Apple(US:AAPL)2025-10-31 10:01Financial Performance and Risks - The Company reported a decline in the fair value of its investment portfolio by $2,416 million due to a hypothetical 100 basis points increase in interest rates as of September 27, 2025[185]. - The annual interest expense on the Company's term debt is expected to increase by $129 million with a hypothetical 100 basis points rise in interest rates[185]. - The Company is exposed to economic risks from interest rates and foreign exchange rates, which may impact its consolidated financial statements[183]. - The Company is primarily exposed to foreign exchange rate risk as a net receiver of currencies other than the U.S. dollar[186]. - A strengthening U.S. dollar negatively impacts the Company's net sales and gross margins expressed in U.S. dollars[186]. - The Company estimates a maximum one-day loss in fair value of $590 million with 95% confidence as of September 27, 2025[187]. - The estimated maximum one-day loss in fair value was $538 million as of September 28, 2024[187]. - The Company uses a value-at-risk (VAR) model with Monte Carlo simulation to assess the impact of exchange rate fluctuations on foreign currency derivative positions[187]. - Changes in the Company's underlying foreign currency exposures generally offset changes in the fair values of its foreign currency derivatives[187]. Business Operations and Strategy - The Company manages its business primarily on a geographic basis, with net sales through direct and indirect distribution channels accounting for 40% and 60% of total net sales, respectively[26]. - As of September 27, 2025, the Company employed approximately 166,000 full-time equivalent employees, emphasizing its commitment to attracting and retaining talent[37]. - The Company continues to invest in research and development to enhance existing products and services, as well as to expand its offerings through new technologies[32]. - The Company faces significant competition in the smartphone, personal computer, tablet, and wearables markets, with a minority market share in these segments[29]. - The Company has a diverse product line, including iPhone, Mac, iPad, wearables, and services, which are crucial for maintaining its competitive edge[19][20][22]. - The Company has experienced higher net sales in its first fiscal quarter due to seasonal holiday demand, impacting overall financial performance[36]. - The Company holds a broad collection of intellectual property rights, which it believes is essential for differentiating its business[33].