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0000320193
20160727
10-Q
614
Moreover, if a computer security breach affects the Company’s systems or results in the unauthorized release of PII, the Company’s reputation and brand could be materially damaged, use of the Company’s products and services could decrease, and the Company could be exposed to a risk of loss or litigation and possible li...
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
615
While the Company maintains insurance coverage that, subject to policy terms and conditions and subject to a significant self-insured retention, is designed to address certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise in the continually...
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
616
The Company is also subject to payment card association rules and obligations under its contracts with payment card processors.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
617
Under these rules and obligations, if information is compromised, the Company could be liable to payment card issuers for associated expenses and penalties.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
618
In addition, if the Company fails to follow payment card industry security standards, even if no customer information is compromised, the Company could incur significant fines or experience a significant increase in payment card transaction costs.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
619
The Company’s business is subject to a variety of U.S. and international laws, rules, policies and other obligations regarding data protection.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
620
The Company is subject to federal, state and international laws relating to the collection, use, retention, security and transfer of PII.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
621
In many cases, these laws apply not only to third-party transactions, but also may restrict transfers of PII among the Company and its international subsidiaries.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
622
Several jurisdictions have passed laws in this area, and other jurisdictions are considering imposing additional restrictions.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
623
These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
624
Complying with emerging and changing international requirements may cause the Company to incur substantial costs or require the Company to change its business practices.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
625
Noncompliance could result in significant penalties or legal liability.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
626
The Company makes statements about its use and disclosure of PII through its privacy policy, information provided on its website and press statements.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
627
Any failure by the Company to comply with these public statements or with other federal, state or international privacy-related or data protection laws and regulations could result in proceedings against the Company by governmental entities or others.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
628
Penalties could include ongoing audit requirements or significant legal liability.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
629
The Company’s success depends largely on the continued service and availability of key personnel.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
630
Much of the Company’s future success depends on the continued availability and service of key personnel, including its Chief Executive Officer, executive team and other highly skilled employees.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
631
Experienced personnel in the technology industry are in high demand and competition for their talents is intense, especially in Silicon Valley, where most of the Company’s key personnel are located.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
632
The Company’s business may be impacted by political events, war, terrorism, public health issues, natural disasters and other business interruptions.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
633
War, terrorism, geopolitical uncertainties, public health issues and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a material adverse effect on the Company, its suppliers, logistics providers, manufacturing vendors and...
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
634
The Company’s business operations are subject to interruption by, among others, natural disasters, whether as a result of climate change or otherwise, fire, power shortages, nuclear power plant accidents, terrorist attacks and other hostile acts, labor disputes, public health issues and other events beyond its control.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
635
Such events could decrease demand for the Company’s products, make it difficult or impossible for the Company to make and deliver products to its customers, including channel partners, or to receive components from its suppliers, and create delays and inefficiencies in the Company’s supply chain.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
636
Should major public health issues, including pandemics, arise, the Company could be adversely affected by more stringent employee travel restrictions, additional limitations in freight services, governmental actions limiting the movement of products between regions, delays in production ramps of new products and disrup...
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
637
The majority of the Company’s R&D activities, its corporate headquarters, information technology systems and other critical business operations, including certain component suppliers and manufacturing vendors, are in locations that could be affected by natural disasters.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
638
In the event of a natural disaster, the Company could incur significant losses, require substantial recovery time and experience significant expenditures in order to resume operations.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
639
The Company expects its quarterly revenue and operating results to fluctuate.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
640
The Company’s profit margins vary across its products and distribution channels.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
641
The Company’s software, accessories, and service and support contracts generally have higher gross margins than certain of the Company’s other products.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
642
Gross margins on the Company’s hardware products vary across product lines and can change over time as a result of product transitions, pricing and configuration changes, and component, warranty, and other cost fluctuations.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
643
The Company’s direct sales generally have higher associated gross margins than its indirect sales through its channel partners.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
644
In addition, the Company’s gross margin and operating margin percentages, as well as overall profitability, may be materially adversely impacted as a result of a shift in product, geographic or channel mix, component cost increases, the strengthening U.S. dollar, price competition, or the introduction of new products, ...
