The Company has entered into certain off–balance sheet commitments that require the future purchase of goods or services (“unconditional purchase obligations”). The Company’s unconditional purchase obligations primarily consist of supplier arrangements, distribution rights, and licensed intellectual property and content. Future payments under unconditional purchase obligations with a remaining term in excess of one year as of September 26, 2026, are as follows (in millions):

The 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 outcome of litigation is inherently uncertain. In the opinion of management, 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, concerning loss contingencies for asserted legal and other claims.

Although most components essential to the Company’s business are generally available from multiple sources, certain components are currently obtained from single or limited sources. The Company also competes for various components with other participants in the markets for smartphones, personal computers, tablets, wearables and accessories. Therefore, many components used by the Company, including those that are available from multiple sources, are at times subject to industry-wide shortages and significant commodity pricing fluctuations. For example, the Company is experiencing supply constraints and rising costs driven by industry-wide supply-demand imbalances for key components, including advanced semiconductors, memory and storage. These constraints adversely affect the Company’s ability to obtain sufficient quantities of components and products on commercially reasonable terms, or at all. The Company expects these trends to intensify for memory and storage components. Restrictions on international trade can increase the cost or limit the availability of the Company’s products and the components and rare earths and other raw materials that go into them.

The Company uses some custom components that are not commonly used by its competitors, and new products introduced by the Company often utilize custom components available from only one source. When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or their manufacturing capacities have increased. The Company has entered into agreements for the supply of many components; however, the Company may not be able to extend or renew agreements for the supply of components on similar terms, or at all, and may not be successful in obtaining sufficient quantities from its suppliers or in a timely manner, or in identifying and obtaining sufficient quantities from an alternative source. In addition, component suppliers may fail, be subject to consolidation within a particular industry, or decide to concentrate on the production of common components instead of components customized to meet the Company’s requirements, further limiting the Company’s ability to obtain sufficient quantities of components on commercially reasonable terms, or at all.

The Company’s business, including its artificial intelligence and machine learning offerings, also depends on access to sufficient compute capacity and storage resources. Demand for cloud compute and storage services and other artificial intelligence infrastructure has increased substantially across the technology industry, resulting in constrained supply, extended lead times, and increasing costs. In addition to its own data center infrastructure, the Company relies on third-party cloud service providers to meet these compute and storage needs. There are limited third-party providers that can reliably meet such demand, and the Company may be unable to secure sufficient capacity on commercially reasonable terms, or at all, to meet customer demand.