AAPLApple Inc.

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

Epic Games, Inc. filed a lawsuit in the U.S. California District Court for the Northern District of California (“California District Court”) against the Company alleging violations of federal and state antitrust laws and California’s unfair competition law based upon the Company’s operation of its App Store. The California District Court found that certain provisions of the Company’s App Review Guidelines violate California’s unfair competition law and issued an injunction (the “2021 Injunction”) enjoining the Company from prohibiting developers from including in their apps buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than the Company’s in-app purchase system. The 2021 Injunction applies to apps on the U.S. storefronts of the iOS and iPadOS App Stores. On January 16, 2024, the Company implemented a plan to comply with the 2021 Injunction and filed a statement of compliance with the California District Court. On September 30, 2024, the Company filed a motion with the California District Court to narrow or vacate the 2021 Injunction. On April 30, 2025, the California District Court found the Company to be in violation of the 2021 Injunction and enjoined the Company from imposing any commission or any fee on purchases that consumers make outside an app; restricting, conditioning, limiting, or prohibiting how developers guide consumers to purchases outside an app; or otherwise interfering with a consumer’s choice to proceed in or out of an app. The California District Court also denied the Company’s motion to narrow or vacate the 2021 Injunction and referred the Company to the U.S. Attorney for the Northern District of California for a determination whether criminal contempt proceedings are appropriate. app (the “2025 Injunction”). The Company will continue to vigorously defend its actions and employees, and has appealed the California District Court’s most recent April 2025 decision to the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit Court”). Although the Company’s request to stay the decision pending appeal was denied, Court. On December 11, 2025, the Ninth Circuit Court has agreed issued an order upholding the 2025 Injunction in part and modifying certain aspects to consider allow the Company to require parity in size, form and placement between the Company’s appeal in-app purchase and any links for consumers to make purchases outside an app. The Ninth Circuit Court also held that the Company can charge some commission on an expedited basis, link-out purchases, and remanded to the California District Court to further amend or modify the 2025 Injunction, consistent with oral arguments heard in October 2025. the Ninth Circuit Court’s order. On May 21, 2026, the Company filed a petition seeking Supreme Court review of the Ninth Circuit Court’s opinion. On June 30, 2026, the Supreme Court granted the Company’s petition to review the applicable legal standard for civil contempt.

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

Beginning with the 2025 2026 annual reporting period, the Company adopted the FASB’s ASU No. 2023-07, Segment Reporting 2023-09, Income Taxes (Topic 280): 740): Improvements to Reportable Segment Income Tax Disclosures (“ASU 2023-07”), 2023-09”), which requires the Company to disclose segment expenses specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that are significant and regularly provided to the Company’s chief operating decision maker (“CODM”). In addition, meet a quantitative threshold. ASU 2023-07 2023-09 also requires the Company to disclose the title disaggregate its income taxes paid disclosure by federal, state and position of its CODM local, and how the CODM uses segment profit or loss information in assessing segment performance and deciding how to allocate resources. foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company adopted ASU 2023-07 2023-09 using a retrospective prospective transition method.