatives through its various non-financial reports, information provided on its website, press\nstatements and other communications. Responding to these environmental, social and governance considerations and implementation of these goals and\ninitiatives involves risks and uncertainties, requires investments, and depends in part on third-party performance or data that is outside the Company’s control.\nThe Company cannot guarantee that it will achieve its announced environmental, social and governance goals and initiatives. In addition, some stakeholders\nmay disagree with the Company’s goals and initiatives. Any failure, or perceived failure, by the Company to achieve its goals, further its initiatives, adhere to its\npublic statements, comply with federal, state or international environmental, social and governance laws and regulations, or meet evolving and varied\nstakeholder expectations and standards could result in legal and regulatory proceedings against the Company and materially adversely affect the Company’s\nbusiness, reputation, results of operations, financial condition and stock price.\nThe technology industry, including, in some instances, the Company, is subject to intense media, political and regulatory scrutiny, which exposes\nthe Company to increasing regulation, government investigations, legal actions and penalties.\nFrom time to time, the Company has made changes to its App Store, including actions taken in response to litigation, competition, market conditions and legal\nand regulatory requirements. The Company expects to make further business changes in the future, including as a result of legislative initiatives impacting the\nApp Store, such as the EU Digital Markets Act, which the Company is required to comply with by March 2024, or similar laws in other jurisdictions. Changes\nhave included how developers communicate with consumers outside the App Store regarding alternative purchasing mechanisms. Future changes could also\naffect what the Company charges developers for access to its platforms, how it manages distribution of apps outside of the App Store, and how and to what\nextent it allows developers to communicate with consumers inside the App Store regarding alternative purchasing mechanisms.\nApple Inc. | 2023 Form 10-K | 13\n\n\nThe Company is also currently subject to antitrust investigations in various jurisdictions around the world, which can result in legal proceedings and claims\nagainst the Company that could, individually or in the aggregate, have a materially adverse impact on the Company’s business, results of operations and\nfinancial condition. For example, the Company is the subject of investigations in Europe and other jurisdictions relating to App Store terms and conditions. If such\ninvestigations result in adverse findings against the Company, the Company could be exposed to significant fines and may be required to make changes to its\nApp Store business, all of which could materially adversely affect the Company’s business, results of operations and financial condition. The Company is also\nsubject to litigation relating to the App Store, which has resulted in changes to the Company’s business practices, and may in the future result in further changes.\nFurther, the Company has commercial relationships with other companies in the technology industry that are or may become subject to investigations and\nlitigation that, if resolved against those other companies, could materially adversely affect the Company’s commercial relationships with those business partners\nand materially adversely affect the Company’s business, results of operations and financial condition. For example, the Company earns revenue from licensing\narrangements with other companies to offer their search services on the Company’s platforms and applications, and certain of these arrangements are currently\nsubject to government investigations and legal proceedings.\nThere can be no assurance the Company’s business will not be materially adversely affected, individually or in the aggregate, by the outcomes of such\ninvestigations, litigation or changes to laws and regulations in the future. Changes to the Company’s business practices to comply with new laws and regulations\nor in connection with other legal proceedings could negatively impact the reputation of the Company’s products for privacy and security and otherwise adversely\naffect 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\nmarket acceptance, reduced demand for products and services, and lost sales.\nThe Company’s business is subject to a variety of U.S. and international laws, rules, policies and other obligations regarding data protection.\nThe Company is subject to an increasing number of federal, state and international laws relating to the collection, use, retention, security and transfer of various\ntypes of personal information. In many cases, these laws apply not only to third-party transactions, but also restrict transfers of personal information among the\nCompany and its international subsidiaries. Several jurisdictions have passed laws in this area, and additional jurisdictions are considering imposing additional\nrestrictions or have laws that are pending. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and\nchanging requirements causes the Company to incur substantial costs and has required and may in the future require the Company to change its business\npractices. Noncompliance could result in significant penalties or legal liability.\nThe Company makes statements about its use and disclosure of personal information through its privacy policy, information provided on its website, press\nstatements and other privacy notices provided to customers. Any failure by the Company to comply with these public statements or with other federal, state or\ninternational privacy or data protection laws and regulations could result in inquiries or proceedings against the Company by governmental entities or others. In\naddition to reputational impacts, penalties could include ongoing audit requirements and significant legal liability.\nIn addition to the risks generally relating to the collection, use, retention, security and transfer of personal information, the Company is also subject to specific\nobligations relating to information considered sensitive under applicable laws, such as health data, financial data and biometric data. Health data and financial\ndata are subject to additional privacy, security and breach notification requirements, and the Company is subject to audit by governmental authorities regarding\nthe Company’s compliance with these obligations. If the Company fails to adequately comply with these rules and requirements, or if health data or financial data\nis handled in a manner not permitted by law or under the Company’s agreements with healthcare or financial institutions, the Company can be subject to\nlitigation or government investigations, and can be liable for associated investigatory expenses, and can also incur significant fees or fines.\nPayment card data is also subject to additional requirements. Under payment card rules and obligations, if cardholder information is potentially compromised,\nthe Company can be liable for associated investigatory expenses and can also incur significant fees or fines if the Company fails to follow payment card industry\ndata security standards. The Company could also experience a significant increase in payment card transaction costs or lose the ability to process payment\ncards if it fails to follow payment card industry data security standards, which could materially adversely affect the Company’s business, reputation, results of\noperations and financial condition.\nApple Inc. | 2023 Form 10-K | 14\n\n\nFinancial Risks\nThe Company expects its quarterly net sales and results of operations to fluctuate.\nThe Company’s profit margins vary across its products, services, geographic segments and distribution channels. For example, the gross margins on the\nCompany’s products and services vary significantly and can change over time. The Company’s gross margins are subject to volatility and downward pressure\ndue to a variety of factors, including: continued industry-wide global product pricing pressures and product pricing actions that the Company may take in\nresponse to such pressures; increased competition; the Company’s ability to effectively stimulate demand for certain of its products and services; compressed\nproduct life cycles; supply shortages; potential increases in the cost of components, outside manufacturing services, and developing, acquiring and delivering\ncontent 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\nin the geographic, currency or channel mix, including to the extent that regulatory changes require the Company to modify its product and service offerings;\nfluctuations in foreign exchange rates; inflation and other macroeconomic pressures; and the introduction of new products or services, including new products or\nservices with higher cost structures. These and other factors could have a materially adverse impact on the Company’s results of operations and financial\ncondition.\nThe Company has historically experienced higher net sales in its first quarter compared to other quarters in its fiscal year due in part to seasonal holiday\ndemand. Additionally, new product and service introductions can significantly impact net sales, cost of sales and operating expenses. Further, the Company\ngenerates a significant portion of its net sales from a single product and a decline in demand for that product could significantly impact quarterly net sales. The\nCompany could also be subject to unexpected developments, such as lower-than-anticipated demand for the Company’s products or services, issues with new\nproduct or service introductions, information technology system failures or network disruptions, or failure of one of the Company’s logistics, components supply,\nor manufacturing partners.\nThe Company’s financial performance is subject to risks associated with changes in the value of the U.S. dollar relative to local currencies.\nThe Company’s primary exposure to movements in foreign exchange rates relates to non–U.S. dollar–denominated sales, cost of sales and operating expenses\nworldwide. Gross margins on the Company’s products in foreign countries and on products that include components obtained from foreign suppliers have in the\npast been adversely affected and could in the future be materially adversely affected by foreign exchange rate fluctuations.\nThe weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of the Company’s foreign currency–denominated sales and\nearnings, and generally leads the Company to raise international pricing, potentially reducing demand for the Company’s products. In some circumstances, for\ncompetitive or other reasons, the Company may decide not to raise international pricing to offset the U.S. dollar’s strengthening, which would adversely affect\nthe U.S. dollar value of the gross margins the Company earns on foreign currency–denominated sales.\nConversely, a strengthening of foreign currencies relative to the U.S. dollar, while generally beneficial to the Company’s foreign currency–denominated sales and\nearnings, could cause the Company to reduce international pricing or incur losses on its foreign currency derivative instruments, thereby limiting the benefit.\nAdditionally, strengthening of foreign currencies may increase the Company’s cost of product components denominated in those currencies, thus adversely\naffecting gross margins.\nThe Company uses derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign\nexchange rates. The use of such hedging activities may not be effective to offset any, or more than a portion, of the adverse financial effects of unfavorable\nmovements in foreign exchange rates over the limited time the hedges are in place.\nThe Company is exposed to credit risk and fluctuations in the values of its investment portfolio.\nThe Company’s investments can be negatively affected by changes in liquidity, credit deterioration, financial results, market and economic conditions, political\nrisk, sovereign risk, interest rate fluctuations or other factors. As a result, the value and liquidity of the Company’s cash, cash equivalents and marketable\nsecurities may fluctuate substantially. Therefore, although the Company has not realized any significant losses on its cash, cash equivalents and marketable\nsecurities, future fluctuations in their value could result in significant losses and could have a material adverse impact on the Company’s results of operations\nand financial condition.\nApple Inc. | 2023 Form 10-K | 15\n\n\nThe Company is exposed to credit risk on its trade accounts receivable, vendor non-trade receivables and prepayments related to long-term supply\nagreements, and this risk is heightened during periods when economic conditions worsen.\nThe Company distributes its products and certain of its services through third-party cellular network carriers, wholesalers, retailers and resellers. The Company\nalso sells its products and services directly to small and mid-sized businesses and education, enterprise and government customers. A substantial majority of the\nCompany’s outstanding trade receivables are not covered by collateral, third-party bank support or financing arrangements, or credit insurance, and a significant\nportion of the Company’s trade receivables can be concentrated within cellular network carriers or other resellers. The Company’s exposure to credit and\ncollectibility risk on its trade receivables is higher in certain international markets and its ability to mitigate such risks may be limited. The Company also has\nunsecured vendor non-trade receivables resulting from purchases of components by outsourcing partners and other vendors that manufacture subassemblies or\nassemble final products for the Company. In addition, the Company has made prepayments associated with long-term supply agreements to secure supply of\ninventory components. As of September 30, 2023, the Company’s vendor non-trade receivables and prepayments related to long-term supply agreements were\nconcentrated among a few individual vendors located primarily in Asia. While the Company has procedures to monitor and limit exposure to credit risk on its\ntrade and vendor non-trade receivables, as well as long-term prepayments, there can be no assurance such procedures will effectively limit its credit risk and\navoid losses.\nThe Company is subject to changes in tax rates, the adoption of new U.S. or international tax legislation and exposure to additional tax liabilities.\nThe Company is subject to taxes in the U.S. and numerous foreign jurisdictions, including Ireland and Singapore, where a number of the Company’s subsidiaries\nare organized. Due to economic and political conditions, tax laws and tax rates for income taxes and other non-income taxes in various jurisdictions may be\nsubject to significant change. For example, the Organisation for Economic Co-operation and Development continues to advance proposals for modernizing\ninternational tax rules, including the introduction of global minimum tax standards. The Company’s effective tax rates are affected by changes in the mix of\nearnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, the introduction of new taxes, and changes\nin tax laws or their interpretation. The application of tax laws may be uncertain, require significant judgment and be subject to differing interpretations.\nThe Company is also subject to the examination of its tax returns and other tax matters by the U.S. Internal Revenue Service and other tax authorities and\ngovernmental bodies. The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its\nprovision for taxes. There can be no assurance as to the outcome of these examinations. If the Company’s effective tax rates were to increase, or if the ultimate\ndetermination of the Company’s taxes owed is for an amount in excess of amounts previously accrued, the Company’s business, results of operations and\nfinancial condition could be materially adversely affected.\nGeneral Risks\nThe price of the Company’s stock is subject to volatility.\nThe Company’s stock has experienced substantial price volatility in the past and may continue to do so in the future. Additionally, the Company, the technology\nindustry and the stock market as a whole have, from time to time, experienced extreme stock price and volume fluctuations that have affected stock prices in\nways that may have been unrelated to these companies’ operating performance. Price volatility may cause the average price at which the Company repurchases\nits stock in a given period to exceed the stock’s price at a given point in time. The Company believes the price of its stock should reflect expectations of future\ngrowth and profitability. The Company also believes the price of its stock should reflect expectations that its cash dividend will continue at current levels or grow,\nand that its current share repurchase program will be fully consummated. Future dividends are subject to declaration by the Company’s Board of Directors, and\nthe Company’s share repurchase program does not obligate it to acquire any specific number of shares. If the Company fails to meet expectations related to\nfuture growth, profitability, dividends, share repurchases or other market expectations, the price of the Company’s stock may decline significantly, which could\nhave a material adverse impact on investor confidence and employee retention.\nItem 1B.    Unresolved Staff Comments\nNone.\nItem 1C.    Cybersecurity\nNot applicable.\nApple Inc. | 2023 Form 10-K | 16\n\n\nItem 2.    Properties\nThe Company’s headquarters is located in Cupertino, California. As of September 30, 2023, the Company owned or leased facilities and land for corporate\nfunctions, 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\nexisting facilities and equipment, which are used by all reportable segments, are in good operating condition and are suitable for the conduct of its business.\nItem 3.    Legal Proceedings\nEpic Games\nEpic Games, Inc. (“Epic”) filed a lawsuit in the U.S. District Court for the Northern District of California (the “District Court”) against the Company alleging\nviolations of federal and state antitrust laws and California’s unfair competition law based upon the Company’s operation of its App Store. On September 10,\n2021, the District Court ruled in favor of the Company with respect to nine out of the ten counts included in Epic’s claim. The District Court found that certain\nprovisions of the Company’s App Store Review Guidelines violate California’s unfair competition law and issued an injunction enjoining the Company from\nprohibiting developers from including in their apps external links that direct customers to purchasing mechanisms other than Apple in-app purchasing. The\ninjunction applies to apps on the U.S. storefront of the iOS and iPadOS App Store. On April 24, 2023, the U.S. Court of Appeals for the Ninth Circuit (the “Circuit\nCourt”) affirmed the District Court’s ruling. On June 7, 2023, the Company and Epic filed petitions with the Circuit Court requesting further review of the decision.\nOn June 30, 2023, the Circuit Court denied both petitions. On July 17, 2023, the Circuit Court granted Apple’s motion to stay enforcement of the injunction\npending appeal to the U.S. Supreme Court. If the U.S. Supreme Court denies Apple’s petition, the stay of the injunction will expire.\nMasimo\nMasimo Corporation and Cercacor Laboratories, Inc. (together, “Masimo”) filed a complaint before the U.S. International Trade Commission (the “ITC”) alleging\ninfringement by the Company of five patents relating to the functionality of the blood oxygen feature in Apple Watch Series 6 and 7. In its complaint, Masimo\nsought a permanent exclusion order prohibiting importation to the United States of certain Apple Watch models that include blood oxygen sensing functionality.\nOn October 26, 2023, the ITC entered a limited exclusion order (the “Order”) prohibiting importation and sales in the United States of Apple Watch models with\nblood oxygen sensing functionality, which includes Apple Watch Series 9 and Ultra 2. The Order will not go into effect until the end of the administrative review\nperiod, which is currently expected to end on December 25, 2023. The Company intends to appeal the Order and seek a stay pending the appeal.\nOther Legal Proceedings\nThe Company is subject to other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business. The\nCompany settled certain matters during the fourth quarter of 2023 that did not individually or in the aggregate have a material impact on the Company’s financial\ncondition or operating results. The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting\nperiod for amounts above management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially\nadversely affected.\nItem 4.    Mine Safety Disclosures\nNot applicable.\nApple Inc. | 2023 Form 10-K | 17\n\n\nPART II\nItem 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities\nThe Company’s common stock is traded on The Nasdaq Stock Market LLC under the symbol AAPL.\nHolders\nAs of October 20, 2023, there were 23,763 shareholders of record.\nPurchases of Equity Securities by the Issuer and Affiliated Purchasers\nShare repurchase activity during the three months ended September 30, 2023 was as follows (in millions, except number of shares, which are reflected in\nthousands, and per-share amounts):\nPeriods\nTotal Number\nof Shares\nPurchased\nAverage Price\nPaid Per\nShare\nTotal Number of\nShares\nPurchased as Part\nof Publicly\nAnnounced Plans or\nPrograms\nApproximate Dollar\nValue of\nShares That May Yet Be\nPurchased\nUnder the Plans or\nPrograms \nJuly 2, 2023 to August 5, 2023:\nOpen market and privately negotiated purchases\n33,864 \n$\n191.62 \n33,864 \nAugust 6, 2023 to September 2, 2023:\nAugust 2023 ASRs\n22,085 \n22,085 \nOpen market and privately negotiated purchases\n30,299 \n$\n178.99 \n30,299 \nSeptember 3, 2023 to September 30, 2023:\nOpen market and privately negotiated purchases\n20,347 \n$\n176.31 \n20,347 \nTotal\n106,595 \n$\n74,069 \n(1)\nAs of September 30, 2023, the Company was authorized by the Board of Directors to purchase up to $90 billion of the Company’s common stock under a share\nrepurchase program announced on May 4, 2023, of which $15.9 billion had been utilized. During the fourth quarter of 2023, the Company also utilized the final\n$4.6 billion under its previous repurchase program, which was most recently authorized in April 2022. The programs do not obligate the Company to acquire a\nminimum amount of shares. Under the programs, shares may be repurchased in privately negotiated or open market transactions, including under plans\ncomplying with Rule 10b5-1 under the Exchange Act.\n(2)\nIn August 2023, the Company entered into new accelerated share repurchase agreements (“ASRs”). Under the terms of the ASRs, two financial institutions\ncommitted to deliver shares of the Company’s common stock during the purchase periods in exchange for up-front payments totaling $5.0 billion. The total\nnumber of shares ultimately delivered under the ASRs, and therefore the average repurchase price paid per share, is determined based on the volume-weighted\naverage price of the Company’s common stock during the ASRs’ purchase periods, which end in the first quarter of 2024.\n(1)\n(2)\n(2)\n(2)\nApple Inc. | 2023 Form 10-K | 18\n\n\nCompany Stock Performance\nThe following graph shows a comparison of five-year cumulative total shareholder return, calculated on a dividend-reinvested basis, for the Company, the S&P\n500 Index and the Dow Jones U.S. Technology Supersector Index. The graph assumes $100 was invested in each of the Company’s common stock, the S&P\n500 Index and the Dow Jones U.S. Technology Supersector Index as of the market close on September  28, 2018. Past stock price performance is not\nnecessarily indicative of future stock price performance.\nSeptember\n2018\nSeptember\n2019\nSeptember\n2020\nSeptember\n2021\nSeptember\n2022\nSeptember\n2023\nApple Inc.\n$\n100 \n$\n98 \n$\n204 \n$\n269 \n$\n277 \n$\n317 \nS&P 500 Index\n$\n100 \n$\n104 \n$\n118 \n$\n161 \n$\n136 \n$\n160 \nDow Jones U.S. Technology Supersector Index\n$\n100 \n$\n105 \n$\n154 \n$\n227 \n$\n164 \n$\n226 \nItem 6.    [Reserved]\nApple Inc. | 2023 Form 10-K | 19\n\n\nItem 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations\nThe following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this\nForm 10-K. This Item generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2021 items and year-to-\nyear comparisons between 2022 and 2021 are not included, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of\nOperations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended September 24, 2022.\nFiscal Period\nThe Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. An additional week is included in the first fiscal quarter\nevery five or six years to realign the Company’s fiscal quarters with calendar quarters, which occurred in the first quarter of 2023. The Company’s fiscal year\n2023 spanned 53 weeks, whereas fiscal years 2022 and 2021 spanned 52 weeks each.\nFiscal Year Highlights\nThe Company’s total net sales were $383.3 billion and net income was $97.0 billion during 2023.\nThe Company’s total net sales decreased 3% or $11.0 billion during 2023 compared to 2022. The weakness in foreign currencies relative to the U.S. dollar\naccounted for more than the entire year-over-year decrease in total net sales, which consisted primarily of lower net sales of Mac and iPhone, partially offset by\nhigher net sales of Services.\nThe Company announces new product, service and software offerings at various times during the year. Significant announcements during fiscal year 2023\nincluded the following:\nFirst Quarter 2023:\n•\niPad and iPad Pro;\n•\nNext-generation Apple TV 4K; and\n•\nMLS Season Pass, a Major League Soccer subscription streaming service.\nSecond Quarter 2023:\n•\nMacBook Pro 14”, MacBook Pro 16” and Mac mini; and\n•\nSecond-generation HomePod.\nThird Quarter 2023:\n•\nMacBook Air 15”, Mac Studio and Mac Pro;\n•\nApple Vision Pro™, the Company’s first spatial computer featuring its new visionOS™, expected to be available in early calendar year 2024; and\n•\niOS 17, macOS Sonoma, iPadOS 17, tvOS 17 and watchOS 10, updates to the Company’s operating systems.\nFourth Quarter 2023:\n•\niPhone 15, iPhone 15 Plus, iPhone 15 Pro and iPhone 15 Pro Max; and\n•\nApple Watch Series 9 and Apple Watch Ultra 2.\nIn May 2023, the Company announced a new share repurchase program of up to $90 billion and raised its quarterly dividend from $0.23 to $0.24 per share\nbeginning in May 2023. During 2023, the Company repurchased $76.6 billion of its common stock and paid dividends and dividend equivalents of $15.0 billion.\nMacroeconomic Conditions\nMacroeconomic conditions, including inflation, changes in interest rates, and currency fluctuations, have directly and indirectly impacted, and could in the future\nmaterially impact, the Company’s results of operations and financial condition.\nApple Inc. | 2023 Form 10-K | 20\n\n\nSegment Operating Performance\nThe following table shows net sales by reportable segment for 2023, 2022 and 2021 (dollars in millions):\n2023\nChange\n2022\nChange\n2021\nNet sales by reportable segment:\nAmericas\n$\n162,560 \n(4)%\n$\n169,658 \n11 %\n$\n153,306 \nEurope\n94,294 \n(1)%\n95,118 \n7 %\n89,307 \nGreater China\n72,559 \n(2)%\n74,200 \n9 %\n68,366 \nJapan\n24,257 \n(7)%\n25,977 \n(9)%\n28,482 \nRest of Asia Pacific\n29,615 \n1 %\n29,375 \n11 %\n26,356 \nTotal net sales\n$\n383,285 \n(3)%\n$\n394,328 \n8 %\n$\n365,817 \nAmericas\nAmericas net sales decreased 4% or $7.1 billion during 2023 compared to 2022 due to lower net sales of iPhone and Mac, partially offset by higher net sales of\nServices.\nEurope\nEurope net sales decreased 1% or $824 million during 2023 compared to 2022. The weakness in foreign currencies relative to the U.S. dollar accounted for\nmore than the entire year-over-year decrease in Europe net sales, which consisted primarily of lower net sales of Mac and Wearables, Home and Accessories,\npartially offset by higher net sales of iPhone and Services.\nGreater China\nGreater China net sales decreased 2% or $1.6 billion during 2023 compared to 2022. The weakness in the renminbi relative to the U.S. dollar accounted for\nmore than the entire year-over-year decrease in Greater China net sales, which consisted primarily of lower net sales of Mac and iPhone.\nJapan\nJapan net sales decreased 7% or $1.7 billion during 2023 compared to 2022. The weakness in the yen relative to the U.S. dollar accounted for more than the\nentire year-over-year decrease in Japan net sales, which consisted primarily of lower net sales of iPhone, Wearables, Home and Accessories and Mac.\nRest of Asia Pacific\nRest of Asia Pacific net sales increased 1% or $240 million during 2023 compared to 2022. The weakness in foreign currencies relative to the U.S. dollar had a\nsignificantly unfavorable year-over-year impact on Rest of Asia Pacific net sales. The net sales increase consisted of higher net sales of iPhone and Services,\npartially offset by lower net sales of Mac and iPad.\nApple Inc. | 2023 Form 10-K | 21\n\n\nProducts and Services Performance\nThe following table shows net sales by category for 2023, 2022 and 2021 (dollars in millions):\n2023\nChange\n2022\nChange\n2021\nNet sales by category:\niPhone \n$\n200,583 \n(2)%\n$\n205,489 \n7 %\n$\n191,973 \nMac \n29,357 \n(27)%\n40,177 \n14 %\n35,190 \niPad \n28,300 \n(3)%\n29,292 \n(8)%\n31,862 \nWearables, Home and Accessories \n39,845 \n(3)%\n41,241 \n7 %\n38,367 \nServices \n85,200 \n9 %\n78,129 \n14 %\n68,425 \nTotal net sales\n$\n383,285 \n(3)%\n$\n394,328 \n8 %\n$\n365,817 \n(1)\nProducts net sales include amortization of the deferred value of unspecified software upgrade rights, which are bundled in the sales price of the respective\nproduct.\n(2)\nServices net sales include amortization of the deferred value of services bundled in the sales price of certain products.\niPhone\niPhone net sales decreased 2% or $4.9 billion during 2023 compared to 2022 due to lower net sales of non-Pro iPhone models, partially offset by higher net\nsales of Pro iPhone models.\nMac\nMac net sales decreased 27% or $10.8 billion during 2023 compared to 2022 due primarily to lower net sales of laptops.\niPad\niPad net sales decreased 3% or $1.0 billion during 2023 compared to 2022 due primarily to lower net sales of iPad mini and iPad Air, partially offset by the\ncombined net sales of iPad 9th and 10th generation.\nWearables, Home and Accessories\nWearables, Home and Accessories net sales decreased 3% or $1.4 billion during 2023 compared to 2022 due primarily to lower net sales of Wearables and\nAccessories.\nServices\nServices net sales increased 9% or $7.1 billion during 2023 compared to 2022 due to higher net sales across all lines of business.\n(1)\n(1)\n(1)\n(1)\n(2)\nApple Inc. | 2023 Form 10-K | 22\n\n\nGross Margin\nProducts and Services gross margin and gross margin percentage for 2023, 2022 and 2021 were as follows (dollars in millions):\n2023\n2022\n2021\nGross margin:\nProducts\n$\n108,803 \n$\n114,728 \n$\n105,126 \nServices\n60,345 \n56,054 \n47,710 \nTotal gross margin\n$\n169,148 \n$\n170,782 \n$\n152,836 \nGross margin percentage:\nProducts\n36.5 %\n36.3 %\n35.3 %\nServices\n70.8 %\n71.7 %\n69.7 %\nTotal gross margin percentage\n44.1 %\n43.3 %\n41.8 %\nProducts Gross Margin\nProducts gross margin decreased during 2023 compared to 2022 due to the weakness in foreign currencies relative to the U.S. dollar and lower Products\nvolume, partially offset by cost savings and a different Products mix.\nProducts gross margin percentage increased during 2023 compared to 2022 due to cost savings and a different Products mix, partially offset by the weakness in\nforeign currencies relative to the U.S. dollar and decreased leverage.\nServices Gross Margin\nServices gross margin increased during 2023 compared to 2022 due primarily to higher Services net sales, partially offset by the weakness in foreign currencies\nrelative to the U.S. dollar and higher Services costs.\nServices gross margin percentage decreased during 2023 compared to 2022 due to higher Services costs and the weakness in foreign currencies relative to the\nU.S. dollar, partially offset by a different Services mix.\nThe Company’s future gross margins can be impacted by a variety of factors, as discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors.”\nAs a result, the Company believes, in general, gross margins will be subject to volatility and downward pressure.\nOperating Expenses\nOperating expenses for 2023, 2022 and 2021 were as follows (dollars in millions):\n2023\nChange\n2022\nChange\n2021\nResearch and development\n$\n29,915 \n14 %\n$\n26,251 \n20 %\n$\n21,914 \nPercentage of total net sales\n8 %\n7 %\n6 %\nSelling, general and administrative\n$\n24,932 \n(1)%\n$\n25,094 \n14 %\n$\n21,973 \nPercentage of total net sales\n7 %\n6 %\n6 %\nTotal operating expenses\n$\n54,847 \n7 %\n$\n51,345 \n17 %\n$\n43,887 \nPercentage of total net sales\n14 %\n13 %\n12 %\nResearch and Development\nThe year-over-year growth in R&D expense in 2023 was driven primarily by increases in headcount-related expenses.\nSelling, General and Administrative\nSelling, general and administrative expense was relatively flat in 2023 compared to 2022.\nApple Inc. | 2023 Form 10-K | 23\n\n\nProvision for Income Taxes\nProvision for income taxes, effective tax rate and statutory federal income tax rate for 2023, 2022 and 2021 were as follows (dollars in millions):\n2023\n2022\n2021\nProvision for income taxes\n$\n16,741 \n$\n19,300 \n$\n14,527 \nEffective tax rate\n14.7 %\n16.2 %\n13.3 %\nStatutory federal income tax rate\n21 %\n21 %\n21 %\nThe Company’s effective tax rate for 2023 and 2022 was lower than the statutory federal income tax rate due primarily to a lower effective tax rate on foreign\nearnings, the impact of the U.S. federal R&D credit, and tax benefits from share-based compensation, partially offset by state income taxes.\nThe Company’s effective tax rate for 2023 was lower compared to 2022 due primarily to a lower effective tax rate on foreign earnings and the impact of U.S.\nforeign tax credit regulations issued by the U.S. Department of the Treasury in 2022, partially offset by lower tax benefits from share-based compensation.\nLiquidity and Capital Resources\nThe Company believes its balances of cash, cash equivalents and unrestricted marketable securities, which totaled $148.3 billion as of September 30, 2023,\nalong with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements and capital return\nprogram over the next 12 months and beyond.\nThe Company’s material cash requirements include the following contractual obligations:\nDebt\nAs of September 30, 2023, the Company had outstanding fixed-rate notes with varying maturities for an aggregate principal amount of $106.6 billion (collectively\nthe “Notes”), with $9.9 billion payable within 12 months. Future interest payments associated with the Notes total $41.1 billion, with $2.9 billion payable within 12\nmonths.\nThe Company also issues unsecured short-term promissory notes pursuant to a commercial paper program. As of September 30, 2023, the Company had $6.0\nbillion of commercial paper outstanding, all of which was payable within 12 months.\nLeases\nThe Company has lease arrangements for certain equipment and facilities, including corporate, data center, manufacturing and retail space. As of\nSeptember 30, 2023, the Company had fixed lease payment obligations of $15.8 billion, with $2.0 billion payable within 12 months.\nManufacturing Purchase Obligations\nThe Company utilizes several outsourcing partners to manufacture subassemblies for the Company’s products and to perform final assembly and testing of\nfinished products. The Company also obtains individual components for its products from a wide variety of individual suppliers. As of September 30, 2023, the\nCompany had manufacturing purchase obligations of $53.1 billion, with $52.9 billion payable within 12 months. The Company’s manufacturing purchase\nobligations are primarily noncancelable.\nOther Purchase Obligations\nThe Company’s other purchase obligations primarily consist of noncancelable obligations to acquire capital assets, including assets related to product\nmanufacturing, and noncancelable obligations related to supplier arrangements, licensed intellectual property and content, and distribution rights. As of\nSeptember 30, 2023, the Company had other purchase obligations of $21.9 billion, with $5.6 billion payable within 12 months.\nDeemed Repatriation Tax Payable\nAs of September 30, 2023, the balance of the deemed repatriation tax payable imposed by the U.S. Tax Cuts and Jobs Act of 2017 (the “Act”) was $22.0 billion,\nwith $6.5 billion expected to be paid within 12 months.\nApple Inc. | 2023 Form 10-K | 24\n\n\nCapital Return Program\nIn addition to its contractual cash requirements, the Company has an authorized share repurchase program. The program does not obligate the Company to\nacquire a minimum amount of shares. As of September  30, 2023, the Company’s quarterly cash dividend was $0.24 per share. The Company intends to\nincrease its dividend on an annual basis, subject to declaration by the Board of Directors.\nCritical Accounting Estimates\nThe preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) and the Company’s\ndiscussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that\naffect the amounts reported. Note 1, “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in Part II, Item 8 of this\nForm 10-K describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. Management\nbases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form\nthe basis for making judgments about the carrying values of assets and liabilities.\nUncertain Tax Positions\nThe Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. The evaluation of the Company’s uncertain tax positions involves\nsignificant judgment in the interpretation and application of GAAP and complex domestic and international tax laws, including the Act and matters related to the\nallocation of international taxation rights between countries. Although management believes the Company’s reserves are reasonable, no assurance can be given\nthat the final outcome of these uncertainties will not be different from that which is reflected in the Company’s reserves. Reserves are adjusted considering\nchanging facts and circumstances, such as the closing of a tax examination. Resolution of these uncertainties in a manner inconsistent with management’s\nexpectations could have a material impact on the Company’s financial condition and operating results.\nLegal and Other Contingencies\nThe Company is subject to various legal proceedings and claims that arise in the ordinary course of business, the outcomes of which are inherently uncertain.\nThe 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\nsignificant judgment. Resolution of legal matters in a manner inconsistent with management’s expectations could have a material impact on the Company’s\nfinancial condition and operating results.\nApple Inc. | 2023 Form 10-K | 25\n\n\nItem 7A.    Quantitative and Qualitative Disclosures About Market Risk\nThe Company is exposed to economic risk from interest rates and foreign exchange rates. The Company uses various strategies to manage these risks;\nhowever, they may still impact the Company’s consolidated financial statements.\nInterest Rate Risk\nThe Company is primarily exposed to fluctuations in U.S. interest rates and their impact on the Company’s investment portfolio and term debt. Increases in\ninterest rates will negatively affect the fair value of the Company’s investment portfolio and increase the interest expense on the Company’s term debt. To protect\nagainst interest rate risk, the Company may use derivative instruments, offset interest rate–sensitive assets and liabilities, or control duration of the investment\nand term debt portfolios.\nThe following table sets forth potential impacts on the Company’s investment portfolio and term debt, including the effects of any associated derivatives, that\nwould result from a hypothetical increase in relevant interest rates as of September 30, 2023 and September 24, 2022 (dollars in millions):\nInterest Rate\nSensitive Instrument\nHypothetical Interest\nRate Increase\nPotential Impact\n2023\n2022\nInvestment portfolio\n100 basis points, all tenors\nDecline in fair value\n$\n3,089 \n$\n4,022 \nTerm debt\n100 basis points, all tenors\nIncrease in annual interest expense\n$\n194 \n$\n201 \nForeign Exchange Rate Risk\nThe Company’s exposure to foreign exchange rate risk relates primarily to the Company being a net receiver of currencies other than the U.S. dollar. Changes in\nexchange rates, and in particular a strengthening of the U.S. dollar, will negatively affect the Company’s net sales and gross margins as expressed in U.S.\ndollars. Fluctuations in exchange rates may also affect the fair values of certain of the Company’s assets and liabilities. To protect against foreign exchange rate\nrisk, the Company may use derivative instruments, offset exposures, or adjust local currency pricing of its products and services. However, the Company may\nchoose to not hedge certain foreign currency exposures for a variety of reasons, including accounting considerations or prohibitive cost.\nThe Company applied a value-at-risk (“VAR”) model to its foreign currency derivative positions to assess the potential impact of fluctuations in exchange rates.\nThe VAR model used a Monte Carlo simulation. The VAR is the maximum expected loss in fair value, for a given confidence interval, to the Company’s foreign\ncurrency derivative positions due to adverse movements in rates. Based on the results of the model, the Company estimates, with 95% confidence, a maximum\none-day loss in fair value of $669 million and $1.0 billion as of September 30, 2023 and September 24, 2022, respectively. Changes in the Company’s underlying\nforeign currency exposures, which were excluded from the assessment, generally offset changes in the fair values of the Company’s foreign currency\nderivatives.\nApple Inc. | 2023 Form 10-K | 26\n\n\nItem 8.    Financial Statements and Supplementary Data\nIndex to Consolidated Financial Statements\nPage\nConsolidated Statements of Operations for the years ended September 30, 2023, September 24, 2022 and September 25, 2021\n28\nConsolidated Statements of Comprehensive Income for the years ended September 30, 2023, September 24, 2022 and September 25, 2021\n29\nConsolidated Balance Sheets as of September 30, 2023 and September 24, 2022\n30\nConsolidated Statements of Shareholders’ Equity for the years ended September 30, 2023, September 24, 2022 and September 25, 2021\n31\nConsolidated Statements of Cash Flows for the years ended September 30, 2023, September 24, 2022 and September 25, 2021\n32\nNotes to Consolidated Financial Statements\n33\nReports of Independent Registered Public Accounting Firm\n49\nAll financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission\nof the schedule, or because the information required is included in the consolidated financial statements and accompanying notes.\nApple Inc. | 2023 Form 10-K | 27\n\n\nApple Inc.\nCONSOLIDATED STATEMENTS OF OPERATIONS\n(In millions, except number of shares, which are reflected in thousands, and per-share amounts)\nYears ended\nSeptember 30,\n2023\nSeptember 24,\n2022\nSeptember 25,\n2021\nNet sales:\n   Products\n$\n298,085 \n$\n316,199 \n$\n297,392 \n   Services\n85,200 \n78,129 \n68,425 \nTotal net sales\n383,285 \n394,328 \n365,817 \nCost of sales:\n   Products\n189,282 \n201,471 \n192,266 \n   Services\n24,855 \n22,075 \n20,715 \nTotal cost of sales\n214,137 \n223,546 \n212,981 \nGross margin\n169,148 \n170,782 \n152,836 \nOperating expenses:\nResearch and development\n29,915 \n26,251 \n21,914 \nSelling, general and administrative\n24,932 \n25,094 \n21,973 \nTotal operating expenses\n54,847 \n51,345 \n43,887 \nOperating income\n114,301 \n119,437 \n108,949 \nOther income/(expense), net\n(565)\n(334)\n258 \nIncome before provision for income taxes\n113,736 \n119,103 \n109,207 \nProvision for income taxes\n16,741 \n19,300 \n14,527 \nNet income\n$\n96,995 \n$\n99,803 \n$\n94,680 \nEarnings per share:\nBasic\n$\n6.16 \n$\n6.15 \n$\n5.67 \nDiluted\n$\n6.13 \n$\n6.11 \n$\n5.61 \nShares used in computing earnings per share:\nBasic\n15,744,231 \n16,215,963 \n16,701,272 \nDiluted\n15,812,547 \n16,325,819 \n16,864,919 \nSee accompanying Notes to Consolidated Financial Statements.\nApple Inc. | 2023 Form 10-K | 28\n\n\nApple Inc.\nCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME\n(In millions)\nYears ended\nSeptember 30,\n2023\nSeptember 24,\n2022\nSeptember 25,\n2021\nNet income\n$\n96,995 \n$\n99,803 \n$\n94,680 \nOther comprehensive income/(loss):\nChange in foreign currency translation, net of tax\n(765)\n(1,511)\n501 \nChange in unrealized gains/losses on derivative instruments, net of tax:\nChange in fair value of derivative instruments\n323 \n3,212 \n32 \nAdjustment for net (gains)/losses realized and included in net income\n(1,717)\n(1,074)\n1,003 \nTotal change in unrealized gains/losses on derivative instruments\n(1,394)\n2,138 \n1,035 \nChange in unrealized gains/losses on marketable debt securities, net of tax:\nChange in fair value of marketable debt securities\n1,563 \n(12,104)\n(694)\nAdjustment for net (gains)/losses realized and included in net income\n253 \n205 \n(273)\nTotal change in unrealized gains/losses on marketable debt securities\n1,816 \n(11,899)\n(967)\nTotal other comprehensive income/(loss)\n(343)\n(11,272)\n569 \nTotal comprehensive income\n$\n96,652 \n$\n88,531 \n$\n95,249 \nSee accompanying Notes to Consolidated Financial Statements.\nApple Inc. | 2023 Form 10-K | 29\n\n\nApple Inc.\nCONSOLIDATED BALANCE SHEETS\n(In millions, except number of shares, which are reflected in thousands, and par value)\nSeptember 30,\n2023\nSeptember 24,\n2022\nASSETS:\nCurrent assets:\nCash and cash equivalents\n$\n29,965 \n$\n23,646 \nMarketable securities\n31,590 \n24,658 \nAccounts receivable, net\n29,508 \n28,184 \nVendor non-trade receivables\n31,477 \n32,748 \nInventories\n6,331 \n4,946 \nOther current assets\n14,695 \n21,223 \nTotal current assets\n143,566 \n135,405 \nNon-current assets:\nMarketable securities\n100,544 \n120,805 \nProperty, plant and equipment, net\n43,715 \n42,117 \nOther non-current assets\n64,758 \n54,428 \nTotal non-current assets\n209,017 \n217,350 \nTotal assets\n$\n352,583 \n$\n352,755 \nLIABILITIES AND SHAREHOLDERS’ EQUITY:\nCurrent liabilities:\nAccounts payable\n$\n62,611 \n$\n64,115 \nOther current liabilities\n58,829 \n60,845 \nDeferred revenue\n8,061 \n7,912 \nCommercial paper\n5,985 \n9,982 \nTerm debt\n9,822 \n11,128 \nTotal current liabilities\n145,308 \n153,982 \nNon-current liabilities:\nTerm debt\n95,281 \n98,959 \nOther non-current liabilities\n49,848 \n49,142 \nTotal non-current liabilities\n145,129 \n148,101 \nTotal liabilities\n290,437 \n302,083 \nCommitments and contingencies\nShareholders’ equity:\nCommon stock and additional paid-in capital, $0.00001 par value: 50,400,000 shares authorized; 15,550,061\nand 15,943,425 shares issued and outstanding, respectively\n73,812 \n64,849 \nAccumulated deficit\n(214)\n(3,068)\nAccumulated other comprehensive loss\n(11,452)\n(11,109)\nTotal shareholders’ equity\n62,146 \n50,672 \nTotal liabilities and shareholders’ equity\n$\n352,583 \n$\n352,755 \nSee accompanying Notes to Consolidated Financial Statements.\nApple Inc. | 2023 Form 10-K | 30\n\n\nApple Inc.\nCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY\n(In millions, except per-share amounts)\nYears ended\nSeptember 30,\n2023\nSeptember 24,\n2022\nSeptember 25,\n2021\nTotal shareholders’ equity, beginning balances\n$\n50,672 \n$\n63,090 \n$\n65,339 \nCommon stock and additional paid-in capital:\nBeginning balances\n64,849 \n57,365 \n50,779 \nCommon stock issued\n1,346 \n1,175 \n1,105 \nCommon stock withheld related to net share settlement of equity awards\n(3,521)\n(2,971)\n(2,627)\nShare-based compensation\n11,138 \n9,280 \n8,108 \nEnding balances\n73,812 \n64,849 \n57,365 \nRetained earnings/(Accumulated deficit):\nBeginning balances\n(3,068)\n5,562 \n14,966 \nNet income\n96,995 \n99,803 \n94,680 \nDividends and dividend equivalents declared\n(14,996)\n(14,793)\n(14,431)\nCommon stock withheld related to net share settlement of equity awards\n(2,099)\n(3,454)\n(4,151)\nCommon stock repurchased\n(77,046)\n(90,186)\n(85,502)\nEnding balances\n(214)\n(3,068)\n5,562 \nAccumulated other comprehensive income/(loss):\nBeginning balances\n(11,109)\n163 \n(406)\nOther comprehensive income/(loss)\n(343)\n(11,272)\n569 \nEnding balances\n(11,452)\n(11,109)\n163 \nTotal shareholders’ equity, ending balances\n$\n62,146 \n$\n50,672 \n$\n63,090 \nDividends and dividend equivalents declared per share or RSU\n$\n0.94 \n$\n0.90 \n$\n0.85 \nSee accompanying Notes to Consolidated Financial Statements.