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0000320193
20151028
10-K
1,052
In major states and major foreign jurisdictions, the years subsequent to 2003 generally remain open and could be subject to examination by the taxing authorities.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,053
Management believes that an adequate provision has been made for any adjustments that may result from tax examinations.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,054
However, the outcome of tax audits cannot be predicted with certainty.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,055
If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,056
Although timing of the resolution and/or closure of audits is not certain, the Company does not believe it is reasonably possible that its unrecognized tax benefits would materially change in the next 12 months.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,057
On June 11, 2014, the European Commission issued an opening decision initiating a formal investigation against Ireland for alleged state aid to the Company.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,058
The opening decision concerns the allocation of profits for taxation purposes of the Irish branches of two subsidiaries of the Company.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,059
The Company believes the European Commission’s assertions are without merit.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,060
If the European Commission were to conclude against Ireland, the European Commission could require Ireland to recover from the Company past taxes covering a period of up to 10 years reflective of the disallowed state aid.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,061
While such amount could be material, as of September 26, 2015 the Company is unable to estimate the impact.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,062
Note 6 - Debt Commercial Paper In 2014, the Board of Directors authorized the Company to issue unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,063
The Company intends to use net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,064
As of September 26, 2015 and September 27, 2014, the Company had $8.5 billion and $6.3 billion of Commercial Paper outstanding, respectively, with a weighted-average interest rate of 0.14% and 0.12%, respectively, and maturities generally less than nine months.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,065
The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for 2015 and 2014 (in millions): Long-Term Debt As of September 26, 2015, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $55.7 bil...
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,066
The Notes are senior unsecured obligations, and interest is payable in arrears, quarterly for the U.S. dollar-denominated and Australian dollar-denominated floating-rate notes, semi-annually for the U.S. dollar-denominated, Australian dollar-denominated, British pound-denominated and Japanese yen-denominated fixed-rate...
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,067
Apple Inc. | 2015 Form 10-K | 57 The following table provides a summary of the Company’s term debt as of September 26, 2015 and September 27, 2014: To manage foreign currency risk associated with the euro-denominated notes issued in the first quarter of 2015 and the British pound-denominated, Australian dollar-denomina...
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,068
Apple Inc. | 2015 Form 10-K | 58 To manage interest rate risk on the U.S. dollar-denominated fixed-rate notes issued in the second quarter of 2015 and maturing in 2020 and 2022, the Company entered into interest rate swaps with an aggregate notional amount of $2.5 billion.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,069
To manage interest rate risk on the U.S. dollar-denominated fixed-rate notes issued in the third quarter of 2015 and maturing in 2017, 2020, 2022 and 2025, the Company entered into interest rate swaps with an aggregate notional amount of $4.3 billion.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,070
These interest rate swaps effectively converted the fixed interest rates on the U.S. dollar-denominated notes to a floating interest rate.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,071
As of September 26, 2015, ¥250.0 billion of the Japanese yen-denominated notes was designated as a hedge of the foreign currency exposure of its net investment in a foreign operation.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,072
The foreign currency transaction gain or loss on the Japanese yen-denominated debt designated as a hedge is recorded in OCI as a part of the cumulative translation adjustment.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,073
As of September 26, 2015, the carrying value of the debt designated as a net investment hedge was $2.1 billion.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,074
For further discussion regarding the Company’s use of derivative instruments see the Derivative Financial Instruments section of Note 2, “Financial Instruments.” The effective interest rates for the Notes include the interest on the Notes, amortization of the discount and, if applicable, adjustments related to hedging.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,075
The Company recognized $722 million, $381 million and $136 million of interest expense on its term debt for 2015, 2014 and 2013, respectively.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,076
The future principal payments for the Company’s Notes as of September 26, 2015 are as follows (in millions): As of September 26, 2015 and September 27, 2014, the fair value of the Company’s Notes, based on Level 2 inputs, was $54.9 billion and $28.5 billion, respectively.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,077
Note 7 - Shareholders’ Equity Dividends The Company declared and paid cash dividends per share during the periods presented as follows: Future dividends are subject to declaration by the Board of Directors.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,078
Apple Inc. | 2015 Form 10-K | 59 Share Repurchase Program In the third quarter of 2015, the Company’s Board of Directors increased the share repurchase authorization to $140 billion of the Company’s common stock, of which $104 billion had been utilized as of September 26, 2015.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,079
The Company’s share repurchase program does not obligate it to acquire any specific number of shares.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,080
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 Securities Exchange Act of 1934, as amended (the “Exchange Act”).
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,081
The Company has entered, and in the future may enter, into accelerated share repurchase arrangements (“ASRs”) with financial institutions.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,082
In exchange for up-front payments, the financial institutions deliver shares of the Company’s common stock during the purchase periods of each ASR.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,083
The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, is determined at the end of the applicable purchase period of each ASR based on the volume weighted-average price of the Company’s common stock during that period.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,084
The shares received are retired in the periods they are delivered, and the up-front payments are accounted for as a reduction to shareholders’ equity in the Company’s Consolidated Balance Sheets in the periods the payments are made.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,085
The Company reflects the ASRs as a repurchase of common stock in the period delivered for purposes of calculating earnings per share and as forward contracts indexed to its own common stock.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,086
The ASRs met all of the applicable criteria for equity classification, and therefore were not accounted for as derivative instruments.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,087
The following table shows the Company’s ASR activity and related information during the years ended September 26, 2015 and September 27, 2014: (1) Includes 38.3 million shares delivered and retired at the beginning of the purchase period, which began in the third quarter of 2015 and 10.0 million shares delivered and re...