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
645
The Company has typically experienced higher net sales in its first quarter compared to other quarters due in part to seasonal holiday demand.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
646
Additionally, new product introductions can significantly impact net sales, product costs and operating expenses.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
647
Further, the Company generates a majority of its net sales from a single product and a decline in demand for that product could significantly impact quarterly net sales.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
648
The Company could also be subject to unexpected developments late in a quarter, such as lower-than-anticipated demand for the Company’s products, issues with new product introductions, an internal systems failure, or failure of one of the Company’s logistics, components supply, or manufacturing partners.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
649
The Company’s stock price is subject to volatility.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
650
The Company’s stock price has experienced substantial price volatility in the past and may continue to do so in the future.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
651
Additionally, the Company, the technology industry and the stock market as a whole have experienced extreme stock price and volume fluctuations that have affected stock prices in ways that may have been unrelated to these companies’ operating performance.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
652
Price volatility over a given period may cause the average price at which the Company repurchases its own stock to exceed the stock’s price at a given point in time.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
653
The Company believes its stock price should reflect expectations of future growth and profitability.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
654
The Company also believes its stock price should reflect expectations that its cash dividend will continue at current levels or grow and that its current share repurchase program will be fully consummated.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
655
Future dividends are subject to declaration by the Company’s Board of Directors, and the Company’s share repurchase program does not obligate it to acquire any specific number of shares.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
656
If the Company fails to meet expectations related to future growth, profitability, dividends, share repurchases or other market expectations, its stock price may decline significantly, which could have a material adverse impact on investor confidence and employee retention.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
657
The Company’s financial performance is subject to risks associated with changes in the value of the U.S. dollar versus local currencies.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
658
The Company’s primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar-denominated sales and operating expenses worldwide.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
659
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 earnings, and generally leads the Company to raise international pricing, potentially reducing demand for the Company’s products.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
660
Margins on sales of the Company’s products in foreign countries and on sales of products that include components obtained from foreign suppliers, could be materially adversely affected by foreign currency exchange rate fluctuations.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
661
In some circumstances, for competitive or other reasons, the Company may decide not to raise local prices to fully offset the dollar’s strengthening, or at all, which would adversely affect the U.S. dollar value of the Company’s foreign currency-denominated sales and earnings.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
662
Conversely, a strengthening of foreign currencies relative to the U.S. dollar, while generally beneficial to the Company’s foreign currency-denominated sales and earnings, could cause the Company to reduce international pricing and incur losses on its foreign currency derivative instruments, thereby limiting the benefi...
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
663
Additionally, strengthening of foreign currencies may also increase the Company’s cost of product components denominated in those currencies, thus adversely affecting gross margins.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
664
The Company uses derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
665
The use of such hedging activities may not offset any, or more than a portion, of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
666
The Company is exposed to credit risk and fluctuations in the market values of its investment portfolio.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
667
Given the global nature of its business, the Company has both domestic and international investments.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
668
Credit ratings and pricing of the Company’s investments can be negatively affected by liquidity, credit deterioration, financial results, economic risk, political risk, sovereign risk or other factors.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
669
As a result, the value and liquidity of the Company’s cash, cash equivalents and marketable securities may fluctuate substantially.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
670
Therefore, although the Company has not realized any significant losses on its cash, cash equivalents and marketable securities, future fluctuations in their value could result in a significant realized loss.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
671
The Company is exposed to credit risk on its trade accounts receivable, vendor non-trade receivables and prepayments related to long-term supply agreements, and this risk is heightened during periods when economic conditions worsen.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
672
The Company distributes its products through third-party cellular network carriers, wholesalers, retailers and value-added resellers.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
673
The Company also sells its products directly to small and mid-sized businesses and education, enterprise and government customers.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
674
A substantial majority of the Company’s outstanding trade receivables are not covered by collateral, third-party financing arrangements or credit insurance.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
675
The Company’s exposure to credit and collectability risk on its trade receivables is higher in certain international markets and its ability to mitigate such risks may be limited.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