\nApple Inc. | 2023 Form 10-K | 31\n\n\nApple Inc.\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n(In millions)\nYears ended\nSeptember 30,\n2023\nSeptember 24,\n2022\nSeptember 25,\n2021\nCash, cash equivalents and restricted cash, beginning balances\n$\n24,977 \n$\n35,929 \n$\n39,789 \nOperating activities:\nNet income\n96,995 \n99,803 \n94,680 \nAdjustments to reconcile net income to cash generated by operating activities:\nDepreciation and amortization\n11,519 \n11,104 \n11,284 \nShare-based compensation expense\n10,833 \n9,038 \n7,906 \nOther\n(2,227)\n1,006 \n(4,921)\nChanges in operating assets and liabilities:\nAccounts receivable, net\n(1,688)\n(1,823)\n(10,125)\nVendor non-trade receivables\n1,271 \n(7,520)\n(3,903)\nInventories\n(1,618)\n1,484 \n(2,642)\nOther current and non-current assets\n(5,684)\n(6,499)\n(8,042)\nAccounts payable\n(1,889)\n9,448 \n12,326 \nOther current and non-current liabilities\n3,031 \n6,110 \n7,475 \nCash generated by operating activities\n110,543 \n122,151 \n104,038 \nInvesting activities:\nPurchases of marketable securities\n(29,513)\n(76,923)\n(109,558)\nProceeds from maturities of marketable securities\n39,686 \n29,917 \n59,023 \nProceeds from sales of marketable securities\n5,828 \n37,446 \n47,460 \nPayments for acquisition of property, plant and equipment\n(10,959)\n(10,708)\n(11,085)\nOther\n(1,337)\n(2,086)\n(385)\nCash generated by/(used in) investing activities\n3,705 \n(22,354)\n(14,545)\nFinancing activities:\nPayments for taxes related to net share settlement of equity awards\n(5,431)\n(6,223)\n(6,556)\nPayments for dividends and dividend equivalents\n(15,025)\n(14,841)\n(14,467)\nRepurchases of common stock\n(77,550)\n(89,402)\n(85,971)\nProceeds from issuance of term debt, net\n5,228 \n5,465 \n20,393 \nRepayments of term debt\n(11,151)\n(9,543)\n(8,750)\nProceeds from/(Repayments of) commercial paper, net\n(3,978)\n3,955 \n1,022 \nOther\n(581)\n(160)\n976 \nCash used in financing activities\n(108,488)\n(110,749)\n(93,353)\nIncrease/(Decrease) in cash, cash equivalents and restricted cash\n5,760 \n(10,952)\n(3,860)\nCash, cash equivalents and restricted cash, ending balances\n$\n30,737 \n$\n24,977 \n$\n35,929 \nSupplemental cash flow disclosure:\nCash paid for income taxes, net\n$\n18,679 \n$\n19,573 \n$\n25,385 \nCash paid for interest\n$\n3,803 \n$\n2,865 \n$\n2,687 \nSee accompanying Notes to Consolidated Financial Statements.\nApple Inc. | 2023 Form 10-K | 32\n\n\nApple Inc.\nNotes to Consolidated Financial Statements\nNote 1 – Summary of Significant Accounting Policies\nBasis of Presentation and Preparation\nThe consolidated financial statements include the accounts of Apple Inc. and its wholly owned subsidiaries. The preparation of these consolidated financial\nstatements and accompanying notes in conformity with GAAP requires the use of management estimates. Certain prior period amounts in the consolidated\nfinancial statements and accompanying notes have been reclassified to conform to the current period’s presentation.\nThe Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. An additional week is included in the first fiscal quarter\nevery five or six years to realign the Company’s fiscal quarters with calendar quarters, which occurred in the first fiscal quarter of 2023. The Company’s fiscal\nyear 2023 spanned 53 weeks, whereas fiscal years 2022 and 2021 spanned 52 weeks each. Unless otherwise stated, references to particular years, quarters,\nmonths and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years.\nRevenue\nThe Company records revenue net of taxes collected from customers that are remitted to governmental authorities.\nShare-Based Compensation\nThe Company recognizes share-based compensation expense on a straight-line basis for its estimate of equity awards that will ultimately vest.\nCash Equivalents\nAll highly liquid investments with maturities of three months or less at the date of purchase are treated as cash equivalents.\nMarketable Securities\nThe cost of securities sold is determined using the specific identification method.\nInventories\nInventories are measured using the first-in, first-out method.\nProperty, Plant and Equipment\nDepreciation on property, plant and equipment is recognized on a straight-line basis.\nDerivative Instruments\nThe Company presents derivative assets and liabilities at their gross fair values in the Consolidated Balance Sheets.\nIncome Taxes\nThe Company records certain deferred tax assets and liabilities in connection with the minimum tax on certain foreign earnings created by the Act.\nLeases\nThe Company combines and accounts for lease and nonlease components as a single lease component for leases of corporate, data center and retail facilities.\nApple Inc. | 2023 Form 10-K | 33\n\n\nNote 2 – Revenue\nThe Company recognizes revenue at the amount to which it expects to be entitled when control of the products or services is transferred to its customers.\nControl is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products or\nservices are transferred to its customers. For most of the Company’s Products net sales, control transfers when products are shipped. For the Company’s\nServices net sales, control transfers over time as services are delivered. Payment for Products and Services net sales is collected within a short period following\ntransfer of control or commencement of delivery of services, as applicable.\nThe Company records reductions to Products net sales related to future product returns, price protection and other customer incentive programs based on the\nCompany’s expectations and historical experience.\nFor arrangements with multiple performance obligations, which represent promises within an arrangement that are distinct, the Company allocates revenue to all\ndistinct performance obligations based on their relative stand-alone selling prices (“SSPs”). When available, the Company uses observable prices to determine\nSSPs. When observable prices are not available, SSPs are established that reflect the Company’s best estimates of what the selling prices of the performance\nobligations would be if they were sold regularly on a stand-alone basis. The Company’s process for estimating SSPs without observable prices considers\nmultiple factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, where applicable, prices\ncharged by the Company for similar offerings, market trends in the pricing for similar offerings, product-specific business objectives and the estimated cost to\nprovide the performance obligation.\nThe Company has identified up to three performance obligations regularly included in arrangements involving the sale of iPhone, Mac, iPad and certain other\nproducts. The first performance obligation, which represents the substantial portion of the allocated sales price, is the hardware and bundled software delivered\nat the time of sale. The second performance obligation is the right to receive certain product-related bundled services, which include iCloud , Siri  and Maps.\nThe third performance obligation is the right to receive, on a when-and-if-available basis, future unspecified software upgrades relating to the software bundled\nwith each device. The Company allocates revenue and any related discounts to these performance obligations based on their relative SSPs. Because the\nCompany lacks observable prices for the undelivered performance obligations, the allocation of revenue is based on the Company’s estimated SSPs. Revenue\nallocated to the delivered hardware and bundled software is recognized when control has transferred to the customer, which generally occurs when the product\nis shipped. Revenue allocated to the product-related bundled services and unspecified software upgrade rights is deferred and recognized on a straight-line\nbasis over the estimated period they are expected to be provided.\nFor certain long-term service arrangements, the Company has performance obligations for services it has not yet delivered. For these arrangements, the\nCompany does not have a right to bill for the undelivered services. The Company has determined that any unbilled consideration relates entirely to the value of\nthe undelivered services. Accordingly, the Company has not recognized revenue, and does not disclose amounts, related to these undelivered services.\nFor the sale of third-party products where the Company obtains control of the product before transferring it to the customer, the Company recognizes revenue\nbased on the gross amount billed to customers. The Company considers multiple factors when determining whether it obtains control of third-party products,\nincluding evaluating if it can establish the price of the product, retains inventory risk for tangible products or has the responsibility for ensuring acceptability of the\nproduct. For third-party applications sold through the App Store, the Company does not obtain control of the product before transferring it to the customer.\nTherefore, the Company accounts for all third-party application–related sales on a net basis by recognizing in Services net sales only the commission it retains.\n®\n®\nApple Inc. | 2023 Form 10-K | 34\n\n\nNet sales disaggregated by significant products and services for 2023, 2022 and 2021 were as follows (in millions):\n2023\n2022\n2021\niPhone \n$\n200,583 \n$\n205,489 \n$\n191,973 \nMac \n29,357 \n40,177 \n35,190 \niPad \n28,300 \n29,292 \n31,862 \nWearables, Home and Accessories \n39,845 \n41,241 \n38,367 \nServices \n85,200 \n78,129 \n68,425 \nTotal net sales\n$\n383,285 \n$\n394,328 \n$\n365,817 \n(1)\nProducts net sales include amortization of the deferred value of unspecified software upgrade rights, which are bundled in the sales price of the respective\nproduct.\n(2)\nServices net sales include amortization of the deferred value of services bundled in the sales price of certain products.\nTotal net sales include $8.2 billion of revenue recognized in 2023 that was included in deferred revenue as of September 24, 2022, $7.5 billion of revenue\nrecognized in 2022 that was included in deferred revenue as of September  25, 2021, and $6.7 billion of revenue recognized in 2021 that was included in\ndeferred revenue as of September 26, 2020.\nThe Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 13, “Segment\nInformation and Geographic Data” for 2023, 2022 and 2021, except in Greater China, where iPhone revenue represented a moderately higher proportion of net\nsales.\nAs of September 30, 2023 and September 24, 2022, the Company had total deferred revenue of $12.1 billion and $12.4 billion, respectively. As of September 30,\n2023, the Company expects 67% of total deferred revenue to be realized in less than a year, 25% within one-to-two years, 7% within two-to-three years and 1%\nin greater than three years.\nNote 3 – Earnings Per Share\nThe following table shows the computation of basic and diluted earnings per share for 2023, 2022 and 2021 (net income in millions and shares in thousands):\n2023\n2022\n2021\nNumerator:\nNet income\n$\n96,995 \n$\n99,803 \n$\n94,680 \nDenominator:\nWeighted-average basic shares outstanding\n15,744,231 \n16,215,963 \n16,701,272 \nEffect of dilutive share-based awards\n68,316 \n109,856 \n163,647 \nWeighted-average diluted shares\n15,812,547 \n16,325,819 \n16,864,919 \nBasic earnings per share\n$\n6.16 \n$\n6.15 \n$\n5.67 \nDiluted earnings per share\n$\n6.13 \n$\n6.11 \n$\n5.61 \nApproximately 24 million restricted stock units (“RSUs”) were excluded from the computation of diluted earnings per share for 2023 because their effect would\nhave been antidilutive.\n(1)\n(1)\n(1)\n(1)\n(2)\nApple Inc. | 2023 Form 10-K | 35\n\n\nNote 4 – Financial Instruments\nCash, Cash Equivalents and Marketable Securities\nThe following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of September 30, 2023 and\nSeptember 24, 2022 (in millions):\n2023\nAdjusted\nCost\nUnrealized\nGains\nUnrealized\nLosses\nFair\nValue\nCash and\nCash\nEquivalents\nCurrent\nMarketable\nSecurities\nNon-Current\nMarketable\nSecurities\nCash\n$\n28,359 \n$\n— \n$\n— \n$\n28,359 \n$\n28,359 \n$\n— \n$\n— \nLevel 1:\nMoney market funds\n481 \n— \n— \n481 \n481 \n— \n— \nMutual funds and equity securities\n442 \n12 \n(26)\n428 \n— \n428 \n— \nSubtotal\n923 \n12 \n(26)\n909 \n481 \n428 \n— \nLevel 2 :\nU.S. Treasury securities\n19,406 \n— \n(1,292)\n18,114 \n35 \n5,468 \n12,611 \nU.S. agency securities\n5,736 \n— \n(600)\n5,136 \n36 \n271 \n4,829 \nNon-U.S. government securities\n17,533 \n6 \n(1,048)\n16,491 \n— \n11,332 \n5,159 \nCertificates of deposit and time deposits\n1,354 \n— \n— \n1,354 \n1,034 \n320 \n— \nCommercial paper\n608 \n— \n— \n608 \n— \n608 \n— \nCorporate debt securities\n76,840 \n6 \n(5,956)\n70,890 \n20 \n12,627 \n58,243 \nMunicipal securities\n628 \n— \n(26)\n602 \n— \n192 \n410 \nMortgage- and asset-backed securities\n22,365 \n6 \n(2,735)\n19,636 \n— \n344 \n19,292 \nSubtotal\n144,470 \n18 \n(11,657)\n132,831 \n1,125 \n31,162 \n100,544 \nTotal \n$\n173,752 \n$\n30 \n$\n(11,683)\n$\n162,099 \n$\n29,965 \n$\n31,590 \n$\n100,544 \n2022\nAdjusted\nCost\nUnrealized\nGains\nUnrealized\nLosses\nFair\nValue\nCash and\nCash\nEquivalents\nCurrent\nMarketable\nSecurities\nNon-Current\nMarketable\nSecurities\nCash\n$\n18,546 \n$\n— \n$\n— \n$\n18,546 \n$\n18,546 \n$\n— \n$\n— \nLevel 1:\nMoney market funds\n2,929 \n— \n— \n2,929 \n2,929 \n— \n— \nMutual funds\n274 \n— \n(47)\n227 \n— \n227 \n— \nSubtotal\n3,203 \n— \n(47)\n3,156 \n2,929 \n227 \n— \nLevel 2 :\nU.S. Treasury securities\n25,134 \n— \n(1,725)\n23,409 \n338 \n5,091 \n17,980 \nU.S. agency securities\n5,823 \n— \n(655)\n5,168 \n— \n240 \n4,928 \nNon-U.S. government securities\n16,948 \n2 \n(1,201)\n15,749 \n— \n8,806 \n6,943 \nCertificates of deposit and time deposits\n2,067 \n— \n— \n2,067 \n1,805 \n262 \n— \nCommercial paper\n718 \n— \n— \n718 \n28 \n690 \n— \nCorporate debt securities\n87,148 \n9 \n(7,707)\n79,450 \n— \n9,023 \n70,427 \nMunicipal securities\n921 \n— \n(35)\n886 \n— \n266 \n620 \nMortgage- and asset-backed securities\n22,553 \n— \n(2,593)\n19,960 \n— \n53 \n19,907 \nSubtotal\n161,312 \n11 \n(13,916)\n147,407 \n2,171 \n24,431 \n120,805 \nTotal \n$\n183,061 \n$\n11 \n$\n(13,963)\n$\n169,109 \n$\n23,646 \n$\n24,658 \n$\n120,805 \n(1)\nThe valuation techniques used to measure the fair values of the Company’s Level 2 financial instruments, which generally have counterparties with high credit\nratings, are based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data.\n(2)\nAs of September 30, 2023 and September 24, 2022, total marketable securities included $13.8 billion and $12.7 billion, respectively, that were restricted from\ngeneral use, related to the State Aid Decision (refer to Note 7, “Income Taxes”) and other agreements.\n(1)\n(2)\n(1)\n(2)\nApple Inc. | 2023 Form 10-K | 36\n\n\nThe following table shows the fair value of the Company’s non-current marketable debt securities, by contractual maturity, as of September 30, 2023 (in millions):\nDue after 1 year through 5 years\n$\n74,427 \nDue after 5 years through 10 years\n9,964 \nDue after 10 years\n16,153 \nTotal fair value\n$\n100,544 \nThe Company’s investments in marketable debt securities have been classified and accounted for as available-for-sale. The Company classifies marketable debt\nsecurities as either current or non-current based solely on each instrument’s underlying contractual maturity date.\nDerivative Instruments and Hedging\nThe Company may use derivative instruments to partially offset its business exposure to foreign exchange and interest rate risk. However, the Company may\nchoose not to hedge certain exposures for a variety of reasons including accounting considerations or the prohibitive economic cost of hedging particular\nexposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange or\ninterest rates.\nThe Company classifies cash flows related to derivative instruments in the same section of the Consolidated Statements of Cash Flows as the items being\nhedged, which are generally classified as operating activities.\nForeign Exchange Rate Risk\nTo protect gross margins from fluctuations in foreign exchange rates, the Company may use forwards, options or other instruments, and may designate these\ninstruments as cash flow hedges. The Company generally hedges portions of its forecasted foreign currency exposure associated with revenue and inventory\npurchases, typically for up to 12 months.\nTo protect the Company’s foreign currency–denominated term debt or marketable securities from fluctuations in foreign exchange rates, the Company may use\nforwards, cross-currency swaps or other instruments. The Company designates these instruments as either cash flow or fair value hedges. As of September 30,\n2023, the maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for term debt–related foreign currency\ntransactions is 19 years.\nThe Company may also use derivative instruments that are not designated as accounting hedges to protect gross margins from certain fluctuations in foreign\nexchange rates, as well as to offset a portion of the foreign currency gains and losses generated by the remeasurement of certain assets and liabilities\ndenominated in non-functional currencies.\nInterest Rate Risk\nTo protect the Company’s term debt or marketable securities from fluctuations in interest rates, the Company may use interest rate swaps, options or other\ninstruments. The Company designates these instruments as either cash flow or fair value hedges.\nThe notional amounts of the Company’s outstanding derivative instruments as of September 30, 2023 and September 24, 2022 were as follows (in millions):\n2023\n2022\nDerivative instruments designated as accounting hedges:\nForeign exchange contracts\n$\n74,730 \n$\n102,670 \nInterest rate contracts\n$\n19,375 \n$\n20,125 \nDerivative instruments not designated as accounting hedges:\nForeign exchange contracts\n$\n104,777 \n$\n185,381 \nApple Inc. | 2023 Form 10-K | 37\n\n\nThe gross fair values of the Company’s derivative assets and liabilities as of September 24, 2022 were as follows (in millions):\n2022\nFair Value of\nDerivatives Designated\nas Accounting Hedges\nFair Value of\nDerivatives Not Designated\nas Accounting Hedges\nTotal\nFair Value\nDerivative assets :\nForeign exchange contracts\n$\n4,317 \n$\n2,819 \n$\n7,136 \nDerivative liabilities :\nForeign exchange contracts\n$\n2,205 \n$\n2,547 \n$\n4,752 \nInterest rate contracts\n$\n1,367 \n$\n— \n$\n1,367 \n(1)\nDerivative assets are measured using Level 2 fair value inputs and are included in other current assets and other non-current assets in the Consolidated\nBalance Sheet.\n(2)\nDerivative liabilities are measured using Level 2 fair value inputs and are included in other current liabilities and other non-current liabilities in the Consolidated\nBalance Sheet.\nThe derivative assets above represent the Company’s gross credit exposure if all counterparties failed to perform. To mitigate credit risk, the Company generally\nuses collateral security arrangements that provide for collateral to be received or posted when the net fair values of certain derivatives fluctuate from\ncontractually established thresholds. To further limit credit risk, the Company generally uses master netting arrangements with the respective counterparties to\nthe Company’s derivative contracts, under which the Company is allowed to settle transactions with a single net amount payable by one party to the other. As of\nSeptember 24, 2022, the potential effects of these rights of set-off associated with the Company’s derivative contracts, including the effects of collateral, would\nbe a reduction to both derivative assets and derivative liabilities of $7.8 billion, resulting in a net derivative asset of $412 million.\nThe carrying amounts of the Company’s hedged items in fair value hedges as of September 30, 2023 and September 24, 2022 were as follows (in millions):\n2023\n2022\nHedged assets/(liabilities):\nCurrent and non-current marketable securities\n$\n14,433 \n$\n13,378 \nCurrent and non-current term debt\n$\n(18,247)\n$\n(18,739)\nAccounts Receivable\nTrade Receivables\nAs of September 24, 2022, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 10%. The Company’s\nthird-party cellular network carriers accounted for 41% and 44% of total trade receivables as of September 30, 2023 and September 24, 2022, respectively. The\nCompany requires third-party credit support or collateral from certain customers to limit credit risk.\nVendor Non-Trade Receivables\nThe Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these vendors who manufacture\nsubassemblies or assemble final products for the Company. The Company purchases these components directly from suppliers. The Company does not reflect\nthe sale of these components in products net sales. Rather, the Company recognizes any gain on these sales as a reduction of products cost of sales when the\nrelated final products are sold by the Company. As of September 30, 2023, the Company had two vendors that individually represented 10% or more of total\nvendor non-trade receivables, which accounted for 48% and 23%. As of September 24, 2022, the Company had two vendors that individually represented 10%\nor more of total vendor non-trade receivables, which accounted for 54% and 13%.\n(1)\n(2)\nApple Inc. | 2023 Form 10-K | 38\n\n\nNote 5 – Property, Plant and Equipment\nThe following table shows the Company’s gross property, plant and equipment by major asset class and accumulated depreciation as of September 30, 2023\nand September 24, 2022 (in millions):\n2023\n2022\nLand and buildings\n$\n23,446 \n$\n22,126 \nMachinery, equipment and internal-use software\n78,314 \n81,060 \nLeasehold improvements\n12,839 \n11,271 \nGross property, plant and equipment\n114,599 \n114,457 \nAccumulated depreciation\n(70,884)\n(72,340)\nTotal property, plant and equipment, net\n$\n43,715 \n$\n42,117 \nDepreciation expense on property, plant and equipment was $8.5 billion, $8.7 billion and $9.5 billion during 2023, 2022 and 2021, respectively.\nNote 6 – Consolidated Financial Statement Details\nThe following tables show the Company’s consolidated financial statement details as of September 30, 2023 and September 24, 2022 (in millions):\nOther Non-Current Assets\n2023\n2022\nDeferred tax assets\n$\n17,852 \n$\n15,375 \nOther non-current assets\n46,906 \n39,053 \nTotal other non-current assets\n$\n64,758 \n$\n54,428 \nOther Current Liabilities\n2023\n2022\nIncome taxes payable\n$\n8,819 \n$\n6,552 \nOther current liabilities\n50,010 \n54,293 \nTotal other current liabilities\n$\n58,829 \n$\n60,845 \nOther Non-Current Liabilities\n2023\n2022\nLong-term taxes payable\n$\n15,457 \n$\n16,657 \nOther non-current liabilities\n34,391 \n32,485 \nTotal other non-current liabilities\n$\n49,848 \n$\n49,142 \nOther Income/(Expense), Net\nThe following table shows the detail of other income/(expense), net for 2023, 2022 and 2021 (in millions):\n2023\n2022\n2021\nInterest and dividend income\n$\n3,750 \n$\n2,825 \n$\n2,843 \nInterest expense\n(3,933)\n(2,931)\n(2,645)\nOther income/(expense), net\n(382)\n(228)\n60 \nTotal other income/(expense), net\n$\n(565)\n$\n(334)\n$\n258 \nApple Inc. | 2023 Form 10-K | 39\n\n\nNote 7 – Income Taxes\nProvision for Income Taxes and Effective Tax Rate\nThe provision for income taxes for 2023, 2022 and 2021, consisted of the following (in millions):\n2023\n2022\n2021\nFederal:\nCurrent\n$\n9,445 \n$\n7,890 \n$\n8,257 \nDeferred\n(3,644)\n(2,265)\n(7,176)\nTotal\n5,801 \n5,625 \n1,081 \nState:\nCurrent\n1,570 \n1,519 \n1,620 \nDeferred\n(49)\n84 \n(338)\nTotal\n1,521 \n1,603 \n1,282 \nForeign:\nCurrent\n8,750 \n8,996 \n9,424 \nDeferred\n669 \n3,076 \n2,740 \nTotal\n9,419 \n12,072 \n12,164 \nProvision for income taxes\n$\n16,741 \n$\n19,300 \n$\n14,527 \nThe foreign provision for income taxes is based on foreign pretax earnings of $72.9 billion, $71.3 billion and $68.7 billion in 2023, 2022 and 2021, respectively.\nA reconciliation of the provision for income taxes to the amount computed by applying the statutory federal income tax rate (21% in 2023, 2022 and 2021) to\nincome before provision for income taxes for 2023, 2022 and 2021, is as follows (dollars in millions):\n2023\n2022\n2021\nComputed expected tax\n$\n23,885 \n$\n25,012 \n$\n22,933 \nState taxes, net of federal effect\n1,124 \n1,518 \n1,151 \nEarnings of foreign subsidiaries\n(5,744)\n(4,366)\n(4,715)\nResearch and development credit, net\n(1,212)\n(1,153)\n(1,033)\nExcess tax benefits from equity awards\n(1,120)\n(1,871)\n(2,137)\nForeign-derived intangible income deduction\n— \n(296)\n(1,372)\nOther\n(192)\n456 \n(300)\nProvision for income taxes\n$\n16,741 \n$\n19,300 \n$\n14,527 \nEffective tax rate\n14.7 %\n16.2 %\n13.3 %\nApple Inc. | 2023 Form 10-K | 40\n\n\nDeferred Tax Assets and Liabilities\nAs of September 30, 2023 and September 24, 2022, the significant components of the Company’s deferred tax assets and liabilities were (in millions):\n2023\n2022\nDeferred tax assets:\nTax credit carryforwards\n$\n8,302 \n$\n6,962 \nAccrued liabilities and other reserves\n6,365 \n6,515 \nCapitalized research and development\n6,294 \n1,267 \nDeferred revenue\n4,571 \n5,742 \nUnrealized losses\n2,447 \n2,913 \nLease liabilities\n2,421 \n2,400 \nOther\n2,343 \n3,407 \nTotal deferred tax assets\n32,743 \n29,206 \nLess: Valuation allowance\n(8,374)\n(7,530)\nTotal deferred tax assets, net\n24,369 \n21,676 \nDeferred tax liabilities:\nRight-of-use assets\n2,179 \n2,163 \nDepreciation\n1,998 \n1,582 \nMinimum tax on foreign earnings\n1,940 \n1,983 \nUnrealized gains\n511 \n942 \nOther\n490 \n469 \nTotal deferred tax liabilities\n7,118 \n7,139 \nNet deferred tax assets\n$\n17,251 \n$\n14,537 \nAs of September 30, 2023, the Company had $5.2 billion in foreign tax credit carryforwards in Ireland and $3.0 billion in California R&D credit carryforwards,\nboth of which can be carried forward indefinitely. A valuation allowance has been recorded for the credit carryforwards and a portion of other temporary\ndifferences.\nUncertain Tax Positions\nAs of September  30, 2023, the total amount of gross unrecognized tax benefits was $19.5 billion, of which $9.5 billion, if recognized, would impact the\nCompany’s effective tax rate. As of September  24, 2022, the total amount of gross unrecognized tax benefits was $16.8 billion, of which $8.0 billion, if\nrecognized, would have impacted the Company’s effective tax rate.\nThe aggregate change in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2023, 2022 and 2021, is as follows (in\nmillions):\n2023\n2022\n2021\nBeginning balances\n$\n16,758 \n$\n15,477 \n$\n16,475 \nIncreases related to tax positions taken during a prior year\n2,044 \n2,284 \n816 \nDecreases related to tax positions taken during a prior year\n(1,463)\n(1,982)\n(1,402)\nIncreases related to tax positions taken during the current year\n2,628 \n1,936 \n1,607 \nDecreases related to settlements with taxing authorities\n(19)\n(28)\n(1,838)\nDecreases related to expiration of the statute of limitations\n(494)\n(929)\n(181)\nEnding balances\n$\n19,454 \n$\n16,758 \n$\n15,477 \nThe Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction and many state and foreign jurisdictions. Tax years after 2017 for\nthe U.S. federal jurisdiction, and after 2014 in certain major foreign jurisdictions, remain subject to examination. Although the timing of resolution or closure of\nexaminations is not certain, the Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease in the next 12 months by as\nmuch as $4.5 billion.\nApple Inc. | 2023 Form 10-K | 41\n\n\nEuropean Commission State Aid Decision\nOn August 30, 2016, the European Commission announced its decision that Ireland granted state aid to the Company by providing tax opinions in 1991 and\n2007 concerning the tax allocation of profits of the Irish branches of two subsidiaries of the Company (the “State Aid Decision”). The State Aid Decision ordered\nIreland to calculate and recover additional taxes from the Company for the period June 2003 through December 2014. Irish legislative changes, effective as of\nJanuary 2015, eliminated the application of the tax opinions from that date forward. The recovery amount was calculated to be €13.1 billion, plus interest of €1.2\nbillion. The Company and Ireland appealed the State Aid Decision to the General Court of the Court of Justice of the European Union (the “General Court”). On\nJuly 15, 2020, the General Court annulled the State Aid Decision. On September 25, 2020, the European Commission appealed the General Court’s decision to\nthe European Court of Justice (the “ECJ”) and a hearing was held on May 23, 2023. A decision from the ECJ is expected in calendar year 2024. The Company\nbelieves it would be eligible to claim a U.S. foreign tax credit for a portion of any incremental Irish corporate income taxes potentially due related to the State Aid\nDecision.\nOn an annual basis, the Company may request approval from the Irish Minister for Finance to reduce the recovery amount for certain taxes paid to other\ncountries. As of September 30, 2023, the adjusted recovery amount was €12.7 billion, excluding interest. The adjusted recovery amount plus interest is funded\ninto escrow, where it will remain restricted from general use pending the conclusion of all legal proceedings. Refer to the Cash, Cash Equivalents and\nMarketable Securities section of Note 4, “Financial Instruments” for more information.\nNote 8 – Leases\nThe Company has lease arrangements for certain equipment and facilities, including corporate, data center, manufacturing and retail space. These leases\ntypically have original terms not exceeding 10 years and generally contain multiyear renewal options, some of which are reasonably certain of exercise.\nPayments under the Company’s lease arrangements may be fixed or variable, and variable lease payments are primarily based on purchases of output of the\nunderlying leased assets. Lease costs associated with fixed payments on the Company’s operating leases were $2.0 billion, $1.9 billion and $1.7 billion for 2023,\n2022 and 2021, respectively. Lease costs associated with variable payments on the Company’s leases were $13.9 billion, $14.9 billion and $12.9 billion for 2023,\n2022 and 2021, respectively.\nThe Company made $1.9 billion, $1.8 billion and $1.4 billion of fixed cash payments related to operating leases in 2023, 2022 and 2021, respectively. Noncash\nactivities involving right-of-use (“ROU”) assets obtained in exchange for lease liabilities were $2.1 billion, $2.8 billion and $3.3 billion for 2023, 2022 and 2021,\nrespectively.\nThe following table shows ROU assets and lease liabilities, and the associated financial statement line items, as of September 30, 2023 and September 24,\n2022 (in millions):\nLease-Related Assets and Liabilities\nFinancial Statement Line Items\n2023\n2022\nRight-of-use assets:\nOperating leases\nOther non-current assets\n$\n10,661 \n$\n10,417 \nFinance leases\nProperty, plant and equipment, net\n1,015 \n952 \nTotal right-of-use assets\n$\n11,676 \n$\n11,369 \nLease liabilities:\nOperating leases\nOther current liabilities\n$\n1,410 \n$\n1,534 \nOther non-current liabilities\n10,408 \n9,936 \nFinance leases\nOther current liabilities\n165 \n129 \nOther non-current liabilities\n859 \n812 \nTotal lease liabilities\n$\n12,842 \n$\n12,411 \nApple Inc. | 2023 Form 10-K | 42\n\n\nLease liability maturities as of September 30, 2023, are as follows (in millions):\nOperating\nLeases\nFinance\nLeases\nTotal\n2024\n$\n1,719 \n$\n196 \n$\n1,915 \n2025\n1,875 \n151 \n2,026 \n2026\n1,732 \n120 \n1,852 \n2027\n1,351 \n52 \n1,403 \n2028\n1,181 \n34 \n1,215 \nThereafter\n5,983 \n872 \n6,855 \nTotal undiscounted liabilities\n13,841 \n1,425 \n15,266 \nLess: Imputed interest\n(2,023)\n(401)\n(2,424)\nTotal lease liabilities\n$\n11,818 \n$\n1,024 \n$\n12,842 \nThe weighted-average remaining lease term related to the Company’s lease liabilities as of September 30, 2023 and September 24, 2022 was 10.6 years and\n10.1 years, respectively. The discount rate related to the Company’s lease liabilities as of September 30, 2023 and September 24, 2022 was 3.0% and 2.3%,\nrespectively. The discount rates related to the Company’s lease liabilities are generally based on estimates of the Company’s incremental borrowing rate, as the\ndiscount rates implicit in the Company’s leases cannot be readily determined.\nAs of September 30, 2023, the Company had $544 million of future payments under additional leases, primarily for corporate facilities and retail space, that had\nnot yet commenced. These leases will commence between 2024 and 2026, with lease terms ranging from 1 year to 21 years.\nNote 9 – Debt\nCommercial Paper\nThe Company issues unsecured short-term promissory notes pursuant to a commercial paper program. The Company uses net proceeds from the commercial\npaper program for general corporate purposes, including dividends and share repurchases. As of September 30, 2023 and September 24, 2022, the Company\nhad $6.0 billion and $10.0 billion of commercial paper outstanding, respectively, with maturities generally less than nine months. The weighted-average interest\nrate of the Company’s commercial paper was 5.28% and 2.31% as of September 30, 2023 and September 24, 2022, respectively. The following table provides a\nsummary of cash flows associated with the issuance and maturities of commercial paper for 2023, 2022 and 2021 (in millions):\n2023\n2022\n2021\nMaturities 90 days or less:\nProceeds from/(Repayments of) commercial paper, net\n$\n(1,333)\n$\n5,264 \n$\n(357)\nMaturities greater than 90 days:\nProceeds from commercial paper\n— \n5,948 \n7,946 \nRepayments of commercial paper\n(2,645)\n(7,257)\n(6,567)\nProceeds from/(Repayments of) commercial paper, net\n(2,645)\n(1,309)\n1,379 \nTotal proceeds from/(repayments of) commercial paper, net\n$\n(3,978)\n$\n3,955 \n$\n1,022 \nApple Inc. | 2023 Form 10-K | 43\n\n\nTerm Debt\nThe Company has outstanding Notes, which are senior unsecured obligations with interest payable in arrears. The following table provides a summary of the\nCompany’s term debt as of September 30, 2023 and September 24, 2022:\nMaturities\n(calendar year)\n2023\n2022\nAmount\n(in millions)\nEffective\nInterest Rate\nAmount\n(in millions)\nEffective\nInterest Rate\n2013 – 2022 debt issuances:\nFixed-rate 0.000% – 4.650% notes\n2024 – 2062\n$\n101,322 \n0.03% – 6.72%\n$\n111,824 \n0.03% – 4.78%\nThird quarter 2023 debt issuance:\nFixed-rate 4.000% – 4.850% notes\n2026 – 2053\n5,250 \n4.04% – 4.88%\n— \nTotal term debt principal\n106,572 \n111,824 \nUnamortized premium/(discount) and issuance costs, net\n(356)\n(374)\nHedge accounting fair value adjustments\n(1,113)\n(1,363)\nTotal term debt\n105,103 \n110,087 \nLess: Current portion of term debt\n(9,822)\n(11,128)\nTotal non-current portion of term debt\n$\n95,281 \n$\n98,959 \nTo manage interest rate risk on certain of its U.S. dollar–denominated fixed-rate notes, the Company uses interest rate swaps to effectively convert the fixed\ninterest rates to floating interest rates on a portion of these notes. Additionally, to manage foreign exchange rate risk on certain of its foreign currency–\ndenominated notes, the Company uses cross-currency swaps to effectively convert these notes to U.S. dollar–denominated notes.\nThe effective interest rates for the Notes include the interest on the Notes, amortization of the discount or premium and, if applicable, adjustments related to\nhedging. The Company recognized $3.7 billion, $2.8 billion and $2.6 billion of interest expense on its term debt for 2023, 2022 and 2021, respectively.\nThe future principal payments for the Company’s Notes as of September 30, 2023, are as follows (in millions):\n2024\n$\n9,943 \n2025\n10,775 \n2026\n12,265 \n2027\n9,786 \n2028\n7,800 \nThereafter\n56,003 \nTotal term debt principal\n$\n106,572 \nAs of September  30, 2023 and September  24, 2022, the fair value of the Company’s Notes, based on Level 2 inputs, was $90.8 billion and $98.8 billion,\nrespectively.\nNote 10 – Shareholders’ Equity\nShare Repurchase Program\nDuring 2023, the Company repurchased 471 million shares of its common stock for $76.6 billion, excluding excise tax due under the Inflation Reduction Act of\n2022. The Company’s share repurchase programs do not obligate the Company to acquire a minimum amount of shares. Under the programs, shares may be\nrepurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.\nApple Inc. | 2023 Form 10-K | 44\n\n\nShares of Common Stock\nThe following table shows the changes in shares of common stock for 2023, 2022 and 2021 (in thousands):\n2023\n2022\n2021\nCommon stock outstanding, beginning balances\n15,943,425 \n16,426,786 \n16,976,763 \nCommon stock repurchased\n(471,419)\n(568,589)\n(656,340)\nCommon stock issued, net of shares withheld for employee taxes\n78,055 \n85,228 \n106,363 \nCommon stock outstanding, ending balances\n15,550,061 \n15,943,425 \n16,426,786 \nNote 11 – Share-Based Compensation\n2022 Employee Stock Plan\nThe Apple Inc. 2022 Employee Stock Plan (the “2022 Plan”) is a shareholder-approved plan that provides for broad-based equity grants to employees, including\nexecutive officers, and permits the granting of RSUs, stock grants, performance-based awards, stock options and stock appreciation rights. RSUs granted under\nthe 2022 Plan generally vest over four years, based on continued employment, and are settled upon vesting in shares of the Company’s common stock on a\none-for-one basis. All RSUs granted under the 2022 Plan have dividend equivalent rights, which entitle holders of RSUs to the same dividend value per share as\nholders of common stock. A maximum of approximately 1.3 billion shares were authorized for issuance pursuant to 2022 Plan awards at the time the plan was\napproved on March 4, 2022.\n2014 Employee Stock Plan\nThe Apple Inc. 2014 Employee Stock Plan (the “2014 Plan”) is a shareholder-approved plan that provided for broad-based equity grants to employees, including\nexecutive officers. The 2014 Plan permitted the granting of substantially the same types of equity awards with substantially the same terms as the 2022 Plan.\nThe 2014 Plan also permitted the granting of cash bonus awards. In the third quarter of 2022, the Company terminated the authority to grant new awards under\nthe 2014 Plan.\nRestricted Stock Units\nA summary of the Company’s RSU activity and related information for 2023, 2022 and 2021, is as follows:\nNumber of\nRSUs\n(in thousands)\nWeighted-Average\nGrant Date Fair\nValue Per RSU\nAggregate\nFair Value\n(in millions)\nBalance as of September 26, 2020\n310,778 \n$\n51.58 \nRSUs granted\n89,363 \n$\n116.33 \nRSUs vested\n(145,766)\n$\n50.71 \nRSUs canceled\n(13,948)\n$\n68.95 \nBalance as of September 25, 2021\n240,427 \n$\n75.16 \nRSUs granted\n91,674 \n$\n150.70 \nRSUs vested\n(115,861)\n$\n72.12 \nRSUs canceled\n(14,739)\n$\n99.77 \nBalance as of September 24, 2022\n201,501 \n$\n109.48 \nRSUs granted\n88,768 \n$\n150.87 \nRSUs vested\n(101,878)\n$\n97.31 \nRSUs canceled\n(8,144)\n$\n127.98 \nBalance as of September 30, 2023\n180,247 \n$\n135.91 \n$\n30,860 \nThe fair value as of the respective vesting dates of RSUs was $15.9 billion, $18.2 billion and $19.0 billion for 2023, 2022 and 2021, respectively. The majority of\nRSUs that vested in 2023, 2022 and 2021 were net share settled such that the Company withheld shares with a value equivalent to the employees’ obligation for\nthe applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were approximately 37\nmillion, 41 million and 53 million for 2023, 2022 and 2021, respectively, and were based on the value of the RSUs on their respective vesting dates as\ndetermined by the Company’s closing stock price. Total payments to taxing authorities for employees’ tax obligations were $5.6 billion, $6.4 billion and $6.8\nbillion in 2023, 2022 and 2021, respectively.\nApple Inc. | 2023 Form 10-K | 45\n\n\nShare-Based Compensation\nThe following table shows share-based compensation expense and the related income tax benefit included in the Consolidated Statements of Operations for\n2023, 2022 and 2021 (in millions):\n2023\n2022\n2021\nShare-based compensation expense\n$\n10,833 \n$\n9,038 \n$\n7,906 \nIncome tax benefit related to share-based compensation expense\n$\n(3,421)\n$\n(4,002)\n$\n(4,056)\nAs of September 30, 2023, the total unrecognized compensation cost related to outstanding RSUs was $18.6 billion, which the Company expects to recognize\nover a weighted-average period of 2.5 years.\nNote 12 – Commitments, Contingencies and Supply Concentrations\nUnconditional Purchase Obligations\nThe Company has entered into certain off–balance sheet commitments that require the future purchase of goods or services (“unconditional purchase\nobligations”). The Company’s unconditional purchase obligations primarily consist of supplier arrangements, licensed intellectual property and content, and\ndistribution rights. Future payments under noncancelable unconditional purchase obligations with a remaining term in excess of one year as of September 30,\n2023, are as follows (in millions):\n2024\n$\n4,258 \n2025\n2,674 \n2026\n3,434 \n2027\n1,277 \n2028\n5,878 \nThereafter\n3,215 \nTotal\n$\n20,736 \nContingencies\nThe Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully resolved. The\noutcome of litigation is inherently uncertain. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a\nmaterial loss, or a material loss greater than a recorded accrual, concerning loss contingencies for asserted legal and other claims.\nConcentrations in the Available Sources of Supply of Materials and Product\nAlthough most components essential to the Company’s business are generally available from multiple sources, certain components are currently obtained from\nsingle or limited sources. The Company also competes for various components with other participants in the markets for smartphones, personal computers,\ntablets, wearables and accessories. Therefore, many components used by the Company, including those that are available from multiple sources, are at times\nsubject to industry-wide shortage and significant commodity pricing fluctuations.\nThe Company uses some custom components that are not commonly used by its competitors, and new products introduced by the Company often utilize\ncustom components available from only one source. When a component or product uses new technologies, initial capacity constraints may exist until the\nsuppliers’ yields have matured or their manufacturing capacities have increased. The continued availability of these components at acceptable prices, or at all,\nmay be affected if suppliers decide to concentrate on the production of common components instead of components customized to meet the Company’s\nrequirements.\nSubstantially all of the Company’s hardware products are manufactured by outsourcing partners that are located primarily in China mainland, India, Japan, South\nKorea, Taiwan and Vietnam.\nApple Inc. | 2023 Form 10-K | 46\n\n\nNote 13 – Segment Information and Geographic Data\nThe Company manages its business primarily on a geographic basis. The Company’s reportable segments consist of the Americas, Europe, Greater China,\nJapan and Rest of Asia Pacific. Americas includes both North and South America. Europe includes European countries, as well as India, the Middle East and\nAfrica. Greater China includes China mainland, Hong Kong and Taiwan. Rest of Asia Pacific includes Australia and those Asian countries not included in the\nCompany’s other reportable segments. Although the reportable segments provide similar hardware and software products and similar services, each one is\nmanaged separately to better align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic\nregion.\nThe Company evaluates the performance of its reportable segments based on net sales and operating income. Net sales for geographic segments are generally\nbased on the location of customers and sales through the Company’s retail stores located in those geographic locations. Operating income for each segment\nconsists of net sales to third parties, related cost of sales, and operating expenses directly attributable to the segment. The information provided to the\nCompany’s chief operating decision maker for purposes of making decisions and assessing segment performance excludes asset information.\nThe following table shows information by reportable segment for 2023, 2022 and 2021 (in millions):\n2023\n2022\n2021\nAmericas:\nNet sales\n$\n162,560 \n$\n169,658 \n$\n153,306 \nOperating income\n$\n60,508 \n$\n62,683 \n$\n53,382 \nEurope:\nNet sales\n$\n94,294 \n$\n95,118 \n$\n89,307 \nOperating income\n$\n36,098 \n$\n35,233 \n$\n32,505 \nGreater China:\nNet sales\n$\n72,559 \n$\n74,200 \n$\n68,366 \nOperating income\n$\n30,328 \n$\n31,153 \n$\n28,504 \nJapan:\nNet sales\n$\n24,257 \n$\n25,977 \n$\n28,482 \nOperating income\n$\n11,888 \n$\n12,257 \n$\n12,798 \nRest of Asia Pacific:\nNet sales\n$\n29,615 \n$\n29,375 \n$\n26,356 \nOperating income\n$\n12,066 \n$\n11,569 \n$\n9,817 \nA reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2023, 2022 and 2021 is as follows (in millions):\n2023\n2022\n2021\nSegment operating income\n$\n150,888 \n$\n152,895 \n$\n137,006 \nResearch and development expense\n(29,915)\n(26,251)\n(21,914)\nOther corporate expenses, net \n(6,672)\n(7,207)\n(6,143)\nTotal operating income\n$\n114,301 \n$\n119,437 \n$\n108,949 \n(1)\nIncludes corporate marketing expenses, certain share-based compensation expenses, various nonrecurring charges, and other separately managed general\nand administrative costs.\n(1)\nApple Inc. | 2023 Form 10-K | 47\n\n\nThe U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2023, 2022 and 2021. Net sales for 2023, 2022\nand 2021 and long-lived assets as of September 30, 2023 and September 24, 2022 were as follows (in millions):\n2023\n2022\n2021\nNet sales:\nU.S.\n$\n138,573 \n$\n147,859 \n$\n133,803 \nChina\n72,559 \n74,200 \n68,366 \nOther countries\n172,153 \n172,269 \n163,648 \nTotal net sales\n$\n383,285 \n$\n394,328 \n$\n365,817 \n2023\n2022\nLong-lived assets:\nU.S.\n$\n33,276 \n$\n31,119 \nChina \n5,778 \n7,260 \nOther countries\n4,661 \n3,738 \nTotal long-lived assets\n$\n43,715 \n$\n42,117 \n(1)\nChina includes Hong Kong and Taiwan.\n (1)\n(1)\nApple Inc. | 2023 Form 10-K | 48\n\n\nReport of Independent Registered Public Accounting Firm\nTo the Shareholders and the Board of Directors of Apple Inc.\nOpinion on the Financial Statements\nWe have audited the accompanying consolidated balance sheets of Apple Inc. as of September 30, 2023 and September 24, 2022, the related consolidated\nstatements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended September 30, 2023, and\nthe related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial\nposition of Apple Inc. at September 30, 2023 and September 24, 2022, and the results of its operations and its cash flows for each of the three years in the\nperiod ended September 30, 2023, in conformity with U.S. generally accepted accounting principles.\nWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), Apple Inc.’s internal\ncontrol over financial reporting as of September 30, 2023, based on criteria established in Internal Control – Integrated Framework issued by the Committee of\nSponsoring Organizations of the Treadway Commission (2013 framework) and our report dated November 2, 2023 expressed an unqualified opinion thereon.\nBasis for Opinion\nThese financial statements are the responsibility of Apple Inc.’s management. Our responsibility is to express an opinion on Apple Inc.’s financial statements\nbased on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Apple Inc. in accordance\nwith the U.S. federal securities laws and the applicable rules and regulations of the U.S. Securities and Exchange Commission and the PCAOB.\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable\nassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to\nassess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such\nprocedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating\nthe accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We\nbelieve that our audits provide a reasonable basis for our opinion.