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,088
(2) Includes 59.9 million shares delivered and retired at the beginning of the purchase period, which began in the fourth quarter of 2014, 8.3 million net shares delivered and retired in the first quarter of 2015 and 13.3 million shares delivered and retired at the end of the purchase period, which concluded in the sec...
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,089
Additionally, the Company repurchased shares of its common stock in the open market, which were retired upon repurchase, during the periods presented as follows: Apple Inc. | 2015 Form 10-K | 60 Note 8 - Comprehensive Income Comprehensive income consists of two components, net income and OCI.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,090
OCI refers to revenue, expenses, and gains and losses that under GAAP are recorded as an element of shareholders’ equity but are excluded from net income.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,091
The Company’s OCI consists of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency, net deferred gains and losses on certain derivative instruments accounted for as cash flow hedges and unrealized gains and losses on marketable securities classified as ...
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,092
The following table shows the pre-tax amounts reclassified from AOCI into the Consolidated Statements of Operations, and the associated financial statement line item, for 2015 and 2014 (in millions): The following table shows the changes in AOCI by component for 2015 (in millions): Apple Inc. | 2015 Form 10-K | 61 Note...
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,093
The 2014 Plan provides for broad-based equity grants to employees, including executive officers, and permits the granting of RSUs, stock grants, performance-based awards, stock options and stock appreciation rights, as well as cash bonus awards.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,094
RSUs granted under the 2014 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 one-for-one basis.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,095
Each share issued with respect to RSUs granted under the 2014 Plan reduces the number of shares available for grant under the plan by two shares.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,096
RSUs cancelled and shares withheld to satisfy tax withholding obligations increase the number of shares available for grant under the 2014 Plan utilizing a factor of two times the number of RSUs cancelled or shares withheld.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,097
Currently, all RSUs granted under the 2014 Plan have dividend equivalent rights (“DERs”), which entitle holders of RSUs to the same dividend value per share as holders of common stock.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,098
DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,099
DERs are accumulated and paid when the underlying shares vest.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,100
Upon approval of the 2014 Plan, the Company reserved 385 million shares plus the number of shares remaining that were reserved but not issued under the 2003 Plan.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,101
Shares subject to outstanding awards under the 2003 Plan that expire, are cancelled or otherwise terminate, or are withheld to satisfy tax withholding obligations with respect to RSUs, will also be available for awards under the 2014 Plan.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,102
As of September 26, 2015, approximately 442.9 million shares were reserved for future issuance under the 2014 Plan.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,103
2003 Employee Stock Plan The 2003 Plan is a shareholder approved plan that provided for broad-based equity grants to employees, including executive officers.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,104
The 2003 Plan permitted the granting of incentive stock options, nonstatutory stock options, RSUs, stock appreciation rights, stock purchase rights and performance-based awards.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,105
Options granted under the 2003 Plan generally expire seven to ten years after the grant date and generally become exercisable over a period of four years, based on continued employment, with either annual, semi-annual or quarterly vesting.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,106
RSUs granted under the 2003 Plan generally vest over two to four years, based on continued employment and are settled upon vesting in shares of the Company’s common stock on a one-for-one basis.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,107
All RSUs, other than RSUs held by the Chief Executive Officer, granted under the 2003 Plan have DERs.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,108
DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,109
DERs are accumulated and paid when the underlying shares vest.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,110
In the second quarter of 2014, the Company terminated the authority to grant new awards under the 2003 Plan.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,111
1997 Director Stock Plan The 1997 Director Stock Plan (the “Director Plan”) is a shareholder approved plan that (i) permits the Company to grant awards of RSUs or stock options to the Company’s non-employee directors, (ii) provides for automatic initial grants of RSUs upon a non-employee director joining the Board of D...
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,112
Each share issued with respect to RSUs granted under the Director Plan reduces the number of shares available for grant under the plan by two shares.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,113
The Director Plan expires November 9, 2019.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,114
All RSUs granted under the Director Plan are entitled to DERs.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,115
DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,116
DERs are accumulated and paid when the underlying shares vest.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,117
As of September 26, 2015, approximately 1.2 million shares were reserved for future issuance under the Director Plan.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,118
Rule 10b5-1 Trading Plans During the fourth quarter of 2015, Section 16 officers Timothy D. Cook, Angela Ahrendts, Luca Maestri, Daniel Riccio, Philip Schiller and Jeffrey Williams had equity trading plans in place in accordance with Rule 10b5-1(c)(1) under the Exchange Act.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,119
An equity trading plan is a written document that pre-establishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including shares acquired pursuant to the Company’s employee and director equity plans.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,120
Employee Stock Purchase Plan The Employee Stock Purchase Plan (the “Purchase Plan”) is a shareholder approved plan under which substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or...