676
The Company also has unsecured vendor non-trade receivables resulting from purchases of components by outsourcing partners and other vendors that manufacture sub-assemblies or assemble final products for the Company.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
677
In addition, the Company has made prepayments associated with long-term supply agreements to secure supply of inventory components.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
678
As of June 25, 2016, a significant portion of the Company’s trade receivables was concentrated within cellular network carriers, and its vendor non-trade receivables and prepayments related to long-term supply agreements were concentrated among a few individual vendors located primarily in Asia.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
679
While the Company has procedures to monitor and limit exposure to credit risk on its trade 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 avoid losses.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
680
The Company could be subject to changes in its tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
681
The Company is subject to taxes in the U.S. and numerous foreign jurisdictions, including Ireland, where a number of the Company’s subsidiaries are organized.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
682
Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
683
The Company’s effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation, including in the U.S. and Ireland.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
684
For example, in June 2014, the European Commission opened a formal investigation of Ireland to examine whether decisions by the tax authorities with regard to the corporate income tax to be paid by two of the Company’s Irish subsidiaries comply with European Union rules on state aid.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
685
If the European Commission were to conclude against Ireland, it could require Ireland to recover from the Company past taxes covering a period of up to 10 years reflective of the disallowed state aid, and such amount could be material.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
686
The Company is also subject to the examination of its tax returns and other tax matters by the Internal Revenue Service and other tax authorities and governmental bodies.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
687
The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for taxes.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
688
There can be no assurance as to the outcome of these examinations.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
689
If the Company’s effective tax rates were to increase, particularly in the U.S. or Ireland, or if the ultimate determination of the Company’s taxes owed is for an amount in excess of amounts previously accrued, the Company’s financial condition, operating results and cash flows could be adversely affected.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
690
Item 2.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
691
Unregistered Sales of Equity Securities and Use of Proceeds Recent Sales of Unregistered Securities On May 23, 2016, the Company issued 120,426 shares of its common stock to an individual in connection with the Company's acquisition of all the outstanding shares of a company.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
692
The sale of these securities was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
693
Purchases of Equity Securities by the Issuer and Affiliated Purchasers Share repurchase activity during the three months ended June 25, 2016 was as follows (in millions, except number of shares, which are reflected in thousands, and per share amounts): (1) In 2012, the Company’s Board of Directors authorized a program ...
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
694
The Company’s Board of Directors increased the authorization to repurchase the Company’s common stock to $60 billion in April 2013, to $90 billion in April 2014, to $140 billion in April 2015 and to $175 billion in April 2016.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
695
As of June 25, 2016, $127 billion of the $175 billion had been utilized.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
696
The remaining $48 billion in the table represents the amount available to repurchase shares under the authorized repurchase program as of June 25, 2016.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
697
The Company’s share repurchase program does not obligate it to acquire any specific number of shares.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
698
Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
699
(2) In November 2015, the Company entered into an accelerated share repurchase arrangement (“ASR") to purchase up to $3.0 billion of the Company’s common stock.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
700
In April 2016, the purchase period for this ASR ended and an additional 8.7 million shares were delivered and retired.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
701
In total, 29.1 million net shares were delivered under this ASR at an average repurchase price of $103.02.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
702
(3) In May 2016, the Company entered into a new ASR to purchase up to $6.0 billion of the Company’s common stock.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
703
In exchange for up-front payments totaling $6.0 billion, the financial institutions party to the arrangement committed to deliver shares to the Company during the ASR’s purchase period, which will end in or before August 2016.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
704
The total number of shares ultimately delivered, and therefore the average price paid per share, will be determined at the end of the applicable purchase period based on the volume weighted-average price of the Company’s common stock during that period.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
705
Item 3.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
706
Defaults Upon Senior Securities None.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
707
Item 4.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
708
Mine Safety Disclosures Not applicable.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
709
Item 5.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
710
Other Information None.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
711
Item 6.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
712
Exhibits Index to Exhibits (1) Incorporated by Reference Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date 4.1 Officer’s Certificate of the Registrant, dated as of June 22, 2016, including forms of global notes representing 4.15% Notes due 2046.
0001628280-16-017809/full-submission.txt
0000320193
20160727
10-Q
713
8-K 4.1 6/22/16 31.1* Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.
0001628280-16-017809/full-submission.txt