\nCritical Audit Matter\nThe critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to\nbe communicated to the audit committee and that: (1)  relates to accounts or disclosures that are material to the financial statements and (2)  involved our\nespecially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial\nstatements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the\naccount or disclosure to which it relates.\nUncertain Tax Positions\nDescription of the Matter\nAs discussed in Note 7 to the financial statements, Apple Inc. is subject to taxation and files income tax returns in\nthe U.S. federal jurisdiction and many state and foreign jurisdictions. As of September 30, 2023, the total amount of\ngross unrecognized tax benefits was $19.5 billion, of which $9.5 billion, if recognized, would impact Apple Inc.’s\neffective tax rate. In accounting for some of the uncertain tax positions, Apple Inc. uses significant judgment in the\ninterpretation and application of complex domestic and international tax laws.\nAuditing management’s evaluation of whether an uncertain tax position is more likely than not to be sustained and\nthe measurement of the benefit of various tax positions can be complex, involves significant judgment, and is based\non interpretations of tax laws and legal rulings.\nApple Inc. | 2023 Form 10-K | 49\n\n\nHow We Addressed the\nMatter in Our Audit\nWe tested controls relating to the evaluation of uncertain tax positions, including controls over management’s\nassessment as to whether tax positions are more likely than not to be sustained, management’s process to\nmeasure the benefit of its tax positions, and the development of the related disclosures.\nTo evaluate Apple Inc.’s assessment of which tax positions are more likely than not to be sustained, our audit\nprocedures included, among others, reading and evaluating management’s assumptions and analysis, and, as\napplicable, Apple Inc.’s communications with taxing authorities, that detailed the basis and technical merits of the\nuncertain tax positions. We involved our tax subject matter resources in assessing the technical merits of certain of\nApple Inc.’s tax positions based on our knowledge of relevant tax laws and experience with related taxing\nauthorities. For certain tax positions, we also received external legal counsel confirmation letters and discussed the\nmatters with external advisors and Apple Inc. tax personnel. In addition, we evaluated Apple Inc.’s disclosure in\nrelation to these matters included in Note 7 to the financial statements.\n/s/ Ernst & Young LLP\nWe have served as Apple Inc.’s auditor since 2009.\nSan Jose, California\nNovember 2, 2023\nApple Inc. | 2023 Form 10-K | 50\n\n\nReport of Independent Registered Public Accounting Firm\nTo the Shareholders and the Board of Directors of Apple Inc.\nOpinion on Internal Control Over Financial Reporting\nWe have audited Apple Inc.’s internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control – Integrated\nFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO criteria”). In our opinion, Apple\nInc. maintained, in all material respects, effective internal control over financial reporting as of September 30, 2023, based on the COSO criteria.\nWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), the consolidated\nbalance sheets of Apple Inc. as of September 30, 2023 and September 24, 2022, the related consolidated statements of operations, comprehensive income,\nshareholders’ equity and cash flows for each of the three years in the period ended September  30, 2023, and the related notes and our report dated\nNovember 2, 2023 expressed an unqualified opinion thereon.\nBasis for Opinion\nApple Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal\ncontrol over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to\nexpress an opinion on Apple Inc.’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and\nare required to be independent with respect to Apple Inc. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the U.S.\nSecurities and Exchange Commission and the PCAOB.\nWe conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable\nassurance about whether effective internal control over financial reporting was maintained in all material respects.\nOur audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and\nevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered\nnecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.\nDefinition and Limitations of Internal Control Over Financial Reporting\nA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the\npreparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A company’s internal control over\nfinancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the\ntransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation\nof financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made\nonly in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely\ndetection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of\neffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance\nwith the policies or procedures may deteriorate.\n/s/ Ernst & Young LLP\nSan Jose, California\nNovember 2, 2023\nApple Inc. | 2023 Form 10-K | 51\n\n\nItem 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure\nNone.\nItem 9A.    Controls and Procedures\nEvaluation of Disclosure Controls and Procedures\nBased on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal\nfinancial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act\nwere effective as of September 30, 2023 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or\nsubmits under the Exchange Act is (i)  recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and\n(ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow\ntimely decisions regarding required disclosure.\nInherent Limitations over Internal Controls\nThe Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the\npreparation of financial statements for external purposes in accordance with GAAP. The Company’s internal control over financial reporting includes those\npolicies and procedures that: \n(i)\npertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s\nassets;\n(ii)\nprovide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with\nGAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management\nand directors; and\n(iii)\nprovide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets\nthat could have a material effect on the financial statements.\nManagement, including the Company’s Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s internal controls will prevent or\ndetect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the\nobjectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of\ncontrols must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide\nabsolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future\nperiods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance\nwith the policies or procedures may deteriorate.\nManagement’s Annual Report on Internal Control over Financial Reporting\nThe Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f)\nunder the Exchange Act). Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the\ncriteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013\nframework). Based on the Company’s assessment, management has concluded that its internal control over financial reporting was effective as of\nSeptember 30, 2023 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance\nwith GAAP. The Company’s independent registered public accounting firm, Ernst & Young LLP, has issued an audit report on the Company’s internal control over\nfinancial reporting, which appears in Part II, Item 8 of this Form 10-K.\nChanges in Internal Control over Financial Reporting\nThere were no changes in the Company’s internal control over financial reporting during the fourth quarter of 2023, which were identified in connection with\nmanagement’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely\nto materially affect, the Company’s internal control over financial reporting.\nApple Inc. | 2023 Form 10-K | 52\n\n\nItem 9B.    Other Information\nInsider Trading Arrangements\nOn August 30, 2023, Deirdre O’Brien, the Company’s Senior Vice President, Retail, and Jeff Williams, the Company’s Chief Operating Officer, each entered into\na trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. The plans provide for the sale of all shares vested\nduring the duration of the plans pursuant to certain equity awards granted to Ms. O’Brien and Mr. Williams, respectively, excluding any shares withheld by the\nCompany to satisfy income tax withholding and remittance obligations. Ms. O’Brien’s plan will expire on October 15, 2024, and Mr. Williams’ plan will expire on\nDecember 15, 2024, subject to early termination for certain specified events set forth in the plans.\nItem 9C.    Disclosure Regarding Foreign Jurisdictions that Prevent Inspections\nNot applicable.\nPART III\nItem 10.    Directors, Executive Officers and Corporate Governance\nThe information required by this Item will be included in the Company’s definitive proxy statement to be filed with the SEC within 120 days after September 30,\n2023, in connection with the solicitation of proxies for the Company’s 2024 annual meeting of shareholders (the “2024 Proxy Statement”), and is incorporated\nherein by reference.\nItem 11.    Executive Compensation\nThe information required by this Item will be included in the 2024 Proxy Statement, and is incorporated herein by reference.\nItem 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters\nThe information required by this Item will be included in the 2024 Proxy Statement, and is incorporated herein by reference.\nItem 13.    Certain Relationships and Related Transactions, and Director Independence\nThe information required by this Item will be included in the 2024 Proxy Statement, and is incorporated herein by reference.\nItem 14.    Principal Accountant Fees and Services\nThe information required by this Item will be included in the 2024 Proxy Statement, and is incorporated herein by reference.\nApple Inc. | 2023 Form 10-K | 53\n\n\nPART IV\nItem 15.    Exhibit and Financial Statement Schedules\n(a) Documents filed as part of this report\n(1) All financial statements\nIndex to Consolidated Financial Statements\nPage\nConsolidated Statements of Operations for the years ended September 30, 2023, September 24, 2022 and September 25, 2021\n28\nConsolidated Statements of Comprehensive Income for the years ended September 30, 2023, September 24, 2022 and September 25, 2021\n29\nConsolidated Balance Sheets as of September 30, 2023 and September 24, 2022\n30\nConsolidated Statements of Shareholders’ Equity for the years ended September 30, 2023, September 24, 2022 and September 25, 2021\n31\nConsolidated Statements of Cash Flows for the years ended September 30, 2023, September 24, 2022 and September 25, 2021\n32\nNotes to Consolidated Financial Statements\n33\nReports of Independent Registered Public Accounting Firm*\n49\n* Ernst & Young LLP, PCAOB Firm ID No. 00042.\n(2) Financial Statement Schedules\nAll financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission\nof the schedule, or because the information required is included in the consolidated financial statements and accompanying notes included in this Form 10-K.\n(3) Exhibits required by Item 601 of Regulation S-K \nIncorporated by Reference\nExhibit Number\nExhibit Description\nForm\nExhibit\nFiling Date/\nPeriod End\nDate\n3.1\nRestated Articles of Incorporation of the Registrant filed on August 3, 2020.\n8-K\n3.1\n8/7/20\n3.2\nAmended and Restated Bylaws of the Registrant effective as of August 17, 2022.\n8-K\n3.2\n8/19/22\n4.1**\nDescription of Securities of the Registrant.\n4.2\nIndenture, dated as of April 29, 2013, between the Registrant and The Bank of New York Mellon\nTrust Company, N.A., as Trustee.\nS-3\n4.1\n4/29/13\n4.3\nOfficer’s Certificate of the Registrant, dated as of May 3, 2013, including forms of global notes\nrepresenting the Floating Rate Notes due 2016, Floating Rate Notes due 2018, 0.45% Notes due\n2016, 1.00% Notes due 2018, 2.40% Notes due 2023 and 3.85% Notes due 2043.\n8-K\n4.1\n5/3/13\n4.4\nOfficer’s Certificate of the Registrant, dated as of May 6, 2014, including forms of global notes\nrepresenting the Floating Rate Notes due 2017, Floating Rate Notes due 2019, 1.05% Notes due\n2017, 2.10% Notes due 2019, 2.85% Notes due 2021, 3.45% Notes due 2024 and 4.45% Notes\ndue 2044.\n8-K\n4.1\n5/6/14\n4.5\nOfficer’s Certificate of the Registrant, dated as of November 10, 2014, including forms of global\nnotes representing the 1.000% Notes due 2022 and 1.625% Notes due 2026.\n8-K\n4.1\n11/10/14\n4.6\nOfficer’s Certificate of the Registrant, dated as of February 9, 2015, including forms of global notes\nrepresenting the Floating Rate Notes due 2020, 1.55% Notes due 2020, 2.15% Notes due 2022,\n2.50% Notes due 2025 and 3.45% Notes due 2045.\n8-K\n4.1\n2/9/15\n4.7\nOfficer’s Certificate of the Registrant, dated as of May 13, 2015, including forms of global notes\nrepresenting the Floating Rate Notes due 2017, Floating Rate Notes due 2020, 0.900% Notes due\n2017, 2.000% Notes due 2020, 2.700% Notes due 2022, 3.200% Notes due 2025, and 4.375%\nNotes due 2045.\n8-K\n4.1\n5/13/15\n4.8\nOfficer’s Certificate of the Registrant, dated as of July 31, 2015, including forms of global notes\nrepresenting the 3.05% Notes due 2029 and 3.60% Notes due 2042.\n8-K\n4.1\n7/31/15\n4.9\nOfficer’s Certificate of the Registrant, dated as of September 17, 2015, including forms of global\nnotes representing the 1.375% Notes due 2024 and 2.000% Notes due 2027.\n8-K\n4.1\n9/17/15\n(1)\nApple Inc. | 2023 Form 10-K | 54\n\n\nIncorporated by Reference\nExhibit Number\nExhibit Description\nForm\nExhibit\nFiling Date/\nPeriod End\nDate\n4.10\nOfficer’s Certificate of the Registrant, dated as of February 23, 2016, including forms of global notes\nrepresenting the Floating Rate Notes due 2019, Floating Rate Notes due 2021, 1.300% Notes due\n2018, 1.700% Notes due 2019, 2.250% Notes due 2021, 2.850% Notes due 2023, 3.250% Notes\ndue 2026, 4.500% Notes due 2036 and 4.650% Notes due 2046.\n8-K\n4.1\n2/23/16\n4.11\nSupplement No. 1 to the Officer’s Certificate of the Registrant, dated as of March 24, 2016.\n8-K\n4.1\n3/24/16\n4.12\nOfficer’s Certificate of the Registrant, dated as of August 4, 2016, including forms of global notes\nrepresenting the Floating Rate Notes due 2019, 1.100% Notes due 2019, 1.550% Notes due\n2021, 2.450% Notes due 2026 and 3.850% Notes due 2046.\n8-K\n4.1\n8/4/16\n4.13\nOfficer’s Certificate of the Registrant, dated as of February 9, 2017, including forms of global notes\nrepresenting the Floating Rate Notes due 2019, Floating Rate Notes due 2020, Floating Rate\nNotes due 2022, 1.550% Notes due 2019, 1.900% Notes due 2020, 2.500% Notes due 2022,\n3.000% Notes due 2024, 3.350% Notes due 2027 and 4.250% Notes due 2047.\n8-K\n4.1\n2/9/17\n4.14\nOfficer’s Certificate of the Registrant, dated as of May 11, 2017, including forms of global notes\nrepresenting the Floating Rate Notes due 2020, Floating Rate Notes due 2022, 1.800% Notes due\n2020, 2.300% Notes due 2022, 2.850% Notes due 2024 and 3.200% Notes due 2027.\n8-K\n4.1\n5/11/17\n4.15\nOfficer’s Certificate of the Registrant, dated as of May 24, 2017, including forms of global notes\nrepresenting the 0.875% Notes due 2025 and 1.375% Notes due 2029.\n8-K\n4.1\n5/24/17\n4.16\nOfficer’s Certificate of the Registrant, dated as of June 20, 2017, including form of global note\nrepresenting the 3.000% Notes due 2027.\n8-K\n4.1\n6/20/17\n4.17\nOfficer’s Certificate of the Registrant, dated as of August 18, 2017, including form of global note\nrepresenting the 2.513% Notes due 2024.\n8-K\n4.1\n8/18/17\n4.18\nOfficer’s Certificate of the Registrant, dated as of September 12, 2017, including forms of global\nnotes representing the 1.500% Notes due 2019, 2.100% Notes due 2022, 2.900% Notes due\n2027 and 3.750% Notes due 2047.\n8-K\n4.1\n9/12/17\n4.19\nOfficer’s Certificate of the Registrant, dated as of November 13, 2017, including forms of global\nnotes representing the 1.800% Notes due 2019, 2.000% Notes due 2020, 2.400% Notes due\n2023, 2.750% Notes due 2025, 3.000% Notes due 2027 and 3.750% Notes due 2047.\n8-K\n4.1\n11/13/17\n4.20\nIndenture, dated as of November 5, 2018, between the Registrant and The Bank of New York Mellon\nTrust Company, N.A., as Trustee.\nS-3\n4.1\n11/5/18\n4.21\nOfficer’s Certificate of the Registrant, dated as of September 11, 2019, including forms of global\nnotes representing the 1.700% Notes due 2022, 1.800% Notes due 2024, 2.050% Notes due\n2026, 2.200% Notes due 2029 and 2.950% Notes due 2049.\n8-K\n4.1\n9/11/19\n4.22\nOfficer’s Certificate of the Registrant, dated as of November 15, 2019, including forms of global\nnotes representing the 0.000% Notes due 2025 and 0.500% Notes due 2031.\n8-K\n4.1\n11/15/19\n4.23\nOfficer’s Certificate of the Registrant, dated as of May 11, 2020, including forms of global notes\nrepresenting the 0.750% Notes due 2023, 1.125% Notes due 2025, 1.650% Notes due 2030 and\n2.650% Notes due 2050.\n8-K\n4.1\n5/11/20\n4.24\nOfficer’s Certificate of the Registrant, dated as of August 20, 2020, including forms of global notes\nrepresenting the 0.550% Notes due 2025, 1.25% Notes due 2030, 2.400% Notes due 2050 and\n2.550% Notes due 2060.\n8-K\n4.1\n8/20/20\n4.25\nOfficer’s Certificate of the Registrant, dated as of February 8, 2021, including forms of global notes\nrepresenting the  0.700% Notes due 2026, 1.200% Notes due 2028,  1.650% Notes due\n2031, 2.375% Notes due 2041, 2.650% Notes due 2051 and 2.800% Notes due 2061.\n8-K\n4.1\n2/8/21\n4.26\nOfficer’s Certificate of the Registrant, dated as of August 5, 2021, including forms of global notes\nrepresenting the 1.400% Notes due 2028, 1.700% Notes due 2031, 2.700% Notes due 2051 and\n2.850% Notes due 2061.\n8-K\n4.1\n8/5/21\n4.27\nIndenture, dated as of October 28, 2021, between the Registrant and The Bank of New York Mellon\nTrust Company, N.A., as Trustee.\nS-3\n4.1\n10/29/21\n4.28\nOfficer’s Certificate of the Registrant, dated as of August 8, 2022, including forms of global notes\nrepresenting the 3.250% Notes due 2029, 3.350% Notes due 2032, 3.950% Notes due 2052 and\n4.100% Notes due 2062.\n8-K\n4.1\n8/8/22\nApple Inc. | 2023 Form 10-K | 55\n\n\nIncorporated by Reference\nExhibit Number\nExhibit Description\nForm\nExhibit\nFiling Date/\nPeriod End\nDate\n4.29\nOfficer’s Certificate of the Registrant, dated as of May 10, 2023, including forms of global notes\nrepresenting the 4.421% Notes due 2026, 4.000% Notes due 2028, 4.150% Notes due 2030,\n4.300% Notes due 2033 and 4.850% Notes due 2053.\n8-K\n4.1\n5/10/23\n4.30*\nApple Inc. Deferred Compensation Plan.\nS-8\n4.1\n8/23/18\n10.1*\nApple Inc. Employee Stock Purchase Plan, as amended and restated as of March 10, 2015.\n8-K\n10.1\n3/13/15\n10.2*\nForm of Indemnification Agreement between the Registrant and each director and executive officer\nof the Registrant.\n10-Q\n10.2\n6/27/09\n10.3*\nApple Inc. Non-Employee Director Stock Plan, as amended November 9, 2021.\n10-Q\n10.1\n12/25/21\n10.4*\nApple Inc. 2014 Employee Stock Plan, as amended and restated as of October 1, 2017.\n10-K\n10.8\n9/30/17\n10.5*\nForm of Restricted Stock Unit Award Agreement under 2014 Employee Stock Plan effective as of\nSeptember 26, 2017.\n10-K\n10.20\n9/30/17\n10.6*\nForm of Restricted Stock Unit Award Agreement under Non-Employee Director Stock Plan effective\nas of February 13, 2018.\n10-Q\n10.2\n3/31/18\n10.7*\nForm of Restricted Stock Unit Award Agreement under 2014 Employee Stock Plan effective as of\nAugust 21, 2018.\n10-K\n10.17\n9/29/18\n10.8*\nForm of Performance Award Agreement under 2014 Employee Stock Plan effective as of August 21,\n2018.\n10-K\n10.18\n9/29/18\n10.9*\nForm of Restricted Stock Unit Award Agreement under 2014 Employee Stock Plan effective as of\nSeptember 29, 2019.\n10-K\n10.15\n9/28/19\n10.10*\nForm of Performance Award Agreement under 2014 Employee Stock Plan effective as of September\n29, 2019.\n10-K\n10.16\n9/28/19\n10.11*\nForm of Restricted Stock Unit Award Agreement under 2014 Employee Stock Plan effective as of\nAugust 18, 2020.\n10-K\n10.16\n9/26/20\n10.12*\nForm of Performance Award Agreement under 2014 Employee Stock Plan effective as of August 18,\n2020.\n10-K\n10.17\n9/26/20\n10.13*\nForm of CEO Restricted Stock Unit Award Agreement under 2014 Employee Stock Plan effective as\nof September 27, 2020.\n10-Q\n10.1\n12/26/20\n10.14*\nForm of CEO Performance Award Agreement under 2014 Employee Stock Plan effective as of\nSeptember 27, 2020.\n10-Q\n10.2\n12/26/20\n10.15*\nApple Inc. 2022 Employee Stock Plan.\n8-K\n10.1\n3/4/22\n10.16*\nForm of Restricted Stock Unit Award Agreement under 2022 Employee Stock Plan effective as of\nMarch 4, 2022.\n8-K\n10.2\n3/4/22\n10.17*\nForm of Performance Award Agreement under 2022 Employee Stock Plan effective as of March 4,\n2022.\n8-K\n10.3\n3/4/22\n10.18*\nApple Inc. Executive Cash Incentive Plan.\n8-K\n10.1\n8/19/22\n10.19*\nForm of CEO Restricted Stock Unit Award Agreement under 2022 Employee Stock Plan effective as\nof September 25, 2022.\n10-Q\n10.1\n12/31/22\n10.20*\nForm of CEO Performance Award Agreement under 2022 Employee Stock Plan effective as of\nSeptember 25, 2022.\n10-Q\n10.2\n12/31/22\n21.1**\nSubsidiaries of the Registrant.\n23.1**\nConsent of Independent Registered Public Accounting Firm.\n24.1**\nPower of Attorney (included on the Signatures page of this Annual Report on Form 10-K).\n31.1**\nRule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.\n31.2**\nRule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.\n32.1***\nSection 1350 Certifications of Chief Executive Officer and Chief Financial Officer.\n101**\nInline XBRL Document Set for the consolidated financial statements and accompanying notes in\nPart II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-\nK.\nApple Inc. | 2023 Form 10-K | 56\n\n\nIncorporated by Reference\nExhibit Number\nExhibit Description\nForm\nExhibit\nFiling Date/\nPeriod End\nDate\n104**\nInline XBRL for the cover page of this Annual Report on Form 10-K, included in the Exhibit 101 Inline\nXBRL Document Set.\n*\nIndicates management contract or compensatory plan or arrangement.\n**\nFiled herewith.\n***\nFurnished herewith.\n(1)\nCertain instruments defining the rights of holders of long-term debt securities of the Registrant are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The\nRegistrant hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.\nItem 16.    Form 10-K Summary\nNone.\nApple Inc. | 2023 Form 10-K | 57\n\n\nSIGNATURES\nPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf\nby the undersigned, thereunto duly authorized.\nDate: November 2, 2023\nApple Inc.\nBy:\n/s/ Luca Maestri\nLuca Maestri\nSenior Vice President,\nChief Financial Officer\nPower of Attorney\nKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Timothy D. Cook and Luca Maestri,\njointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this\nAnnual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange\nCommission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.\nPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and\nin the capacities and on the dates indicated:\nName\nTitle\nDate\n/s/ Timothy D. Cook\nChief Executive Officer and Director\n(Principal Executive Officer)\nNovember 2, 2023\nTIMOTHY D. COOK\n/s/ Luca Maestri\nSenior Vice President, Chief Financial Officer\n(Principal Financial Officer)\nNovember 2, 2023\nLUCA MAESTRI\n/s/ Chris Kondo\nSenior Director of Corporate Accounting\n(Principal Accounting Officer)\nNovember 2, 2023\nCHRIS KONDO\n/s/ James A. Bell\nDirector\nNovember 2, 2023\nJAMES A. BELL\n/s/ Al Gore\nDirector\nNovember 2, 2023\nAL GORE\n/s/ Alex Gorsky\nDirector\nNovember 2, 2023\nALEX GORSKY\n/s/ Andrea Jung\nDirector\nNovember 2, 2023\nANDREA JUNG\n/s/ Arthur D. Levinson\nDirector and Chair of the Board\nNovember 2, 2023\nARTHUR D. LEVINSON\n/s/ Monica Lozano\nDirector\nNovember 2, 2023\nMONICA LOZANO\n/s/ Ronald D. Sugar\nDirector\nNovember 2, 2023\nRONALD D. SUGAR\n/s/ Susan L. Wagner\nDirector\nNovember 2, 2023\nSUSAN L. WAGNER\nApple Inc. | 2023 Form 10-K | 58\n\n\nExhibit 4.1\nDESCRIPTION OF THE REGISTRANT’S SECURITIES\nREGISTERED PURSUANT TO SECTION 12 OF THE\nSECURITIES EXCHANGE ACT OF 1934\nAs of September 30, 2023, Apple Inc. (“Apple” or the “Company”) had ten classes of securities registered under Section 12 of the Securities Exchange\nAct of 1934, as amended (the “Exchange Act”): (i) Common Stock, $0.00001 par value per share (“Common Stock”); (ii) 1.375% Notes due 2024 (the “2024\nNotes”); (iii) 0.000% Notes due 2025 (the “0.000% 2025 Notes”); (iv) 0.875% Notes due 2025 (the “0.875% 2025 Notes”); (v) 1.625% Notes due 2026 (the “2026\nNotes”); (vi) 2.000% Notes due 2027 (the “2027 Notes”); (vii) 1.375% Notes due 2029 (the “1.375% 2029 Notes”); (viii) 3.050% Notes due 2029 (the “3.050%\n2029 Notes”); (ix) 0.500% Notes due 2031 (the “2031 Notes”); and (x) 3.600% Notes due 2042 (the “2042 Notes,” and together with the 2024 Notes, the 0.000%\n2025 Notes, the 0.875% 2025 Notes, the 2026 Notes, the 2027 Notes, the 1.375% 2029 Notes, the 3.050% 2029 Notes, and the 2031 Notes, the “Notes”). Each\nof the Company’s securities registered under Section 12 of the Exchange Act are listed on The Nasdaq Stock Market LLC.\nDESCRIPTION OF COMMON STOCK\nThe following is a description of the rights of Common Stock and related provisions of the Company’s Restated Articles of Incorporation (the “Articles”)\nand Amended and Restated Bylaws (the “Bylaws”) and applicable California law. This description is qualified in its entirety by, and should be read in conjunction\nwith, the Articles, Bylaws and applicable California law.\nAuthorized Capital Stock\nThe Company’s authorized capital stock consists of 50,400,000,000 shares of Common Stock.\nCommon Stock\n    Fully Paid and Nonassessable\n    All of the outstanding shares of the Company’s Common Stock are fully paid and nonassessable.\nVoting Rights\nThe holders of shares of Common Stock are entitled to one vote per share on all matters to be voted on by such holders. Holders of shares of Common\nStock are not entitled to cumulative voting rights.\nExcept as described below or as required by law, all matters to be voted on by shareholders must be approved by the affirmative vote of (i) a majority of\nthe shares present or represented by proxy and voting and (ii) a majority of the shares required to constitute a quorum.\nIn an election of directors where the number of nominees exceeds the number of directors to be elected, the candidates receiving the highest number\nof affirmative votes of the shares entitled to be voted for them up to the number of directors to be elected by such shares will be elected.\nThe Company’s entire Board of Directors or any individual director may be removed without cause by an affirmative vote of a majority of the outstanding\nshares entitled to vote, subject to the provisions of the Company’s Bylaws.\nVacancies created by the removal of a director must be filled only by approval of the shareholders, or by the unanimous written consent of all shares\nentitled to vote. The shareholders may elect a director at any time to fill a vacancy not filled by the directors, but any such election by written consent, other than\nto fill a vacancy created by removal, requires the consent of a majority of the outstanding shares entitled to vote thereon.\nAn amendment of the Bylaws or the Articles may be adopted by the vote of the majority of the outstanding shares entitled to vote. Any amendment of\nthe Bylaws specifying or changing a fixed number of directors or the maximum or minimum number or changing from a fixed to a variable board or vice versa\nmay only be adopted by the shareholders; provided, however, that an amendment of the Bylaws or the Articles reducing the fixed number or the minimum\nnumber of directors to less than five cannot be adopted if the votes cast against its adoption are equal to more than 16 2/3% of the outstanding shares entitled to\nvote.\n\n\nAny shareholders’ meeting may be adjourned from time to time by the vote of a majority of the shares present in person or represented by proxy.\nDividends\nThe holders of shares of Common Stock are entitled to receive such dividends, if any, as may be declared from time to time by the Company’s Board of\nDirectors in its discretion from funds legally available therefor.\nRight to Receive Liquidation Distributions\nUpon liquidation, dissolution or winding-up, the holders of shares of Common Stock are entitled to receive pro rata all assets remaining available for\ndistribution to holders of such shares.\nNo Preemptive or Similar Rights\nCommon Stock has no preemptive or other subscription rights, and there are no conversion rights or redemption or sinking fund provisions with respect\nto such shares of Common Stock.\nAnti-Takeover Provisions of the Articles, Bylaws and California Law\nProvisions of the Articles and Bylaws may delay or discourage transactions involving an actual or potential change in control of the Company or change\nin its management, including transactions in which shareholders might otherwise receive a premium for their shares, or transactions that its shareholders might\notherwise deem to be in their best interests. Among other things, the Articles and Bylaws:\n•\nprovide that, except for a vacancy caused by the removal of a director as provided in the Bylaws, a vacancy on the Company’s Board of Directors\nmay be filled by a person selected by a majority of the remaining directors then in office, whether or not less than a quorum, or by a sole remaining\ndirector;\n•\nprovide that shareholders seeking to present proposals before a meeting of shareholders or to nominate candidates for election as directors at a\nmeeting of shareholders must provide notice in writing in a timely manner, and also specify requirements as to the form and content of a\nshareholder’s notice, including with respect to a shareholder’s notice under Rule 14a-19 of the Exchange Act;\n•\nprovide that a shareholder, or group of up to 20 shareholders, that has owned continuously for at least three years shares of Common Stock\nrepresenting an aggregate of at least 3% of the Company’s outstanding shares of Common Stock, may nominate and include in the Company’s\nproxy materials director nominees constituting up to 20% of the Company’s Board of Directors, provided that the shareholder(s) and nominee(s)\nsatisfy the requirements in the Bylaws;\n•\ndo not provide for cumulative voting rights for the election of directors; and\n•\nprovide that special meetings of the shareholders may only be called by (i) the Board of Directors, the Chair of the Board of Directors or the Chief\nExecutive Officer or (ii) one or more holders of shares entitled to cast not less than ten percent (10%) of the votes on the record date established\npursuant to the Company’s Bylaws, provided that the shareholder(s) satisfy requirements in the Bylaws.\nIn addition, as a California corporation, the Company is subject to the provisions of Section 1203 of the California General Corporation Law, which\nrequires it to provide a fairness opinion to its shareholders in connection with their consideration of any proposed “interested party” reorganization transaction.\nListing\nThe Company’s Common Stock is listed on The Nasdaq Stock Market LLC under the trading symbol “AAPL.”\n2\n\n\nDESCRIPTION OF DEBT SECURITIES\nThe following description of the Notes is a summary and does not purport to be complete. This description is qualified in its entirety by reference, as\napplicable, to the Indenture, dated as of April 29, 2013, between Apple Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (the “2013\nIndenture”) and the Indenture, dated as of November 5, 2018, between Apple Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (the “2018\nIndenture,” and together with the 2013 Indenture, the “Indentures”). References in this section to the “Company,” “us,” “we” and “our” are solely to Apple Inc. and\nnot to any of its subsidiaries, unless the context requires otherwise.\nThe Notes\nEach of the Notes were issued under the applicable Indenture, which provides that debt securities may be issued under such Indenture from time to\ntime in one or more series. The Indentures and the Notes are governed by, and construed in accordance with, the laws of the State of New York. The Indentures\ndo not limit the amount of debt securities that we may issue thereunder. We may, without the consent of the holders of the debt securities of any series, issue\nadditional debt securities ranking equally with, and otherwise similar in all respects to, the debt securities of the series (except for the date of issuance, the date\ninterest begins to accrue and, in certain circumstances, the first interest payment date) so that those additional debt securities will be consolidated and form a\nsingle series with the debt securities of the series previously offered and sold; provided, however, that any additional debt securities will have a separate ISIN\nnumber unless certain conditions are met.\nThe 2024 Notes\nWe issued €1,000,000,000 aggregate principal amount of the 2024 Notes on September 17, 2015. The maturity date of the 2024 Notes is January 17,\n2024, and interest at a rate of 1.375% per annum is paid annually on January 17 of each year, beginning on January 17, 2016, and on the maturity date. As of\nOctober 20, 2023, €1,000,000,000 aggregate principal amount of the 2024 Notes was outstanding.\nThe 0.000% 2025 Notes\nWe issued €1,000,000,000 aggregate principal amount of the 0.000% 2025 Notes on November 15, 2019. The maturity date of the 0.000% 2025 Notes\nis November 15, 2025, and interest at a rate of 0.000% per annum is paid annually on November 15 of each year, beginning on November 15, 2020, and on the\nmaturity date. As of October 20, 2023, €1,000,000,000 aggregate principal amount of the 0.000% 2025 Notes was outstanding.\nThe 0.875% 2025 Notes\nWe issued €1,250,000,000 aggregate principal amount of the 0.875% 2025 Notes on May 24, 2017. The maturity date of the 0.875% 2025 Notes is\nMay 24, 2025, and interest at a rate of 0.875% per annum is paid annually on May 24 of each year, beginning on May 24, 2018, and on the maturity date. As of\nOctober 20, 2023, €1,250,000,000 aggregate principal amount of the 0.875% 2025 Notes was outstanding.\nThe 2026 Notes\nWe issued €1,400,000,000 aggregate principal amount of the 2026 Notes on November 10, 2014. The maturity date of the 2026 Notes is November 10,\n2026, and interest at a rate of 1.625% per annum is paid annually on November 10 of each year, beginning on November 10, 2015, and on the maturity date. As\nof October 20, 2023, €1,400,000,000 aggregate principal amount of the 2026 Notes was outstanding.\nThe 2027 Notes\nWe issued €1,000,000,000 aggregate principal amount of the 2027 Notes on September 17, 2015. The maturity date of the 2027 Notes is September\n17, 2027, and interest at a rate of 2.000% per annum is paid annually on September 17 of each year, beginning on September 17, 2016, and on the maturity\ndate. As of October 20, 2023, €1,000,000,000 aggregate principal amount of the 2027 Notes was outstanding.\n3\n\n\nThe 1.375% 2029 Notes\nWe issued €1,250,000,000 aggregate principal amount of the 1.375% 2029 Notes on May 24, 2017. The maturity date of the 1.375% 2029 Notes is\nMay 24, 2029, and interest at a rate of 1.375% per annum is paid annually on May 24 of each year, beginning on May 24, 2018, and on the maturity date. As of\nOctober 20, 2023, €1,250,000,000 aggregate principal amount of the 1.375% 2029 Notes was outstanding.\nThe 3.050% 2029 Notes\nWe issued £750,000,000 aggregate principal amount of the 3.050% 2029 Notes on July 31, 2015. The maturity date of the 3.050% 2029 Notes is July\n31, 2029, and interest at a rate of 3.050% per annum is paid semi-annually on January 31 and July 31 of each year, beginning on January 31, 2016, and on the\nmaturity date. As of October 20, 2023, £750,000,000 aggregate principal amount of the 3.050% 2029 Notes was outstanding.\nThe 2031 Notes\nWe issued €1,000,000,000 aggregate principal amount of the 2031 Notes on November 15, 2019. The maturity date of the 2031 Notes is November 15,\n2031, and interest at a rate of 0.500% per annum is paid annually on November 15 of each year, beginning on November 15, 2020, and on the maturity date. As\nof October 20, 2023, €1,000,000,000 aggregate principal amount of the 2031 Notes was outstanding.\nThe 2042 Notes\nWe issued £500,000,000 aggregate principal amount of the 2042 Notes on July 31, 2015. The maturity date of the 2042 Notes is July 31, 2042, and\ninterest at a rate of 3.600% per annum is paid semi-annually on January 31 and July 31 of each year, beginning on January 31, 2016, and on the maturity date.\nAs of October 20, 2023, £500,000,000 aggregate principal amount of the 2042 Notes was outstanding.\nRanking\nThe Notes are our senior unsecured indebtedness and rank equally with each other and with all of our other senior unsecured and unsubordinated\nindebtedness from time to time outstanding. However, the Notes are structurally subordinated to any indebtedness and preferred stock, if any, of our subsidiaries\nand are effectively subordinated to any secured indebtedness to the extent of the value of the assets securing such indebtedness. Claims of the creditors of our\nsubsidiaries generally have priority with respect to the assets and earnings of such subsidiaries over the claims of our creditors, including holders of the Notes.\nAccordingly, the Notes are effectively subordinated to creditors, including trade creditors and preferred stockholders, if any, of our subsidiaries. The Indentures\ndo not restrict our ability or that of our subsidiaries to incur additional indebtedness.\nPayment on the Notes\nAll payments of principal of, the redemption price (if any), and interest and additional amounts (if any) on the 2024 Notes, the 0.000% 2025 Notes, the\n0.875% 2025 Notes, the 2026 Notes, the 2027 Notes, the 1.375% 2029 Notes and the 2031 Notes are payable in euro, provided that, if the euro is unavailable\nto the Company due to the imposition of exchange controls or other circumstances beyond the Company’s control, or if the euro is no longer being used by the\nthen member states of the European Monetary Union that have adopted the euro as their currency or for the settlement of transactions by public institutions of or\nwithin the international banking community, then all payments in respect of the 2024 Notes, the 0.000% 2025 Notes, the 0.875% 2025 Notes, the 2026 Notes,\nthe 2027 Notes, the 1.375% 2029 Notes and the 2031 Notes will be made in U.S. dollars, until the euro is again available to the Company or so used. The\namount payable on any date in euro will be converted into U.S. dollars at the rate mandated by the U.S. Federal Reserve Board as of the close of business on\nthe second Business Day prior to the relevant payment date or, in the event the U.S. Federal Reserve Board has not mandated a rate of conversion, on the\nbasis of the most recent U.S. dollar/euro exchange rate published in The Wall Street Journal on or prior to the second Business Day prior to the relevant\npayment date. Any payment in respect of the 2024 Notes, the 0.000% 2025 Notes, the 0.875% 2025 Notes, the 2026 Notes, the 2027 Notes, the 1.375% 2029\nNotes and the 2031 Notes so made in U.S. dollars will not constitute an event of default under such Notes or the applicable Indenture.\n4\n\n\nWith respect to the 2024 Notes, the 0.000% 2025 Notes, the 0.875% 2025 Notes, the 2026 Notes, the 2027 Notes, the 1.375% 2029 Notes and the\n2031 Notes, “Business Day” means any day, other than a Saturday or Sunday, (1) which is not a day on which banking institutions in The City of New York or\nLondon are authorized or required by law, regulation or executive order to close and (2) on which the Trans-European Automated Real-time Gross Settlement\nExpress Transfer system (the TARGET2 system), or any successor thereto, is open.\nAll payments of principal of, the redemption price (if any), and interest and additional amounts (if any) on the 3.050% 2029 Notes and the 2042 Notes\nare payable in pounds sterling, or, if the United Kingdom adopts euro as its lawful currency, in euro. If pounds sterling or, in the event the Notes are\nredenominated into euro, euro is unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company’s control\nor, in the event the notes are redenominated into euro, the euro is no longer being used by the then member states of the European Monetary Union that have\nadopted the euro as their currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments\nin respect of the 3.050% 2029 Notes and the 2042 Notes will be made in U.S. dollars until the pound sterling or euro, as the case may be, is again available to\nthe Company or so used. The amount payable on any date in pounds sterling or, in the event such Notes are redenominated into euro, euro will be converted\ninto U.S. dollars at the rate mandated by the U.S. Federal Reserve Board as of the close of business on the second Business Day prior to the relevant payment\ndate or, in the event the U.S. Federal Reserve Board has not mandated a rate of conversion, on the basis of the most recent U.S. dollar/pounds sterling or, in the\nevent the Notes are redenominated into euro, the most recent U.S. dollar/euro exchange rate published in The Wall Street Journal on or prior to the second\nBusiness Day prior to the relevant payment date. Any payment in respect of the 3.050% 2029 Notes and the 2042 Notes so made in U.S. dollars will not\nconstitute an event of default under such Notes or the 2013 Indenture.\nWith respect to the 3.050% 2029 Notes and the 2042 Notes, “Business Day” means any day which is not a day on which banking institutions in The City\nof New York or London or the relevant place of payment are authorized or required by law, regulation or executive order to close.\nPayment of Additional Amounts\nThe terms of the Notes state that all payments of principal and interest in respect of the Notes will be made free and clear of, and without deduction or\nwithholding for or on account of any present or future taxes, duties, assessments or other governmental charges of whatsoever nature required to be deducted\nor withheld by the United States or any political subdivision or taxing authority of or in the United States, unless such withholding or deduction is required by law.\nAll of the Notes also contain a covenant substantially similar to the following:\nThe Company will, subject to the exceptions and limitations set forth below, pay as additional interest on the Notes such additional amounts (“Additional\nAmounts”) as are necessary in order that the net payment by the Company or the paying agent of the Company for the applicable Notes (“Paying Agent”) of the\nprincipal of and interest on the Notes to a holder who is not a United States person (as defined below), after withholding or deduction for any present or future\ntax, assessment or other governmental charge (“Tax”) imposed by the United States or a taxing authority in the United States, will not be less than the amount\nprovided in the Notes to be then due and payable; provided, however, that the foregoing obligation to pay Additional Amounts shall not apply:\n(1) to any Tax that is imposed by reason of the holder (or the beneficial owner for whose benefit such holder holds the Notes), or a fiduciary, settlor,\nbeneficiary, member or shareholder of the holder if the holder is an estate, trust, partnership or corporation, or a person holding a power over an\nestate or trust administered by a fiduciary holder, being considered as:\n(a) being or having been engaged in a trade or business in the United States or having or having had a permanent establishment in the United\nStates;\n(b) having a current or former connection with the United States (other than a connection arising solely as a result of the ownership of the Notes,\nthe receipt of any payment or the enforcement of any rights hereunder), including being or having been a citizen or resident of the United\nStates;\n(c)\nbeing or having been a personal holding company, a passive foreign investment company or a controlled foreign corporation for U.S. federal\nincome tax purposes or a corporation that has accumulated earnings to avoid U.S. federal income tax;\n5\n\n\n(d) being or having been a “10-percent shareholder” of the Company as defined in Section 871(h)(3) of the Internal Revenue Code of 1986, as\namended (the “Code”);\n(e) being a controlled foreign corporation that is related to the Company within the meaning of Section 864(d)(4) of the Code; or\n(f)\nbeing a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade\nor business;\n(2) to any holder that is not the sole beneficial owner of the Notes, or a portion of the Notes, or that is a fiduciary, partnership or limited liability\ncompany, but only to the extent that a beneficial owner with respect to the holder, a beneficiary or settlor with respect to the fiduciary, or a beneficial\nowner or member of the partnership or limited liability company would not have been entitled to the payment of an additional amount had the\nbeneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment;\n(3) to any Tax that would not have been imposed but for the failure of the holder or any other person to comply with certification, identification or\ninformation reporting requirements concerning the nationality, residence, identity or connection with the United States of the holder or beneficial\nowner of the Notes, if compliance is required by statute, by regulation of the United States or any taxing authority therein or by an applicable\nincome tax treaty to which the United States is a party as a precondition to exemption from such Tax (including, but not limited to, the requirement\nto provide Internal Revenue Service Forms W-8BEN, W-8BEN-E, W-8ECI, or any subsequent versions thereof or successor thereto, and any\ndocumentation requirement under an applicable income tax treaty);\n(4) to any Tax that is imposed otherwise than by withholding by the Company or a Paying Agent from the payment;\n(5) to any Tax that would not have been imposed but for a change in law, regulation, or administrative or judicial interpretation that becomes effective\nmore than 10 days after the payment becomes due or is duly provided for, whichever occurs later;\n(6) to any estate, inheritance, gift, sales, excise, transfer, wealth, capital gains or personal property or similar Tax;\n(7) to any Tax required to be withheld by any paying agent from any payment of principal of or interest on any Note, if such payment can be made\nwithout such withholding by at least one other paying agent;\n(8) to any Tax that would not have been imposed but for the presentation by the holder of any Note, where presentation is required, for payment on a\ndate more than 30 days after the date on which payment became due and payable or the date on which payment thereof is duly provided for,\nwhichever occurs later;\n(9) to any Tax imposed under Sections 1471 through 1474 of the Code (or any amended or successor provisions), any current or future regulations or\nofficial interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or\npractices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such sections of the Code;\nor\n(10) in the case of any combination of items (1) through (9) above.\nThe Notes are subject in all cases to any tax, fiscal or other law or regulation or administrative or judicial interpretation applicable to the Notes. Except as\nspecifically provided under this heading “—Payment of Additional Amounts,” the Company will not be required to make any payment for any Tax imposed by any\ngovernment or a political subdivision or taxing authority of or in any government or political subdivision. As used under “—Payment of Additional Amounts” and\nunder “—Redemption for Tax Reasons,” the term “United States” means the United States of America (including the states and the District of Columbia and any\npolitical subdivision thereof), and the term “United States person” means any individual who is a citizen or resident of the United States for U.S. federal income\ntax purposes, a corporation, partnership or other entity created or organized in or under the laws of the United States, any state of the United States or the\nDistrict of Columbia (other than a partnership that is not treated as a United\n6\n\n\nStates person under any applicable Treasury regulations), or any estate or trust the income of which is subject to U.S. federal income taxation regardless of its\nsource.