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,121
An employee’s payroll deductions under the Purchase Plan are limited to 10% of the employee’s compensation and employees may not purchase more than $25,000 of stock during any calendar year.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,122
As of September 26, 2015, approximately 53.0 million shares were reserved for future issuance under the Purchase Plan.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,123
Apple Inc. | 2015 Form 10-K | 62 401(k) Plan The Company’s 401(k) Plan is a deferred salary arrangement under Section 401(k) of the Internal Revenue Code.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,124
Under the 401(k) Plan, participating U.S. employees may defer a portion of their pre-tax earnings, up to the IRS annual contribution limit ($18,000 for calendar year 2015).
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,125
The Company matches 50% to 100% of each employee’s contributions, depending on length of service, up to a maximum 6% of the employee’s eligible earnings.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,126
The Company’s matching contributions to the 401(k) Plan were $200 million, $163 million and $135 million in 2015, 2014 and 2013, respectively.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,127
Restricted Stock Units A summary of the Company’s RSU activity and related information for 2015, 2014 and 2013, is as follows: The fair value as of the respective vesting dates of RSUs was $4.8 billion, $3.4 billion and $3.1 billion for 2015, 2014 and 2013, respectively.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,128
The majority of RSUs that vested in 2015, 2014 and 2013 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,129
The total shares withheld were approximately 14.1 million, 15.6 million and 15.5 million for 2015, 2014 and 2013, respectively, and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,130
Total payments for the employees’ tax obligations to taxing authorities were $1.6 billion, $1.2 billion and $1.1 billion in 2015, 2014 and 2013, respectively, and are reflected as a financing activity within the Consolidated Statements of Cash Flows.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,131
These net-share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,132
Stock Options The Company had 1.2 million stock options outstanding as of September 26, 2015, with a weighted-average exercise price per share of $15.08 and weighted-average remaining contractual term of 4.1 years, substantially all of which are exercisable.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,133
The aggregate intrinsic value of the stock options outstanding as of September 26, 2015 was $120 million, which represents the value of the Company’s closing stock price on the last trading day of the period in excess of the weighted-average exercise price multiplied by the number of options outstanding.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,134
Total intrinsic value of options at time of exercise was $479 million, $1.5 billion and $1.0 billion for 2015, 2014 and 2013, respectively.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,135
Apple Inc. | 2015 Form 10-K | 63 Share-based Compensation The following table shows a summary of the share-based compensation expense included in the Consolidated Statements of Operations for 2015, 2014 and 2013 (in millions): The income tax benefit related to share-based compensation expense was $1.2 billion, $1.0 bil...
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,136
As of September 26, 2015, the total unrecognized compensation cost related to outstanding stock options, RSUs and restricted stock was $6.8 billion, which the Company expects to recognize over a weighted-average period of 2.7 years.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,137
Note 10 - Commitments and Contingencies Accrued Warranty and Indemnification The following table shows changes in the Company’s accrued warranties and related costs for 2015, 2014 and 2013 (in millions): The Company generally does not indemnify end-users of its operating system and application software against legal cl...
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,138
Other agreements entered into by the Company sometimes include indemnification provisions under which the Company could be subject to costs and/or damages in the event of an infringement claim against the Company or an indemnified third-party.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,139
In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss with respect to indemnification of end-users of its operating system or application software for infringement of third-party intellectual property rights.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,140
The Company did not record a liability for infringement costs related to indemnification as of September 26, 2015 or September 27, 2014.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,141
In September 2015, the Company introduced the iPhone Upgrade Program, which is available to customers who purchase an iPhone 6s and 6s Plus in one of its U.S. physical retail stores and activate the purchased iPhone with one of the four national carriers.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,142
The iPhone Upgrade Program provides customers the right to trade in that iPhone for a new iPhone, provided certain conditions are met.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,143
One of the conditions of this program requires the customer to finance the initial purchase price of the iPhone with a third-party lender.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,144
Upon exercise of the trade-in right and purchase of a new iPhone, the Company satisfies the customer’s outstanding balance due to the third-party lender on the original device.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,145
The Company accounts for the trade-in right as a guarantee liability and recognizes arrangement revenue net of the fair value of such right with subsequent changes to the guarantee liability recognized within revenue.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,146
The Company has entered into indemnification agreements with its directors and executive officers.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,147
Under these agreements, the Company has agreed to indemnify such individuals to the fullest extent permitted by law against liabilities that arise by reason of their status as directors or officers and to advance expenses incurred by such individuals in connection with related legal proceedings.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,148
It is not possible to determine the maximum potential amount of payments the Company could be required to make under these agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each claim.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,149
However, the Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,150
Concentrations in the Available Sources of Supply of Materials and Product Although most components essential to the Company’s business are generally available from multiple sources, a number of components are currently obtained from single or limited sources.
0001193125-15-356351/full-submission.txt
0000320193
20151028
10-K
1,151
In addition, the Company competes for various components with other participants in the markets for mobile communication and media devices and personal computers.
0001193125-15-356351/full-submission.txt