\nRedemption for Tax Reasons\nIf, as a result of any change in, or amendment to, or, in the case of the 0.000% 2025 Notes and the 2031 Notes, introduction of, the laws (or any\nregulations or rulings promulgated under the laws) of the United States (or any political subdivision or taxing authority of or in the United States), or any change\nin, or amendments to, an official position regarding the application or interpretation of such laws, regulations or rulings, which change or amendment is\nannounced or becomes effective on or after the date of the applicable prospectus supplement, we become, or based upon a written opinion of independent\ncounsel selected by us, will become obligated to pay additional amounts as described above under the heading “Payments of Additional Amounts” with respect\nto a series of the Notes, then we may at our option redeem, in whole, but not in part, in the case of the 2024 Notes, the 2026 Notes, the 2027 Notes, the 3.050%\n2029 Notes and the 2042 Notes, the Notes of such series on not less than 30 nor more than 60 days’ prior notice, in the case of the 0.875% 2025 Notes and the\n1.375% 2029 Notes, the Notes of such series on not less than 15 nor more than 60 days’ notice, and in the case of the 0.000% 2025 Notes and the 2031 Notes,\nthe Notes of such series on not less than 10 nor more than 60 days’ prior notice, in each case at a redemption price equal to 100% of their principal amount,\ntogether with interest accrued but unpaid on those Notes to (and, in the case of the 0.000% 2025 Notes and the 2031 Notes, but not including) the date fixed for\nredemption.\nOptional Redemption\nWe may redeem the 2024 Notes, the 2026 Notes, the 2027 Notes, the 3.050% 2029 Notes and the 2042 Notes at our option, at any time in whole or\nfrom time to time in part, at a redemption price equal to the greater of:\n•\n100% of the principal amount of the Notes to be redeemed; or\n•\nthe sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of\ninterest accrued as of the date of redemption), discounted to the date of redemption on an annual basis (ACTUAL/ACTUAL (ICMA)) at the\napplicable Comparable Government Bond Rate (as defined below), plus 10 basis points in the case of the 2026 Notes, plus 15 basis points in the\ncase of the 2024 Notes, the 3.050% 2029 Notes and the 2042 Notes and plus 20 basis points in the case of the 2027 Notes.\nWe may redeem the 0.000% 2025 Notes, the 0.875% 2025 Notes, the 1.375% 2029 Notes and the 2031 Notes at our option, at any time in whole or\nfrom time to time in part, prior to the applicable Par Call Date at a redemption price equal to the greater of:\n•\n100% of the principal amount of the Notes to be redeemed; or\n•\nthe sum of the present values of the remaining scheduled payments of principal and interest thereon assuming that the Notes matured on the\napplicable Par Call Date (not including any portion of such payments of interest accrued as of the date of redemption), discounted to the date of\nredemption on an annual basis (ACTUAL/ACTUAL (ICMA)) at the applicable Comparable Government Bond Rate (as defined below), plus 10\nbasis points in the case of the 0.000% 2025 Notes, plus 15 basis points in the case of the 0.875% 2025 Notes and the 2031 Notes, and 20 basis\npoints in the case of the 2029 Notes.\n“Par Call Date” means (i) with respect to the 0.000% 2025 Notes, August 15, 2025 (three months prior to the maturity date of the 0.000% 2025 Notes),\n(ii) with respect to the 0.875% 2025 Notes, February 24, 2025 (three months prior to the maturity date of the 0.875% 2025 Notes), (iii) with respect to the 1.375%\n2029 Notes, February 24, 2029 (three months prior to the maturity date of 1.375% 2029 Notes) and (iv) with respect to the 2031 Notes, August 15, 2031 (three\nmonths prior to the maturity of the 2031 Notes).\nIf any of the 0.000% 2025 Notes, the 0.875% 2025 Notes, the 1.375% 2029 Notes or the 2031 Notes are redeemed on or after the applicable Par Call\nDate, the redemption price for such Notes will equal 100% of the principal amount of the Notes being redeemed.\nIn each case upon redemption of the Notes, we will pay accrued and unpaid interest on the principal amount being redeemed to, but excluding, the date\nof redemption.\n7\n\n\nInstallments of interest on Notes being redeemed that are due and payable on interest payment dates falling on or prior to a redemption date shall be\npayable on the interest payment date to the holders as of the close of business on the relevant regular record date according to the Notes and the applicable\nIndenture.\n“Comparable Government Bond” means, in relation to any Comparable Government Bond Rate calculation for the 2024 Notes, the 2026 Notes and the\n2027 Notes, at the discretion of an independent investment bank selected by us, a German government bond whose maturity is closest to the maturity of the\nNotes being redeemed, or if such independent investment bank in its discretion determines that such similar bond is not in issue, such other German\ngovernment bond as such independent investment bank may, with the advice of three brokers of, and/or market makers in, German government bonds selected\nby us, determine to be appropriate for determining the Comparable Government Bond Rate.\n“Comparable Government Bond” means, in relation to any Comparable Government Bond Rate calculation for the 3.050% 2029 Notes and the 2042\nNotes, at the discretion of an independent investment bank selected by us, a United Kingdom government bond whose maturity is closest to the maturity of the\nNotes being redeemed, or if such independent investment bank in its discretion determines that such similar bond is not in issue, such other United Kingdom\ngovernment bond as such independent investment bank may, with the advice of three brokers of, and/or market makers in, United Kingdom government bonds\nselected by us, determine to be appropriate for determining the Comparable Government Bond Rate.\n“Comparable Government Bond” means, in relation to any Comparable Government Bond Rate calculation for the 0.000% 2025 Notes, the 0.875%\n2025 Notes, the 1.375% 2029 Notes and the 2031 Notes, at the discretion of an independent investment bank selected by us, a German government bond\nwhose maturity is closest to the applicable Par Call Date of the Notes being redeemed, or if such independent investment bank in its discretion determines that\nsuch similar bond is not in issue, such other German government bond as such independent investment bank may, with the advice of three brokers of, and/or\nmarket makers in, German government bonds selected by us, determine to be appropriate for determining the Comparable Government Bond Rate.\n“Comparable Government Bond Rate” means the price, expressed as a percentage (rounded to three decimal places, with 0.0005 being rounded\nupwards), at which the gross redemption yield on the Notes, if they were to be purchased at such price on the third business day prior to the date fixed for\nredemption, would be equal to the gross redemption yield on such business day of the Comparable Government Bond on the basis of the middle market price of\nthe Comparable Government Bond prevailing at 11:00 a.m. (London time) on such business day as determined by an independent investment bank selected by\nus.\nCovenants\nThe Indentures set forth limited covenants that apply to the Notes. However, these covenants do not, among other things:\n•\nlimit the amount of indebtedness or lease obligations that may be incurred by us and our subsidiaries;\n•\nlimit our ability or that of our subsidiaries to issue, assume or guarantee debt secured by liens; or\n•\nrestrict us from paying dividends or making distributions on our capital stock or purchasing or redeeming our capital stock.\nConsolidation, Merger and Sale of Assets\nThe Indentures provide that we may consolidate with or merge with or into any other person, and may sell, transfer, or lease or convey all or\nsubstantially all of our properties and assets to another person; provided that the following conditions are satisfied:\n•\nwe are the continuing entity, or the resulting, surviving or transferee person (the “Successor”) is a person (if such person is not a corporation, then\nthe Successor will include a corporate co-issuer of the debt securities) organized and existing under the laws of the United States of America, any\nstate thereof or the District of Columbia and the Successor (if not us) will expressly assume, by supplemental indenture, all of our obligations under\nthe debt securities and the applicable Indenture and, for each security that by its terms provides for conversion, provide for the right to convert such\nsecurity in accordance with its terms;\n8\n\n\n•\nimmediately after giving effect to such transaction, no default or event of default under the applicable Indenture has occurred and is continuing; and\n•\nin the case of the 2013 Indenture, the trustee receives from us an officers’ certificate and an opinion of counsel that the transaction and such\nsupplemental indenture, as the case may be, complies with the applicable provisions of the 2013 Indenture.\nIf we consolidate or merge with or into any other person or sell, transfer, lease or convey all or substantially all of our properties and assets in\naccordance with the Indentures, the Successor will be substituted for us in the Indentures, with the same effect as if it had been an original party to the\nIndentures. As a result, the Successor may exercise our rights and powers under the Indentures, and we will be released from all our liabilities and obligations\nunder the Indentures and under the debt securities.\nFor purposes of this covenant, “person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock\ncompany, trust, unincorporated organization or government or any agency or political subdivision thereof or any other entity.\nEvents of Default\nEach of the following events are defined in the Indentures as an “event of default” (whatever the reason for such event of default and whether or not it\nwill be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any\nadministrative or governmental body) with respect to the debt securities of any series:\n(1)    default in the payment of any installment of interest on any debt securities of such series for 30 days after becoming due;\n(2)    default in the payment of principal of or premium, if any, on any debt securities of such series when it becomes due and payable at its stated\nmaturity, upon optional redemption, upon declaration or otherwise;\n(3)    default in the performance, or breach, of any covenant or agreement of ours in the applicable Indenture with respect to the debt securities of such\nseries (other than a covenant or agreement, a default in the performance of which or a breach of which is elsewhere in the applicable Indenture\nspecifically dealt with or that has expressly been included in the applicable Indenture solely for the benefit of a series of debt securities other than\nsuch series), which continues for a period of 90 days after written notice to us by the trustee or to us and the trustee by the holders of, in the case\nof the 2013 Indenture, at least 25% in aggregate principal amount of the outstanding debt securities of that series, and in the case of the 2018\nIndenture, at least 33% in aggregate principal amount of the outstanding debt securities of that series;\n(4)    we, pursuant to or within the meaning of the Bankruptcy Law:\n•\ncommence a voluntary case or proceeding;\n•\nconsent to the entry of an order for relief against us in an involuntary case or proceeding;\n•\nconsent to the appointment of a custodian of us or for all or substantially all of our property;\n•\nmake a general assignment for the benefit of our creditors;\n•\nfile a petition in bankruptcy or answer or consent seeking reorganization or relief;\n•\nconsent to the filing of such petition or the appointment of or taking possession by a custodian; or\n•\ntake any comparable action under any foreign laws relating to insolvency;\n9\n\n\n(5)    a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:\n•\nis for relief against us in an involuntary case, or adjudicates us insolvent or bankrupt;\n•\nappoints a custodian of us or for all or substantially all of our property; or\n•\norders the winding-up or liquidation of us (or any similar relief is granted under any foreign laws);\nand the order or decree remains unstayed and in effect for 90 days (or, in the case of the 2018 Indenture, 90 consecutive days); or\n(6)    any other event of default provided with respect to debt securities of such series occurs.\n“Bankruptcy Law” means Title 11, United States Code or any similar federal or state or foreign law for the relief of debtors. “Custodian” means any\ncustodian, receiver, trustee, assignee, liquidator or other similar official under any Bankruptcy Law.\nIf an event of default with respect to debt securities of any series (other than an event of default relating to certain events of bankruptcy, insolvency, or\nreorganization of us) occurs and is continuing, the trustee by notice to us, or the holders of, in the case of the 2013 Indenture, at least 25% in aggregate principal\namount of the outstanding debt securities of such series, and in the case of the 2018 Indenture, at least 33% in aggregate principal amount of the outstanding\ndebt securities of such series, by notice to us and the trustee, may, and the trustee at the request of these holders will, declare the principal of and premium, if\nany, and accrued and unpaid interest on all the debt securities of such series to be due and payable. Upon such a declaration, such principal, premium and\naccrued and unpaid interest will be due and payable immediately. If an event of default relating to certain events of bankruptcy, insolvency, or reorganization of\nus occurs and is continuing, the principal of and premium, if any, and accrued and unpaid interest on the debt securities of such series will become and be\nimmediately due and payable without any declaration or other act on the part of the trustee or any holders.\nThe holders of not less than a majority in aggregate principal amount of the outstanding debt securities of any series may rescind a declaration of\nacceleration and its consequences, if we have deposited certain sums with the trustee and all events of default with respect to the debt securities of such series,\nother than the non-payment of the principal or interest which have become due solely by such acceleration, have been cured or waived, as provided in the\nIndentures.\nAn event of default for a particular series of debt securities does not necessarily constitute an event of default for any other series of debt securities\nissued under the Indentures.\nWe are required to furnish the trustee annually within 120 days after the end of our fiscal year a statement by one of our officers to the effect that, to the\nbest knowledge of such officer, we are not in default in the fulfillment of any of our obligations under the applicable Indenture or, if there has been a default in the\nfulfillment of any such obligation, specifying each such default and the nature and status thereof.\nNo holder of any debt securities of any series will have any right to institute any judicial or other proceeding with respect to the applicable Indenture, or\nfor the appointment of a receiver or trustee, or for any other remedy unless:\n(1)    an event of default has occurred and is continuing and such holder has given the trustee prior written notice of such continuing event of default\nwith respect to the debt securities of such series;\n(2)    in the case of the 2013 Indenture, the holders of not less than 25% of the aggregate principal amount of the outstanding debt securities of such\nseries, and in the case of the 2018 Indenture, the holders of not less than 33% of the aggregate principal amount of the outstanding debt securities\nof such series have requested the trustee to institute proceedings in respect of such event of default;\n(3)    the trustee has been offered indemnity reasonably satisfactory to it against its costs, expenses and liabilities in complying with such request;\n(4)    the trustee has failed to institute proceedings 60 days after the receipt of such notice, request and offer of indemnity; and\n10\n\n\n(5)    no direction inconsistent with such written request has been given for 60 days by the holders of a majority in aggregate principal amount of the\noutstanding debt securities of such series.\nThe holders of a majority in aggregate principal amount of outstanding debt securities of a series will have the right, subject to certain limitations, to\ndirect the time, method and place of conducting any proceeding for any remedy available to the trustee with respect to the debt securities of that series or\nexercising any trust or power conferred to the trustee, and to waive certain defaults. Each of the Indentures provides that if an event of default occurs and is\ncontinuing, the trustee will exercise such of its rights and powers under such Indenture, and use the same degree of care and skill in their exercise, as a prudent\nperson would exercise or use under the circumstances in the conduct of such person’s own affairs. Subject to such provisions, the trustee will be under no\nobligation to exercise any of its rights or powers under the applicable Indenture at the request of any of the holders of the debt securities of a series unless they\nwill have offered to the trustee security or indemnity satisfactory to the trustee against the costs, expenses and liabilities which might be incurred by it in\ncompliance with such request.\nNotwithstanding the foregoing, the holder of any debt security will have an absolute and unconditional right to receive payment of the principal of and\npremium, if any, and interest on that debt security on or after the due dates expressed in that debt security and to institute suit for the enforcement of payment.\nModification and Waivers\nModification and amendments of the Indentures and the Notes may be made by us and the trustee with the consent of the holders of not less than a\nmajority in aggregate principal amount of the outstanding series of Notes affected thereby; provided, however, that no such modification or amendment may,\nwithout the consent of the holder of each outstanding Note of that series affected thereby:\n•\nchange the stated maturity of the principal of, or installment of interest on, any Note;\n•\nreduce the principal amount of any Note or reduce the amount of the principal of any Note which would be due and payable upon a declaration of\nacceleration of the maturity thereof or reduce the rate of interest on any Note;\n•\nreduce any premium payable on the redemption of any Note or change the date on which any Note may or must be redeemed (in the case of the\n2018 Indenture, it being understood that a change to any notice requirement with respect to such date shall not be deemed to be a change of such\ndate);\n•\nchange the coin or currency in which the principal of, premium, if any, or interest on any Note is payable;\n•\nimpair the right of any holder to institute suit for the enforcement of any payment on or after the stated maturity of any Note (or, in the case of\nredemption, on or after the redemption date);\n•\nreduce the percentage in principal amount of the outstanding Notes, the consent of whose holders is required in order to take certain actions;\n•\nreduce the requirements for quorum or voting by holders of Notes in the applicable Indenture or the Note;\n•\nmodify any of the provisions in the applicable Indenture regarding the waiver of past defaults and the waiver of certain covenants by the holders of\nNotes except to increase any percentage vote required or to provide that certain other provisions of the applicable Indenture cannot be modified or\nwaived without the consent of the holder of each Notes affected thereby;\n•\nmake any change that adversely affects the right to convert or exchange any debt security or decreases the conversion or exchange rate or\nincreases the conversion price of any convertible or exchangeable debt security, unless such decrease or increase is permitted by the terms of the\ndebt securities; or\n•\nmodify any of the above provisions.\n11\n\n\nWe and the trustee may, without the consent of any holders, modify or amend the terms of the Indentures and any series of Notes with respect to the\nfollowing:\n•\nto add to our covenants for the benefit of holders of all or any series of the Notes or to surrender any right or power conferred upon us;\n•\nto evidence the succession of another person to, and the assumption by the successor of our covenants, agreements and obligations under, the\napplicable Indenture pursuant to the covenant described above under the caption “Covenants—Consolidation, Merger and Sale of Assets”;\n•\nto add any additional events of default for the benefit of holders of all or any series of the Notes;\n•\nto add one or more guarantees, and in the case of the 2018 Indenture, co-obligors, for the benefit of holders of the Notes;\n•\nto secure the Notes pursuant to the covenants of the Indenture;\n•\nto add or appoint a successor or separate trustee or other agent;\n•\nto provide for the issuance of additional debt securities of any series;\n•\nto establish the form or terms of the debt securities of any series as permitted by the Indenture;\n•\nto comply with the rules of any applicable securities depository;\n•\nto provide for uncertificated Notes in addition to or in place of certificated Notes;\n•\nin the case of the 2013 Indenture, to add to, change or eliminate any of the provisions of the 2013 Indenture in respect of one or more series of\ndebt securities; provided that any such addition, change or elimination (a) shall neither (1) apply to any debt security of any series created prior to\nthe execution of such supplemental indenture and entitled to the benefit of such provision nor (2) modify the rights of the holder of any such debt\nsecurity with respect to such provision or (b) shall become effective only when there is no debt security described in clause (a)(1) outstanding;\n•\nin the case of the 2018 Indenture, to add to, change or eliminate any of the provisions of the 2018 Indenture in respect of one or more series of\ndebt securities; provided that any such addition, change or elimination shall become effective only when there is no outstanding security of any\nseries created prior to the execution of such supplemental indenture that is entitled to the benefit of such provision and as to which such\nsupplemental indenture would apply;\n•\nto cure any ambiguity, omission, defect or inconsistency;\n•\nto change any other provision; provided that the change does not adversely affect the interests of the holders of debt securities of, in the case of\nthe 2013 Indenture any series, and in the case of the 2018 Indenture, any outstanding series, in any material respect;\n•\nto supplement any of the provisions of the applicable Indenture to such extent as shall be necessary to permit or facilitate the defeasance and\ndischarge of any series of Notes pursuant to the Indenture; provided that any such action shall not adversely affect the interests of the holders of\nNotes of such series or any other series of debt securities in any material respect;\n•\nto comply with the rules or regulations of any securities exchange or automated quotation system on which any of the Notes may be listed or\ntraded; and\n•\nto add to, change or eliminate any of the provisions of the applicable Indenture as shall be necessary or desirable in accordance with any\namendments to the Trust Indenture Act of 1939, as amended, and in the case of the 2013 Indenture, provided that such action does not adversely\naffect the rights or interests of any holder of debt securities in any material respect.\n12\n\n\nThe holders of at least a majority in aggregate principal amount of the outstanding Notes of any series may, on behalf of the holders of all Notes of that\nseries, waive compliance by us with certain restrictive provisions of the Indentures. The holders of not less than a majority in aggregate principal amount of the\noutstanding Notes of a series may, on behalf of the holders of all Notes of that series, waive any past default and its consequences under the applicable\nIndenture with respect to the Notes of that series, except a default (1) in the payment of principal or premium, if any, or interest on Notes of that series or (2) in\nrespect of a covenant or provision of the applicable Indenture that cannot be modified or amended without the consent of the holder of each Note of that series.\nUpon any such waiver, such default will cease to exist, and any event of default arising therefrom will be deemed to have been cured, for every purpose of the\nIndenture; however, no such waiver will extend to any subsequent or other default or event of default or impair any rights consequent thereon.\nDischarge, Defeasance and Covenant Defeasance\nWe may discharge certain obligations to holders of the Notes of a series that have not already been delivered to the trustee for cancellation and that\neither have become due and payable or will become due and payable within one year (or scheduled for redemption within one year) by depositing with the\ntrustee, in trust, funds in U.S. dollars in an amount sufficient to pay the entire indebtedness including, but not limited to, the principal and premium, if any, and\ninterest to the date of such deposit (if due and payable) or to the maturity thereof or the redemption date of the Notes of that series, as the case may be. We may\ndirect the trustee to invest such funds in U.S. Treasury securities with a maturity of one year or less or in a money market fund that invests solely in short-term\nU.S. Treasury securities.\nThe Indentures provide that we may elect either (1) to defease and be discharged from any and all obligations with respect to the Notes of a series\n(except for, among other things, obligations to register the transfer or exchange of the Notes, to replace temporary or mutilated, destroyed, lost or stolen Notes,\nto maintain an office or agency with respect to the Notes and to hold moneys for payment in trust) (“legal defeasance”) or (2) to be released from our obligations\nto comply with the restrictive covenants under the applicable Indenture, and any omission to comply with such obligations will not constitute a default or an event\nof default with respect to the Notes of a series and clauses (3) and (6) under the caption “Events of Default” above will no longer be applied (“covenant\ndefeasance”). Legal defeasance or covenant defeasance, as the case may be, will be conditioned upon, among other things, the irrevocable deposit by us with\nthe trustee, in trust, of an amount in U.S. dollars, or U.S. government obligations (as such term is modified below), or both, applicable to the Notes of that series\nwhich through the scheduled payment of principal and interest in accordance with their terms will provide money in an amount sufficient to pay the principal or\npremium, if any, and interest on the Notes on the scheduled due dates therefor.\nIf we effect covenant defeasance with respect to the Notes of any series, the amount in U.S. dollars, or U.S. government obligations (as such term is\nmodified below), or both, on deposit with the trustee will be sufficient, in the opinion of a nationally recognized firm of independent accountants, to pay amounts\ndue on the Notes of that series at the time of the stated maturity but may not be sufficient to pay amounts due on the Notes of that series at the time of the\nacceleration resulting from such event of default. However, we would remain liable to make payment of such amounts due at the time of acceleration.\nWith respect to the 2024 Notes, the 0.000% 2025 Notes, the 0.875% 2025 Notes, the 2026 Notes, the 2027 Notes, the 1.375% 2029 Notes and the\n2031 Notes, the term “U.S. government obligations” shall instead mean (x) any security that is (i) a direct obligation of the German government or (ii) an\nobligation of a person controlled or supervised by and acting as an agency or instrumentality of the German government the payment of which is fully and\nunconditionally guaranteed by the German government or the central bank of the German government, which, in either case (x)(i) or (ii), is not callable or\nredeemable at the option of the issuer thereof, and (y) certificates, depositary receipts or other instruments which evidence a direct ownership interest in\nobligations described in clause (x)(i) or (x)(ii) above or in any specific principal or interest payments due in respect thereof.\nWith respect to the 3.050% 2029 Notes and the 2042 Notes, the term “U.S. government obligations” shall instead mean (x) any security that is (i) a\ndirect obligation of the United Kingdom government or (ii) an obligation of a person controlled or supervised by and acting as an agency or instrumentality of the\nUnited Kingdom government the payment of which is fully and unconditionally guaranteed by the United Kingdom government or the central bank of the United\nKingdom government, which, in either case (x)(i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (y) certificates, depositary receipts\nor other instruments which evidence a direct ownership interest in obligations described in clause (x)(i) or (x)(ii) above or in any specific principal or interest\npayments due in respect thereof.\n13\n\n\nWe will be required to deliver to the trustee an opinion of counsel that the deposit and related defeasance will not cause the holders and beneficial\nowners of the Notes of that series to recognize income, gain or loss for federal income tax purposes. If we elect legal defeasance, that opinion of counsel must\nbe based upon a ruling from the U.S. Internal Revenue Service or a change in law to that effect.\nWe may exercise our legal defeasance option notwithstanding our prior exercise of our covenant defeasance option.\nBook-Entry and Settlement\nThe Notes were issued in book-entry form and are represented by global notes deposited with, or on behalf of, a common depositary on behalf of\nEuroclear and Clearstream, and are registered in the name of the common depositary or its nominee. Except as described herein, certificated notes will not be\nissued in exchange for beneficial interests in the global notes.\nCertificated Notes\nSubject to certain conditions, the Notes represented by the global notes are exchangeable for certificated notes in definitive form of like tenor, in\nminimum denominations of €100,000 principal amount and integral multiples of €1,000 in excess thereof in the case of the 2024 Notes, the 0.000% 2025 Notes,\nthe 0.875% 2025 Notes, the 2026 Notes, the 2027 Notes, the 1.375% 2029 Notes and the 2031 Notes, and in minimum denominations of £100,000 principal\namount and integral multiples of £1,000 in excess thereof in the case of the 3.050% 2029 Notes and the 2042 Notes, if:\n1.\nthe common depositary notifies us that it is unwilling or unable to continue as depositary or if the common depositary ceases to be eligible under\nthe applicable Indenture and we do not appoint a successor depository within 90 days;\n2.    we determine that the Notes will no longer be represented by global securities and execute and deliver to the trustee an order to that effect; or\n3.    an event of default with respect to the Notes will have occurred and be continuing.\nAny Note that is exchangeable as above is exchangeable for certificated notes issuable in authorized denominations and registered in such names as\nthe common depositary shall direct. Subject to the foregoing, a global note is not exchangeable, except for a global note of the same aggregate denomination to\nbe registered in the name of the common depositary or its nominee.\nThe Trustee for the Notes\nThe Bank of New York Mellon Trust Company, N.A. is the trustee under the Indentures. We have commercial deposits and custodial arrangements with\nThe Bank of New York Mellon Trust Company, N.A. and its affiliates (“BNYM”). We may enter into similar or other banking relationships with BNYM in the future\nin the normal course of business. In addition, BNYM acts as trustee and as paying agent with respect to other debt securities issued by us, and may do so for\nfuture issuances of debt securities by us as well.\n14\n\n\nExhibit 21.1\nSubsidiaries of\nApple Inc.*\nJurisdiction\nof Incorporation\nApple Asia Limited\nHong Kong\nApple Asia LLC\nDelaware, U.S.\nApple Canada Inc.\nCanada\nApple Computer Trading (Shanghai) Co., Ltd.\nChina\nApple Distribution International Limited\nIreland\nApple India Private Limited\nIndia\nApple Insurance Company, Inc.\nArizona, U.S.\nApple Japan, Inc.\nJapan\nApple Korea Limited\nSouth Korea\nApple Operations International Limited\nIreland\nApple Operations Limited\nIreland\nApple Operations Mexico, S.A. de C.V.\nMexico\nApple Pty Limited\nAustralia\nApple Sales International Limited\nIreland\nApple South Asia (Thailand) Limited\nThailand\nApple Vietnam Limited Liability Company\nVietnam\nBraeburn Capital, Inc.\nNevada, U.S.\niTunes K.K.\nJapan\n*\nPursuant to Item 601(b)(21)(ii) of Regulation S-K, the names of other subsidiaries of Apple Inc. are omitted because, considered in the aggregate, they would\nnot constitute a significant subsidiary as of the end of the year covered by this report.\n\n\nExhibit 23.1\nConsent of Independent Registered Public Accounting Firm\nWe consent to the incorporation by reference in the following Registration Statements:\n(1)\nRegistration Statement (Form S-3 ASR No. 333-260578) of Apple Inc.,\n(2)\nRegistration Statement (Form S-8 No. 333-264555) pertaining to Apple Inc. Deferred Compensation Plan,\n(3)\nRegistration Statement (Form S-8 No. 333-165214) pertaining to Apple Inc. 2014 Employee Stock Plan and Apple Inc. 2022 Employee Stock Plan,\n(4)\nRegistration Statement (Form S-8 No. 333-195509) pertaining to Apple Inc. 2014 Employee Stock Plan and Apple Inc. 2022 Employee Stock Plan,\n(5)\nRegistration Statement (Form S-8 No. 333-226986) pertaining to Apple Inc. Deferred Compensation Plan,\n(6)\nRegistration Statement (Form S-8 No. 333-203698) pertaining to Apple Inc. Employee Stock Purchase Plan, and\n(7)\nRegistration Statement (Form S-8 No. 333-60455) pertaining to Apple Inc. Non-Employee Director Stock Plan;\nof our reports dated November 2, 2023 with respect to the consolidated financial statements of Apple Inc., and the effectiveness of internal control over financial\nreporting of Apple Inc., included in this Annual Report on Form 10-K for the year ended September 30, 2023.\n/s/ Ernst & Young LLP\nSan Jose, California\nNovember 2, 2023\n\n\nExhibit 31.1\nCERTIFICATION\nI, Timothy D. Cook, certify that:\n1.\nI have reviewed this annual report on Form 10-K of Apple Inc.;\n2.\nBased on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the\nstatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;\n3.\nBased on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial\ncondition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;\n4.\nThe Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange\nAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the\nRegistrant and have:\n(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,\nto ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within\nthose entities, particularly during the period in which this report is being prepared;\n(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our\nsupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for\nexternal purposes in accordance with generally accepted accounting principles;\n(c)\nEvaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the\neffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and\n(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent\nfiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to\nmaterially affect, the Registrant’s internal control over financial reporting; and\n5.\nThe Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the\nRegistrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):\n(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably\nlikely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and\n(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal\ncontrol over financial reporting.\nDate: November 2, 2023\nBy:\n/s/ Timothy D. Cook\nTimothy D. Cook\nChief Executive Officer\n\n\nExhibit 31.2\nCERTIFICATION\nI, Luca Maestri, certify that:\n1.\nI have reviewed this annual report on Form 10-K of Apple Inc.;\n2.\nBased on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the\nstatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;\n3.\nBased on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial\ncondition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;\n4.\nThe Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange\nAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the\nRegistrant and have:\n(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,\nto ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within\nthose entities, particularly during the period in which this report is being prepared;\n(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our\nsupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for\nexternal purposes in accordance with generally accepted accounting principles;\n(c)\nEvaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the\neffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and\n(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent\nfiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to\nmaterially affect, the Registrant’s internal control over financial reporting; and\n5.\nThe Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the\nRegistrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):\n(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably\nlikely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and\n(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal\ncontrol over financial reporting.\nDate: November 2, 2023\nBy:\n/s/ Luca Maestri\nLuca Maestri\nSenior Vice President,\nChief Financial Officer\n\n\nExhibit 32.1\nCERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER\nPURSUANT TO\n18 U.S.C. SECTION 1350,\nAS ADOPTED PURSUANT TO\nSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002\nI, Timothy D. Cook, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,\nthat the Annual Report of Apple Inc. on Form 10-K for the fiscal year ended September 30, 2023 fully complies with the requirements of Section 13(a) or 15(d) of\nthe Securities Exchange Act of 1934 and that information contained in such Form 10-K fairly presents in all material respects the financial condition and results\nof operations of Apple Inc. at the dates and for the periods indicated.\nDate: November 2, 2023\nBy:\n/s/ Timothy D. Cook\nTimothy D. Cook\nChief Executive Officer\nI, Luca Maestri, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that\nthe Annual Report of Apple Inc. on Form 10-K for the fiscal year ended September 30, 2023 fully complies with the requirements of Section 13(a) or 15(d) of the\nSecurities Exchange Act of 1934 and that information contained in such Form 10-K fairly presents in all material respects the financial condition and results of\noperations of Apple Inc. at the dates and for the periods indicated.\nDate: November 2, 2023\nBy:\n/s/ Luca Maestri\nLuca Maestri\nSenior Vice President,\nChief Financial Officer\nA signed original of this written statement required by Section 906 has been provided to Apple Inc. and will be retained by Apple Inc. and furnished to the\nSecurities and Exchange Commission or its staff upon request.\n\n\n \n \n \n \n \nSAMSUNG ELECTRONICS CO., LTD. AND ITS SUBSIDIARIES \n \n \n \nConsolidated Financial Statements \n \n \n \n \nDecember 31, 2023 and 2022 \n \n \n  \n \n(With Independent Auditors’ Report Thereon) \n \n \n\n\n \nContents \n \n \n \nPage \n \n \nIndependent Auditors’ Report \n1 \n \n \nConsolidated Statements of Financial Position \n4 \n \n \nConsolidated Statements of Profit or Loss \n7 \n \n \nConsolidated Statements of Comprehensive Income \n8 \n \n \nConsolidated Statements of Changes in Equity \n9 \n \n \nConsolidated Statements of Cash Flows \n13 \n \n \nNotes to the Consolidated Financial Statements \n15 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n\n152, Teheran-ro, Gangnam-gu, Seoul 06236\n(Yeoksam-dong, Gangnam Finance Center 27th Floor)\nRepublic of Korea\n \n \nIndependent Auditors’ Report \n \nTo the Shareholders and Board of Directors of \nSamsung Electronics Co., Ltd.: \n \nOpinion \nWe have audited the consolidated financial statements of Samsung Electronics Co., Ltd. and its subsidiaries (“the Group”), expressed \nin Korean won, which comprise the consolidated statement of financial position as of December 31, 2023, and the consolidated \nstatements of profit or loss, comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising \nmaterial accounting policy information and other explanatory information.  \n \nIn our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated \nfinancial position of the Group as of December 31, 2023 and its consolidated financial performance and cash flows for the year \nthen ended in accordance with Korean International Financial Reporting Standards (“Korean IFRS”). \n \nBasis for Opinion  \nWe conducted our audit in accordance with International Standards on Auditing (“ISAs”) and Korean Standards on Auditing (“KSAs”). \nOur responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated \nFinancial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards \nBoard for Accountant’s International Code of Ethics for Professional Accountants (including International Independence Standards) \n(“IESBA Code”) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in \nthe Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA \nCode. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.  \n \nKey Audit Matters  \nKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated \nfinancial statements as of and for the year ended December 31, 2023. These matters were addressed in the context of our audit of \nthe consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion \non these matters.  \n \n1) Valuation of memory semiconductor inventory at net realizable value  \n \nThe memory semiconductor products manufactured and sold by the Group’s Device Solutions (DS) division have been affected by \nprice erosion in the current financial year due to weak demand caused by macroeconomic uncertainties. As disclosed in Note 2, \nMaterial Accounting Policies, and Note 3, Material Accounting Estimates and Assumptions, to the consolidated financial statements, \nthe Group values its inventories at the lower of cost and net realizable value.  \n \nDue to the uncertainty associated with estimating future demand and selling prices, and the complexity of the measurement process \nin estimating net realizable value of the inventories, we believe the potential for error is significant and thus identified the estimation \nof memory semiconductor inventories’ net realizable value as a key audit matter.  \n \nThe primary audit procedures we performed to address this key audit matter are as follows: \n• \nEvaluating the reasonableness of the Group’s accounting policies and understanding the processes and internal controls \napplied to the valuation of inventories at lower of cost or net realizable value; \n• \nEvaluating the design and testing the operating effectiveness of the internal controls established for the lower of cost or net \nrealizable value method of inventory valuation; \n• \nEvaluating the appropriateness of the underlying data used to determine the net realizable value of inventory which includes \nforecast sales price, on a sample basis; \n• \nEvaluating the reasonableness of estimates by retrospectively comparing the estimated sales price and the actual sales price; \nand \n• \nEvaluating reasonableness of inventory valuation by assessing the reasonableness of the assumptions used to determine \nestimates including the forecast sale price and costs associated with sale and checking the mathematical accuracy of inventory \nvaluation by performing recalculations.  \n \n \n\n\n \n \n- 2 - \n \n2) Sales deduction related to sales promotion activities \n \nThe Group’s Device eXperience (DX) division performs sales promotion activities, which includes providing price or volume \ndiscounts and incentives to customers including retail and telecommunication companies, based on explicit or implicit agreements. \nAs disclosed in Note 2, Material Accounting Policies, and Note 3, Material Accounting Estimates and Assumptions, of the \nconsolidated financial statements, the Group estimates the expected expenditures on sales promotion activities at the time of \nrevenue recognition and deducts the amount from revenue.  \n \nWe identified the amount of sales deductions from promotional activities as a key audit matter because the calculation of sales \ndeductions involves significant estimates and judgements by management and is subject to possible bias and the amount is material \nto the consolidated financial statements. \n \nThe primary audit procedures we performed to address this key audit matter are as follow: \n• \nEvaluating the Group's accounting policies and understanding the processes and internal controls relating to the applied to \nsales deductions; \n• \nEvaluating the design and testing the operating effectiveness of internal controls over the approval of the sales deduction \npolicy; \n• \nEvaluating the design and testing the operating effectiveness of internal controls over the sales deduction estimates and the \napproval of post-settlement adjustments; \n• \nEvaluating the accuracy of the estimates by inspecting, on a sample basis, the documentation supporting sales deductions \nestimates on a sampling basis; and \n• \nEvaluating the accuracy and completeness of sales deductions by comparing, on a sample basis, the period-end estimates to \namounts settled subsequent to the period-end and by examining relevant documentation. \n  \nOther Matters \nThe consolidated financial statements of the Group for the year ended December 31, 2022 were audited by another auditor who \nexpressed an unmodified opinion on those financial statements on February 15, 2023. \n \nThe procedures and practices utilized in the Republic of Korea to audit such consolidated financial statements may differ from \nthose generally accepted and applied in other countries. \n \nThe accompanying consolidated financial statements as of and for the years ended December 31, 2023 and 2022 have been \ntranslated into United States dollars solely for the convenience of the reader. We have audited the translation and, in our opinion, \nthe consolidated financial statements expressed in Korean won have been translated into dollars on the basis set forth in Note 2.18 \nto the consolidated financial statements. \n \nResponsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements \nManagement is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with \nKorean IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated \nfinancial statements that are free from material misstatement, whether due to fraud or error.  \n \nIn preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a \ngoing concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless \nmanagement either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.  \n \nThose charged with governance are responsible for overseeing the Group’s financial reporting process.  \n \nAuditors’ Responsibilities for the Audit of the Consolidated Financial Statements  \nOur objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from \nmaterial misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable \nassurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and KSAs will always \ndetect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, \nindividually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of \nthese consolidated financial statements.  \n \n\n\n \n \n- 3 - \nAs part of an audit in accordance with ISAs and KSAs, we exercise professional judgment and maintain professional skepticism \nthroughout the audit. We also:  \n• \nIdentify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, \ndesign and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate \nto provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for \none resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override \nof internal control. \n• \nObtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in \nthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal controls.  \n• \nEvaluate the appropriateness of accounting policies used in the preparation of the consolidated financial statements and \nreasonableness of accounting estimates and related disclosures made by management. \n• \nConclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit \nevidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on \nthe Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw \nattention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are \ninadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ \nreport. However, future events or conditions may cause the Group to cease to continue as a going concern. \n• \nEvaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, \nand whether the consolidated financial statements represent the underlying transactions and events in a manner that \nachieves fair presentation. \n• \nObtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within \nthe Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision \nand performance of the group audit. We remain solely responsible for our audit opinion. \n \nWe communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit \nand significant audit findings, including any significant deficiencies in internal control that we identify during our audit.  \n \nWe also provide those charged with governance with a statement that we have complied with relevant ethical requirements \nregarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear \non our independence, and where appliable, related safeguards.  \n \nFrom the matters communicated with those charged with governance, we determine those matters that were of most significance \nin the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe \nthese matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely \nrare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of \ndoing so would reasonably be expected to outweigh the public interest benefits of such communication. \n \n \nThe engagement partner on the audit resulting in this independent auditors’ report is Han, Sang Hyun.  \n \n \n \n \n \n \n \n \n \n \nSeoul, Korea \nFebruary 19, 2024 \n \nThis report is effective as of February 19, 2024. Certain subsequent events or circumstances which may occur between the audit \nreport date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements \nand notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated \nto reflect the impact of such subsequent events or circumstances, if any. \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nCONSOLIDATED STATEMENTS OF FINANCIAL POSITION \n \n \nThe above consolidated statements of financial position should be read in conjunction with the accompanying notes. \n \n \n- 4 - \n(In millions of Korean won, in thousands of US dollars (Note 2.18)) \n \n  \n  \nDecember 31, \nDecember 31, \nDecember 31, \nDecember 31, \n  \nNotes \n2023 \n2022 \n2023 \n2022 \n \n \nKRW \nKRW \nUSD \nUSD \n \n \n \n \n \n \nAssets \n \n \n \n \n \nCurrent assets \n \n \n \n \n \nCash and cash equivalents \n4, 28 \n69,080,893 \n49,680,710 \n52,890,158 \n38,036,865 \nShort-term financial instruments \n4, 28 \n22,690,924 \n65,102,886 \n17,372,771 \n49,844,491 \nShort-term financial assets at amortized cost \n4, 28 \n608,281 \n414,610 \n465,716 \n317,436 \nShort-term financial assets at fair value  \nthrough profit or loss \n4, 6, 28 \n27,112 \n29,080 \n20,758 \n22,264 \nTrade receivables \n4, 5, 7, 28 \n36,647,393 \n35,721,563 \n28,058,213 \n27,349,373 \nNon-trade receivables \n4, 7, 28 \n6,633,248 \n6,149,209 \n5,078,590 \n4,707,997 \nPrepaid expenses  \n \n3,366,130 \n2,867,823 \n2,577,198 \n2,195,681 \nInventories \n8 \n51,625,874 \n52,187,866 \n39,526,134 \n39,956,410 \nOther current assets \n4, 28 \n5,038,838 \n6,316,834 \n3,857,868 \n4,836,335 \nAssets held-for-sale \n33 \n217,864 \n- \n166,802 \n- \n \n  \n195,936,557 \n218,470,581 \n150,014,208 \n167,266,852 \nNon-current assets \n \n \n \n \n \nFinancial assets at fair value  \nthrough other comprehensive income \n4, 6, 28 \n7,481,297 \n11,397,012 \n5,727,879 \n8,725,854 \nFinancial assets at fair value  \nthrough profit or loss \n4, 6, 28 \n1,431,394 \n1,405,468 \n1,095,913 \n1,076,063 \nInvestments in associates and joint ventures \n9 \n11,767,444 \n10,893,869 \n9,009,466 \n8,340,634 \nProperty, plant and equipment \n10 \n187,256,262 \n168,045,388 \n143,368,344 \n128,659,991 \nIntangible assets \n11 \n22,741,862 \n20,217,754 \n17,411,771 \n15,479,247 \nNet defined benefit assets \n14 \n4,905,219 \n5,851,972 \n3,755,565 \n4,480,424 \nDeferred income tax assets \n25 \n10,211,797 \n5,101,318 \n7,818,422 \n3,905,704 \nOther non-current assets \n4, 7, 28 \n14,174,148 \n7,041,145 \n10,852,104 \n5,390,887 \n \n  \n259,969,423 \n229,953,926 \n199,039,464 \n176,058,804 \nTotal assets \n  \n455,905,980 \n448,424,507 \n349,053,672 \n343,325,656 \n \n \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nCONSOLIDATED STATEMENTS OF FINANCIAL POSITION \n \n \nThe above consolidated statements of financial position should be read in conjunction with the accompanying notes. \n \n \n- 5 - \n(In millions of Korean won, in thousands of US dollars (Note 2.18)) \n \n  \n  \nDecember 31, \nDecember 31, \nDecember 31, \nDecember 31, \n  \nNotes \n2023 \n2022 \n2023 \n2022 \n \n \nKRW \nKRW \nUSD \nUSD \nLiabilities and Equity \n \n \n \n \n \nCurrent liabilities \n \n \n \n \n \nTrade payables \n4, 28 \n11,319,824 \n10,644,686 \n8,666,757 \n8,149,853 \nShort-term borrowings  \n4, 5, 12, 28 \n7,114,601 \n5,147,315 \n5,447,127 \n3,940,920 \nOther payables \n4, 28 \n15,324,119 \n17,592,366 \n11,732,551 \n13,469,180 \nAdvances received \n17 \n1,492,602 \n1,314,934 \n1,142,776 \n1,006,748 \nWithholdings \n4, 28 \n892,441 \n1,298,244 \n683,276 \n993,970 \nAccrued expenses \n4, 17, 28 \n26,013,273 \n29,211,487 \n19,916,449 \n22,365,087 \nCurrent income tax liabilities \n \n3,358,715 \n4,250,397 \n2,571,521 \n3,254,216 \nCurrent portion of long-term liabilities \n4, 12, 13, 28 \n1,308,875 \n1,089,162 \n1,002,109 \n833,891 \nProvisions \n15 \n6,524,876 \n5,844,907 \n4,995,618 \n4,475,015 \nOther current liabilities \n4, 17, 28 \n2,308,472 \n1,951,354 \n1,767,427 \n1,494,008 \nLiabilities held-for-sale \n33 \n61,654 \n- \n47,204 \n- \n \n  \n75,719,452 \n78,344,852 \n57,972,815 \n59,982,888 \n  \n \n \n \n \nNon-current liabilities \n \n \n \n \n \nDebentures \n4, 13, 28 \n537,618 \n536,093 \n411,615 \n410,447 \nLong-term borrowings \n4, 12, 28 \n3,724,850 \n3,560,672 \n2,851,844 \n2,726,145 \nLong-term other payables \n4, 28 \n5,488,283 \n2,753,305 \n4,201,975 \n2,108,003 \nNet defined benefit liabilities \n14 \n456,557 \n268,370 \n349,552 \n205,471 \nDeferred income tax liabilities \n25 \n620,549 \n5,111,332 \n475,109 \n3,913,371 \nLong-term provisions \n15 \n2,878,450 \n1,928,518 \n2,203,817 \n1,476,524 \nOther non-current liabilities \n4, 17, 28 \n2,802,356 \n1,171,761 \n2,145,558 \n897,132 \n  \n  \n16,508,663 \n15,330,051 \n12,639,470 \n11,737,093 \nTotal liabilities \n  \n92,228,115 \n93,674,903 \n70,612,285 \n71,719,981 \n \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nCONSOLIDATED STATEMENTS OF FINANCIAL POSITION \n \n \nThe above consolidated statements of financial position should be read in conjunction with the accompanying notes. \n \n \n- 6 - \n(In millions of Korean won, in thousands of US dollars (Note 2.18)) \n \n  \n  \nDecember 31, \nDecember 31, \nDecember 31, \nDecember 31, \n  \nNotes \n2023 \n2022 \n2023 \n2022 \n \n \nKRW \nKRW \nUSD \nUSD \nEquity attributable to owners of the parent company \n \n \n \n \nPreference shares \n18 \n119,467 \n119,467 \n91,467 \n91,467 \nOrdinary shares \n18 \n778,047 \n778,047 \n595,693 \n595,693 \nShare premium \n \n4,403,893 \n4,403,893 \n3,371,737 \n3,371,737 \nRetained earnings \n19 \n346,652,238 \n337,946,407 \n265,406,117 \n258,740,703 \nOther components of equity \n20, 33 \n1,280,130 \n1,938,328 \n980,102 \n1,484,036 \n  \n  \n353,233,775 \n345,186,142 \n270,445,116 \n264,283,636 \nNon-controlling interests \n31 \n10,444,090 \n9,563,462 \n7,996,271 \n7,322,039 \nTotal equity \n  \n363,677,865 \n354,749,604 \n278,441,387 \n271,605,675 \n  \n \n \n \n \nTotal liabilities and equity \n  \n455,905,980 \n448,424,507 \n349,053,672 \n343,325,656 \n \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nCONSOLIDATED STATEMENTS OF PROFIT OR LOSS \n \n \nThe above consolidated statements of profit or loss should be read in conjunction with the accompanying notes. \n \n \n- 7 - \n(In millions of Korean won, in thousands of US dollars (Note 2.18)) \n \n  \n  \nFor the years ended December 31, \n  \nNotes \n2023 \n2022 \n2023 \n2022 \n \n \nKRW \nKRW \nUSD \nUSD \n \n \n \n \n \n \nRevenue \n29 \n258,935,494 \n302,231,360 \n198,247,859 \n231,396,319 \nCost of sales \n21 \n180,388,580 \n190,041,770 \n138,110,266 \n145,501,003 \nGross profit \n \n78,546,914 \n112,189,590 \n60,137,593 \n85,895,316 \nSelling and administrative expenses \n21, 22 \n71,979,938 \n68,812,960 \n55,109,743 \n52,685,021 \nOperating profit \n29 \n6,566,976 \n43,376,630 \n5,027,850 \n33,210,295 \nOther non-operating income \n23 \n1,180,448 \n1,962,071 \n903,782 \n1,502,213 \nOther non-operating expense \n23 \n1,083,327 \n1,790,176 \n829,424 \n1,370,606 \nShare of net profit of associates and joint ventures \n9 \n887,550 \n1,090,643 \n679,532 \n835,025 \nFinancial income \n24 \n16,100,148 \n20,828,995 \n12,326,699 \n15,947,229 \nFinancial expense \n24 \n12,645,530 \n19,027,689 \n9,681,752 \n14,568,101 \nProfit before income tax \n \n11,006,265 \n46,440,474 \n8,426,687 \n35,556,055 \nIncome tax benefit \n25 \n(4,480,835) \n(9,213,603) \n(3,430,646) \n(7,054,178) \nProfit for the year \n  \n15,487,100 \n55,654,077 \n11,857,333 \n42,610,233 \nProfit attributable to \n \n \n \n \n \nOwners of the parent company \n \n14,473,401 \n54,730,018 \n11,081,218 \n41,902,749 \nNon-controlling interests \n  \n1,013,699 \n924,059 \n776,115 \n707,484 \nEarnings per share \n(in Korean won, in US dollars) \n26 \n  \n  \n  \n  \n- Basic \n \n2,131 \n8,057 \n1.63 \n6.17 \n- Diluted \n  \n2,131 \n8,057 \n1.63 \n6.17 \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME \n \n \nThe above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes. \n \n \n- 8 - \n(In millions of Korean won, in thousands of US dollars (Note 2.18)) \n \n  \n  \nFor the years ended December 31, \n  \nNotes \n2023 \n2022 \n2023 \n2022 \n \n \nKRW \nKRW \nUSD \nUSD \n \n \n \n \n \n \nProfit for the year \n \n15,487,100 \n55,654,077 \n11,857,333 \n42,610,233 \nOther comprehensive income  \n \n \n \n \n \nItems that will not be reclassified subsequently to  \nprofit or loss: \n \n \n \n \n \nGain (loss) on valuation of financial assets at fair \nvalue through other comprehensive income, net \nof tax \n6, 20 \n1,481,091 \n(1,969,498) \n1,133,962 \n(1,507,900) \nShare of other comprehensive income (loss) of \nassociates and joint ventures, net of tax  \n9, 20 \n13,150 \n(6,318) \n10,068 \n(4,837) \nRemeasurement of net defined benefit liabilities \n(assets), net of tax \n14, 20 \n(828,298) \n1,153,679 \n(634,167) \n883,287 \nItems that may be reclassified subsequently to \n profit or loss: \n \n \n \n \n \nShare of other comprehensive income (loss) of \nassociates and joint ventures, net of tax  \n9, 20 \n61,962 \n(44,192) \n47,440 \n(33,835) \nForeign currency translation differences for \nforeign operations, net of tax \n20 \n2,621,479 \n4,884,886 \n2,007,074 \n3,739,998 \nGain (loss) on valuation of cash flow hedge \nderivatives \n20 \n927 \n(12,893) \n710 \n(9,871) \nOther comprehensive income for the year, net of \ntax \n \n3,350,311 \n4,005,664 \n2,565,087 \n3,066,842 \nTotal comprehensive income for the year \n \n18,837,411 \n59,659,741 \n14,422,420 \n45,677,075 \nComprehensive income attributable to:  \n \n \n \n \n \nOwners of the parent company \n \n17,845,661 \n58,745,107 \n13,663,110 \n44,976,807 \nNon-controlling interests \n  \n991,750 \n914,634 \n759,310 \n700,268 \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY \n \n \nThe above consolidated statements of changes in equity should be read in conjunction with the accompanying notes. \n \n \n- 9 - \n(In millions of Korean won) \n \nFor the year ended December 31, 2022 \nNotes \nPreference \nshares \nOrdinary \nshares \nShare \npremium \nRetained \nearnings \nOther \ncomponents \nof equity \nEquity \nattributable \nto owners of \nthe parent \ncompany \nNon-\ncontrolling \ninterests \nTotal \n \n \n \n \n \n \n \n \n \n \nBalance as of January 1, 2022 \n \n119,467 \n778,047 \n4,403,893 \n293,064,763 \n(2,128,473) \n296,237,697 \n8,662,234 \n304,899,931 \nProfit for the year \n  \n- \n- \n- \n54,730,018 \n- \n54,730,018 \n924,059 \n55,654,077 \nLoss on valuation of financial assets at fair value \nthrough other comprehensive income, net of tax \n6, 20 \n- \n- \n- \n(38,937) \n(1,867,530) \n(1,906,467) \n(63,031) \n(1,969,498) \nShare of other comprehensive income (loss) of \nassociates and joint ventures, net of tax \n9, 20 \n- \n- \n- \n- \n(51,848) \n(51,848) \n1,338 \n(50,510) \nForeign currency translation differences for  \nforeign operations translation, net of tax \n20 \n- \n- \n- \n- \n4,863,930 \n4,863,930 \n20,956 \n4,884,886 \nRemeasurement of net defined benefit liabilities, \nnet of tax \n14, 20 \n- \n- \n- \n- \n1,122,367 \n1,122,367 \n31,312 \n1,153,679 \nLoss on valuation of cash flow hedge derivatives \n20 \n- \n- \n- \n- \n(12,893) \n(12,893) \n- \n(12,893) \nTotal comprehensive income for the year \n  \n- \n- \n- \n54,691,081 \n4,054,026 \n58,745,107 \n914,634 \n59,659,741 \nDividends declared \n19 \n- \n- \n- \n(9,809,437) \n- \n(9,809,437) \n(5,523) \n(9,814,960) \nCapital transaction under common control \n \n- \n- \n- \n- \n- \n- \n(176) \n(176) \nChanges in consolidated entities \n \n- \n- \n- \n- \n- \n- \n124 \n124 \nOther \n \n- \n- \n- \n- \n12,775 \n12,775 \n(7,831) \n4,944 \nTotal transactions with owners \n  \n- \n- \n- \n(9,809,437) \n12,775 \n(9,796,662) \n(13,406) \n(9,810,068) \nBalance as of December 31, 2022 \n  \n119,467 \n778,047 \n4,403,893 \n337,946,407 \n1,938,328 \n345,186,142 \n9,563,462 \n354,749,604 \n  \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY \n \n \nThe above consolidated statements of changes in equity should be read in conjunction with the accompanying notes. \n \n \n- 10 - \n (In thousands of US dollars (Note 2.18)) \n \nFor the year ended December 31, 2022 \nNotes \nPreference \nshares \nOrdinary \nshares \nShare \npremium \nRetained \nearnings \nOther \ncomponents \nof equity \nEquity \nattributable \nto owners of \nthe parent \ncompany \nNon-\ncontrolling \ninterests \nTotal \n \n \n \n \n \n \n \n \n \n \nBalance as of January 1, 2022 \n \n91,467 \n595,693 \n3,371,737 \n224,378,130 \n(1,629,615) \n226,807,412 \n6,632,035 \n233,439,447 \nProfit for the year \n \n- \n- \n- \n41,902,749 \n- \n41,902,749 \n707,484 \n42,610,233 \nLoss on valuation of financial assets at fair value \nthrough other comprehensive income, net of tax \n6, 20 \n- \n- \n- \n(29,812) \n(1,429,830) \n(1,459,642) \n(48,258) \n(1,507,900) \nShare of other comprehensive income (loss) of \nassociates and joint ventures, net of tax \n9, 20 \n- \n- \n- \n- \n(39,696) \n(39,696) \n1,024 \n(38,672) \nForeign currency translation differences for foreign \noperations, net of tax \n20 \n- \n- \n- \n- \n3,723,953 \n3,723,953 \n16,045 \n3,739,998 \nRemeasurement of net defined benefit liabilities, \nnet of tax \n14, 20 \n- \n- \n- \n- \n859,314 \n859,314 \n23,973 \n883,287 \nLoss on valuation of cash flow hedge derivatives \n20 \n- \n- \n- \n- \n(9,871) \n(9,871) \n- \n(9,871) \nTotal comprehensive income for the year \n \n- \n- \n- \n41,872,937 \n3,103,870 \n44,976,807 \n700,268 \n45,677,075 \nDividends declared \n19 \n- \n- \n- \n(7,510,364) \n- \n(7,510,364) \n(4,229) \n(7,514,593) \nCapital transaction under common control \n \n- \n- \n- \n- \n- \n- \n(135) \n(135) \nChanges in consolidated entities \n \n- \n- \n- \n- \n- \n- \n95 \n95 \nOther \n \n- \n- \n- \n- \n9,781 \n9,781 \n(5,995) \n3,786 \nTotal transactions with owners \n \n- \n- \n- \n(7,510,364) \n9,781 \n(7,500,583) \n(10,264) \n(7,510,847) \nBalance as of December 31, 2022 \n \n91,467 \n595,693 \n3,371,737 \n258,740,703 \n1,484,036 \n264,283,636 \n7,322,039 \n271,605,675 \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY \n \n \nThe above consolidated statements of changes in equity should be read in conjunction with the accompanying notes. \n \n \n- 11 - \n(In millions of Korean won) \n \nFor the year ended December 31, 2023 \nNotes \nPreference \nshares \nOrdinary \nshares \nShare \npremium \nRetained \nearnings \nOther \ncomponents \nof equity \nEquity \nattributable \nto owners of \nthe parent \ncompany \nNon-\ncontrolling \ninterests \nTotal \n \n \n \n \n \n \n \n \n \n \nBalance as of January 1, 2023 \n \n119,467 \n778,047 \n4,403,893 \n337,946,407 \n1,938,328 \n345,186,142 \n9,563,462 \n354,749,604 \nProfit for the year \n \n- \n- \n- \n14,473,401 \n- \n14,473,401 \n1,013,699 \n15,487,100 \nGain (loss) on valuation of financial \nassets at fair value through other \ncomprehensive income, net of tax \n6, 20 \n- \n- \n- \n4,041,867 \n(2,554,690) \n1,487,177 \n(6,086) \n1,481,091 \nShare of other comprehensive income of \nassociates and joint ventures, net of tax \n9, 20 \n- \n- \n- \n- \n70,157 \n70,157 \n4,955 \n75,112 \nForeign currency translation \ndifferences for foreign operations, net \nof tax \n20 \n- \n- \n- \n- \n2,611,915 \n2,611,915 \n9,564 \n2,621,479 \nRemeasurement of net defined benefit  \n assets, net of tax \n14, 20 \n- \n- \n- \n- \n(797,916) \n(797,916) \n(30,382) \n(828,298) \nGain on valuation of cash flow hedge \nderivatives \n20 \n- \n- \n- \n- \n927 \n927 \n- \n927 \nTotal comprehensive income for the year \n \n- \n- \n- \n18,515,268 \n(669,607) \n17,845,661 \n991,750 \n18,837,411 \nDividends declared \n19 \n- \n- \n- \n(9,809,437) \n- \n(9,809,437) \n(101,984) \n(9,911,421) \nCapital transactions under common control \n \n- \n- \n- \n- \n- \n- \n(9,368) \n(9,368) \nChanges in consolidated entities \n \n- \n- \n- \n- \n- \n- \n230 \n230 \nOthers \n \n- \n- \n- \n- \n11,409 \n11,409 \n- \n11,409 \nTotal transactions with owners \n \n- \n- \n- \n(9,809,437) \n11,409 \n(9,798,028) \n(111,122) \n(9,909,150) \nBalance as of December 31, 2023 \n  \n119,467 \n778,047 \n4,403,893 \n346,652,238 \n1,280,130 \n353,233,775 \n10,444,090 \n363,677,865 \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY \n \n \nThe above consolidated statements of changes in equity should be read in conjunction with the accompanying notes. \n \n \n- 12 - \n(In thousands of US dollars (Note 2.18)) \n \nFor the year ended December 31, 2023 \nNotes \nPreference \nshares \nOrdinary \nshares \nShare \npremium \nRetained \nearnings \nOther \ncomponents \nof equity \nEquity \nattributable \nto owners of \nthe parent \ncompany \nNon-\ncontrolling \ninterests \nTotal \n \n \n \n \n \n \n \n \n \n \nBalance as of January 1, 2023 \n \n91,467 \n595,693 \n3,371,737 \n258,740,703 \n1,484,036 \n264,283,636 \n7,322,039 \n271,605,675 \nProfit for the year \n \n- \n- \n- \n11,081,218 \n- \n11,081,218 \n776,115 \n11,857,333 \nGain (loss) on valuation of financial \nassets at fair value through other \ncomprehensive income, net of tax \n6, 20 \n- \n- \n- \n3,094,560 \n(1,955,938) \n1,138,622 \n(4,660) \n1,133,962 \nShare of other comprehensive income of \nassociates and joint ventures, net of tax \n9, 20 \n- \n- \n- \n- \n53,714 \n53,714 \n3,794 \n57,508 \nForeign currency translation differences \nfor foreign operations, net of tax \n20 \n- \n- \n- \n- \n1,999,752 \n1,999,752 \n7,322 \n2,007,074 \nRemeasurement of net defined benefit \nassets, net of tax \n14, 20 \n- \n- \n- \n- \n(610,906) \n(610,906) \n(23,261) \n(634,167) \nGain on valuation of cash flow hedge \nderivatives \n20 \n- \n- \n- \n- \n710 \n710 \n- \n710 \nTotal comprehensive income for the year \n \n- \n- \n- \n14,175,778 \n(512,668) \n13,663,110 \n759,310 \n14,422,420 \nDividends declared \n19 \n- \n- \n- \n(7,510,364) \n- \n(7,510,364) \n(78,082) \n(7,588,446) \nCapital transactions under common control \n \n- \n- \n- \n- \n- \n- \n(7,172) \n(7,172) \nChanges in consolidated entities \n \n- \n- \n- \n- \n- \n- \n176 \n176 \nOthers \n \n- \n- \n- \n- \n8,734 \n8,734 \n- \n8,734 \nTotal transactions with owners \n  \n- \n- \n- \n(7,510,364) \n8,734 \n(7,501,630) \n(85,078) \n(7,586,708) \nBalance as of December 31, 2023 \n  \n91,467 \n595,693 \n3,371,737 \n265,406,117 \n980,102 \n270,445,116 \n7,996,271 \n278,441,387 \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nCONSOLIDATED STATEMENTS OF CASH FLOWS \n \n \nThe above consolidated statements of cash flows should be read in conjunction with the accompanying notes. \n \n \n- 13 - \n(In millions of Korean won, in thousands of US dollars (Note 2.18)) \n \n  \n  \nFor the years ended December 31, \n  \nNotes \n2023 \n2022 \n2023 \n2022 \n \n \nKRW \nKRW \nUSD \nUSD \n \n \n \n \n \n \nOperating activities \n \n \n \n \n \nProfit for the year \n \n15,487,100 \n55,654,077 \n11,857,333 \n42,610,233 \nAdjustments \n27 \n36,519,534 \n33,073,439 \n27,960,321 \n25,321,899 \nChanges in assets and liabilities arising  \nfrom operating activities \n27 \n(5,458,745) \n(16,998,948) \n(4,179,359) (13,014,844) \nCash generated from operations \n \n46,547,889 \n71,728,568 \n35,638,295 \n54,917,288 \nInterest received \n \n4,786,010 \n2,136,795 \n3,664,296 \n1,635,987 \nInterest paid \n \n(844,691) \n(714,543) \n(646,718) \n(547,073) \nDividends received \n \n269,169 \n529,421 \n206,083 \n405,339 \nIncome tax paid \n  \n(6,620,950) \n(11,498,895) \n(5,069,175) \n(8,803,859) \nNet cash from operating activities \n  \n44,137,427 \n62,181,346 \n33,792,781 \n47,607,682 \n  \n \n \n \n \nInvesting activities \n \n \n \n \n \nNet decrease in short-term financial instruments \n \n39,421,565 \n15,214,321 \n30,182,192 \n11,648,486 \nNet decrease (increase) in short-term financial \nassets at amortized cost \n \n(195,616) \n3,050,104 \n(149,769) \n2,335,240 \nNet decrease in short-term financial assets at  \nfair value through profit or loss \n \n2,718 \n11,677 \n2,081 \n8,940 \nDisposal of long-term financial instruments \n \n4,565,426 \n8,272,909 \n3,495,411 \n6,333,958 \nAcquisition of long-term financial \ninstruments \n \n(5,307,770) \n(4,393,754) \n(4,063,769) \n(3,363,974) \nDisposal of financial assets at fair value  \n through other comprehensive income \n \n6,521,568 \n496,090 \n4,993,085 \n379,820 \nAcquisition of financial assets at fair value  \nthrough other comprehensive income \n \n(124,488) \n(37,687) \n(95,311) \n(28,854) \n Disposal of financial assets at fair value through \nprofit or loss \n \n63,962 \n166,315 \n48,971 \n127,335 \nAcquisition of financial assets at fair value  \n through profit or loss \n \n(130,459) \n(158,244) \n(99,883) \n(121,156) \n Disposal of investment in associates and joint \nventures \n \n33,457 \n13,233 \n25,616 \n10,132 \nAcquisition of investment in associates and \njoint ventures \n \n(78,690) \n(907,958) \n(60,247) \n(695,157) \nDisposal of property, plant and equipment \n \n98,341 \n217,878 \n75,292 \n166,813 \nAcquisition of property, plant and equipment \n \n(57,611,292) \n(49,430,428) \n(44,108,728) (37,845,242) \nDisposal of intangible assets \n \n11,744 \n23,462 \n8,992 \n17,963 \nAcquisition of intangible assets \n \n(2,922,875) \n(3,696,304) \n(2,237,830) \n(2,829,988) \nCash outflow from business combinations \n \n(356,511) \n(31,383) \n(272,954) \n(24,028) \nCash outflow from other investing activities \n  \n(913,897) \n(413,035) \n(699,705) \n(316,230) \nNet cash used in investing activities \n  \n(16,922,817) \n(31,602,804) \n(12,956,556) (24,195,942) \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nCONSOLIDATED STATEMENTS OF CASH FLOWS \n \n \nThe above consolidated statements of cash flows should be read in conjunction with the accompanying notes. \n \n \n- 14 - \n(In millions of Korean won, in thousands of US dollars (Note 2.18)) \n \n  \n  \nFor the years ended December 31, \n  \nNotes \n2023 \n2022 \n2023 \n2022 \n       \n \nKRW \nKRW \nUSD \nUSD \nFinancing activities \n \n \n \n \n \nNet increase (decrease) in short-term borrowings \n27 \n2,145,400 \n(8,339,149) \n1,642,575 \n(6,384,673) \nIncrease in long-term borrowings  \n27 \n354,712 \n271,997 \n271,577 \n208,248 \nRepayment of debentures and long-term borrowings \n27 \n(1,219,579) \n(1,508,465) \n(933,742) \n(1,154,921) \nDividends paid \n \n(9,864,474) \n(9,814,426) \n(7,552,502) \n(7,514,184) \nNet decrease in non-controlling interests \n  \n(9,118) \n(6) \n(6,981) \n(4) \nNet cash used in financing activities \n  \n(8,593,059) \n(19,390,049) \n(6,579,073) \n(14,845,534) \n  \n \n \n \n \nReclassification to assets held-for-sale \n33 \n(14,153) \n- \n(10,836) \n- \nEffect of foreign exchange rate changes  \n  \n792,785 \n(539,198) \n606,977 \n(412,822) \nNet increase in cash and cash equivalents \n  \n19,400,183 \n10,649,295 \n14,853,293 \n8,153,384 \n  \n \n \n \n \nCash and cash equivalents \n \n \n \n \n \nBeginning of the year \n  \n49,680,710 \n39,031,415 \n38,036,865 \n29,883,483 \nEnd of the year \n  \n69,080,893 \n49,680,710 \n52,890,158 \n38,036,867 \n \n \n \n \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 15 - \n \nAs of December 31, 2023 and 2022, and \nFor the years ended December 31, 2023 and 2022 \n1. General Information \n1.1 Company Overview \n \nSamsung Electronics Co., Ltd. (“SEC”) was incorporated under the laws of the Republic of Korea in 1969 and listed its shares \non the Korea Stock Exchange in 1975. SEC and its subsidiaries (collectively referred to as the “Company”) operate four \nbusiness divisions: DX, DS, SDC and Harman. DX (Device eXperience) division comprises businesses for digital televisions, \nrefrigerators, smartphones and communication systems. DS (Device Solutions) division comprises businesses for memory, \nfoundry, and system Large Scale Integration (LSI). SDC includes display panels products. Harman division includes connected \ncar systems, audio and visual products, enterprise automation solutions and connected services. SEC is domiciled in the \nRepublic of Korea and is located in Suwon, the Republic of Korea. \n \nThese consolidated financial statements have been prepared in accordance with Korean International Financial Reporting \nStandards (“Korean IFRS”) 1110, Consolidated Financial Statements. SEC, as the controlling company, consolidates its 232 \nsubsidiaries, including Samsung Display and Samsung Electronics America. The Company also applies the equity method of \naccounting for its 37 associates and joint ventures, including Samsung Electro-Mechanics Co., Ltd. \n \n1.2 Consolidated Subsidiaries  \n \nThe consolidated subsidiaries as of December 31, 2023 are as follows: \nRegion \nSubsidiaries \nBusiness \nPercentage of \nownership (%)(*) \nAmerica \nSamsung Electronics America, Inc. (SEA) \nSale of electronic devices \n100.0 \nSamsung International, Inc. (SII) \nManufacture of electronic devices \n100.0 \nSamsung Mexicana S.A. de C.V (SAMEX) \nManufacture of electronic devices \n100.0 \nSamsung Electronics Home Appliances America, LLC (SEHA) \nManufacture of home appliances \n100.0 \nSamsung Research America, Inc. (SRA) \nR&D \n100.0 \nSamsung Next LLC (SNX) \nManagement of overseas subsidiaries \n100.0 \nSamsung Next Fund LLC (SNXF) \nVenture capital investment fund \n100.0 \nNeuroLogica Corp. \nManufacture and sale of medical equipment \n100.0 \nSamsung HVAC America, LLC \nSale of air conditioning products \n100.0 \nJoyent, Inc. \nCloud services \n100.0 \nSmartThings, Inc. \nSale of smart home electronics \n100.0 \nTeleWorld Solutions, Inc. (TWS) \nInstallation of network devices \n100.0 \nSamsung Semiconductor, Inc. (SSI) \nSale of semiconductor and display panels \n100.0 \nSamsung Federal, Inc. (SFI) \nR&D \n100.0 \nSamsung Austin Semiconductor LLC. (SAS) \nManufacture of semiconductors \n100.0 \nSamsung Oak Holdings, Inc. (SHI) \nManagement of overseas subsidiaries \n100.0 \nSEMES America, Inc. \nSemiconductor equipment maintenance \n100.0 \nSamsung Display America Holdings, Inc. (SDAH) \nManagement of overseas subsidiaries \n100.0 \neMagin Corporation \nDevelopment and manufacture of display \npanels \n100.0 \nSamsung Electronics Canada, Inc. (SECA) \nSale of electronic devices \n100.0 \nAdGear Technologies Inc. \nDigital advertising platforms \n100.0 \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 16 - \n(*) Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships. \n \nRegion \nSubsidiaries \nBusiness \nPercentage of \nownership (%)(*) \nAmerica \nSamsung Eletronica da Amazonia Ltda. (SEDA) \nManufacture and sale of electronic devices \n100.0 \nSamsung Electronics Mexico S.A. De C.V. (SEM) \nSale of electronic devices \n100.0 \nSamsung Electronics Digital Appliance Mexico, SA de CV (SEDAM) \nManufacture of home appliances \n100.0 \nSamsung Electronics Latinoamerica(Zona Libre), S. A. (SELA) \nSale of electronic devices \n100.0 \nSamsung Electronics Latinoamerica Miami, Inc. (SEMI) \nSale of electronic devices \n100.0 \nSamsung Electronica Colombia S.A. (SAMCOL) \nSale of electronic devices \n100.0 \nSamsung Electronics Argentina S.A. (SEASA) \nMarketing and related services \n100.0 \nSamsung Electronics Chile Limitada (SECH) \nSale of electronic devices \n100.0 \nSamsung Electronics Peru S.A.C. (SEPR) \nSale of electronic devices \n100.0 \nSamsung Electronics Venezuela, C.A. (SEVEN) \nMarketing and related services \n100.0 \nSamsung Electronics Panama. S.A. (SEPA) \nConsulting \n100.0 \nHarman International Industries, Inc. \nManagement of overseas subsidiaries \n100.0 \nHarman Becker Automotive Systems, Inc. \nManufacture and sale of audio products, \nR&D \n100.0 \nHarman Connected Services, Inc. \nConnected service provider \n100.0 \nHarman Connected Services Engineering Corp. \nConnected service provider \n100.0 \nHarman da Amazonia Industria Eletronica e Participacoes Ltda. \nManufacture and sale of audio products \n100.0 \nHarman de Mexico, S. de R.L. de C.V. \nManufacture of audio products \n100.0 \nHarman do Brasil Industria Eletronica e Participacoes Ltda. \nSale of audio products, R&D \n100.0 \nHarman Financial Group LLC \nManagement company \n100.0 \nHarman International Industries Canada Ltd. \nSale of audio products \n100.0 \nHarman International Mexico, S. de R.L. de C.V. \nSale of audio products \n100.0 \nHarman KG Holding, LLC \nManagement of overseas subsidiaries \n100.0 \nHarman Professional, Inc. \nSale of audio products, R&D \n100.0 \nRoon Labs, LLC. \nSale of audio products \n100.0 \nBeijing Integrated Circuit Industry International Fund, L.P \nVenture capital investment fund \n61.4 \nChina Materialia New Materials 2016 Limited Partnership \nVenture capital investment fund \n99.0 \n \n(*) Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships. \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 17 - \nRegion \nSubsidiaries \nBusiness \nPercentage of \nownership (%)(*) \nEurope & \nCIS \nSamsung Electronics (UK) Ltd. (SEUK) \nSale of electronic devices \n100.0 \nSamsung Electronics Ltd. (SEL) \nManagement of overseas subsidiaries \n100.0 \nSamsung Semiconductor Europe Limited (SSEL) \nSale of semiconductor and display panels \n100.0 \nSamsung Electronics GmbH (SEG) \nSale of electronic devices \n100.0 \nSamsung Electronics Holding GmbH (SEHG) \nManagement of overseas subsidiaries \n100.0 \nSamsung Semiconductor Europe GmbH (SSEG) \nSale of semiconductor and display panels \n100.0 \nSamsung Electronics France S.A.S (SEF) \nSale of electronic devices \n100.0 \nSamsung Electronics Italia S.P.A. (SEI) \nSale of electronic devices \n100.0 \nSamsung Electronics Iberia, S.A. (SESA) \nSale of electronic devices \n100.0 \nSamsung Electronics Portuguesa, Unipessoal, Lda. (SEP) \nSale of electronic devices \n100.0 \nSamsung Electronics Hungarian Private Co. Ltd. (SEH) \nManufacture and sale of electronic devices \n100.0 \nSamsung Electronics Europe Logistics B.V. (SELS) \nLogistics \n100.0 \nSamsung Electronics Benelux B.V. (SEBN) \nSale of electronic devices \n100.0 \nSamsung Electronics Europe Holding Cooperatief U.A. (SEEH) \nManagement of overseas subsidiaries \n100.0 \nSamsung Electronics Nordic Aktiebolag (SENA) \nSale of electronic devices \n100.0 \nSamsung Electronics Slovakia s.r.o (SESK) \nManufacture of TV and monitors \n100.0 \nSamsung Display Slovakia, s.r.o., v likvidacii (SDSK) \nToll processing of display panels \n100.0 \nSamsung Electronics Polska, SP.Zo.o (SEPOL) \nSale of electronic devices \n100.0 \nSamsung Electronics Poland Manufacturing SP.Zo.o (SEPM) \nManufacture of home appliances \n100.0 \nSamsung Electronics Romania LLC (SEROM) \nSale of electronic devices \n100.0 \nSamsung Electronics Austria GmbH (SEAG) \nSale of electronic devices \n100.0 \nSamsung Electronics Switzerland GmbH (SESG) \nSale of electronic devices \n100.0 \nSamsung Electronics Czech and Slovak s.r.o. (SECZ) \nSale of electronic devices \n100.0 \nSamsung Electronics Baltics SIA (SEB) \nSale of electronic devices \n100.0 \nSamsung Electronics Greece S.M.S.A (SEGR) \nSale of electronic devices \n100.0 \nSamsung Electronics Air Conditioner Europe B.V. (SEACE) \nSale of air conditioning products \n100.0 \nSamsung Nanoradio Design Center (SNDC) \nR&D \n100.0 \nSamsung Denmark Research Center ApS (SDRC) \nR&D \n100.0 \nSamsung Cambridge Solution Centre Limited (SCSC) \nR&D \n100.0 \nSAMSUNG Zhilabs, S.L. \nDevelopment and sale of network solutions \n100.0 \nFOODIENT LTD. \nR&D \n100.0 \nSamsung Electronics Rus Company LLC (SERC) \nSale of electronic devices \n100.0 \nSamsung Electronics Rus Kaluga LLC (SERK) \nManufacture of TV \n100.0 \nSamsung Electronics Ukraine Company LLC (SEUC) \nSale of electronic devices \n100.0 \nSamsung R&D Institute Ukraine (SRUKR) \nR&D \n100.0 \nSamsung Electronics Central Eurasia LLP (SECE) \nSale of electronic devices \n100.0 \nSamsung Electronics Overseas B.V. (SEO) \nSale of electronic devices \n100.0 \nSamsung R&D Institute Rus LLC (SRR) \nR&D \n100.0 \nSamsung Electronics Caucasus Co. Ltd (SECC) \nMarketing \n100.0 \nSamsung Electronics Uzbekistan Ltd. (SEUZ) \nMarketing \n100.0 \n \n(*) Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships. \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 18 - \nRegion \nSubsidiaries \nBusiness \nPercentage of \nownership (%)(*) \nEurope & \nCIS  \nAKG Acoustics GmbH \nManufacture and sale of audio products \n100.0 \nApostera UA, LLC \nConnected Service Provider \n100.0 \nHarman Audio Iberia Espana Sociedad Limitada \nSale of audio products \n100.0 \nHarman Becker Automotive Systems GmbH \nManufacture and sale of audio products, \nR&D \n100.0 \nHarman Becker Automotive Systems Italy S.R.L. \nSale of audio products \n100.0 \nHarman Becker Automotive Systems Manufacturing Kft \nManufacture of audio products, R&D \n100.0 \nHarman Belgium SA \nSale of audio products \n100.0 \nHarman Connected Services AB. \nConnected service provider \n100.0 \nHarman Finland Oy \nConnected service provider \n100.0 \nHarman Connected Services GmbH \nConnected service provider \n100.0 \nHarman Connected Services Poland Sp.zoo \nConnected service provider \n100.0 \nHarman Connected Services UK Ltd. \nConnected service provider \n100.0 \nHarman Consumer Nederland B.V. \nSale of audio products \n100.0 \nHarman Deutschland GmbH \nSale of audio products \n100.0 \nHarman France SNC \nSale of audio products \n100.0 \nHarman Holding GmbH & Co. KG \nManagement company \n100.0 \nHarman Hungary Financing Ltd. \nFinancing company \n100.0 \nHarman Inc. & Co. KG \nManagement of overseas subsidiaries \n100.0 \nHarman International Estonia OU \nR&D \n100.0 \nHarman International Industries Limited \nSale of audio products, R&D \n100.0 \nHarman International Romania SRL \nR&D \n100.0 \nHarman Management GmbH \nManagement of overseas subsidiaries \n100.0 \nHarman Professional Kft \nManufacture of audio products, R&D \n100.0 \nHarman Professional Denmark ApS \nSale of audio products, R&D \n100.0 \nRed Bend Software SAS \nSoftware design \n100.0 \nStuder Professional Audio GmbH \nSale of audio products, R&D \n100.0 \nHarman Connected Services OOO \nConnected service provider \n100.0 \nHarman RUS CIS LLC \nSale of audio products \n100.0 \n(*) Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships. \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 19 - \nRegion \nSubsidiaries \nBusiness \nPercentage of \nownership (%)* \nMiddle East  \n& Africa \nSamsung Gulf Electronics Co., Ltd. (SGE) \nSale of electronic devices \n100.0 \nSamsung Electronics Turkiye (SETK) \nSale of electronic devices \n100.0 \nSamsung Electronics Industry and Commerce Ltd. (SETK-P) \nManufacture of electronic devices \n100.0 \nSamsung Electronics Levant Co., Ltd. (SELV) \nSale of electronic devices \n100.0 \nSamsung Electronics Maghreb Arab (SEMAG) \nSale of electronic devices \n100.0 \nSamsung Electronics Egypt S.A.E (SEEG) \nManufacture and sale of electronic devices \n100.0 \nSamsung Electronics Israel Ltd. (SEIL) \nMarketing \n100.0 \nSamsung Electronics Tunisia S.A.R.L (SETN) \nMarketing \n100.0 \nSamsung Electronics Pakistan (Private) Ltd. (SEPAK) \nMarketing \n100.0 \nSamsung Electronics Saudi Arabia Ltd. (SESAR) \nSale of electronic devices \n100.0 \nSamsung Semiconductor Israel R&D Center, Ltd. (SIRC) \nR&D \n100.0 \nCorephotonics Ltd. \nR&D \n100.0 \nSamsung Electronics South Africa(Pty) Ltd. (SSA) \nSale of electronic devices \n100.0 \nSamsung Electronics South Africa Production (Pty) Ltd. (SSAP) \nManufacture of TV and monitors \n100.0 \nSamsung Electronics West Africa Ltd. (SEWA) \nMarketing \n100.0 \nSamsung Electronics East Africa Ltd. (SEEA) \nMarketing \n100.0 \nGlobal Symphony Technology Group Private Ltd. \nManagement of overseas subsidiaries \n100.0 \nHarman Connected Services Morocco \nConnected service provider \n100.0 \nHarman Industries Holdings Mauritius Ltd. \nManagement of overseas subsidiaries \n100.0 \nRed Bend Ltd. \nManufacture of audio products \n100.0 \nAsia \n(Excluding \nChina) \nSamsung Asia Pte. Ltd. (SAPL) \nManagement of overseas subsidiaries \n100.0 \nSamsung Electronics Singapore Pte. Ltd. (SESP) \nSale of electronic devices \n100.0 \nSamsung Malaysia Electronics (SME) Sdn. Bhd. (SME) \nSale of electronic devices \n100.0 \nSamsung Electronics Display (M) Sdn. Bhd. (SDMA) \nManufacture of electronic devices \n100.0 \nSamsung Electronics (M) Sdn. Bhd. (SEMA) \nManufacture of home appliances \n100.0 \nSamsung Vina Electronics Co., Ltd. (SAVINA) \nSale of electronic devices \n100.0 \nSamsung Electronics Vietnam Co., Ltd. (SEV) \nManufacture of electronic devices \n100.0 \nSamsung Electronics Vietnam THAINGUYEN Co., Ltd. (SEVT) \nManufacture of communication equipment \n100.0 \nSamsung Electronics HCMC CE Complex Co., Ltd. (SEHC) \nManufacture and sale of electronic devices \n100.0 \nSamsung Display Vietnam Co., Ltd. (SDV) \nManufacture of display panels \n100.0 \nDOWOOINSYS VINA COMPANY LIMITED \nManufacture of display panel components \n100.0 \nPT Samsung Electronics Indonesia (SEIN) \nManufacture and sale of electronic devices \n100.0 \nPT Samsung Telecommunications Indonesia (STIN) \nSale of electronic devices and services \n100.0 \nThai Samsung Electronics Co., Ltd. (TSE) \nManufacture and sale of electronic devices \n91.8 \nLaos Samsung Electronics Sole Co., Ltd (LSE) \nMarketing \n100.0 \nSamsung Electronics Philippines Corporation (SEPCO) \nSale of electronic devices \n100.0 \nSamsung Electronics Australia Pty. Ltd. (SEAU) \nSale of electronic devices \n100.0 \nSamsung Electronics New Zealand Limited (SENZ) \nSale of electronic devices \n100.0 \nSamsung India Electronics Private Ltd. (SIEL) \nManufacture and sale of electronic devices \n100.0 \nRed Brick Lane Marketing Solutions Pvt. Ltd. \nMarketing \n100.0 \nSamsung Display Noida Private Limited (SDN) \nManufacture of display panels \n100.0 \nSamsung R&D Institute India-Bangalore Private Limited (SRI-Bangalore) \nR&D \n100.0 \nSamsung R&D Institute Bangladesh Limited (SRBD) \nR&D \n100.0 \nSamsung Nepal Services Pvt. Ltd. (SNSL) \nService \n100.0 \nSamsung Japan Corporation (SJC) \nSale of semiconductor and display panels \n100.0 \n(*) Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships. \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 20 - \nRegion \nSubsidiaries \nBusiness \nPercentage of \nownership (%)(\n*\n) \nAsia \n(Excluding \nChina) \nSamsung R&D Institute Japan Co., Ltd. (SRJ) \nR&D \n100.0 \nSamsung Electronics Japan Co., Ltd. (SEJ) \nSale of electronic devices \n100.0 \nHarman Connected Services Corp. India Pvt. Ltd. \nConnected service provider \n100.0 \nHarman International (India) Private Limited \nSale of audio products, R&D \n100.0 \nHarman International Industries PTY Ltd. \nManagement of overseas subsidiaries \n100.0 \nHarman International Japan Co., Ltd. \nSale of audio products, R&D \n100.0 \nHarman Singapore Pte. Ltd. \nSale of audio products \n100.0 \nChina  \nSamsung (CHINA) Investment Co., Ltd. (SCIC) \nSale of electronic devices \n100.0 \nSamsung Electronics Hong Kong Co., Ltd. (SEHK) \nSale of electronic devices \n100.0 \nSamsung Electronics Taiwan Co., Ltd. (SET) \nSale of electronic devices \n100.0 \nTianjin Samsung Electronics Co., Ltd. (TSEC) \nManufacture of TV and monitors \n91.2 \nSuzhou Samsung Electronics Co., Ltd. (SSEC) \nManufacture of home appliances \n88.3 \nSamsung Suzhou Electronics Export Co., Ltd. (SSEC-E) \nManufacture of home appliances \n100.0 \nSamsung Electronics Suzhou Computer Co., Ltd. (SESC) \nR&D \n100.0 \nTianjin Samsung Telecom Technology Co., Ltd. (TSTC) \nManufacture of communication equipment \n90.0 \nBeijing Samsung Telecom R&D Center (SRC-Beijing) \nR&D \n100.0 \nSamsung Electronics China R&D Center (SRC-Nanjing) \nR&D \n100.0 \nSamsung Mobile R&D Center China-Guangzhou (SRC-Guangzhou) \nR&D \n100.0 \nSamsung R&D Institute China-Shenzhen (SRC-Shenzhen) \nR&D \n100.0 \nShanghai Samsung Semiconductor Co., Ltd. (SSS) \nSale of semiconductor and display panels \n100.0 \nSamsung (China) Semiconductor Co., Ltd. (SCS) \nManufacture of semiconductors \n100.0 \nSamsung SemiConductor Xian Co., Ltd. (SSCX) \nSale of semiconductor and display panels \n100.0 \nSamsung Electronics Suzhou Semiconductor Co., Ltd. (SESS) \nToll processing of semiconductors \n100.0 \nTianjin Samsung LED Co., Ltd. (TSLED) \nManufacture of LED \n100.0 \nSamsung Semiconductor (China) R&D Co., Ltd. (SSCR) \nR&D \n100.0 \nSamsung Display Dongguan Co., Ltd. (SDD) \nManufacture of display panels \n100.0 \nSamsung Display Tianjin Co., Ltd. (SDT) \nManufacture of display panels \n95.0 \nSEMES (XIAN) Co., Ltd. \nSemiconductor/FPD equipment services \n100.0 \nSamsung Semiconductor Investment L.P.Ⅰ \nVenture capital investment fund \n99.0 \nHarman (China) Technologies Co., Ltd. \nManufacture of audio products \n100.0 \nHarman (Suzhou) Audio and Infotainment Systems Co., Ltd. \nSale of audio products \n100.0 \nHarman Automotive Electronic Systems (Suzhou) Co., Ltd. \nManufacture of audio products, R&D \n100.0 \nHarman Commercial (Shanghai) Co., Ltd. \nSale of audio products \n100.0 \nHarman Connected Services Solutions (Chengdu) Co., Ltd. \nConnected service provider \n100.0 \nHarman Holding Limited \nSale of audio products \n100.0 \nHarman International (China) Holdings Co., Ltd. \nSale of audio products, R&D \n100.0 \nHarman Technology (Shenzhen) Co., Ltd. \nSale of audio products, R&D \n100.0 \n \n(*) Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 21 - \nRegion \nSubsidiaries \nBusiness \nPercentage of \nownership (%)(\n*\n) \nDomestic \nSamsung Display Co., Ltd. \nManufacture and sale of display panels \n84.8 \nSU Materials \nManufacture of display panel components \n50.0 \nSTECO Co., Ltd. \nManufacture of semiconductor components \n70.0 \nSEMES Co., Ltd. \nManufacture and sale of semiconductor/FPD \n91.5 \nSamsung Electronics Service Co., Ltd. \nRepair services for electronic devices \n99.3 \nSamsung Electronics Service Customer Satisfaction Co., Ltd. \nCall center for repair services for electronic devices \n100.0 \nSamsung Electronics Sales Co., Ltd. \nSale of electronic devices \n100.0 \nSamsung Electronics Logitech Co., Ltd. \nGeneral logistics agency \n100.0 \nSamsung Medison Co., Ltd. \nManufacture and sale of medical equipment \n68.5 \nStella Forest of Hope \nManufacture of food \n100.0 \nMirero System Co., Ltd. \nDevelopment and supply of semiconductor \nprocess defect and quality control software \n99.9 \nDowooinsys Co., Ltd. \nManufacture of display panel components \n69.0 \nGf-System Co., Ltd. \nManufacture of display panel components \n100.0 \nHarman International Korea \nSoftware development and supply \n100.0 \nSamsung Venture Capital Union #21 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #22 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #26 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #28 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #29 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #32 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #33 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #37 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #40 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #42 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #43 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #45 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #48 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #52 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #55 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #56 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #57 \nVenture capital investment fund \n99.0 \nSamsung Venture Capital Union #62 \nVenture capital investment fund \n99.0 \nGrowth Type Private Equity Trust Specialized in \nSemiconductors \nInvestment in semiconductor industry \n66.7 \nSystem LSI Mutual Benefit Private Equity Trust \nInvestment in semiconductor industry \n62.5 \nSemiconductor Ecosystem Private Equity Trust \nInvestment in semiconductor industry \n66.7 \n(*) Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 22 - \n1.3 Summary of Financial Data of Major Consolidated Subsidiaries \n \nSummary of financial data of major consolidated subsidiaries is as follows:  \n \n(1) 2023 \n(In millions of Korean won) \nAs of December 31, 2023 \nFor the year ended December 31, 2023 \nMajor subsidiaries (*1) \nAssets \nLiabilities \nSales \nProfit (loss)  \nfor the year \nSamsung Display Co., Ltd. \n65,328,568  \n7,266,213  \n27,083,336  \n8,268,314  \nSamsung Electronics America, Inc. (SEA) \n41,926,899  \n15,322,780  \n39,551,809  \n477,338  \nSamsung Asia Pte. Ltd. (SAPL) \n22,234,942  \n282,614  \n- \n14,140,195  \nHarman and its subsidiaries (*2) \n17,956,557  \n6,009,675  \n14,367,766  \n896,384  \nSamsung Austin Semiconductor LLC. (SAS) \n16,714,945  \n7,791,914  \n4,109,744  \n301,778  \nSamsung (China) Semiconductor Co., Ltd. (SCS) \n15,808,283  \n870,453  \n8,693,788  \n877,892  \nSamsung Semiconductor, Inc. (SSI) \n12,796,440  \n6,276,293  \n23,465,031  \n136,458  \nSamsung Electronics Vietnam THAINGUYEN Co., Ltd. (SEVT) \n12,554,481  \n3,593,527  \n30,639,349  \n2,240,480  \nSamsung (CHINA) Investment Co., Ltd. (SCIC) \n10,222,557  \n8,797,991  \n3,148,858  \n189,887  \nSamsung Electronics Europe Holding Cooperatief U.A. (SEEH) \n9,660,481  \n4,585,806  \n- \n103,387  \nSamsung India Electronics Private Ltd. (SIEL) \n7,738,259  \n3,373,730  \n15,216,331  \n1,153,256  \nSamsung Display Vietnam Co., Ltd. (SDV) \n7,383,485  \n1,570,459  \n24,200,246  \n1,143,824  \nSamsung Electronics Vietnam Co., Ltd. (SEV) \n7,301,860  \n2,215,062  \n20,154,119  \n1,476,382  \nSamsung Eletronica da Amazonia Ltda. (SEDA) \n5,542,627  \n1,587,911  \n7,222,304  \n333,812  \nShanghai Samsung Semiconductor Co., Ltd. (SSS) \n5,262,086  \n4,552,030  \n15,649,307  \n244,210  \nSamsung Electronics HCMC CE Complex Co., Ltd. (SEHC) \n4,043,677  \n843,736  \n6,152,983  \n402,418  \nThai Samsung Electronics Co., Ltd. (TSE) \n3,039,379  \n640,512  \n4,213,492  \n150,510  \nSamsung Electronics (UK) Ltd. (SEUK) \n2,902,722  \n1,976,067  \n5,859,133  \n185,113  \nSEMES Co., Ltd. \n2,187,919  \n659,607  \n2,502,143  \n58,754  \nSamsung Electronics Mexico S.A. De C.V. (SEM) \n2,153,032  \n1,038,115  \n3,638,080  \n148,873  \nSamsung Electronics GmbH (SEG) \n2,097,706  \n2,033,152  \n6,374,670  \n(3,157) \nSamsung International, Inc. (SII) \n1,879,442  \n383,763  \n6,553,383  \n141,226  \nSamsung Electronics Taiwan Co., Ltd. (SET) \n1,797,627  \n1,139,056  \n4,108,479  \n56,467  \nSamsung Electronics Benelux B.V. (SEBN) \n1,794,552  \n639,120  \n2,833,717  \n140,313  \nSamsung Electronics Europe Logistics B.V. (SELS) \n1,639,004  \n1,443,005  \n15,462,852  \n4,984  \n(*1) Summary of condensed financial information is based on separate financial statements of each subsidiary.  \n(*2) Consolidated financial data of an intermediate company, Harman International Industries, Inc. and its subsidiaries. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 23 - \n(2) 2022 \n(In millions of Korean won) \nAs of December 31, 2022 \nFor the year ended December 31, 2022 \nMajor subsidiaries (*1) \nAssets \nLiabilities \nSales \nProfit (loss)  \nfor the year \nSamsung Display Co., Ltd. \n57,302,567  \n7,282,718  \n30,779,405  \n4,365,588  \nSamsung Electronics America, Inc. (SEA) \n37,883,156  \n12,258,315  \n46,738,920  \n219,670  \nSamsung Asia Pte. Ltd. (SAPL) \n26,894,611  \n2,678,285  \n- \n8,699,679  \nHarman and its subsidiaries (*2) \n17,102,324  \n6,380,456  \n13,211,151  \n631,019  \nSamsung (China) Semiconductor Co., Ltd. (SCS) \n17,095,000  \n2,970,835  \n9,679,757  \n638,385  \nSamsung Electronics Vietnam THAINGUYEN Co., Ltd. (SEVT) \n15,718,299  \n2,358,140  \n36,336,963  \n2,721,701  \nSamsung (CHINA) Investment Co., Ltd. (SCIC) \n13,830,988  \n9,764,636  \n2,865,831  \n257,878  \nSamsung Semiconductor, Inc. (SSI) \n12,199,102  \n5,930,369  \n43,009,331  \n88,467  \nSamsung Electronics Vietnam Co., Ltd. (SEV) \n10,931,037  \n1,408,387  \n23,667,565  \n1,646,165  \nSamsung Electronics Europe Holding Cooperatief U.A. (SEEH) \n10,841,515  \n6,272,800  \n- \n57,997  \nSamsung Austin Semiconductor LLC. (SAS) \n9,301,017  \n828,494  \n3,663,909  \n208,879  \nSamsung Display Vietnam Co., Ltd. (SDV) \n7,471,680  \n1,608,448  \n25,773,970  \n1,301,926  \nSamsung India Electronics Private Ltd. (SIEL) \n6,772,537  \n3,571,863  \n16,180,492  \n508,510  \nShanghai Samsung Semiconductor Co., Ltd. (SSS) \n5,067,891  \n2,858,382  \n21,370,622  \n318,578  \nSamsung Eletronica da Amazonia Ltda. (SEDA) \n4,600,508  \n1,342,517  \n7,485,104  \n(38,490) \nSamsung Electronics HCMC CE Complex Co., Ltd. (SEHC) \n3,732,057  \n980,448  \n6,253,401  \n386,119  \nThai Samsung Electronics Co., Ltd. (TSE) \n3,263,473  \n486,820  \n4,824,734  \n168,524  \nSamsung Electronics (UK) Ltd. (SEUK) \n2,819,792  \n1,708,064  \n5,929,357  \n243,396  \nSamsung Electronics Benelux B.V. (SEBN) \n2,377,730  \n597,044  \n2,834,008  \n25,411  \nSamsung Electronics Hungarian Private Co. Ltd. (SEH) \n2,374,317  \n452,628  \n3,935,745  \n199,742  \nSamsung Electronics Europe Logistics B.V. (SELS) \n2,194,975  \n2,021,491  \n15,409,984  \n20,347  \nSamsung Display Dongguan Co., Ltd. (SDD) \n2,135,132  \n265,835  \n2,556,608  \n111,643  \nSEMES Co., Ltd. \n2,065,558  \n602,323  \n2,889,238  \n185,762  \nSamsung Electronics GmbH (SEG) \n1,968,273  \n1,907,132  \n6,567,011  \n3,695  \nSamsung Electronics Mexico S.A. De C.V. (SEM) \n1,816,895  \n996,002  \n3,270,016  \n110,386  \n(*1) Summary of condensed financial information is based on separate financial statements of each subsidiary.  \n(*2) Consolidated financial data of an intermediate company, Harman International Industries, Inc. and its subsidiaries. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 24 - \n1.4 Changes in Consolidation Scope  \n \nChanges in consolidation scope during the year ended December 31, 2023 are as follows: \nChange \nArea \nSubsidiary \nDescription \nIncluded \nDomestic \nSamsung Venture Capital Union #62 \nEstablishment \nSemiconductor Ecosystem Private Equity Trust \nEstablishment \nAmerica \nSamsung Federal, Inc. (SFI) \nEstablishment \nSamsung Display America Holdings, Inc. (SDAH) \nEstablishment \neMagin Corporation \nAcquisition \nRoon Labs, LLC. \nAcquisition \nExcluded \nAmerica \nDacor Holdings, Inc. \nMerger \nDacor, Inc. \nMerger \nEurope & CIS \nRed Bend Software Ltd. \nLiquidation \nHarman Finance International GP S.a.r.l \nLiquidation \nHarman Finance International, SCA \nLiquidation \nHarman Automotive UK Limited \nLiquidation \n \n \n2. Material Accounting Policies \nThe followings are material accounting policies applied on financial statements. Unless mentioned otherwise, these policies \nare consistent throughout the accounting periods denoted. \n \n2.1 Basis of Presentation \n \nThe Company’s financial statements have been written in accordance with the Korean International Financial Reporting \nStandards (“Korean IFRS”). The Korean IFRS refers to standards selected by the Republic of Korea among accounting \nstandards and interpretations published by International Accounting Standards Board (IASB). \n \nThe Korean IFRS permits application of material accounting estimates on the financial statements and requires management’s \njudgements in applying accounting policies. The areas involving a higher degree of judgment or complexity, or areas where \nassumptions and estimates are material to the financial statements are disclosed in Note 3. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 25 - \n2.2 Changes in Accounting Policies and Disclosures \n \n(A) \nNew and amended standards adopted by the Company \n \nThe Company applied the following amended standards for the first time for the annual reporting period commencing on \nJanuary 1, 2023: \n \nAmendments to Korean IFRS 1001, Presentation of Financial Statements \n \nThe amendments replace the term ‘significant’ accounting policy information with ‘material’ accounting policy and clarify its \nmeaning. These amendments do not result in a change in accounting policy but affects the accounting policy information \ndisclosed in the consolidated financial statements. In addition, IFRS Practice Statement 2, Making Materiality Judgments has \nbeen amended to provide guidance on the application of the concept of materiality. The Company has adopted the amendments \nto the standard and discloses the Company’s material accounting policies in Note 2. \n \nAmendments to Korean IFRS 1008, Accounting Policies, Changes in Accounting Estimates and Errors \n \nThe amendments clarify how accounting estimates are defined and distinguished from changes in accounting policies. The \nadoption of the amendments does not have a significant impact on the Company’s consolidated financial statements. \n \nAmendments to Korean IFRS 1012, Income Tax \n \nThe amendments add to a condition to the initial recognition exemption that the initial recognition exemption does not apply \nto transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The \nadoption of the amendments does not have a significant impact on the Company’s consolidated financial statements. \n \nAmendments to Korean IFRS 1012, Income Tax \n \nThe amendments clarify that Korean IFRS 1012, Income Taxes, applies to income taxes arising from tax law enacted or \nsubstantively enacted to implement the Pillar Two Model Rules issued by the Organization for Economic Co-operation and \nDevelopment (OECD). \n \nHowever, a temporary exemption from the requirements of Korean IFRS 1012, Income Taxes, has been adopted to allow the \nCompany to neither recognize nor disclose deferred tax assets and liabilities relating to Pillar Two income taxes. \n \n(B) \nNew and amended standards not yet adopted by the Company \n \nThe amended accounting standards that have been issued but not yet effective for the annual reporting period commencing on \nJanuary 1, 2023 which have not been early adopted by the Company are as follows:  \n \nAmendments to Korean IFRS 1001, Presentation of Financial Statements \n \nThe amendments to Korean-IFRS 1001 clarify that the classification of liabilities as current or non-current should be based \non rights that are in existence at the end of the reporting period and that the classification is unaffected by management’s \nintentions or expectations about whether an entity will exercise its right to defer settlement of a liability. The amendments also \nintroduce a definition of settlement to make clear that settlement includes the transfer to the counterparty of the entity's own \nequity instruments, however, it would be excluded if an option to settle the liability by the transfer of the entity’s own equity \ninstruments is recognized separately from the liability as an equity component of a compound financial instrument. The \namendments are applied for annual periods beginning on or after January 1, 2024, with early application permitted. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 26 - \nAmendments to Korean IFRS 1116, Leases \n \nThe amendments add requirements for the subsequent measurement of sale-and-leaseback transactions that are accounted for \nas sales in accordance with Korean IFRS 1115, Revenue from Contracts with Customers. The amendments require the seller-\nlessee to calculate the ‘lease payments’ or ‘revised lease payments’ in a way that does not result in the seller-lessee recognizing \nany gain or loss for the rights of use that the seller-lessee continues to retain after the lease commences. The amendments are \neffective for annual reporting periods beginning on or after January 1, 2024, with early application permitted. \n \nAmendments to Korean IFRS 1007, Statement of Cash Flows, and 1107, Financial Instruments: Presentation \n \nThe amendments add to the disclosure objectives in Korean IFRS 1007, Statement of Cash Flows, that information about \nsupplier financing arrangements should be disclosed to enable users of financial statements to assess the impact of those \narrangements on the Company’s liabilities and cash flows. The amendments also amend Korean IFRS 1107, Financial \nInstruments: Presentation, to add supplier financing arrangements as an example of a requirement to disclose information \nabout an entity’s exposure to concentrations of liquidity risk. \n \nThe amendments are effective for annual reporting periods beginning on or after January 1, 2024, and include specific \ntransitional provisions for the first annual period in which they are applied. Early application is permitted. \n \n \n2.3 Consolidation \n \nThe Company prepares its consolidated financial statements in accordance with Korean IFRS 1110, Consolidated Financial \nStatements.  \n \n(A) \nNon-controlling interests \n \nEach component of profit or loss and other comprehensive income is attributable to the owners of the parent and the non-\ncontrolling interests, and total comprehensive income is attributable to the owners of the parent and the non-controlling \ninterests, even if the non-controlling interests have a negative balance.  \n \n(B) \nElimination of intercompany transactions \n \nIntercompany transactions, balances, income and expenses and unrealized gains and losses (excluding foreign exchange gains \nand losses) are eliminated on consolidation. The Company’s share of unrealized losses on transactions with associates \naccounted for using the equity method are eliminated in the same way as unrealized gains unless there is evidence of \nimpairment of the asset.  \n \n \n  2.4 Functional and Presentation Currency \n \n(A) \nFunctional and presentation currency \n \nThe Company measures the items included in the financial statements of each component using the currency of the primary \neconomic environment in which each it operates (“functional currency”). The functional currency of the parent company is \nKorean won (KRW) and the consolidated financial statements are presented in Korean won (KRW). \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 27 - \n(B) \nTranslation into the presentation currency \n \nThe results and financial position of all entities subjected to consolidation that have a functional currency different from the \nparent’s presentation currency are translated into the parent’s presentation currency as follows: \n \n(1) Assets and liabilities are translated at the closing rate at the end of the reporting date. \n(2) Income and expenses in the statement of profit or loss are translated at average exchange rates for the period.  \nHowever, if this average rate is not a reasonable approximation of the cumulative effect of the exchange rates at the \ndates of the transactions, the transactions are translated at the exchange rates at the dates of transactions.  \n(3) Exchange differences arising on translation in (1) and (2) above are recognized in other comprehensive income. \n \n \n2.5 Cash and Cash Equivalents \n \nCash and cash equivalents include cash on hand, deposits held at call with banks, and highly liquid short-term investment \nassets that are readily convertible to known amounts of cash at the date of acquisition and which are subject to an insignificant \nrisk of changes in value. \n \n \n2.6 Financial Assets \n \n(A) \nClassification \n \nFinancial instruments are classified based on the business model for managing the financial assets and the contractual cash \nflow characteristics of the financial asset. The Company considers the contractual terms of the relevant financial instrument \nand assesses whether the contractual cash flows consist solely of payments of principal and interest on the principal amount \noutstanding. \n \n(B) \nImpairment \n \nThe Company assesses the expected credit losses of debt instruments carried at amortized cost or fair value through other \ncomprehensive income on a forward-looking basis. However, the Company applies the simplified approach for trade \nreceivables, which requires expected credit losses to be recognized over the life of the receivable from initial recognition. \n \n \n2.7 Trade Receivables \n \nTrade receivables are recognized at initial transaction price, unless they contain a significant financing component, and are \nsubsequently measured at amortized cost using the effective interest method less any allowance for impairment.  \n \n \n2.8 Inventories \n \nThe Company determines the unit cost of inventories, except for materials in transit, using the average cost method. The cost \nof finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production \noverheads based on normal operating capacity, excluding the cost of idle production equipment and scrapping costs.  \n \nThe Company measures inventories at the lower of cost and net realizable value. Net realizable value is the estimated selling \nprice in the ordinary course of business less the applicable variable selling expenses, and reflects the decrease in selling price, \nthe increase in costs to completion, or decrease in value due to excess or obsolete inventory.  \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 28 - \n2.9 Property, Plant and Equipment \n \nDepreciation of property, plant and equipment begins when assets are considered by management to be available for their \nintended use, such as in the production of products. \n \nThe Company’s property, plant and equipment is depreciated on a straight-line method over the estimated useful lives of the \nassets, less any residual values. Land is not depreciated. Costs that are directly attributable to the acquisition, construction of \na qualifying asset, including capitalized interest costs, are depreciated over the estimated useful lives. \n \nThe estimated useful lives of property, plant and equipment used by the Company for each asset category are as follows: \n \n \nEstimated useful lives \nBuildings and structures \n15, 30 years \nMachinery and equipment \n5 years \nOther \n5 years \n \n \n2.10 Intangible Assets \n \nGoodwill represents the excess of the cost of an acquisition over the fair value of the identifiable net assets of subsidiaries, \nassociates and joint ventures, businesses and other entities acquired at the date of acquisition and is recognized as an intangible \nassets in respect of acquisitions of businesses of subsidiaries and as an investment in associates and joint ventures in respect \nof acquisitions of interests in associates and joint ventures.  \n \nIntangible assets, other than goodwill, are initially recognized at their historical cost and are subsequently stated at cost less \naccumulated amortization and accumulated impairment losses. \n \nMembership rights are regarded as intangible assets with indefinite useful life and not amortized as there are no foreseeable \nrestrictions on their use. However, whenever there is an indication of impairment, such as a decline in the market value of \nmembership rights, a reasonable estimate is made to reflect the impairment. Intangible assets with finite useful lives, such as \npatents, trademarks and other intangible assets, are amortized on a straight-line method over their estimated useful lives.  \n \nThe estimated useful lives of intangible assets used by the Company are as follows: \n \n \nEstimated useful lives \nPatents, trademarks and other intangible assets \n3 - 25 years \n \n \n2.11 Financial Liabilities \n \nThe Company classifies financial liabilities into financial liabilities at fair value through profit or loss and other financial \nliabilities and recognizes them on the consolidated statement of financial position when the Company becomes a party to a \ncontract, depending on the substance of the contractual terms.  \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 29 - \n2.12 Employee Benefits \n \nThe Company operates various types of post-employment benefit plans, including defined benefit plans and defined \ncontribution plans. The defined benefit liability (asset) recognized in the consolidated statement of financial position in respect \nof defined benefit plans is the present value of the defined benefit obligation at the reporting date less the fair value of plan \nassets, less any deficit (excess of plan assets over the asset recognition threshold) and is calculated annually by an independent \nactuary using the projected unit credit method.  \n \n \n2.13 Income Tax Expense \n \nThe Company applies the exemption to the recognition and disclosure of deferred tax assets and liabilities related to the Pillar \nTwo Model Rules of OECD. Furthermore, as the relevant legislation will be effective from January 1, 2024, the Company has \nnot recognized any current tax expense related to Pillar Two in the fiscal year ended December 31, 2023.  \n \nThe Company recognizes deferred tax liabilities for taxable temporary differences associated with investments in subsidiaries, \nassociates and joint ventures, except where the Company is able to control the timing of the reversal of the temporary \ndifference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are \nrecognized for deductible temporary differences arising on these assets only to the extent that it is probable that the temporary \ndifferences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences \ncan be utilized.  \n \n \n2.14 Derivative Instruments  \n \nThe Company recognizes its rights and obligations under derivative contracts as assets and liabilities at fair value and records \ngains and losses on these contracts in the statement of profit or loss. However, effective portion of changes in the fair value of \ncash flow hedges are deferred in equity.  \n \nThe Company applies cash flow hedge accounting for hedges of risks including changes in the price of inventories. The \neffective portion of the change in fair value of a derivative that is designated as a cash flow hedge is recognized in other \ncomprehensive income, while the ineffective portion is recognized in ‘financial income’ or ‘financial expense’.  \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 30 - \n2.15 Revenue Recognition \n \nThe Company’s revenue primarily represents the fair value of the consideration received or receivable for the sale of goods in \nthe ordinary course of the Company’s activities. Revenue is net of value-added tax, returns, sales incentives, discounts and \nothers. \n \n(A) \nIdentification of performance obligations \n \nThe Company is required to transfer control of goods and services under contracts with customers. For the export of products \nand goods under Incoterms Group C terms (such as CIF), the Company recognize the transportation services (including \ninsurance) provided after the control of the goods has passed to the customer as a separate performance obligation.  \n \n(B) \nPerformance obligations satisfied at a point of time \n \nThe Company’s revenue is primarily derived from the sale of goods and is recognized when control of the goods passes to \nthe customer.  \n \n(C) \nPerformance obligations satisfied over time \n \nThe Company recognizes revenue over time for sales of software, transportation services, installation services, and etc. where \nthe customer has direct control over the outcome during the performance of the service.  \n \n(D) \nVariable consideration \n \nThe Company provides a variety of sales promotions including incentives, promotion and sales allowances. Where these sales \npromotion policies result in variability in the consideration promised to customers, the Company estimates the variable \nconsideration using either the expected value or the most likely amount whichever method the Company expects to better \npredict the amount of consideration to which it will be entitled. The estimate of variable consideration is included in transaction \nprice only to the extent that it is highly probable that a significant portion of the cumulative revenue already recognized will \nnot be reversed. Revenue and contract liabilities are recognized when the related revenue is earned or when the decision to \npay the variable consideration to the customer is made, whichever is later.  \n \nThe Company recognizes contract liabilities (refund liabilities) after the sale of products to customers by estimating the return \nrate using the expected value methods based on historical experience. When the customer exercises its right to return the \nproduct, the Company recognizes the asset as a refund asset and adjusts cost of sales by the amount of the right to collect the \nproduct from the customer. The right to collect the product is measured by deducting the cost of collecting the product from \nthe historical carrying amount of the product.  \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 31 - \n2.16 Leases \n \n(A) \nLessee accounting \n \nThe Company applies the practical expedient of Korean IFRS 1116, Leases, and does not separate the non-lease elements \nfrom the lease elements and accounts for the non-lease elements relating to each lease element as a single lease element.  \n \nAt the commencement date of a lease, the Company recognizes a right-of-use asset (the lease asset) representing the right to \nuse the underlying asset and a lease liability representing the obligation to make lease payments. The right-of-use asset is \npresented in the consolidated statement of financial position as ‘property, plant and equipment’ and the lease liability is \npresented as ‘current portion of long-term liabilities’ or ‘long-term borrowings.’ \n \nLease liabilities are measured at the inception of the lease at the present value of the lease payments outstanding at that date, \ndiscounted at the Company’s incremental borrowing rate.  \n \nFor short-term leases (lease terms of 12 months or less at the inception of the lease) and low value assets (underlying assets \nof USD 5,000 or less), lease payments are recognized as expenses on a straight-line basis over the lease term applying the \nsimplified practical expedient.  \n \n(B) \nLessor accounting \n \nThe Company, as a lessor, determines whether a lease is a finance or an operating lease at the inception of the lease.  \n \nLeases that transfer substantially all the risk and rewards of ownership of the leased assets are classified as finance leases and \nall leases other than finance leases are classified as operating leases. Lease income from operating leases is recognized on a \nstraight-line basis over the lease term, while initial direct costs incurred during the negotiation and contracting phase of an \noperating lease are added to the carrying amount of the leased asset and expensed over the lease term against the lease income.  \n \n \n2.17 Government Grants \n \nGovernment grants relating to revenues are deferred and recognized in the consolidated statement of profit or loss in the same \nperiod in which they are matched with revenues or expenses related to the purpose for which the grant was made. Government \ngrants received related to the acquisition of assets are treated as deferred income and credited to the consolidated statement of \nprofit or loss over the useful lives of the related assets.  \n \n \n2.18 Convenience Translation into United States Dollar Amounts \n \nThe US dollar amounts provided in the consolidated financial statements represent supplementary information solely for the \nconvenience of the reader. All Korean won amounts are expressed in US dollar at the rate of W 1,306.1 to $1, the average \nexchange rate for the year ended December 31, 2023. Such presentation is not in accordance with generally accepted \naccounting principles and should not be construed as a representation that the Korean won amounts shown could be readily \nconverted, realized or settled in US dollars at this or any other rate.  \n \n \n2.19 Approval of the Consolidated Financial Statements \n \nThe consolidated financial statements of the Company were approved by the Board of Directors on January 31, 2024, and may \nbe approved as amended at the Annual General Shareholders’ Meetings. \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 32 - \n3. Material Accounting Estimates and Assumptions \n \nThe Company makes estimates and assumptions concerning the future. Estimates and assumptions are continuously evaluated \nand are based on historical experience and future events that are reasonably foreseeable under the circumstances. These \nestimates may differ from actual results. The estimates and assumptions that have the most significant risk of causing a material \nadjustment to the carrying amounts of assets and liabilities in the next financial year are as follows. \n \n(A) Revenue recognition \n \nThe Company recognizes a liability for a product return and a right to the returned goods that are expected to be returned by \ncustomers following the sale of products to customers. At the point of sale, the Company estimates the return using the \nexpected value method based on accumulated experience at the portfolio level and the Company’s revenue is affected by \nchanges in the expected return.  \n \nRevenue from the sale of goods recognized at the point of transfer of control is the contractual consideration less consideration \npaid to customers in relation to certain sales promotion activities. Based on the historical experience and terms of contracts, \nthe Company makes reasonable estimates of the sales deductions which affect the Company’s revenue \n \n(B) Provision for warranty \n \nThe Company provides warranties for products sold. At the end of each reporting period, the Company recognizes a provision \nfor warranties based on its best estimate of the amount it believes is necessary to provide for future and current warranty \nobligations. These best estimates are based on historical experience.  \n \n(C) Fair value of financial instruments  \n \nThe fair value of financial instruments that are not traded in an active market is determined by using various valuation \ntechniques and assumptions based on market conditions prevailing at the end of each reporting period. \n \n(D) Impairment of financial assets \n \nIn measuring the allowance for impairment losses on financial assets, the Company make assumptions about the risk of default \nand expected credit rates. In making these assumptions and selecting the inputs for the impairment calculations, the Company \nmakes judgment based on past experience and current and forecast of future economic conditions at the reporting date.  \n \n(E) Lease \n \nIn determining the lease term, the Company considers all relevant facts and circumstances that provide an economic incentive \nto exercise a renewal option, or not to exercise a termination option. The period covered by the renewal option (or the period \ncovered by the termination option) is included in the lease term only if it is reasonably certain that the lessee will exercise (or \nnot exercise) the renewal option.  \n \nThe lease term is reassessed when the option is actually exercised (or not exercised) or when the Company becomes committed \nto exercise (or not exercise) the option. The Company only changes its assessment of whether it is reasonably certain the \nrenewal option will be exercised (or not) if there is a significant event or change in circumstances within the lessee’s control \nthat affects the calculation of the lease term.  \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 33 - \n(F) Net defined benefit liabilities (assets) \n \nThe net defined benefit liabilities (assets) are dependent on a number of factors which are determined using actuarial methods \nbased on a number of assumptions. Among the assumptions used to determine the net defined benefit liabilities (assets) is the \ndiscount rate, and changes in these assumptions will affect the carrying amount of the net defined benefit liability (asset). At \nthe end of each year the Company determines an appropriate discount rate, taking into account the interest rates on high-\nquality corporate bonds, which represents the interest rate that should be used to determine the present value of the estimated \nfuture cash outflows expected to be required to settle the net defined benefit liability (asset). Some key assumptions relating \nto the net defined benefit liability (asset) are based on current market conditions.  \n \n(G) Impairment of goodwill and intangible assets that have indefinite useful life \n \nThe Company tests goodwill and intangible assets with indefinite useful life for impairment annually. The recoverable amount \nof a cash-generating unit or asset, including goodwill, is determined based on a value-in-use calculation. These calculations \nare based on estimates.  \n \n(H) Income taxes \n \nIncome taxes on the Company’s taxable income are calculated by applying tax laws and decisions of tax authorities in various \ncountries, and, therefore, there is uncertainty in determining the final tax effect. The Company has recognized current and \ndeferred tax based on its best estimate of the tax consequences expected to be payable in future periods as a result of the \nCompany’s operating activities up to the reporting date. However, the actual future final tax liability may not be consistent \nwith the related assets and liabilities recognized, and such differences may affect the current and deferred tax assets and \nliabilities when the final tax effect is determined.  \n \nThe Company is subject to additional income taxes, calculated in accordance with the method prescribed by tax laws, when a \ncertain amount is not used for investment, wage growth, etcetera, in a given period. The related tax effect is reflected in the \nmeasurement of current and deferred income taxes for the period, and the amount of income tax payable by the Company \ndepends on the level of investment, wage growth, etcetera in each year, resulting in uncertainty in determining the final tax \neffects.  \n \nThe Company assesses uncertainty over its tax positions and, if the Company concludes that it is not probably that the tax \nauthorities will accept a uncertain tax position, the effect of the uncertainty is recognized in the consolidated financial \nstatements for each uncertain tax position using the method that is expected to provide a better estimate of the resolution of \nthe uncertainty, which is more likely of the following methods.  \n \n(1) Most likely amount: the single most probable amount within a range of possible outcomes. \n(2) Expected value: the sum of the probability-weighted amounts in a range of possible outcomes. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 34 - \n4. Financial Instruments by Category \n \n(A) Categorizations of financial assets and liabilities as of December 31, 2023 and 2022 are as follows: \n \n(1) As of December 31, 2023 \n \n(In millions of Korean won) \nFinancial assets \nmeasured at  \namortized cost \nFinancial assets \nmeasured at fair \nvalue through \nother \ncomprehensive \nincome \nFinancial assets \nmeasured at fair \nvalue through \nprofit or loss \nOther \nfinancial \n assets(*) \nTotal \n \n \n \n \n \n \nFinancial assets \n   \n \n \n \nCash and cash equivalents \n69,080,893 \n- \n- \n- \n69,080,893 \nShort-term financial instruments \n22,690,924 \n- \n- \n- \n22,690,924 \nShort-term financial assets at \namortized cost \n608,281 \n- \n- \n- \n608,281 \nShort-term financial assets at fair \nvalue through profit or loss \n- \n- \n27,112 \n- \n27,112 \nTrade receivables \n36,647,393 \n- \n- \n- \n36,647,393 \nFinancial assets at fair value through \nother comprehensive income  \n- \n7,481,297 \n- \n- \n7,481,297 \nFinancial assets at fair value through \nprofit or loss  \n- \n- \n1,431,394 \n- \n1,431,394 \nOther \n14,294,254 \n- \n475,244 \n70,777 \n14,840,275 \nTotal \n143,321,745  \n7,481,297  \n1,933,750  \n70,777  \n152,807,569  \n \n(*) Other financial assets include derivatives designated as hedging instruments. \n \n \n(In millions of Korean won) \nFinancial liabilities \nmeasured at  \namortized cost \nFinancial liabilities \nmeasured at  \nfair value through  \nprofit or loss \nOther financial \nliabilities(*) \nTotal \n \n \n \n \n \nFinancial liabilities \n \n \n \n \nTrade payables \n11,319,824 \n- \n- \n11,319,824 \nShort-term borrowings \n504,552 \n- \n6,610,049 \n7,114,601 \nOther payables \n13,996,395 \n- \n- \n13,996,395 \nCurrent portion of long-term \nliabilities \n310,436 \n- \n998,439 \n1,308,875 \nDebentures  \n537,618 \n- \n- \n537,618 \nLong-term borrowings \n- \n- \n3,724,850 \n3,724,850 \nLong-term other payables \n4,907,875 \n- \n- \n4,907,875 \nOther \n11,330,545 \n49,904 \n33,559 \n11,414,008 \nTotal \n42,907,245  \n49,904  \n11,366,897  \n54,324,046  \n \n(*) Other financial liabilities include lease liabilities, which are not subject to categorization, collateralized borrowings and derivatives \ndesignated as hedging instruments. \n \n \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 35 - \n(2) As of December 31, 2022 \n \n(In millions of Korean won) \nFinancial assets \nmeasured at  \namortized cost \nFinancial assets \nmeasured at \nfair value \nthrough other \ncomprehensive \nincome \nFinancial assets \nmeasured at fair \nvalue through \nprofit or loss \nOther \nfinancial  \nassets(*) \nTotal \n \n \n \n  \n \n \nFinancial assets \n   \n \n \n \nCash and cash equivalents \n49,680,710 \n- \n- \n- \n49,680,710 \nShort-term financial instruments \n65,102,886 \n- \n- \n- \n65,102,886 \nShort-term financial assets at \namortized cost \n414,610 \n- \n- \n- \n414,610 \nShort-term financial assets at fair \nvalue through profit or loss \n- \n- \n29,080 \n- \n29,080 \nTrade receivables \n35,721,563 \n- \n- \n- \n35,721,563 \nFinancial assets at fair value through \nother comprehensive income  \n- \n11,397,012 \n- \n- \n11,397,012 \nFinancial assets at fair value through \nprofit or loss  \n- \n- \n1,405,468 \n- \n1,405,468 \nOther \n9,945,209 \n- \n334,263 \n61,404 \n10,340,876 \nTotal \n160,864,978  \n11,397,012  \n1,768,811  \n61,404  \n174,092,205  \n \n(*)  Other financial assets include derivatives designated as hedging instruments. \n \n \n(In millions of Korean won) \nFinancial liabilities \nmeasured at \namortized cost \nFinancial liabilities \nmeasured at  \nfair value through \n profit or loss \nOther financial \nliabilities(*) \nTotal \n \n \n \n \n \nFinancial liabilities \n \n \n \n \nTrade payables \n10,644,686  \n- \n- \n10,644,686  \nShort-term borrowings \n1,577,958  \n- \n3,569,357  \n5,147,315  \nOther payables \n16,328,237  \n- \n- \n16,328,237  \nCurrent portion of long-term \nliabilities \n215,143  \n- \n874,019  \n1,089,162  \nDebentures  \n536,093  \n- \n- \n536,093  \nLong-term borrowings \n33,846  \n- \n3,526,826  \n3,560,672  \nLong-term other payables \n2,289,236  \n- \n- \n2,289,236  \nOther \n12,047,761  \n334,415  \n27,353  \n12,409,529  \nTotal \n43,672,960  \n334,415  \n7,997,555  \n52,004,930  \n \n(*) Other financial liabilities include lease liabilities, which are not subject to categorization, collateralized borrowings and derivatives \ndesignated as hedging instruments. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 36 - \n(B) Net gains or losses on each category of financial assets and liabilities for the years ended December 31, 2023 and 2022 are \nas follows: \n \n(1) 2023 \n \n \n(In millions of Korean won) \nFinancial assets \nmeasured at  \namortized cost \nFinancial assets \nmeasured  \nat fair value \nthrough other \ncomprehensive \nincome \nFinancial assets \nmeasured  \nat fair value \nthrough \nprofit or loss \nOther financial \nassets(*) \nTotal \n \n \n \n \n \n \nFinancial assets \n \n \n \n \n \nGain on valuation  \n(other comprehensive income) \n- \n1,481,091  \n- \n58,290  \n1,539,381  \nGain (loss) on valuation/disposal \n(profit or loss) \n(64,758) \n- \n213,308  \n436  \n148,986  \nReclassification from other \ncomprehensive income to profit \nor loss \n- \n- \n- \n1,169  \n1,169  \nInterest income \n4,357,792  \n- \n230  \n- \n4,358,022  \nForeign exchange differences  \n(profit or loss) \n(98,522) \n- \n- \n- \n(98,522) \nDividend income \n- \n161,509  \n2,694  \n- \n164,203  \nImpairment/reversal  \n(profit or loss) \n(74,594) \n- \n- \n- \n(74,594) \n \n(*) Other financial assets include derivatives designated as hedging instruments. \n \n \n \n(In millions of Korean won) \nFinancial liabilities \nmeasured at \namortized cost \nFinancial liabilities \nmeasured at  \nfair value through \nprofit or loss \nOther financial \nliabilities(*) \nTotal \n \n \n \n \n \nFinancial liabilities \n \n \n \n \nLoss on valuation  \n (other comprehensive income) \n- \n- \n(16,809) \n(16,809) \nLoss on valuation/disposal  \n (profit or loss) \n- \n(116,167) \n(126) \n(116,293) \nReclassification from  \nother comprehensive income  \nto profit or loss \n- \n- \n(337) \n(337) \nInterest expense \n(510,865) \n- \n(419,388) \n(930,253) \nForeign exchange differences  \n (profit or loss) \n162,844  \n- \n61,920  \n224,764  \n \n(*) Other financial liabilities include lease liabilities, which are not subject to categorization, collateralized borrowings and derivatives \ndesignated as hedging instruments. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 37 - \n(2) 2022 \n \n \n(In millions of Korean won) \nFinancial assets \nmeasured at  \namortized cost \nFinancial assets \nmeasured  \nat fair value \nthrough other \ncomprehensive \nincome \nFinancial assets \nmeasured  \nat fair value \nthrough \nprofit or loss \nOther financial \nassets(*) \nTotal \n \n \n \n \n \n \nFinancial assets \n \n \n \n \n \nGain (loss) on valuation  \n(other comprehensive \nincome) \n- \n(1,969,498) \n- \n53,180  \n(1,916,318) \nGain (loss) on valuation/disposal \n(profit or loss) \n(36,550) \n- \n83,332  \n474  \n47,256  \nReclassification from other \ncomprehensive income to \nprofit or loss \n- \n- \n- \n310  \n310  \nInterest income \n2,720,213  \n- \n266  \n- \n2,720,479  \nForeign exchange differences  \n(profit or loss) \n(822,011) \n- \n- \n- \n(822,011) \nDividend income \n- \n413,467  \n1,134  \n- \n414,601  \nImpairment/reversal  \n(profit or loss) \n(19,124) \n- \n- \n- \n(19,124) \n \n(*) Other financial assets include derivatives designated as hedging instruments. \n \n \n \n(In millions of Korean won) \nFinancial liabilities \nmeasured at \namortized cost \nFinancial liabilities \nmeasured at \nfair value through \nprofit or loss \nOther financial \nliabilities(*) \nTotal \n \n \n \n \n \nFinancial liabilities \n \n \n \n \nLoss on valuation  \n (other comprehensive loss) \n- \n- \n(10,621) \n(10,621) \nLoss on valuation/disposal  \n (profit or loss) \n- \n(91,056) \n(45) \n(91,101) \nReclassification from  \nother comprehensive income  \nto profit or loss \n- \n- \n59  \n59  \nInterest expense \n(322,529) \n- \n(440,486) \n(763,015) \nForeign exchange differences  \n (profit or loss) \n574,771  \n- \n155,952  \n730,723  \n \n(*) Other financial liabilities include lease liabilities, which are not subject to categorization, collateralized borrowings and derivatives \ndesignated as hedging instruments \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 38 - \n5. Transfer of Financial Assets \n \nThe Company discounted trade receivables through factoring arrangements with banks during the years ended December 31, \n2023 and 2022. Trade receivables provided as collaterals in factoring transactions have not been derecognized as they do not \nmeet the requirements for derecognition of financial assets as the Company retains substantially all the risks and rewards, \nincluding the recourse in the event of default by the debtor. Financial liabilities recognized in these transactions are classified \nas ‘short-term borrowings’ on the consolidated statement of financial position (refer to Note 12).  \n \nThe carrying amount of the discounted trade receivables and the associated liabilities as of December 31, 2023 and 2022 are \nas follows: \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \nCarrying amount of the discounted trade receivables (*) \n6,610,049 \n3,569,357 \nCarrying amount of the associated liabilities \n6,610,049 \n3,569,357 \n \n(*) Discounted trade receivables includes trade receivables between consolidated entities. \n \n \n6. Financial Assets at Fair Value \n \n(A) \nDetails of financial assets at fair value as of December 31, 2023 and 2022 are as follows: \n \n(1) Financial assets at fair value through other comprehensive income \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \nNon-current  \n \n \nEquity instruments \n7,481,297  \n11,397,012  \n \n(2) Financial assets at fair value through profit or loss \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \nCurrent  \n \n \nDebt instruments \n27,112  \n29,080  \nNon-current  \n \n \nEquity instruments \n812,358  \n773,063  \nDebt instruments \n619,036  \n632,405  \nSubtotal \n1,431,394  \n1,405,468  \nTotal \n1,458,506  \n1,434,548  \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 39 - \n(B) \nChanges in financial assets at fair value for the years ended December 31, 2023 and 2022 are as follows: \n \n(1) Financial assets at fair value through other comprehensive income \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nBalance as of January 1 \n11,397,012  \n13,965,839  \nAcquisition \n124,897  \n35,013  \nDisposal \n(5,918,616) \n(20,913) \nFair value valuation gain (loss) \n1,548,022  \n(2,636,448) \nOther \n329,982  \n53,521  \nBalance as of December 31 \n7,481,297  \n11,397,012  \n \n \n(2) Financial assets at fair value through profit or loss \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nBalance as of January 1 \n1,405,468  \n1,525,344  \nAcquisition \n146,392  \n158,244  \nDisposal \n(81,113) \n(80,718) \nFair value valuation gain (loss) \n(38,110) \n(198,594) \nOther \n(1,243) \n1,192  \nBalance as of December 31 \n1,431,394  \n1,405,468  \n \n \n(C) \nChanges in gain (loss) on valuation of financial assets at fair value through other comprehensive income for the years \nended December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nBalance as of January 1 \n3,636,478  \n6,222,980  \nFair value valuation gain (loss) \n1,548,022  \n(2,636,448) \nReclassification to retained earnings due to disposals \n(4,935,379) \n49,946  \nBalance as of December 31 \n249,121  \n3,636,478  \nIncome tax effects on equity \n(54,702) \n(887,369) \nTotal \n194,419  \n2,749,109  \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 40 - \n(D) \nDetails of listed equity securities of financial assets at fair value as of December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won,  \nnumber of shares and percentage) \nDecember 31, 2023 \nDecember 31, 2022 \nNumber of \nshares owned \nPercentage of \nownership(*) (%) \nAcquisition cost \nCarrying amount \n(Market value) \nCarrying amount \n(Market value) \n \n \n \n \n \n \nSamsung Heavy Industries Co., Ltd. \n134,027,281 \n15.2 \n932,158  \n1,038,711  \n684,879  \nHotel Shilla Co., Ltd.  \n2,004,717 \n5.1 \n13,957  \n131,108  \n166,592  \niMarketKorea Inc. \n647,320 \n1.9 \n324  \n5,560  \n6,538  \nSFA Engineering Corporation \n2,100,000 \n5.8 \n22,050  \n63,840  \n132,642  \nWonik Holdings Co., Ltd.  \n3,518,342 \n4.6 \n30,821  \n11,857  \n11,945  \nWonik IPS Co., Ltd.  \n3,701,872 \n7.5 \n32,428  \n125,679  \n91,621  \nWacom Co., Ltd. \n8,398,400 \n5.3 \n62,013  \n50,358  \n46,750  \nCorning Incorporated \n80,000,000 \n9.4 \n3,980,636  \n3,140,978  \n3,238,205  \nOther \n  \n  \n561,530  \n1,030,123  \n5,142,573  \nTotal \n  \n  \n5,635,917  \n5,598,214  \n9,521,745  \n(*) Ownership represents the Company’s ownership of the ordinary shares issued by each entity. \n \n \n7. Trade and Non-Trade Receivables \n \n(A) Trade and non-trade receivables as of December 31, 2023 and 2022 are as follows: \n \n \nDecember 31, 2023 \nDecember 31, 2022 \n(In millions of Korean won) \nTrade \nNon-trade \nTrade \nNon-trade \n \n \n \n \n \nReceivables \n37,026,738  \n7,474,967  \n36,238,032  \n7,051,536  \nLess: Loss allowance \n(355,456) \n(82,224) \n(312,221) \n(78,101) \nSubtotal \n36,671,282  \n7,392,743  \n35,925,811  \n6,973,435  \nLess: Non-current  \n(23,889) \n(759,495) \n(204,248) \n(824,226) \nCurrent  \n36,647,393  \n6,633,248  \n35,721,563  \n6,149,209  \n \n \n(B) Movements in the loss allowance for receivables for the years ended December 31, 2023 and 2022 are as follows: \n \n \n2023 \n2022 \n(In millions of Korean won) \nTrade \nNon-trade \nTrade \nNon-trade \n \n \n \n \n \nBalance as of January 1 \n312,221  \n78,101  \n310,880  \n72,805  \nBad debt expense (reversal) \n62,964  \n(297) \n8,784  \n7,312  \nWrite-off \n(18,875) \n(124) \n(3,557) \n(6,154) \nOther \n(854) \n4,544  \n(3,886) \n4,138  \nBalance as of December 31 \n355,456  \n82,224  \n312,221  \n78,101  \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 41 - \n(C) The details of trade and non-trade receivables classified by past due date for the purpose of measuring expected credit \nlosses as of December 31, 2023 and 2022 are as follows: \n \n \nDecember 31, 2023 \nDecember 31, 2022 \n(In millions of Korean won) \nTrade \nNon-trade \nTrade \nNon-trade \n \n \n \n \n \nReceivables not past due \n33,633,006  \n7,077,413  \n33,177,298  \n5,890,018  \nPast due: \n \n \n \n \nLess than 31 days past due(*) \n2,262,296  \n269,390  \n2,206,622  \n981,889  \n31 days to 90 days past due \n478,371  \n15,369  \n642,859  \n52,972  \nMore than 90 days past due \n653,065  \n112,795  \n211,253  \n126,657  \nSubtotal \n3,393,732  \n397,554  \n3,060,734  \n1,161,518  \nTotal \n37,026,738  \n7,474,967  \n36,238,032  \n7,051,536  \n \n(*) The Company does not consider the credit risk of non-trade receivables that are overdue for less than or equal to 31 days has been \nsignificantly increased.  \n \n(D) The maximum exposure to current credit risk is equivalent to the carrying amount of receivables as of December 31, \n2023. The Company has entered into insurance contracts with insurers for its major receivables. \n \n \n8. Inventories \n \nInventories as of December 31, 2023 and 2022 are as follows: \n \n \nDecember 31, 2023 \nDecember 31, 2022 \n(In millions of Korean won) \nGross \namount \nValuation \nallowance \nCarrying \namount \nGross \namount \nValuation \nallowance \nCarrying \namount \nFinished goods \n16,120,367  \n(1,567,353) \n14,553,014  \n17,526,178  \n(1,493,952) \n16,032,226  \nWork in process  \n26,501,664  \n(4,303,216) \n22,198,448  \n21,612,965  \n(1,535,446) \n20,077,519  \nRaw materials and supplies \n15,222,937  \n(1,525,583) \n13,697,354  \n16,268,974  \n(1,289,694) \n14,979,280  \nMaterials in transit \n1,177,058  \n- \n1,177,058  \n1,098,841  \n- \n1,098,841  \nTotal \n59,022,026  \n(7,396,152) \n51,625,874  \n56,506,958  \n(4,319,092) \n52,187,866  \n \nInventories recognized as an expense for the year ended December 31, 2023 amount to W 177,539,372 million       \n(2022: W 186,396,549 million). The amount includes a loss on the valuation of inventories. \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 42 - \n9. Investments in Associates and Joint Ventures \n \n(A) \nChanges in investments in associates and joint ventures for the years ended December 31, 2023 and 2022 are as \nfollows: \n \n(In millions of Korean won) \n2023 \n2022 \nBalance as of January 1 \n10,893,869  \n8,932,251  \nAcquisition \n78,690  \n1,006,998  \nDisposal \n(33,464) \n(20,894) \nShare of profit \n887,550  \n1,090,643  \nOther(*) \n(59,201) \n(115,129) \nBalance as of December 31 \n11,767,444  \n10,893,869  \n \n(*) Other consists of dividends, (reversal of) impairment, and reclassification. \n \n(B) \nMajor investments in associates and joint ventures as of December 31, 2023 are as follows: \n \n(1) Investments in associates \n \nInvestee \nNature of relationship with associate \nPercentage of \nownership (%)(*1) \nPrincipal \nbusiness \nlocation \nFiscal \nperiod-end \nSamsung Electro- \n Mechanics Co., Ltd. \nManufacture and supply electronic components \nincluding passive components, circuit boards, and \nmodules \n23.7 \nKorea \nDecember \nSamsung SDS Co., Ltd. \nProvide IT services including computer \nprogramming, system integration and \nmanagement and logistical services \n22.6 \nKorea \nDecember \nSamsung Biologics Co., Ltd. \nInvestment in new business \n31.2 \nKorea \nDecember \nSamsung SDI Co., Ltd.(*2) \nManufacture and supply electronic parts including \nsecondary cell batteries \n19.6 \nKorea \nDecember \nCheil Worldwide, Inc. \nAdvertising agency \n25.2 \nKorea \nDecember \n(*1) Ownership represents the Company’s ownership of the ordinary shares issued by each entity. \n(*2) The Company’s ownership of ordinary shares outstanding is 20.6%. \n \n \n(2) Investments in joint ventures \n \nInvestee \nNature of relationship with joint venture \nPercentage of \nownership (%)(*1) \nPrincipal \nbusiness \nlocation \nFiscal \nperiod-end \nSamsung Corning \n Advanced Glass, LLC \nManufacture and supply industrial glass products \n50.0 \nKorea \nDecember \n(*1) Ownership represents the Company’s ownership of the ordinary shares issued by each entity. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 43 - \n(C) \nDetails of investments in associates and joint ventures as of December 31, 2023 and 2022 are as follows: \n \n(1) Investments in associates \n(In millions of Korean won) \nDecember 31, 2023 \nInvestee \nAcquisition cost \nNet asset value of \nequity shares(*) \nCarrying amount \n \n \n \n \nSamsung Electro-Mechanics Co., Ltd. \n359,237 \n1,837,925 \n1,841,393  \nSamsung SDS Co., Ltd. \n147,963 \n1,955,699 \n1,966,206  \nSamsung Biologics Co., Ltd. \n1,424,358 \n3,068,636 \n3,073,595  \nSamsung SDI Co., Ltd. \n1,242,605 \n3,726,675 \n2,912,564  \nCheil Worldwide, Inc. \n506,162 \n368,875 \n669,363  \nOther \n690,481 \n844,645 \n1,093,799  \nTotal \n4,370,806 \n11,802,455 \n11,556,920  \n(*)\\ The Company’s portion of net asset value of associates is based on the Company’s percentage of ownership. \n \n(In millions of Korean won) \nDecember 31, 2022 \nInvestee \nAcquisition cost \nNet asset value of \nequity shares(*) \nCarrying amount \n \n \n \n \nSamsung Electro-Mechanics Co., Ltd. \n359,237  \n1,765,507  \n1,764,249  \nSamsung SDS Co., Ltd. \n147,963  \n1,857,481  \n1,870,338  \nSamsung Biologics Co., Ltd. \n1,424,358  \n2,804,547  \n2,808,673  \nSamsung SDI Co., Ltd. \n1,242,605  \n3,318,875  \n2,691,223  \nCheil Worldwide, Inc. \n506,162  \n347,510  \n649,161  \nOther \n645,255  \n718,801  \n907,333  \nTotal \n4,325,580  \n10,812,721  \n10,690,977  \n(*) The Company’s portion of net asset value of associates is based on the Company’s percentage of ownership. \n \n \n(2) Investments in joint ventures \n \n(In millions of Korean won) \nDecember 31, 2023 \nInvestee \nAcquisition cost \nNet asset value of \nequity shares (*) \nCarrying amount \n \n \n \n \nSamsung Corning Advanced Glass LLC \n215,000  \n138,939  \n138,938  \nOther \n259,994  \n72,215  \n71,586  \nTotal \n474,994  \n211,154  \n210,524  \n(*) The Company’s portion of net asset value of joint ventures is based on the Company’s percentage of ownership. \n \n(In millions of Korean won) \nDecember 31, 2022 \nInvestee \nAcquisition cost \nNet asset value of \nequity shares (*) \nCarrying amount \n \n \n \n \nSamsung Corning Advanced Glass LLC \n215,000  \n137,727  \n137,745  \nOther \n259,994  \n67,632  \n65,147  \nTotal \n474,994  \n205,359  \n202,892  \n(*) The Company’s portion of net asset value of joint ventures is based on the Company’s percentage of ownership. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 44 - \n(D) \nDetails of the changes in investments in associates and joint ventures using the equity method are as follows: \n \n(1) For the year ended December 31, 2023 \n \n(In millions of Korean won) \nBalance as of \nJanuary 1 \nShare of profit \nShare of other \ncomprehensive \nincome (loss) \nOther(*) \nBalance as of \nDecember 31 \n \n \n \n \n \n \nSamsung Electro-Mechanics Co., Ltd. \n1,764,249  \n106,455  \n7,844  \n(37,155) \n1,841,393  \nSamsung SDS Co., Ltd. \n1,870,338  \n154,282  \n(2,503) \n(55,911) \n1,966,206  \nSamsung Biologics Co., Ltd. \n2,808,673  \n267,614  \n(2,692) \n- \n3,073,595  \nSamsung SDI Co., Ltd. \n2,691,223  \n214,702  \n20,506  \n(13,867) \n2,912,564  \nCheil Worldwide, Inc. \n649,161  \n53,690  \n(94) \n(33,394) \n669,363  \nSamsung Corning Advanced Glass LLC \n137,745  \n1,336  \n(124) \n(19) \n138,938  \nOther \n972,480  \n89,471  \n52,175  \n51,259  \n1,165,385  \nTotal \n10,893,869  \n887,550  \n75,112  \n(89,087) \n11,767,444  \n(*) Other consists of acquisitions, disposals, dividends, impairment and reclassification. \n \n \n(2) For the year ended December 31, 2022 \n \n(In millions of Korean won) \nBalance as of \nJanuary 1 \nShare of profit \nShare of other \ncomprehensive \nincome (loss) \nOther(*) \nBalance as of \nDecember 31 \n \n \n \n \n \n \nSamsung Electro-Mechanics Co., Ltd. \n1,556,386  \n242,139  \n2,880  \n(37,156) \n1,764,249  \nSamsung SDS Co., Ltd. \n1,652,155  \n241,962  \n18,154  \n(41,933) \n1,870,338  \nSamsung Biologics Co., Ltd. \n1,577,664  \n250,028  \n(183) \n981,164  \n2,808,673  \nSamsung SDI Co., Ltd. \n2,529,650  \n194,242  \n(19,207) \n(13,462) \n2,691,223  \nCheil Worldwide, Inc. \n621,292  \n55,476  \n1,140  \n(28,747) \n649,161  \nSamsung Corning Advanced Glass LLC \n135,580  \n1,999  \n144  \n22  \n137,745  \nOther \n859,524  \n104,797  \n(53,438) \n61,597  \n972,480  \nTotal \n8,932,251  \n1,090,643  \n(50,510) \n921,485  \n10,893,869  \n \n \n(*) Other consists of acquisitions, disposals, dividends, impairment, and reclassification. \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 45 - \n(E) \nSummary of the condensed financial information of major associates and joint ventures \n \n(1) Summary of condensed financial information of major associates and dividends received from associates as of \nDecember 31, 2023 and 2022, and for the years ended December 31, 2023 and 2022 are as follows: \n \n \n2023 \n(In millions of Korean won) \nSamsung \nElectro-\nMechanics \nCo., Ltd. \nSamsung \nSDS Co., \nLtd. \nSamsung \nBiologics \nCo., Ltd. \nSamsung \nSDI Co., \nLtd. \nCheil \nWorldwide, \nInc. \n \n \n \n \n \n  \n1. Condensed financial information \n \n \n \n \n \nCondensed statements of financial position: \n \n \n \n \n \nCurrent assets \n5,208,418  \n8,160,300  \n5,521,988  \n9,187,029  \n2,372,420  \nNon-current assets \n6,449,453  \n4,160,724  \n10,524,209  \n24,851,831  \n517,085  \nCurrent liabilities \n2,900,460  \n2,391,861  \n4,157,861  \n8,518,933  \n1,375,034  \nNon-current liabilities \n727,087  \n953,592  \n2,057,844  \n5,612,677  \n216,707  \nNon-controlling interests \n182,613  \n317,562  \n- \n1,395,877  \n11,206  \nCondensed statements of comprehensive income: \nRevenue \n8,909,348  \n13,276,844  \n3,694,589  \n22,708,300  \n4,138,275  \nProfit from continuing operations, net of tax (*1) \n430,839  \n693,422  \n857,691  \n2,009,207  \n187,302  \nLoss from discontinued operations, net of tax (*1) \n(7,883) \n- \n- \n- \n- \nOther comprehensive income (loss) (*1) \n45,054  \n(11,085) \n(11,673) \n85,394  \n3,685  \nTotal comprehensive income(*1) \n468,010  \n682,337  \n846,018  \n2,094,601  \n190,987  \n2. Reconciliation to the carrying amount of investments in associates \nNet assets (a) \n7,847,711  \n8,658,009  \n9,830,492 \n18,511,373 \n1,286,558 \nOwnership percentage (b) (*2) \n23.4% \n22.6% \n31.2% \n20.1% \n28.7% \nNet assets of equity shares (a x b) \n1,837,925  \n1,955,699  \n3,068,636 \n3,726,675 \n368,875 \nGoodwill \n7,081  \n26,801  \n3,645 \n- \n298,779 \nIntercompany transactions and other(*3) \n(3,613) \n(16,294) \n1,314 \n(814,111) \n 1,709 \nCarrying amount of associates \n1,841,393  \n1,966,206  \n3,073,595 \n2,912,564 \n669,363 \n3. Dividends from associates \n \n \n \n \n \nDividends \n37,155  \n55,911  \n- \n13,867  \n33,394  \n(*1) Profit (loss) attributable to owners of the investee \n(*2) Ownership percentage includes ordinary and preference shares. \n(*3) Consists of uSnrealized gains and losses and other differences. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 46 - \n \n \n2022 \n(In millions of Korean won) \nSamsung \nElectro-\nMechanics \nCo., Ltd. \nSamsung SDS \nCo., Ltd. \nSamsung \nBiologics Co., \nLtd. \nSamsung \nSDI Co., \nLtd. \nCheil \nWorldwide, \nInc. \n \n \n \n \n \n \n1. Condensed financial information \n \n \n \n \n \nCondensed statements of financial position: \n \n \n \n \n \nCurrent assets \n4,888,319 \n8,005,764 \n6,457,657 \n9,651,702 \n2,193,979 \nNon-current assets \n6,108,852 \n3,946,660 \n10,124,394 \n20,605,823 \n557,466 \nCurrent liabilities \n2,525,123 \n2,493,323 \n4,181,542 \n8,006,939 \n1,335,643 \nNon-current liabilities \n778,563 \n992,132 \n3,416,034 \n5,033,084 \n194,373 \nNon-controlling interests \n154,991 \n243,777 \n- \n731,779 \n9,388 \nCondensed statements of comprehensive income: \nRevenue \n9,441,276  \n17,234,750  \n3,001,295  \n20,124,070  \n4,253,367  \nProfit from continuing operations, net of tax (*1) \n1,009,739  \n1,099,745  \n798,056  \n1,952,149  \n193,732  \nLoss from discontinued operations, net of tax (*1) \n(29,187) \n- \n- \n- \n- \nOther comprehensive income (loss) (*1) \n(2,215) \n80,368  \n6,995  \n(139,877) \n(1,122) \nTotal comprehensive income(*1) \n978,337  \n1,180,113  \n805,051  \n1,812,272  \n192,610  \n2. Reconciliation to the carrying amount of investments in associates \nNet assets (a) \n7,538,494 \n8,223,192 \n8,984,475 \n16,485,723 \n1,212,041 \nOwnership percentage (b) (*2) \n23.4% \n22.6% \n31.2% \n20.1% \n28.7% \nNet assets of equity shares (a x b) \n1,765,507  \n1,857,481  \n2,804,547  \n3,318,875  \n347,510  \nGoodwill \n7,081  \n26,801  \n3,645  \n- \n298,779  \nIntercompany transactions and other(*3) \n(8,339) \n(13,944) \n481  \n(627,652) \n2,872  \nCarrying amount of associates \n1,764,249  \n1,870,338  \n2,808,673  \n2,691,223  \n649,161  \n3. Dividends from associates \n \n \n \n \n \nDividends \n37,155 \n41,933 \n- \n13,463 \n28,748 \n(*1) Profit (loss) attributable to owners of the investee. \n(*2) Ownership percentage includes ordinary and preference shares. \n(*3) Consists of unrealized gains and losses and other differences. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 47 - \n(2) \nSummary of condensed financial information of major joint ventures and dividends received from joint ventures as \nof December 31, 2023 and 2022, and for the years ended December 31, 2023 and 2022 are as follows: \n \n \nSamsung Corning Advanced Glass, LLC \n(In millions of Korean won) \n2023 \n2022 \n \n \n \n1. Condensed financial information \n \n \nCondensed statements of financial position: \n \n \nCurrent assets \n116,372  \n170,103  \nNon-current assets \n185,100  \n125,507  \nCurrent liabilities \n22,684  \n19,794  \nNon-current liabilities \n911  \n363  \nCondensed statements of comprehensive income: \n \n \nRevenue \n122,446  \n133,634  \nProfit from continuing operations, net of tax(*1) \n2,672  \n3,998  \nOther comprehensive income (loss) (*1) \n- \n288  \nTotal comprehensive income(*1) \n2,672  \n4,286  \n2. Reconciliation to the carrying amount of investments in joint ventures \nNet assets (a) \n277,877  \n275,453 \nOwnership percentage (b) \n50.0% \n50.0% \nNet assets of equity shares (a x b) \n138,939  \n137,727 \nIntercompany transactions and other(*2) \n(1) \n18  \nCarrying amount of joint ventures \n138,938  \n137,745 \n3. Dividends from joint ventures \n \n \nDividends \n-     \n-     \n \n(*1) Profit (loss) attributable to owners of the parent company. \n(*2) Consists of unrealized gains and losses and other differences. \n \n(3) \nProfit (loss) attributable to owners of the parent company from associates and joint ventures which are not individually \nmaterial for the years ended December 31, 2023 and 2022 are as follows: \n \n \n2023 \n2022 \n(In millions of Korean won) \nAssociates \nJoint ventures \nAssociates \nJoint ventures \n \n \n \n \n \nProfit from continuing operations \n87,072  \n2,399  \n102,930  \n1,867  \nOther comprehensive income (loss) \n50,260  \n1,915  \n(50,761) \n(2,677) \nTotal comprehensive income (loss) \n137,332  \n4,314  \n52,169  \n(810) \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 48 - \n(F) \nFair value of marketable investments in associates as of December 31, 2023 and 2022 is as follows: \n \n(In millions of Korean won  \nand number of shares) \nDecember 31, 2023 \nDecember 31, 2022 \nNumber of shares held \nMarket value \nMarket value \n \n \n \n \nSamsung Electro-Mechanics Co., Ltd. \n17,693,084  \n2,710,580  \n2,308,947  \nSamsung SDS Co., Ltd. \n17,472,110  \n2,970,259  \n2,149,070  \nSamsung Biologics Co., Ltd. \n22,217,309  \n16,885,155  \n18,240,411  \nSamsung SDI Co., Ltd. \n13,462,673  \n6,354,382  \n7,956,440  \nCheil Worldwide, Inc. \n29,038,075  \n552,595  \n669,328  \n \n(G) Other matters \nOn July 12, 2018, the Korea Securities and Futures Commission determined an initial measure following an investigation \nrelating to Samsung Biologics Co., Ltd., an associate of the Company, and its accounting for its investment in Samsung \nBioepis Co., Ltd, a joint venture between Biogen Therapeutics Inc. and Samsung Biologics Co., Ltd. This measure included \na recommendation to dismiss the director in charge, prosecution charges, and external auditor designation by the regulator, \non the basis that the Joint Venture Agreement was not disclosed in the notes to the financial statements. On November 14, \n2018, the Korea Securities and Futures Commission determined a second measure which included a penalty of W 8,000 \nmillion, a recommendation to dismiss the CEO, a requirement to restate its financial statements, and further prosecution \ncharges.  \n \nTo prove justification of its accounting treatment, Samsung Biologics Co., Ltd. filed a suit for cancellation of the \naforementioned measures to the Seoul Administrative Court, which is currently in progress. On September 24, 2021, the \nSeoul Administrative Court announced a decision to cancel the first measure charged by the Korea Securities and Futures \nCommission, and suspended its execution until the final rulings of the appeal. On October 16, 2021, the Korea Securities and \nFutures Commission appealed and the litigation is in progress at Seoul High Court. Samsung Biologics Co., Ltd. also filed \nfor suspending the execution of the initial and second measures. On January 22, 2019 and February 19, 2019, the Seoul \nAdministrative Court pronounced decisions to suspend the second and initial measure, respectively, until the final rulings. \nThe Korea Securities and Futures Commission immediately appealed against the decisions but the appeals were dismissed \nby the Seoul High Court on May 13, 2019 and May 24, 2019, in relation to the second and first measures, respectively. On \nMay 23, 2019 and June 10, 2019, the Korea Securities and Futures Commission re-appealed against the dismissals relating \nto the second and first measures, respectively. On September 6, 2019 and October 11, 2019, the Supreme Court of Korea \ndismissed the Korea Securities and Futures Commission’s re-appeal relating to the second and first measures, respectively, \nand confirmed the decision to suspend the execution of these measures. \n \nAlthough the future outcome of the administrative litigation cannot be estimated, should Samsung Biologics Co., Ltd. be \nrequired to restate its financial statements to amend its historical accounting treatment relating to its investment in Samsung \nBioepis Co., Ltd., the Company’s share of profit or loss relating to its equity method investment, the amount of investment \nin associates, and retained earnings, for the years ended December 31, 2015 and onwards, and the profit on disposal of \ninvestment for the year ended December 31, 2016, may be impacted. Given the timing of completion and the final result of \nthe administrative litigation between Samsung Biologics Co., Ltd. and the Korea Securities and Futures Commission is \nuncertain and cannot currently be estimated, it is not possible for the Company to recognize the effects of these proceedings \nin the current period consolidated financial statements. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 49 - \n10. Property, Plant and Equipment \n(A) \nChanges in property, plant and equipment for the years ended December 31, 2023 and 2022 are as follows: \n \n \n2023 \n(In millions of Korean won) \nLand \nBuildings and \nstructures \nMachinery \nand equipment \nConstruction in \nprogress \nOther \nTotal \n \n \n \n \n \n \n \nBalance as of January 1 \n9,892,167  \n40,706,918  \n79,714,631  \n33,607,564  \n4,124,108  \n168,045,388  \nAcquisition cost \n10,024,569  \n67,713,808  \n303,000,627  \n33,607,564  \n13,248,490  \n427,595,058  \nAccumulated depreciation \nand impairment \n(132,402) \n(27,006,890) \n(223,285,996) \n- \n(9,124,382) \n(259,549,670) \nAcquisitions and capital \nexpenditures(*1) \n172,262  \n6,498,611  \n33,641,691  \n13,141,766  \n1,462,032  \n54,916,362  \nAcquisitions through \nbusiness combinations \n- \n18,125  \n20,140  \n34,698  \n165  \n73,128  \nDepreciation \n(49,367) \n(3,884,333) \n(30,031,617) \n- \n(1,567,094) \n(35,532,411) \nDisposals/scrap \n(25,934) \n(181,700) \n(37,681) \n(256) \n(30,547) \n(276,118) \nImpairment (reversal) \n- \n(30,864) \n(47,044) \n- \n(7,449) \n(85,357) \nReclassify as held-for-sale \n(6,615) \n(54,318) \n(37,101) \n(6,255) \n(14,100) \n(118,389) \nOther(*2) \n16,864  \n165,676  \n86,149  \n(57,189) \n22,159  \n233,659  \nBalance as of December 31 \n9,999,377  \n43,238,115  \n83,309,168  \n46,720,328  \n3,989,274  \n187,256,262  \nAcquisition cost \n10,157,963  \n73,689,951  \n328,561,492  \n46,720,328  \n14,058,654  \n473,188,388  \nAccumulated depreciation \n and impairment \n(158,586) \n(30,451,836) \n(245,252,324) \n- \n(10,069,380) \n(285,932,126) \n(*1) Acquisition cost and capital expenditures include amounts reclassified from constructions in progress. Capitalized borrowing costs amount to      \nW 204,814 million and the capitalization interest rate used to calculate the capitalized borrowing costs ranged from 3.9%~5.8%. \n(*2) Other includes effects of changes in foreign currency exchange rates. \n \n \n2022 \n(In millions of Korean won) \nLand \nBuildings and \nstructures \nMachinery \nand equipment \nConstruction in \nprogress \nOther \nTotal \n \n \n \n \n \n \n \nBalance as of January 1 \n9,830,154  \n38,869,440  \n79,526,297  \n18,009,324  \n3,693,324  \n149,928,539  \nAcquisition cost \n9,943,570  \n62,651,459  \n274,909,571  \n18,009,324  \n11,958,070  \n377,471,994  \nAccumulated depreciation \nand impairment \n(113,416) \n(23,782,019) \n(195,383,274) \n- \n(8,264,746) \n(227,543,455) \nAcquisitions and capital \nexpenditures(*1) \n138,925  \n5,302,095  \n31,010,080  \n16,675,741  \n2,100,119  \n55,226,960  \nDepreciation \n(49,516) \n(3,533,917) \n(30,761,685) \n- \n(1,606,980) \n(35,952,098) \nDisposals, scrap \n(57,596) \n(127,935) \n(35,098) \n(193) \n(34,208) \n(255,030) \nImpairment (reversal) \n- \n(2,255) \n(11,815) \n- \n(12,323) \n(26,393) \nOther2 \n30,200  \n199,490  \n(13,148) \n(1,077,308) \n(15,824) \n(876,590) \nBalance as of December 31 \n9,892,167  \n40,706,918  \n79,714,631  \n33,607,564  \n4,124,108  \n168,045,388  \nAcquisition cost \n10,024,569  \n67,713,808  \n303,000,627  \n33,607,564  \n13,248,490  \n427,595,058  \nAccumulated depreciation \n and impairment \n(132,402) \n(27,006,890) \n(223,285,996) \n- \n(9,124,382) \n(259,549,670) \n(*1) Acquisition cost and capital expenditures include amounts reclassified from constructions in progress. Capitalized borrowing costs amount to      \nW 41,634 million and the capitalization interest rate used to calculate the capitalized borrowing costs ranged from 2.1~4.1%. \n(*2) Other includes effects of changes in foreign currency exchange rates and effects of the deduction of government grants. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 50 - \n(B) Changes in the right-of-use assets included in the property, plant and equipment for the years ended December 31, 2023 \nand 2022 are as follows: \n \n \n2023 \n(In millions of Korean won) \nLand \nBuildings and \nstructures \nMachinery \nand equipment \nOther \nTotal \n \n \n \n \n \n \nBalance as of January 1 \n503,203  \n3,451,596  \n175,151  \n787,659  \n4,917,609  \nAcquisition \n38,677  \n1,594,886  \n10,058  \n158,842  \n1,802,463  \nDepreciation \n(49,367) \n(871,275) \n(47,174) \n(147,178) \n(1,114,994) \nCancellation of contracts \n(12,461) \n(174,426) \n(279) \n(6,904) \n(194,070) \nReclassify as held-for-sale \n(4,305) \n(17) \n- \n(414) \n(4,736) \nOther(*) \n5,863  \n33,288  \n(182) \n3,791  \n42,760  \nBalance as of December 31 \n481,610  \n4,034,052  \n137,574  \n795,796  \n5,449,032  \n \n(*) Other includes effects of changes in foreign currency exchange rates. \n \n \n \n2022 \n(In millions of Korean won) \nLand \nBuildings and \nstructures \nMachinery \nand equipment \nOther \nTotal \n \n \n \n \n \n \nBalance as of January 1 \n525,954  \n2,841,970  \n191,059  \n391,584  \n3,950,567  \nAcquisition \n32,632  \n1,542,889  \n29,098  \n507,041  \n2,111,660  \nDepreciation \n(49,516) \n(823,543) \n(58,000) \n(116,287) \n(1,047,346) \nCancellation of contracts \n(13,741) \n(111,145) \n(263) \n(4,220) \n(129,369) \nOther(*) \n7,874  \n1,425  \n13,257  \n9,541  \n32,097  \nBalance as of December 31 \n503,203  \n3,451,596  \n175,151  \n787,659  \n4,917,609  \n \n(*) Other includes effects of changes in foreign currency exchange rates. \n \n \n(C) \nDetails of depreciation of property, plant and equipment for the years ended December 31, 2023 and 2022 are as \nfollows: \n \n(In millions of Korean won) \n2023 \n2022 \nCost of sales \n31,647,926  \n32,285,800  \nSelling and administrative expenses and other \n3,884,485  \n3,666,298  \nTotal \n35,532,411  \n35,952,098  \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 51 - \n11. Intangible Assets \n(A) \nChanges in intangible assets for the years ended December 31, 2023 and 2022 are as follows: \n(In millions of Korean won) \n2023 \nIntellectual \nproperty rights \nDevelopment \ncost \nMembership \nGoodwill \nOther \nTotal \n \n \n \n \n \n \n \nBalance as of January 1 \n4,278,750  \n85,018  \n253,554  \n6,014,422  \n9,586,010  \n20,217,754  \nExternal acquisitions \n401,561  \n- \n6,251  \n- \n4,608,488  \n5,016,300  \nAcquisition through business \ncombinations \n3,944  \n- \n- \n315,136  \n37,758  \n356,838  \nAmortization \n(276,781) \n(85,018) \n- \n- \n(2,772,349) \n(3,134,148) \nDisposals/scrap \n(41,492) \n- \n(8,656) \n- \n(44) \n(50,192) \nImpairment(reversal) \n(6,265) \n- \n3,738  \n- \n(2,900) \n(5,427) \nReclassify as held-for-sale \n(2) \n- \n- \n(58,455) \n(4,405) \n(62,862) \nOther(*) \n64,851  \n- \n1,972  \n186,516  \n150,260  \n403,599  \nBalance as of December 31 \n4,424,566  \n- \n256,859  \n6,457,619  \n11,602,818  \n22,741,862  \n \n(*) Other includes the cumulative effect of changes in foreign currency exchange rates and others. \n \n(In millions of Korean won) \n2022 \nIntellectual \nproperty rights \nDevelopment \ncost \nMembership \nGoodwill \nOther \nTotal \n \n \n \n \n \n \n \nBalance as of January 1 \n4,153,236  \n236,910  \n241,219  \n5,844,259  \n9,760,620  \n20,236,244  \nExternal acquisitions \n299,484  \n- \n8,905  \n- \n2,375,986  \n2,684,375  \nAmortization \n(268,070) \n(151,892) \n- \n- \n(2,735,599) \n(3,155,561) \nDisposals/scrap \n(50,979) \n- \n(417) \n- \n(402) \n(51,798) \nImpairment(reversal) \n- \n- \n(509) \n- \n(5,753) \n(6,262) \nOther(*) \n145,079  \n- \n4,356  \n170,163  \n191,158  \n510,756  \nBalance as of December 31 \n4,278,750  \n85,018  \n253,554  \n6,014,422  \n9,586,010  \n20,217,754  \n \n(*) Other includes the cumulative effect of changes in foreign currency exchange rates and others. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 52 - \n(B) Goodwill \n \nGoodwill is allocated to each cash-generating unit. Details of goodwill as of December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \nDX \n1,256,815  \n1,249,290 \nDS \n164,607  \n159,359 \nSDC \n343,967  \n138,754 \nHarman \n4,691,440  \n4,466,339 \nOther \n790  \n680 \nTotal \n6,457,619  \n6,014,422 \n \nThe Company tests goodwill for impairment annually and the recoverable amount of each cash-generating units is determined \nbased on value-in-use calculations. The value-in-use calculation is based on estimates of pre-tax cash flows based on financial \nbudgets approved by management for the next five years (or longer if the medium and long-term plans are reasonable, such \nas in new technology business). A constant growth rate assumption (but not exceeding the industry average growth rate) has \nbeen used to calculate the perpetual cash flows for periods beyond the fiver-year period.  \n \n(C) \nDetails of amortization of intangible assets for the years ended December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nCost of sales \n2,197,662  \n2,211,481  \nSelling and administrative expenses and other \n936,486  \n944,080  \nTotal \n3,134,148  \n3,155,561  \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 53 - \n12. Borrowings  \n(A) Details of the carrying amounts of borrowings as of December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \nFinancial institutions \nInterest rates (%) \nas of Dec 31, 2023 \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \n \n \nShort-term borrowings \n \n \n \n \nCollateralized borrowings(*1) \nWoori Bank and others \n0.0~17.3 \n6,610,049  \n3,569,357  \nNon-collateralized borrowings \nCitibank and others \n0.0~62.2 \n504,552  \n1,577,958  \nTotal \n  \n  \n7,114,601  \n5,147,315  \n \n \n \n \n \nCurrent portion of long-term borrowings \n \n \n \nBank borrowings \nBNP and others \n36.1~61.5 \n304,082  \n208,915  \nLease liabilities(*2) \nCSSD and others \n4.3 \n998,439  \n874,019  \nTotal \n  \n  \n1,302,521  \n1,082,934  \n \n \n \n \n \nLong-term borrowings \n \n \n \n \nBank borrowings \n- \n- \n- \n33,846  \nLease liabilities(*2) \nCSSD and others \n4.3 \n3,724,850  \n3,526,826  \nTotal \n  \n  \n3,724,850  \n3,560,672  \n(*1) Collateralized borrowings are secured by trade receivables. \n(*2) Interest expenses arising from the lease liabilities for the years ended December 31, 2023 and 2022 amount to W 197,202 million and \nW 140,111 million, respectively, which were determined using the weighted average incremental borrowing rate. Short-term lease \npayments and low-valued asset lease payments that are not included in lease liabilities during the years ended December 31, 2023 and \n2022 amount to W 158,395 million and W 211,283 million, respectively.  \n \n(B) Maturities of lease liabilities outstanding as of December 31, 2023 are as follows: \n(In millions of Korean won) \nLease liabilities \nRepayment in \n \n2024 \n1,171,751  \n2025 \n965,266  \n2026 \n821,551  \n2027 \n625,811  \n2028 and thereafter \n1,822,019  \nTotal \n5,406,398  \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 54 - \n13. Debentures \n \n(A) Details of the carrying amounts of debentures as of December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \nIssue date \nDue date \nInterest rate (%) \nas of Dec 31, 2023 \nDecember 31, 2023 \nDecember 31, 2022 \nUS dollar denominated \nstraight bonds(*1) \nOct. 2, 1997 \nOct. 1, 2027 \n7.7 \n25,788  \n31,683  \n(US $ 20 million) \n(US $ 25 million) \nUS dollar denominated \ndebenture bonds(*2) \nMay 11, 2015 \nMay 15, 2025 \n4.2 \n515,760  \n506,920  \n(US $ 400 million) \n(US $ 400 million) \nLess: Discounts \n \n \n \n(370) \n(543) \nAdd: Premium \n \n \n \n2,794  \n4,261  \nLess: Current portion \n \n \n \n(6,354) \n(6,228) \nTotal \n  \n  \n  \n537,618  \n536,093  \n(*1) US dollar denominated straight bonds are repaid annually for twenty years after a ten-year grace period from the date of issuance.  \nInterest is paid semi-annually in arrears. \n(*2) Harman International Industries, Inc. issued US dollar denominated debenture bonds. These debentures are repaid on the maturity and   \n interest is paid semi-annually in arrears. \n \n(B) Repayment schedule of debentures outstanding as of December 31, 2023 are as follows: \n \n(In millions of Korean won)  \nDebentures \nRepayment in \n \n2024 \n6,447  \n2025 \n522,207  \n2026 \n6,447  \n2027 \n6,447  \nTotal \n541,548  \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 55 - \n14. Net Defined Benefit Liabilities (Assets) \n \n(A) \nDetails of net defined benefit liabilities (assets) recognized in the statements of financial position as of December 31, \n2023 and 2022 are as follows: \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \nPresent value of funded defined benefit obligations \n15,403,976  \n13,639,460  \nPresent value of unfunded defined benefit obligations \n319,689  \n370,848  \nSubtotal \n15,723,665  \n14,010,308  \nFair value of plan assets \n(20,172,327) \n(19,593,910) \nTotal \n(4,448,662) \n(5,583,602) \n \n \n(B) \nThe components of defined benefit costs recognized in profit or loss for the years ended December 31, 2023 and 2022 \nare as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nCurrent service cost \n1,294,308  \n1,365,600  \nNet interest income \n(354,220) \n(99,356) \nPast service cost \n4,839  \n(253) \nOther \n9,491  \n28,713  \nTotal \n954,418  \n1,294,704  \n \nThe amount recognized as expenses of defined contribution plans for the years ended December 31, 2023 and 2022 are \nW 203,004 million and W 145,395 million, respectively. \n \n \n(C) \nThe expenses related to the defined benefit plans recognized in the statements of profit or loss for the years ended  \nDecember 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nCost of sales \n378,104  \n514,589  \nSelling and administrative expenses and other \n576,314  \n780,115  \nTotal \n954,418  \n1,294,704  \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 56 - \n(D) Changes in the defined benefit obligations for the years ended December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nBalance as of January 1 \n14,010,308  \n14,658,185  \nCurrent service cost \n1,294,308  \n1,365,600  \nInterest cost \n805,084  \n528,884  \nPast service cost \n4,839  \n(253) \nRemeasurement: \n \n \nActuarial gains or losses arising from changes in demographic assumptions \n62,291  \n34,917  \nActuarial gains or losses arising from changes in financial assumptions \n266,505  \n(2,496,879) \nOther \n123,165  \n521,452  \nBenefits paid \n(846,457) \n(630,019) \nOther(*) \n3,622  \n28,421  \nBalance as of December 31 \n15,723,665 \n14,010,308  \n(*) Other includes effects of changes in foreign currency exchange rates and reclassifications as held for sales. \n \n \n(E) Changes in the fair value of plan assets for the years ended December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nBalance as of January 1 \n19,593,910  \n17,001,891  \nInterest income on plan assets \n1,159,304  \n628,240  \nRemeasurement of plan assets \n(654,005) \n(312,565) \nContributions by employer \n746,068  \n2,741,417  \nBenefits paid \n(687,125) \n(498,246) \nOther(*) \n14,175  \n33,173  \nBalance as of December 31 \n20,172,327  \n19,593,910  \n(*) Other includes effects of changes in foreign currency exchange rates and reclassifications as held for sales. \n \nThe reasonable estimate of the employer contributions expected to be paid in 2024 in respect of the defined benefit plans as \nof December 31, 2023 is W 1,757,413 million. \n \n(F) Plan assets as of December 31, 2023 and 2022 consist of the following: \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \nPrincipal guaranteed fixed income financial instruments and other \n18,178,623 \n18,766,006 \nOther \n1,993,704 \n827,904 \nTotal \n20,172,327 \n19,593,910 \n \nPlan assets are mostly invested in instruments which have a quoted price in active markets. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 57 - \n(G) The principal actuarial assumptions as of December 31, 2023 and 2022 are as follows:  \n \n (In percentage) \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \nDiscount rate \n3.9~5.9 \n4.3~6.4 \nSalary growth rate (including the effects of inflation) \n3.0~6.3 \n2.0~6.4 \n \n \n(H) The sensitivity analysis of the defined benefit obligations as of December 31, 2023 and 2022 to changes in the principal \nassumptions is as follows: \n \n \nDefined benefit obligations \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \nDiscount rate \n \n \n1% p increase \n14,291,442 \n12,920,156 \n1% p decrease \n17,385,125 \n15,268,164 \nSalary growth rate \n \n \n1% p increase \n17,365,127 \n15,261,609 \n1% p decrease \n14,280,988 \n12,900,865 \n \n \n(I) The weighted average maturity of the defined benefit obligations is 9.84 years as of December 31, 2023. \n \n \n15. Provisions  \n \nChanges in provisions for the year ended December 31, 2023 are as follows: \n(In millions of Korean won) \nWarranty (A) \nRoyalty   \nexpenses (B) \nLong-term \nincentives (C) \nOther \n(D, E) \nTotal \n \n \n \n \n \n \nBalance as of January 1 \n2,309,726  \n1,546,606  \n783,263  \n3,133,830  \n7,773,425  \nCharged to profit or loss \n2,456,609  \n595,307  \n468,745  \n2,012,062  \n5,532,723  \nPayment \n(2,279,281) \n(299,250) \n(261,622) \n(1,125,666) \n(3,965,819) \nOther(*) \n53,158  \n(4,611) \n3,365  \n11,085  \n62,997  \nBalance as of December 31 \n2,540,212  \n1,838,052  \n993,751  \n4,031,311  \n9,403,326  \n (*) Other includes effects of changes in foreign currency exchange rates. \n \n(A) \nThe Company accrues warranty provisions for estimated costs of quality assurance, exchanges, repairs, recalls, and \nfuture services based on historical experience and terms of warranty programs. \n \n(B) \nThe Company recognizes provisions for the estimated royalty expenses that are under negotiation with counterparties. \nThe timing and amount of payment depend on the settlement of the negotiation. \n \n(C) \nThe Company has a long-term incentive plan for its executives based on a three-year management performance criteria \nand recognizes a provision for the estimated incentive cost. \n \n(D) \nThe Company records provisions for estimated losses from contracts associated with discontinued products. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 58 - \n(E) \nThe Company makes provisions for the emission in excess of the emission rights held by the Company. Details of \nemission rights and liabilities as of December 31, 2023 are as follows: \n \n(1) The amount of emission rights allocated free of charge in the current commitment period and the estimated amount \nof emission as of December 31, 2023 are as follows: \n(In million metric tons) \nDecember 31, 2023 \nEmission rights allocated free of charge(*) \n18.06 \nEstimated volume of emission \n17.66 \n (*)As of December 31, 2023, emission rights allocated free of charge for the remainder of the plan period are 32.60 million metric \ntons (2024: 16.30 million metric tons, 2025: 16.30 million metric tons). \n \n(2) Changes in the emission rights for the year ended December 31, 2023 and 2022 are as follows: \n(In millions of Korean won) \n2023 \n2022 \nBalance as of January 1 \n19,567  \n46,073  \nIncrease \n1,272  \n1,872  \nUtilization \n(17,702) \n(28,378) \nBalance as of December 31(*) \n3,137  \n19,567  \n (*) The quantity of emission rights is 56.25 million metric tons and there is no emission rights provided as provision of collateral  \n   as of December 31, 2023.  \n \n(3) Changes in emissions liabilities for the year ended December 31, 2023 and 2022 are as follows: \n(In millions of Korean won) \n2023 \n2022 \nBalance as of January 1 \n32,838  \n45,049  \nCharged to profit or loss \n(15,210) \n16,167  \nUtilization \n(17,491) \n(28,378) \nBalance as of December 31 \n137  \n32,838  \n \n \n16. Commitments and Contingencies \n \n(A) \nLitigation \n \nAs of December 31, 2023, the Company is involved in various claims, disputes, and investigations conducted by regulatory \nbodies that arose during the normal course of business with numerous entities. Although the outflow of resources and timing \nof these matters are uncertain, the Company believes the outcome will not have a material impact on the financial position \nof the Company. \n \n(B) Other commitments  \n \n(1) As of December 31, 2023, the Company has trade financing agreements, trade notes receivable discounting facilities, \nand loan facilities secured by accounts receivable with 28 financial institutions, including Woori Bank, with a \ncombined limit of W 21,762,600 million. In addition, the Company has a trade financing agreement with 23 financial \ninstitutions, including Shinhan Bank, with a limit of W 15,958,875 million, and loan facilities secured by trade \nreceivables with 13 banks, including Woori Bank, with a limit of W 2,149,320 million. \n \n(2) As of December 31, 2023, contractual commitments for the acquisition of property, plant and equipment and \nintangible assets amount to W 9,783,549 million. \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 59 - \n17. Contract Liabilities \n \nThe Company has recognized contract liabilities related to contracts with customers as follows:  \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \nContract liabilities(*) \n13,327,724  \n13,255,682  \n \n(*) Contract liabilities include advances received, accrued expenses, other current liabilities and others. \n \nThe revenue recognized for the year ended December 31, 2023 in relation to the contract liabilities carried forward as of \nJanuary 1, 2023 amounts to W 1,156,619 million. \n \n \n18. Share Capital \n \nAs of December 31, 2023, the parent company’s total number of authorized shares is 25,000,000,000 shares (W 100 per share). \nAs well as its ordinary shares, the parent company also has non-cumulative preference shares that are eligible for an additional \n1% cash dividend over par value per annum compared to ordinary shares, but without voting rights. The parent company has \nissued 5,969,782,550 shares of ordinary shares and 822,886,700 shares of preference shares as of December 31, 2023, \nexcluding the number of retired shares. As of the December 31, 2023, the number of shares outstanding is the same as the \nnumber of shares aforementioned with no changes during the years ended December 31, 2023 and 2022. Due to the retirement \nof shares, the total par value of the shares issued which excludes the number of retired shares is W 679,267 million (ordinary \nshares of W 596,978 million and preference shares of W 82,289 million), which does not agree with paid-in capital of W \n897,514 million.  \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 60 - \n19. Retained Earnings \n \n(A) Retained earnings as of December 31, 2023 and 2022 consist of the following: \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \nDiscretionary reserve and other \n208,198,003  \n192,294,496  \nUnappropriated retained earnings \n138,454,235  \n145,651,911  \nTotal \n346,652,238  \n337,946,407  \n \n \n(B) Details of interim and year-end dividends are as follows:  \n \n(1) Interim dividends (Record date: March 31, June 30 and September 30, 2023 and 2022) \n \n(In millions of Korean won and number of shares) \n2023 \n2022 \n1st Quarter \nNumber of shares eligible for dividends \nOrdinary shares \n5,969,782,550 \n5,969,782,550 \nPreference shares \n822,886,700 \n822,886,700 \nDividend rate (based on par value) \nOrdinary/Preference  \n361% \n361% \nDividend amount \nOrdinary shares \n2,155,092  \n2,155,092  \nPreference shares \n297,062  \n297,062  \nTotal \n2,452,154  \n2,452,154  \n2nd Quarter \nNumber of shares eligible for dividends \nOrdinary shares \n5,969,782,550 \n5,969,782,550 \nPreference shares \n822,886,700 \n822,886,700 \nDividend rate (based on par value) \nOrdinary/Preference    \n361% \n361% \nDividend amount \nOrdinary shares \n2,155,092  \n2,155,092  \nPreference shares \n297,062  \n297,062  \nTotal \n2,452,154  \n2,452,154  \n3rd Quarter \nNumber of shares eligible for dividends \nOrdinary shares \n5,969,782,550 \n5,969,782,550 \nPreference shares \n822,886,700 \n822,886,700 \nDividend rate (based on par value) \nOrdinary/Preference   \n361% \n361% \nDividend amount \nOrdinary shares \n2,155,092  \n2,155,092  \nPreference shares \n297,062  \n297,062  \nTotal \n2,452,154  \n2,452,154  \n \n(2) Year-end dividends (Record date: December 31, 2023 and 2022) \n \n (In millions of Korean won and number of shares) \n2023 \n2022 \nNumber of shares eligible for dividends \nOrdinary shares \n5,969,782,550 \n5,969,782,550 \nPreference shares \n822,886,700 \n822,886,700 \nDividend rate (based on par value) \nOrdinary shares \n361% \n361% \nPreference shares \n362% \n362% \nDividend amount \nOrdinary shares \n2,155,092  \n2,155,092  \nPreference shares \n297,884  \n297,884  \nTotal \n2,452,976  \n2,452,976  \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 61 - \n20. Other Components of Equity \nOther components of equity as of December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \nGain on valuation of financial assets at fair value through other comprehensive income \n194,419  \n2,749,109  \nShare of other comprehensive income of associates and joint ventures \n185,144  \n114,987  \nForeign currency translation differences for foreign operations \n3,651,112  \n1,039,197  \nRemeasurement of net defined benefit assets \n(2,849,526) \n(2,051,610) \nOther \n98,981  \n86,645  \nTotal \n1,280,130  \n1,938,328  \n \n \n21. Expenses by Nature  \n \nExpenses by nature for the years ended December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nChanges in finished goods, work in process, and other \n(644,905)  \n(10,355,548)  \nRaw materials used, merchandise purchased, and other \n96,219,181  \n112,591,917  \nWages and salaries \n30,405,245  \n30,078,623  \nPost-employment benefit \n1,157,422  \n1,440,099  \nDepreciation \n35,532,411  \n35,952,098  \nAmortization \n3,134,148  \n3,155,561  \nWelfare \n6,472,979  \n6,091,626  \nUtilities \n7,502,408  \n6,142,317  \nOutsourcing \n7,058,833  \n6,597,467  \nAdvertising \n5,213,896  \n6,112,951  \nSales promotion  \n6,894,395  \n7,110,649  \nOther  \n53,422,505  \n53,936,970  \nTotal(*) \n252,368,518  \n258,854,730  \n \n(*) Equal to the sum of cost of sales and selling and administrative expenses in the consolidated statements of profit or loss. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 62 - \n22. Selling and Administrative Expenses \nSelling and administrative expenses for the years ended December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nSelling and administrative expenses \n \n \nWages and salaries \n8,324,562  \n7,763,588  \nPost-employment benefit \n299,369  \n330,115  \nCommissions  \n8,753,442  \n7,457,896  \nDepreciation \n1,649,335  \n1,574,757  \nAmortization \n688,786  \n664,346  \nAdvertising \n5,213,896  \n6,112,951  \nSales promotion  \n6,894,395  \n7,110,649  \nTransportation \n1,721,614  \n3,214,301  \nService  \n3,968,816  \n3,671,913  \nOther  \n6,125,999  \n5,993,246  \nSubtotal \n43,640,214  \n43,893,762  \nResearch and development expenses \n \n \nResearch and development \n28,339,724  \n24,919,198  \nTotal \n71,979,938  \n68,812,960  \n \n \n23. Other Non-Operating Income and Expenses \nDetails of other non-operating income and expenses for the years ended December 31, 2023 and 2022 are as follows: \n  \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nOther non-operating income \n \n \nDividend income \n164,203  \n414,601  \nRental income \n150,273  \n140,908  \nGain on disposal of property, plant and equipment \n104,663  \n159,123  \nOther \n761,309  \n1,247,439  \nTotal \n1,180,448  \n1,962,071  \n \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nOther non-operating expenses \n \n \nLoss on disposal of property, plant and equipment \n85,799  \n61,256  \nDonations \n243,377  \n305,941  \nOther \n754,151  \n1,422,979  \nTotal \n1,083,327  \n1,790,176  \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 63 - \n \n24. Financial Income and Expenses \n \nDetails of financial income and expenses for the years ended December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nFinancial income \n \n \nInterest income \n4,358,022  \n2,720,479  \nFinancial assets measured at amortized cost \n4,357,792  \n2,720,213  \nFinancial assets measured at fair value through profit or loss \n230  \n266  \nForeign exchange differences \n10,608,661  \n16,537,855  \nGain from derivatives \n1,133,465  \n1,570,661  \nTotal \n16,100,148  \n20,828,995  \n \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nFinancial expenses \n \n \nInterest expenses \n930,253  \n763,015  \nFinancial liabilities measured at amortized cost \n510,865  \n322,529  \nOther financial liabilities \n419,388  \n440,486  \nForeign exchange differences \n10,711,058  \n16,809,703  \nLoss from derivatives \n1,004,219  \n1,454,971  \nTotal \n12,645,530  \n19,027,689  \n \nThe Company recognizes foreign exchange gains and losses arising from foreign currency transactions and translation as \nfinancial income and expenses. \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 64 - \n25. Income Tax Expense \n \n(A) \nIncome tax expense for the years ended December 31, 2023 and 2022 consists of the following: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nCurrent taxes \n \n \nCurrent tax on profits for the year \n5,660,505  \n7,391,099  \nAdjustments recognized in the current year \n(725,524) \n(501,683) \nSubtotal \n4,934,981  \n6,889,416  \nDeferred taxes \n \n \nChanges in deferred taxes arising from unused tax credits \n(5,346,657) \n(1,080,068) \nChanges in deferred taxes arising from temporary differences \n(3,061,001) \n(15,407,692) \nChanges in deferred taxes arising from unused tax losses \n(1,041,996) \n160,123  \nOther \n33,838  \n224,618  \nSubtotal \n(9,415,816) \n(16,103,019) \nIncome tax expense \n(4,480,835) \n(9,213,603) \n \n \n(B) \nThe difference between the income tax expense on the Company’s profit before tax and the theoretical amount computed  \n     using the weighted-average tax rate applicable to the profit before tax of each of the Company’ entities is as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nProfit before income tax \n11,006,265  \n46,440,474  \nTax calculated at weighted average of applicable tax rates(*) \n1,901,195  \n13,652,900  \nAdjustments: \n \n \nPermanent differences \n219,374 \n(2,090,031) \nTemporary differences for which no deferred income tax was recognized \n(12,588)  \n769,211  \nTax credits and exemptions \n(6,706,820) \n(5,185,576) \nResults of interest in subsidiaries, etc. \n(389,305) \n(16,186,745) \nImpact of changes in tax rates \n(3,926) \n(376) \nOther \n511,235  \n(172,986) \nSubtotal \n(6,382,030) \n(22,866,503) \nIncome tax expense \n(4,480,835) \n(9,213,603) \n \n(*) The statutory tax rate is the weighted average of the statutory tax rates applicable to the Company’s year-end profits as of December \n31, 2023 and 2022, which vary by tax jurisdictions. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 65 - \n(C) \nThe movement in deferred income tax assets and liabilities for the years ended December 31, 2023 and 2022 are as \nfollows: \n \n \n2023 \n2022 \n(In millions of Korean won) \nBalance  \nas of \n January 1 \nIncrease \n(Decrease) \nBalance  \nas of \nDecember 31 \nBalance  \nas of \nJanuary 1 \nIncrease \n(Decrease) \nBalance  \nas of \nDecember 31 \n \n \n \n \n \n \n \nDeferred tax arising from temporary differences \nRevaluation of land \n(898,505) \n(182) \n(898,687) \n(936,822) \n38,317  \n(898,505) \nInvestments in subsidiaries, associates \nand joint ventures(*1,2) \n(4,960,247) \n57,640  (4,902,607) (20,614,554) \n15,654,307  (4,960,247) \nAccumulated depreciation and other \n(2,566,535) \n682,845  (1,883,690) \n(1,771,793) \n(794,742) \n(2,566,535) \nAccrued income \n39,680  \n28,042  \n67,722  \n6,853  \n32,827  \n39,680  \nProvisions, accrued expenses, and other \n5,219,130  \n1,923,486  \n7,142,616  \n4,560,874  \n658,256  \n5,219,130  \nForeign currency translation \n185,900  \n(12,997) \n172,903  \n12,076  \n173,824  \n185,900  \nAsset impairment losses \n234,734  \n1,011 \n235,745  \n258,886  \n(24,152) \n234,734  \nOther \n(969,702) \n381,157  \n(588,545)  \n(638,757) \n(330,945) \n(969,702) \nSubtotal \n(3,715,545) \n3,061,002  \n(654,543) (19,123,237) \n15,407,692  (3,715,545) \nDeferred tax arising from tax losses  \nUnused tax losses  \n276,358  \n1,041,996  \n1,318,354  \n436,481  \n(160,123) \n276,358  \nDeferred tax arising from unused tax credits \nUnused tax credits \n2,746,430  \n5,346,657 \n8,093,087  \n1,666,362  \n1,080,068  \n2,746,430  \nDeferred tax recognized in equity \nLoss (gain) on valuation of financial assets at fair value  \nthrough other comprehensive income and other \n(50,392) \n(156,443)  \n(206,835)  (3,155,310) \n3,104,918  \n(50,392) \nRemeasurement of net defined benefit assets \n733,135  \n308,050  \n1,041,185  \n1,238,713  \n(505,578) \n733,135  \nSubtotal \n682,743  \n151,607  \n834,350  (1,916,597) \n2,599,340  \n682,743  \nNet deferred tax assets (liabilities) \n(10,014) \n9,601,262 \n9,591,248 (18,936,991) \n18,926,997 \n(10,014) \nDeferred tax assets \n5,101,318  \n5,110,479 \n10,211,797 \n4,261,214 \n840,104  \n5,101,318  \nDeferred tax liabilities \n(5,111,332) \n4,490,783 \n(620,549) (23,198,205) \n18,086,873  (5,111,332) \n \n(*) Deferred tax assets are not recognized if it is probable that the temporary differences will not reverse in the foreseeable future for \ninvestments in subsidiaries, associates and joint ventures. \n \n \nThe Company assessed that it is probable that deferred tax asset will be realized to the extent that the Company’s expected \naverage annual taxable losses and tax credits that can be utilized in each accounting period. However, the following temporary \ndifferences have not been recognized for tax purposes as it is not probable that they will be realized in the future as of December \n31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nUnused tax losses \n597,176  \n594,798  \nUnused tax credits \n118,694  \n46,550  \n \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 66 - \nExpected expiry dates of unused tax losses and credits for which no deferred tax asset is recognized are as follows: \n \n(In millions of Korean won) \n2023 \n2024 \n2025 \n2026 and after \n \n \n \n \n \nUnused tax losses \n37,899  \n741  \n- \n558,536  \nUnused tax credits \n7,163  \n-  \n110,450  \n1,081  \n \n \n(D) Details of the period when the deferred tax assets (liabilities) are expected to be recovered (settled) as of December 31, \n2023 and 2022 are as follows: \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \nDeferred tax assets \n \n \nDeferred tax assets to be recovered within 12 months \n9,392,311  \n3,249,661  \nDeferred tax assets to be recovered after 12 months \n819,486  \n1,851,657  \nSubtotal \n10,211,797  \n5,101,318  \nDeferred tax liabilities \n \n \nDeferred tax liabilities to be settled after 12 months \n(620,549) \n(5,111,332) \nTotal \n9,591,248  \n(10,014) \n \n \n(E) Global minimum top-up tax \n \nThe global minimum top-up is a system under which multinational companies with consolidated revenue of €750 million or \nmore in at least two of the four preceding financial years are required to pay a substantial amount of tax to the tax authorities \nof the country in which the parent company resides if their effective tax rate in those countries is less than 15%.  \n  \nThe Republic of Korea, where the parent company is domiciled, enacted the Global Minimum Tax Act in 2023, which requires \nthe application of the Global Minimum Tax for accounting periods beginning on or after January 1, 2024. \n   \nThe Company believes that it will be subject to the Global Minimum Tax Act, but as the Global Minimum Tax Act will be \neffective in the Republic of Korea from January 1, 2024, there is no impact on the Company's current income tax expense. In \naddition, the Company has applied the temporary exemption for deferred taxes under Korean IFRS 1012 and has not \nrecognized any deferred tax assets or liabilities related to the global minimum tax law and has not disclosed any deferred tax \ninformation. \n \nAs the legislation in the countries where the Company’s subsidiaries are located that are primarily affected by the global \nminimum top-up tax legislation has not been enacted or specific legislation is in the process of being enacted, it is not possible \nto reasonably estimate the impact on the Company as at December 31, 2023. Each of the Company’s subsidiaries is reviewing \nthe impact on its financial statements with tax experts in each country. \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 67 - \n26. Earnings per Share \n \n(A) \nBasic earnings per share \n \nBasic earnings per share for the years ended December 31, 2023 and 2022 are calculated as follows: \n \n(1) \nOrdinary shares \n \n(In millions of Korean won, thousands of number of shares) \n2023 \n2022 \n \n \n \nProfit for the year attributable to owners of the parent company \n14,473,401  \n54,730,018  \nProfit for the year available for ordinary shares \n12,719,321  \n48,099,117  \nWeighted-average number of ordinary shares outstanding \n5,969,783  \n5,969,783  \nBasic earnings per ordinary share (in Korean won) \n2,131  \n8,057  \n \n(2) \nPreference shares \n \n(In millions of Korean won, thousands of number of shares) \n2023 \n2022 \n \n \n \nProfit for the year attributable to owners of the parent company \n14,473,401  \n54,730,018  \nProfit for the year available for preference shares \n1,754,080  \n6,630,901  \nWeighted-average number of preference shares outstanding \n822,887  \n822,887  \nBasic earnings per preference share (in Korean won) \n2,132  \n8,058  \n \n \n(B) \nDiluted earnings per share \n \nThe Company does not have dilutive potential ordinary shares and as a result, basic earnings per share and diluted earnings \nper share are the same for the years ended December 31, 2023 and 2022. \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 68 - \n27. Statements of Cash Flows \n(A) The Company used the indirect method to present cash flows from operating activities. Adjustments and changes in assets \n and liabilities arising from operating activities for the years ended December 31, 2023 and 2022 are as follows: \n \n- \nAdjustments \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nAdjustments: \n \n \nIncome tax income \n(4,480,835) \n(9,213,603) \nFinancial income \n(6,156,093) \n(5,778,279) \nFinancial expenses \n3,076,837  \n4,336,254  \nPost-employment benefits \n1,157,422  \n1,440,099  \nDepreciation \n35,532,411  \n35,952,098  \nAmortization \n3,134,148  \n3,155,561  \nBad debt expense \n62,964  \n8,784  \nDividend income \n(164,203) \n(414,601) \nShare of profit of associates and joint ventures \n(887,550) \n(1,090,643) \nGain on disposal of property, plant and equipment \n(104,663) \n(159,123) \nLoss on disposal of property, plant and equipment \n85,799  \n61,256  \nLoss on valuation of inventories and others \n5,037,579  \n4,408,767  \nOthers \n225,718  \n366,869  \nTotal \n36,519,534  \n33,073,439  \n \n- \nChanges in assets and liabilities arising from operating activities \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nChanges in assets and liabilities : \n \n \nDecrease (increase) in trade receivables \n(90,243) \n7,856,258  \nDecrease (increase) in other receivables \n325,894  \n(1,524,173) \nDecrease (increase) in prepaid expenses \n(390,636) \n3,506  \nIncrease in inventories \n(3,206,615) \n(13,311,072) \nIncrease (decrease) in trade payables \n318,432  \n(5,298,547) \nIncrease (decrease) in other payables \n785,534  \n(1,443,409) \nIncrease in advances received \n138,188  \n106,977  \nIncrease (decrease) in withholdings \n(411,028) \n25,392  \nIncrease (decrease) in accrued expenses \n(3,704,020) \n919,271  \nIncrease (decrease) in provisions \n1,566,904  \n(34,298) \nPayment of post-employment benefits \n(938,691) \n(707,887) \nDecrease (increase) in plan assets \n100,384  \n(2,243,171) \nOther \n47,152  \n(1,347,795) \nTotal \n(5,458,745) \n(16,998,948) \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 69 - \n(B) \n Significant non-cash investing and financing transactions for the years ended December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nValuation of financial assets at fair value through other comprehensive income \n1,548,022  \n(2,636,448) \nValuation of investments in associates and joint ventures \n75,112  \n(50,510) \nReclassification of construction in progress to property, plant and equipment \n39,749,735  \n36,047,916  \nNew lease contracts established \n1,802,463  \n2,111,660  \nReclassification of current portion of debentures and long-term borrowings \n1,308,875 \n1,089,162 \n \n \n(C) Changes in liabilities arising from financing activities for the years ended December 31, 2023 and 2022 are as follows: \n \n(1) 2023 \n \n \nAs of \nJanuary 1 \nCash flows from \nfinancing \nactivities \nNon-cash transactions \nAs of  \nDecember 31 \n(In millions of Korean won) \nNew lease \ncontracts \nOther(*) \n \n \n \n \n \n \nShort-term borrowings \n5,147,315  \n2,145,400  \n- \n(178,114) \n7,114,601  \nDebentures and long-term borrowings \n5,185,927  \n(864,867) \n1,497,058  \n(246,775) \n5,571,343  \nTotal \n10,333,242  \n1,280,533  \n1,497,058  \n(424,889) \n12,685,944  \n \n(*) Other includes accreted interest and effects of changes in foreign currency exchange rates. \n \n(2) 2022 \n \n \nAs of \nJanuary 1 \nCash flows from \nfinancing \nactivities \nNon-cash transactions \nAs of \nDecember 31 \n(In millions of Korean won) \nNew lease \ncontracts \nOther(*) \n \n \n \n \n \n \nShort-term borrowings \n13,687,793  \n(8,339,149) \n- \n(201,329) \n5,147,315  \nDebentures and long-term borrowings \n4,704,356  \n(1,236,468) \n2,111,660  \n(393,621) \n5,185,927  \nTotal \n18,392,149  \n(9,575,617) \n2,111,660  \n(594,950) \n10,333,242  \n \n(*) Other includes accreted interest and effects of changes in foreign currency exchange rates.  \n \nFor the years ended December 31, 2023 and 2022, cash outflows from repayment of the principal of lease liabilities \n(financial activities) amount to W 1,098,944 million and W 998,531 million, respectively, while cash outflows due to \ninterest expenses (operating activities) in relation to the lease liabilities amount to W 197,202 million and W 140,111 \nmillion, respectively. \n \n \n(D) The Company recorded cash inflows and outflows from short-term financial instruments with frequent transactions, large \ngross amounts and short-term maturities, as well as from short-term borrowings on a net basis. As of December 31, 2023, \nmost of the Company’s cash and cash equivalents consist mainly of bank deposits. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 70 - \n28. Financial Risk Management \n \nThe Company manages its financial risks with a focus on minimizing market risk, credit risk, liquidity risk and others arising \nfrom its operating activities. To this end, the Company closely monitors and responds to each risk factor. \n \nThe Company establishes global financial management standards and manages the risks by periodically measuring customer’s \nand counterparties’ financial risk, applying currency hedges, and reviewing cash flows.  \n \nThe Company also manages foreign exchange risk by monitoring foreign exchange rate fluctuations through local financial \ncenters in the major regions (United States, United Kingdom, Singapore, China, Brazil, and Russia), which act as an agent for \nthe subsidiaries in each region to manage foreign exchange transactions. In addition, local finance centers in the major regions \nrespond to liquidity risk through a regionally integrated financial structure. \n \nThe Company’s financial assets subject to financial risk management consist of cash and cash equivalents, short-term financial \ninstruments, financial assets at amortized cost, trade receivables and others, while its financial liabilities consist of trade \npayables, borrowings, and others. \n \n(A) \nMarket risk \n \n(1) \nForeign exchange risk  \n \nThe Company is exposed to foreign exchange risk arising from its global operations through transactions in currencies other \nthan its functional currency. The main currencies in which the Company is exposed to foreign exchange risk are the US dollar \nand European Euro. \n \nThe Company focuses on minimizing the impact of foreign exchange fluctuation by matching levels of assets and liabilities \ndenominated in each foreign currency. To minimize exchange position, the Company’s foreign exchange management \npolicy requires normal business transactions, including import and export, as well as financing transactions such as \ndepositing and borrowing, to be in local currency or match as closely as possible cash inflows and outflows incurred in the \nrespective foreign currencies. This reduces but does not eliminate the foreign exchange risk to which the Company is \nexposed. Moreover, the Company periodically evaluates and monitors the foreign exchange risk to efficiently mitigate such \nrisk, and the speculative foreign exchange transactions are strictly prohibited. \n \nAs of December 31, 2023 and 2022, the impact on profit or loss (before tax) of a 5% change in exchange rates on the \nCompany’s financial assets and financial liabilities denominated in a major foreign currency other than the functional \ncurrency would be as follows:   \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \nIncrease \nDecrease \nIncrease \nDecrease \n \n \n \n \n \nUSD \n418,776  \n(418,776) \n258,655  \n(258,655) \nEUR \n151,740  \n(151,740) \n92,546  \n(92,546) \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 71 - \n(2) \nInterest rate risk \n \nInterest rate risk for floating interest rate financial instruments can be defined as the risk of changes in the fair value of \ncomponents of the statements of financial position due to changes in the market interest rates, and the risk of changes in the \nfuture cash flows of interest income and expenses arising from investing and financing activities. The Company’s exposure \nto interest rate risk arises primarily from interest-bearing deposits and floating interest rate debt obligations, and the \nCompany manages its exposure to interest rate risk to minimize uncertainty and cost of financing resulting from changes in \ninterest rates.  \n \nAs of December 31, 2023 and 2022, the effect on profit or loss before tax of a 1%p change in interest rates on the Company’s \nvariable rate financial assets and liabilities at the reporting date would have been as follows:  \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \nIncrease \nDecrease \nIncrease \nDecrease \n \n \n \n \n \nFinancial assets \n210,617  \n(210,617) \n72,750  \n(72,750) \nFinancial liabilities \n(6,197) \n6,197  \n(8,427) \n8,427  \nNet effect \n204,420  \n(204,420) \n64,323  \n(64,323) \n \n \n(3) \n Price risk \n \nThe Company’s investment portfolio consists of direct and indirect investments in equity instruments classified as financial \nassets at fair value through other comprehensive income and financial assets at fair value through profit or loss, which is in \nline with the Company’s strategy. \n \nAs of December 31, 2023 and 2022, price fluctuation of marketable equity securities (listed stocks) by 1% would result in \nchanges in other comprehensive income (before income tax) of W 52,510 million and W 92,073 million, respectively, and \nchanges in profit before tax of W 3,472 million and W 3,144 million, respectively.  \n \n \n(B) \n Credit risk \n \nCredit risk arises during the normal course of transactions and investing activities where customers or other parties fail to \ndischarge an obligation. The Company monitors and sets the customer’s and counterparty’s credit limit on a periodic basis \nbased on the customer’s and counterparty’s financial conditions, default history and other factors. Adequate insurance \ncoverage is maintained for trade receivables related to trading partners situated in higher risk countries. \n \nCredit risk can arise from transactions with financial institutions including financial instrument transactions such as cash and \ncash equivalents, deposits, and derivative instruments. To minimize such risk, the Company has a policy of transacting only \nwith banks that have a strong international credit rating (S&P A and above), and new transactions with financial institutions \nwhich the Company does not have an existing relationship are subject to the completion of risk assessments prior to \ncommencement of transactions. The Company generally enters into financial agreements without restrictions, such as debt \nratio covenants, provision of collateral and/or repayment of borrowings, and otherwise separate approvals are obtained. \n \nThe carrying amount of the Company’s financial assets net of impairment losses is the Company’s maximum exposure to \ncredit risk. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 72 - \n(C) \nLiquidity risk  \n \nLiquidity risk is the risk that a company will have difficulty in meeting all its financial obligations. The Company’s main \nsources of liquidity are cash generated from operations and funds raised from the capital markets and financial institutions, \nwhile its main liquidity needs are for investments in production, research and development, working capital and dividends. \nDue to the nature of the Company’s business, which involves large investments, maintaining adequate levels of liquidity is \ncritical. The Company maintains and manages adequate liquidity through forecasting periodic cash flows, estimating required \ncash levels, and monitoring inflows and outflows of cash. \n \nThe Company has established Cash Pooling by region to respond effectively to liquidity risks, even when individual companies \nwithin a region are underfunded. Cash Pooling is a system that shares funds between underfunded and overfunded companies, \nminimizing the liquidity risk of individual companies, easing the burden of fund management, and reducing financial costs.  \n \nIn addition, the Company has secured credit lines for its overseas subsidiaries by means of payment guarantees from the head \noffice in the event of large liquidity needs, and, at the end of the period, the Company had investment grade ratings of Aa2 \nfrom Moody’s and AA- from S&P, enabling it to raise funds on the capital market in a timely manner.  \n \nAs of December 31, 2023 and 2022, the maturity analysis of financial liabilities, based on the remaining period from the \nreporting date to the contractual maturity date, is as follows:  \n \n \nDecember 31, 2023 \n(In millions of Korean won) \nLess than \n3 months \n~ 6 months \n~1 year \n1 ~ 5 years \nMore than \n5 years \n \n \n \n \n \n \nFinancial liabilities \n43,302,421 \n589,743 \n1,529,785 \n7,811,246 \n2,337,792 \n \n \nDecember 31, 2022 \n(In millions of Korean won) \nLess than \n3 months \n~ 6 months \n~1 year \n1 ~ 5 years \nMore than \n5 years \n \n \n \n \n \n \nFinancial liabilities \n42,990,570 \n733,984 \n1,925,448 \n5,402,672 \n1,562,274 \n \nThe cash flows included in the maturity classification, based on the remaining period to the contractual maturity date, are \nundiscounted expected cash outflows.  \n \nThe Company’s derivative financial liabilities of W 44,252 million (December 31, 2022: W 119,061 million) has been \nincluded within the less than 3 months bucket. These are the Company’s trading portfolio of derivative instruments, on a net \nsettlement term, of which the contractual maturities are not essential for understanding its cash flows. These contracts are \nmanaged on a net fair value basis rather than by the maturity date. Net settled derivatives consist of forwards on currency rates \nused by the Company to manage the exchange rate profile. \n \nDerivatives that are settled on a gross basis by the delivery of underlying items, including derivatives for hedging, will be \nsettled within the next 48 months from the end of the reporting period. These derivatives are not included in the table above. \n \nThere is no maximum liquidity risk exposure from those other than the above financial liabilities (e.g., payment and \nperformance guarantees) as of December 31, 2023. \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 73 - \n(D) \nDerivative financial instruments \n \nThe Company uses cash flow hedge accounting to hedges of the exposure to changes in the price of inventories. As of \nDecember 31, 2023, the Company’s derivative financial instruments designated as cash flow hedges are as follows:  \n \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \nAssets \nLiabilities \nAssets \nLiabilities \n \n \n \n \n \nCurrency forward exchange contracts \n \n \n \n \nCurrent  \n50,018  \n15,031  \n44,567  \n11,035  \nNon-current  \n19,853  \n18,099  \n15,703  \n15,813  \nTotal \n69,871  \n33,130  \n60,270  \n26,848  \n \nFor the years ended December 31, 2023 and 2022, the Company recognizes the gains and losses relating to the effective \nportion of changes in fair value of derivatives that are designated and qualify as cash flow hedges in other comprehensive \nincome, which amount to the gain of W 927 million (after tax) and loss of W 12,893 million (after tax), respectively, and \nrecognizes the gains relating to the ineffective portion in profit or loss, which amount to the gain of W 1,304 million (before \ntax) and gain of W 611 million (before tax), respectively. For the years ended December 31, 2023 and 2022, gains and losses \nreclassified directly from other comprehensive income to profit or loss amount to the gain of W 6,692 million (after tax) and \nthe loss of W 4,602 million (after tax), respectively, and the gains reclassified from other comprehensive income to the carrying \namount of inventory amount to the gain of W 51,614 million (after tax) and the gain of W 55,856 million (after tax), \nrespectively. \n \n \n(E) \nCapital risk management  \n \nThe purpose of capital management is to maintain a sound capital structure and protect the Company’s ability to continue to \nprovide benefits to its shareholders and stakeholders as a going concern. The Company monitors capital on the basis of credit \nratings and debt ratio.  \n \nThe debt ratio as of December 31, 2023 and 2022 are as follows: \n(In millions of Korean won) \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \nTotal liabilities \n92,228,115  \n93,674,903  \nTotal equity \n363,677,865 \n354,749,604 \nDebt ratio \n25.4% \n26.4% \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 74 - \n(F) \nFair value measurement \n \n(1) \nCarrying amounts and fair value of financial instruments by category as of December 31, 2023 and 2022 are as \nfollows: \n \n \nDecember 31, 2023 \nDecember 31, 2022 \n(In millions of Korean won) \nCarrying amount \nFair value \nCarrying amount \nFair value \nFinancial assets \n \n \n \n \nCash and cash equivalents \n69,080,893  \n(*1) \n49,680,710  \n(*1) \nShort-term financial instruments \n22,690,924  \n(*1) \n65,102,886  \n(*1) \nShort-term financial assets at amortized cost  \n608,281  \n(*1) \n414,610  \n(*1) \nShort-term financial assets at fair value  \nthrough profit or loss \n27,112  \n27,112 \n29,080  \n29,080 \nTrade receivables \n36,647,393  \n(*1) \n35,721,563  \n(*1) \nFinancial assets at fair value through  \nother comprehensive income \n7,481,297  \n7,481,297 \n11,397,012  \n11,397,012 \nFinancial assets at fair value through  \nprofit or loss \n1,431,394  \n1,431,394 \n1,405,468  \n1,405,468 \nOther(*2) \n14,840,275  \n546,021 \n10,340,876  \n395,667 \nTotal financial assets \n152,807,569  \n  \n174,092,205  \n  \nFinancial liabilities \n \n \n \n \nTrade payables \n11,319,824  \n(*1) \n10,644,686  \n(*1) \nShort-term borrowings \n7,114,601  \n(*1) \n5,147,315  \n(*1) \nOther payables \n13,996,395  \n(*1) \n16,328,237  \n(*1) \nCurrent portion of long-term liabilities \n1,308,875  \n6,757 \n1,089,162  \n6,580 \n - Long-term borrowing \n1,302,521  \n(*1)(*3) \n1,082,934  \n(*1)(*3) \n - Debentures \n6,354  \n6,757 \n6,228  \n6,580 \nDebentures  \n537,618  \n529,254 \n536,093  \n521,129 \nLong-term borrowings \n3,724,850  \n(*1)(*3) \n3,560,672  \n(*1)(*3) \nLong-term other payables \n4,907,875  \n(*1) \n2,289,236  \n(*1) \nOther(*2) \n11,414,008  \n83,463 \n12,409,529  \n361,768 \nTotal financial liabilities \n54,324,046  \n  \n52,004,930    \n \n(*1) Assets and liabilities whose carrying amount is a reasonable approximation of fair value are excluded from the fair value disclosures. \n(*2) Assets measured at the cost of W 14,294,254 million and W 9,945,209 million as at December 31, 2023 and 2022, respectively, and \nliabilities measured at the cost of W 11,330,545 million and W 12,047,761 million as at December 31, 2023 and 2022, respectively, are excluded \nas their carrying amounts are a reasonable estimation of fair value. \n(*3) Lease liabilities, classified under the current portion of long-term liabilities and long-term borrowings, are excluded from the fair value \ndisclosures in accordance with Korean IFRS 1107. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 75 - \n(2) \nFair value hierarchy classifications of the financial instruments that are measured at or only disclosed their fair value \nas of December 31, 2023 and 2022 are as follows: \n \n \nDecember 31, 2023 \n(In millions of Korean won) \nLevel 1 \nLevel 2 \nLevel 3 \nTotal balance \nAssets \n \n \n \n \nShort-term financial assets at fair value \nthrough profit or loss \n- \n27,112  \n- \n27,112  \nFinancial assets at fair value through \nother comprehensive income \n5,250,993  \n- \n2,230,304  \n7,481,297  \nFinancial assets at fair value through \nprofit or loss \n347,221  \n- \n1,084,173  \n1,431,394  \nOther \n- \n130,364  \n415,657  \n546,021  \nLiabilities \n \n \n \n \nCurrent portion of debentures \n- \n6,757  \n- \n6,757  \nDebentures \n- \n529,254  \n- \n529,254  \nOther \n- \n83,463  \n- \n83,463  \n \n \nDecember 31, 2022 \n(In millions of Korean won) \nLevel 1 \nLevel 2 \nLevel 3 \nTotal balance \nAssets \n \n \n \n \nShort-term financial assets at fair value \nthrough profit or loss \n- \n29,080  \n- \n29,080  \nFinancial assets at fair value through \nother comprehensive income \n9,207,295  \n- \n2,189,717  \n11,397,012  \nFinancial assets at fair value through \nprofit or loss \n314,449  \n- \n1,091,019  \n1,405,468  \nOther \n- \n373,176  \n22,491  \n395,667  \nLiabilities \n \n \n \n \nCurrent portion of debentures \n- \n6,580  \n- \n6,580  \nDebentures \n- \n521,129  \n- \n521,129  \nOther \n- \n354,364  \n7,404  \n361,768  \n \nThe levels of the fair value hierarchy and its application to financial assets and liabilities are described below. \n \nㆍ Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities \nㆍ Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either \ndirectly or indirectly \nㆍ Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) \n \nThe fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A \nmarket is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry \ngroup, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions \non an arm’s length basis. These instruments are included in Level 1. The instruments included in Level 1 are listed equity \ninvestments, most of which are classified as financial assets at fair value through other comprehensive income. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 76 - \nThe fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. \nThese valuation techniques maximize the use of observable market data where available and rely as little as possible on \nentity-specific estimates. If all significant inputs required to measure the fair value of an instrument are observable, the \ninstrument is included in Level 2. \n \nIf one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3. \n \nThe Company performs the fair value measurements required for financial reporting purposes, including Level 3 fair values, \nand discusses valuation processes and results in line with the financial reporting timelines. The Company’s policy is to \nrecognize transfers between levels at the end of the reporting period if corresponding events or changes in circumstances \nhave occurred. \n \nSpecific valuation techniques used to value financial instruments include: \n \nㆍ Quoted market prices or dealer quotes for similar instruments \nㆍThe fair value of forward foreign exchange contracts is determined using forward exchange rates at the reporting date, \nwith the resulting value discounted to present value \n \nOther techniques, such as discounted cash flow analysis, binomial distribution model, etcetera, are used to determine fair \nvalue for the remaining financial instruments. For trade and other receivables that are classified as current assets, the book \nvalue approximates a reasonable estimate of fair value. \n \n(3) \nValuation technique and the inputs \n \nThe Company utilizes a present value technique to discount future cash flows using proper interest rates for corporate bonds, \ngovernment and public bonds, and bank debentures that are classified as Level 2 in the fair value hierarchy.   \n \nThe following table presents the valuation technique and the inputs used for major financial instruments classified as Level \n3 as of December 31, 2023. \n \n(In millions of Korean won and percentage)  \nClassification \nFair \nvalue \nValuation technique \nLevel 3 inputs \nInput range \n(Weighted average) \nFinancial assets at fair value through other comprehensive income \nSamsung Venture Investment \n32,286 \nDiscounted cash flow \nPermanent growth rate \n1.0% \nWeighted average cost of capital \n17.1% \nMiCo Ceramics Co., Ltd. \n33,973 \nDiscounted cash flow \nPermanent growth rate \n0.0% \nWeighted average cost of capital \n15.8% \nTCL China Star Optoelectronics \nTechnology Co. Ltd. (CSOT) \n1,286,007 \nDiscounted cash flow \nPermanent growth rate \n0.0% \nWeighted average cost of capital \n10.6% \nChina Star Optoelectronics \nSemiconductor Display \nTechnology Ltd (CSOSDT) \n226,531 \nDiscounted cash flow \nPermanent growth rate \n0.0% \nWeighted average cost of capital \n10.6% \nOthers \nCall option on equity instruments \n393,235 \nBinomial model \nRisk-free discount rate \n3.2% \nPrice volatility \n69.5% \nPut option on equity instruments \n22,422 \nBinomial model \nRisk-free discount rate \n3.9%~5.2%, 2.2% \nPrice volatility \n22.7%, 24.4% \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 77 - \n(4) \nChanges in Level 3 instruments for the years ended December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nFinancial assets \n \n \nBalance as of January 1 \n3,303,227  \n3,430,214  \nAcquisitions \n207,023  \n207,730  \nDisposals \n(124,477) \n(207,252) \nAmount recognized in profit or loss \n297,680  \n73,782  \nAmount recognized in other comprehensive income \n46,725  \n(197,830) \nOther \n(44) \n(3,417) \nBalance as of December 31 \n3,730,134  \n3,303,227  \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nFinancial Liabilities \n \n \nBalance as of January 1 \n7,404  \n5,438  \nAmount recognized in profit or loss \n619  \n1,966  \nOther \n(8,023) \n- \nBalance as of December 31 \n- \n7,404  \n \n \n(5) \nSensitivity analysis for recurring fair value measurements categorized within Level 3 \n \nSensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair value of \nfinancial instruments which are affected by the unobservable parameters, using a statistical technique. When the fair value \nis affected by more than two input parameters, the amounts represent the most favorable or unfavorable. \n \nThe results of the sensitivity analysis for effect on income or loss before tax from changes in inputs for major financial \ninstruments which are categorized within Level 3 and subject to sensitivity analysis are as follows: \n \n(In millions of Korean won) \nFavorable changes \nUnfavorable changes \nClassification \nProfit or loss \nEquity \nProfit or loss \nEquity \nFinancial assets at fair value through \nother comprehensive income(*1) \n- \n161,758  \n- \n(111,678) \nOther (*2) \n101,749  \n- \n(101,696) \n- \n \n(*1) For equity securities, changes in fair value are calculated with the correlation between the growth rate (-1.0%~1.0%) and the discount \nrate, which are significant unobservable inputs. \n(*2) Changes in fair value were calculated based on the correlation between underlying asset price (20%) and price volatility (10%), which \nare significant unobservable inputs. \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 78 - \n29. Segment Information \n \n(A) \nOperating segment information \n \nThe chief operating decision-maker has been identified as the Management Committee. The Company determines operating \nsegments based on the segment information reported to the Management Committee. The Management Committee reviews \nthe operating profits of each operating segment in order to evaluate the performance and to make strategic decisions regarding \nthe allocation of resources to each segment. \n \nRevenue consists mostly of product sales. The operating segments are product-based and are identified based on the internal \norganization and revenue streams. As of the reporting date, the operating segments are comprised of DX, DS, SDC, Harman, \nand others. \n \nThe segment information including depreciation, amortization and operating profits is prepared after adjusting intercompany \ntransactions. Total assets and liabilities of each operating segment are excluded from the disclosure as these have not been \nprovided regularly to the Management Committee. \n \n(1) For the year ended December 31, 2023 \n \n(In millions of Korean won) \nDX \nDS \nSDC \nHarman \nIntercompany \nreconciliations \nTotal(*) \n \n \n \n \n \n \n \nRevenue \n169,992,337  \n66,594,471  \n30,975,373  \n14,388,454  (23,015,141)  258,935,494  \nDepreciation \n2,524,199  \n29,371,056  \n3,108,935  \n327,572  \n -  \n35,532,411  \nAmortization \n1,721,938  \n754,901  \n222,045  \n200,896  \n -  \n3,134,148  \nOperating profit \n14,384,705  (14,879,458)  \n5,566,478  \n1,173,702  \n -  \n6,566,976  \n(*) Other operating segments are not separately disclosed. \n \nRevenue by major product for the year ended December 31, 2022 are as follows: \n \n(In millions of Korean won) \nTV, monitor, and \nother \nSmartphone and \nother \nMemory \nDisplay panels \nTotal(*) \n \n \n \n \n \n \nRevenue \n30,375,193  \n108,632,515  \n44,125,386  \n30,975,373  \n258,935,494  \n(*) Other products are not separately disclosed. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 79 - \n(2) For the year ended December 31, 2022 \n \n(In millions of Korean won)  \nDX \nDS \nSDC \nHarman \nIntercompany \nreconciliations \nTotal(*) \n \n \n \n \n \n \n \nRevenue \n182,489,720  \n98,455,270  \n34,382,619  \n13,213,694  (26,309,943)  302,231,360  \nDepreciation \n2,520,708  \n28,196,959  \n4,768,498  \n331,342  \n -  \n35,952,098  \nAmortization \n1,678,572  \n809,270  \n237,182  \n211,549  \n -  \n3,155,561  \nOperating profit \n12,746,074  \n23,815,810  \n5,952,973  \n880,548  \n -  \n43,376,630  \n(*) Other operating segments are not separately disclosed. \n \nRevenue by major product for the year ended December 31, 2022 are as follows: \n \n(In millions of Korean won) \nTV, monitor, and \nother \nSmartphone and \nother \nMemory \nDisplay panels \nTotal(*) \n \n \n \n \n \n \nRevenue \n33,279,488  \n115,425,375  \n68,534,930  \n34,382,619  \n302,231,360  \n(*) Other products are not separately disclosed. \n \n \n(B) \nRegional information \n \nThe regional information provided to the Management Committee for the reportable segments as of and for the years ended \nDecember 31, 2023 and 2022 are as follows: \n \n(1) \nAs of and for the year ended December 31, 2023 \n \n(In millions of Korean won) \nKorea \nAmerica \nEurope \nAsia \nand Africa \nChina \nIntercompany \nelimination \nConsolidated \n \n \n \n \n \n \n \n \nRevenue \n45,599,419  \n92,136,669  \n48,108,965  \n44,814,355  \n28,276,086  \n- \n258,935,494  \nNon-current assets(*) \n163,312,301  \n20,346,775  \n6,288,864  \n8,737,541  \n12,191,879  \n(879,236) \n209,998,124  \n \n \n(*) Financial instruments, deferred tax assets, investments in associates and joint ventures, and others are excluded from non-current assets. \n \n(2) \nAs of and for the year ended December 31, 2022 \n \n(In millions of Korean won) \nKorea \nAmerica \nEurope \nAsia \nand Africa \nChina \nIntercompany \nelimination \nConsolidated \n \n \n \n \n \n \n \n \nRevenue \n48,654,656  \n118,974,561  \n50,283,975  \n48,692,399  \n35,625,769  \n- \n302,231,360  \nNon-current assets(*) \n144,936,912  \n14,022,225  \n5,839,813  \n9,056,272  \n15,338,153  \n(930,233) \n188,263,142  \n \n(*) Financial instruments, deferred tax assets, investments in associates and joint ventures, and others are excluded from non-current assets. \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 80 - \n30. Related Party Transactions \n(A) \nSale and purchase transactions \nSale and purchase transactions with related parties for the years ended December 31, 2023 and 2022 are as follows: \n \n \n2023 \n(In millions of \nKorean won) \nName of company(*1) \nSales \nDisposal of \nnon-current \nassets \nPurchases \nPurchase of \nnon-current \nassets \nAssociates and \njoint ventures \nSamsung SDS Co., Ltd. \n202,810  \n- \n1,984,263  \n291,120  \nSamsung Electro-Mechanics Co., Ltd. \n69,782  \n- \n1,113,058  \n60  \nSamsung SDI Co., Ltd. \n110,025  \n- \n754,792  \n31,750  \nCheil Worldwide Inc. \n38,930  \n- \n948,677  \n4,900  \nOther \n1,023,702  \n- \n12,540,601  \n168,977  \nTotal  \n1,445,249  \n- \n17,341,391  \n496,807  \nOther related \nparties \nSamsung C&T Co., Ltd. \n49,366  \n70  \n270,079  \n6,149,229  \nOther \n582,978  \n- \n1,675,564  \n4,686,787  \nTotal  \n632,344  \n70  \n1,945,643  \n10,836,016  \nOther(*2) \nSamsung Engineering Co., Ltd. \n1,358  \n- \n35,482  \n2,837,309  \nS-1 \n9,720  \n- \n527,232  \n40,327  \nOther \n239,223  \n- \n1,251,775  \n612,481  \nTotal  \n250,301  \n- \n1,814,489  \n3,490,117  \n \n(*1) Transactions with separate entities that are related parties of the Company.  \n(*2) Although these entities are not related parties of the Company in accordance with Korean IFRS 1024, they belong to the same large \nenterprise group in accordance with the Monopoly Regulation and Fair Trade Act. \n \n \n \n2022 \n(In millions of \nKorean won) \nName of company(*1) \nSales \nDisposal of \nnon-current \nassets \nPurchases \nPurchase of \nnon-current \nassets \nAssociates and \njoint ventures \nSamsung SDS Co., Ltd. \n214,105  \n- \n1,865,588  \n378,770  \nSamsung Electro-Mechanics Co., Ltd. \n62,274  \n767  \n1,401,483  \n120  \nSamsung SDI Co., Ltd. \n82,062  \n- \n803,556  \n24,926  \nCheil Worldwide Inc. \n31,782  \n- \n964,096  \n361  \nOther \n1,353,769  \n- \n15,158,969  \n125,053  \nTotal  \n1,743,992  \n767  \n20,193,692  \n529,230  \nOther related \nparties \nSamsung C&T Co., Ltd. \n51,447  \n- \n433,100  \n7,423,404  \nOther \n345,901  \n188  \n1,595,487  \n1,910,813  \nTotal  \n397,348  \n188  \n2,028,587  \n9,334,217  \nOther(*2) \nSamsung Engineering Co., Ltd. \n1,666  \n- \n53,793  \n3,249,254  \nS-1 \n13,634  \n- \n510,311  \n54,069  \nOther \n166,052  \n- \n550,757  \n746,749  \nTotal  \n181,352  \n- \n1,114,861  \n4,050,072  \n \n(*1) Transactions with separate entities that are related parties of the Company.  \n(*2) Although these entities are not related parties of the Company in accordance with Korean IFRS 1024, they belong to the same large \nenterprise group in accordance with the Monopoly Regulation and Fair Trade Act. \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 81 - \n(B) \nBalances of receivables and payables \n \nBalances of receivables and payables arising from the sales and purchases of goods and services as of December 31, 2023 \nand 2022 are as follows: \n \n \n \nDecember 31, 2023 \n(In millions of Korean won) \nName of company(*1) \nReceivables \nPayables(*2) \nAssociates and  \njoint ventures \nSamsung SDS Co., Ltd. \n84,747  \n458,723  \nSamsung Electro-Mechanics Co., Ltd. \n1,894  \n138,405  \nSamsung SDI Co., Ltd. \n117,690  \n92,854  \nCheil Worldwide Inc. \n137  \n440,414  \nOther \n310,708  \n1,268,131  \nTotal  \n515,176  \n2,398,527  \nOther related parties \nSamsung C&T Co., Ltd. \n213,538  \n1,955,976  \nOther \n23,155  \n318,355  \nTotal  \n236,693  \n2,274,331  \nOther(*3) \nSamsung Engineering Co., Ltd. \n305  \n807,098  \nS-1 \n1,289  \n49,955  \nOther \n16,096  \n390,073  \nTotal  \n17,690  \n1,247,126  \n(*1) Balances due from and to separate entities that are related parties of the Company. \n(*2) Payables and others include lease liabilities. \n(*3) Although these entities are not related parties of the Company in accordance with Korean IFRS 1024, they belong to the same large \nenterprise group in accordance with the Monopoly Regulation and Fair Trade Act. \n \n \n \nDecember 31, 2022 \n(In millions of Korean won) \nName of company(*1) \nReceivables \nPayables(*2) \nAssociates and  \njoint ventures \nSamsung SDS Co., Ltd. \n49,792  \n512,022  \nSamsung Electro-Mechanics Co., Ltd. \n385  \n133,952  \nSamsung SDI Co., Ltd. \n121,605  \n92,452  \nCheil Worldwide Inc. \n223  \n453,545  \nOther \n371,575  \n1,236,017  \nTotal  \n543,580  \n2,427,987  \nOther related parties \nSamsung C&T Co., Ltd. \n217,818  \n2,783,240  \nOther \n20,830  \n250,103  \nTotal  \n238,648  \n3,033,343  \nOther(*3) \nSamsung Engineering Co., Ltd. \n331  \n1,251,039  \nS-1 \n3,839  \n73,102  \nOther \n15,647  \n545,684  \nTotal  \n19,817  \n1,869,825  \n(*1) Balances due from and to separate entities that are related parties of the Company. \n(*2) Payables and others include lease liabilities. \n(*3) Although these entities are not related parties of the Company in accordance with Korean IFRS 1024, they belong to the same large \nenterprise group in accordance with the Monopoly Regulation and Fair Trade Act. \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 82 - \n(C) \nFor the years ended December 31, 2023 and 2022, the Company invested W 78,690 million and W 907,958 million, \nrespectively, in associates and joint ventures. In addition, the Company has made capital recovery of W 33,457 million \nand W 13,087 million from its investments in associates and joint ventures during the year ended December 31, 2023 \nand 2022, respectively. \n \n(D) \nFor the years ended December 31, 2023 and 2022, the Company declared dividend of W 1,650,995 million and W \n1,663,149 million, respectively, to related parties. In addition, for the years ended December 31, 2023 and 2022, the \nCompany declared dividends of W 128,232 million and W 128,232 million, respectively, to the entities that are not \nrelated parties of the Company in accordance with Korean IFRS 1024, but belong to the same conglomerate according \nto the Monopoly Regulation and Fair Trade Act. As of December 31, 2023 and 2022, there are no dividends payable to \nrelated parties. \n \n(E) \nFor the years ended December 31, 2023 and 2022, the Company entered into lease agreements with its related parties \namounting to W 3,791 million and W 25,243 million, respectively, and the lease payments made to the related parties \nwere W 25,443 million and W 22,607 million, respectively. \n \n(F) \nKey management compensation \n \nThe compensation paid or payable to key management (executive directors) for their services for the years ended December \n31, 2023 and 2022 consists of: \n \n(In millions of Korean won) \n2023 \n2022 \n \n \n \nShort-term employee benefits \n14,073  \n14,768  \nPost-employment benefits \n557  \n612  \nOther long-term employee benefits \n7,834  \n5,434  \n \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 83 - \n31. Information for Non-Controlling Interests \n(A) Changes in non-controlling interests \n \nThe profit or loss allocated to non-controlling interests and accumulated non-controlling interests of subsidiaries that are \nmaterial to the Company for the years ended December 31, 2023 and 2022 are as follows: \n \n(In millions of Korean won) \nSamsung Display Co., Ltd. and its subsidiaries \n2023 \n2022 \n \n \n \nPercentage of non-controlling interests \n15.2% \n15.2% \nBalance as of January 1 \n8,853,712  \n8,028,555  \nProfit for the year \n941,786  \n853,290  \nDividends \n(43,646) \n(3,947) \nOther \n(24,178) \n(24,186) \nBalance as of December 31 \n9,727,674  \n8,853,712  \n \n \n(B) The summarized financial information for the subsidiary with non-controlling interests that are material to the Company \nbefore the intercompany eliminations for the years ended December 31, 2023 and 2022 are as follows: \n \n(1) Summarized consolidated statements of financial position  \n \n(In millions of Korean won) \nSamsung Display Co., Ltd. and its subsidiaries \nDecember 31, 2023 \nDecember 31, 2022 \n \n \n \nCurrent assets \n24,721,411  \n42,082,412 \nNon-current assets \n46,413,723  \n23,070,658 \nCurrent liabilities \n5,821,885  \n6,294,310 \nNon-current liabilities \n1,485,250  \n1,220,097 \nEquity attributable to: \n63,827,999  \n57,638,663 \nOwners of the parent company \n63,769,776  \n57,552,528 \nNon-controlling interests \n58,223  \n86,135 \n \n \n(2) Summarized consolidated statements of comprehensive income \n \n(In millions of Korean won) \nSamsung Display Co., Ltd. and its subsidiaries \n2023 \n2022 \n \n \n \nSales \n30,950,579  \n34,298,283  \nProfit for the year \n6,331,238  \n6,614,496  \nOther comprehensive loss \n(108,689) \n(67,942) \nTotal comprehensive income attributable to: \n6,222,549  \n6,546,554  \nOwners of the parent company \n6,217,248  \n6,539,633  \nNon-controlling interests \n5,301  \n6,921  \n \n \n \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 84 - \n(3) Summarized consolidated statements of cash flows \n \n(In millions of Korean won) \nSamsung Display Co., Ltd. and its subsidiaries \n2023 \n2022 \n \n \n \nCash flows from operating activities \n9,244,331  \n11,395,827  \nCash flows from investing activities \n(3,931,091) \n(8,654,933) \nCash flows from financing activities \n(277,515) \n(1,146,117) \nReclassify as held-for-sale \n(14,153) \n- \nEffect of exchange rate changes on cash and cash equivalents \n(1,534) \n(44,426) \nIncrease in cash and cash equivalents \n5,020,038  \n1,550,351  \nCash and cash equivalents at beginning of the year \n2,309,210  \n758,859  \nCash and cash equivalents at end of year \n7,329,248  \n2,309,210  \n \n \n32. Business Combinations \n \nTo enhance the competitiveness of Micro-Display, Samsung Display America Holdings, Inc., the Company's subsidiary, \nacquired 100% of the equity shares of eMagin Corporation on October 18, 2023. \n \n(1) Overview of the acquired company \n \n \nName of the acquired company \neMagin Corporation \nHeadquarters location \nNew York, USA \nRepresentative director \nAndrew G. Sculley Jr. \nIndustry \nDevelopment and manufacture of display panels \n \n(2) Purchase price allocation \n(In millions of Korean won) \nAmount \nI. Consideration transferred \n \nCash and cash equivalents \n295,291 \nFair value of additional consideration transferred \n15,164 \nTotal consideration transferred \n310,455 \nII. Identifiable assets and liabilities \n \nCash and cash equivalents \n4,473 \nTrade and other receivables \n13,033 \nInventory \n13,753 \nProperty, plant and equipment \n77,500 \nIntangible assets \n15,580 \nOther assets \n1,691 \nTrade and other payables \n(22,370) \nOther liabilities \n(69,653) \nTotal net identifiable assets \n34,007 \nIII. Goodwill (I - II) \n276,448 \n \nAssuming that eMagin Corporation had been consolidated from January 1, 2023, eMagin Corporation’s revenue and net loss \nfor the year ended December 31, 2023, would have been W 27,781 million and W 36,021 million, respectively. Revenue and \nnet loss for the period contributed by eMagin Corporation since consolidation amounted to W 4,684 million and W 6,847 \nmillion, respectively. \n\n\nSamsung Electronics Co., Ltd. and its subsidiaries \n \nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS \n \n- 85 - \n33. Assets and Liabilities Held-for-Sale \n \nDuring the year ended December 31, 2023, the Company’s management decided to sell its 56.8% ownership in Dowooinsys \nCo., Ltd. to three parties, including New Power Plasma Co., Ltd. The sale and purchase agreement was signed on December \n7, 2023, and the sale was completed on January 31, 2024.  \n \n(1) Details of assets and liabilities classified as held-for-sale as of December 31, 2023 are as follows: \n(In millions of Korean won) \nDecember 31, 2023 \nAssets held-for-sale \n \nCash and cash equivalents \n14,153 \nTrade receivables \n1,316 \nInventories \n4,697 \nOther current assets \n13,134 \nProperty, plant and equipment and intangible assets \n181,251 \nOther non-current assets \n3,313 \nTotal \n217,864 \nLiabilities held-for-sale \n \nCurrent liabilities \n27,608 \nNon-current liabilities \n34,046 \nTotal \n61,654 \n \n(2) Details of accumulated other comprehensive income attributable to assets held-for-sale are as follows: \n(In millions of Korean won) \nDecember 31, 2023 \nForeign currency translation, net of tax \n(217)","difficulty":"easy","domain":"Multi-Document QA","length":"medium","question":"In the financial reports of Apple Inc. and Samsung Electronics for the years 2022 and 2023, which company has a higher percentage of revenue derived from the product category of phones, and in what range do the differences in this dependency between the two companies in the two years fall?","sub_domain":"Financial"}

Source: https://huggingface.co/datasets/zai-org/LongBench-v2

initial import

Posting: /agents

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