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0000320193
20161026
10-K
438
The Company uses derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
439
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
440
The Company is exposed to credit risk and fluctuations in the market values of its investment portfolio.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
441
Given the global nature of its business, the Company has both domestic and international investments.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
442
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
443
As a result, the value and liquidity of the Company’s cash, cash equivalents and marketable securities may fluctuate substantially.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
444
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
445
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
446
The Company distributes its products through third-party cellular network carriers, wholesalers, retailers and value-added resellers.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
447
The Company also sells its products directly to small and mid-sized businesses and education, enterprise and government customers.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
448
A substantial majority of the Company’s outstanding trade receivables are not covered by collateral, third-party financing arrangements or credit insurance.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
449
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
450
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
451
In addition, the Company has made prepayments associated with long-term supply agreements to secure supply of inventory components.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
452
As of September 24, 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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
453
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
454
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
455
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
456
Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
457
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
458
The Company is also subject to the examination of its tax returns and other tax matters by the U.S. Internal Revenue Service (the "IRS") and other tax authorities and governmental bodies.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
459
The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for taxes.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
460
There can be no assurance as to the outcome of these examinations.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
461
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
462
Apple Inc. | 2016 Form 10-K | 16 Item 1B.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
463
Unresolved Staff Comments None.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
464
Item 2.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
465
Properties The Company’s headquarters are located in Cupertino, California.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
466
As of September 24, 2016, the Company owned 7.1 million square feet and leased 22.3 million square feet of building space, primarily in the U.S. Additionally, the Company owned a total of 2,583 acres of land primarily in the U.S. As of September 24, 2016, the Company owned facilities and land for R&D, corporate functio...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
467
Outside the U.S., the Company owned additional facilities and land for various purposes.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
468
The Company believes its existing facilities and equipment, which are used by all operating segments, are in good operating condition and are suitable for the conduct of its business.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
469
The Company has invested in internal capacity and strategic relationships with outside manufacturing vendors and continues to make investments in capital equipment as needed to meet anticipated demand for its products.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
470
Item 3.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
471
Legal Proceedings The Company is subject to legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
472
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 in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
473
However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
474
Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be ma...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
475
See the risk factor “The Company could be impacted by unfavorable results of legal proceedings, such as being found to have infringed on intellectual property rights” in Part I, Item 1A of this Form 10-K under the heading “Risk Factors.” The Company settled certain matters during the fourth quarter of 2016 that did not...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
476
Item 4.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
477
Mine Safety Disclosures Not applicable.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
478
Apple Inc. | 2016 Form 10-K | 17 PART II Item 5.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
479
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common stock is traded on the NASDAQ Stock Market LLC (“NASDAQ”) under the symbol AAPL.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
480
Price Range of Common Stock The price range per share of common stock presented below represents the highest and lowest intraday sales prices for the Company’s common stock on the NASDAQ during each quarter of the two most recent years.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
481
Holders As of October 14, 2016, there were 25,641 shareholders of record.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
482
Dividends The Company paid a total of $12.0 billion and $11.4 billion in dividends during 2016 and 2015, respectively, and expects to pay quarterly dividends of $0.57 per common share each quarter, subject to declaration by the Board of Directors.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
483
The Company also plans to increase its dividend on an annual basis, subject to declaration by the Board of Directors.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
484
Apple Inc. | 2016 Form 10-K | 18 Purchases of Equity Securities by the Issuer and Affiliated Purchasers Share repurchase activity during the three months ended September 24, 2016 was as follows (in millions, except number of shares, which are reflected in thousands, and per share amounts): (1) In April 2016, the Compan...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
485
As of September 24, 2016, $133 billion of the $175 billion had been utilized.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
486
The remaining $42 billion in the table represents the amount available to repurchase shares under the authorized repurchase program as of September 24, 2016.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
487
The Company’s share repurchase program does not obligate it to acquire any specific number of shares.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
488
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
489
(2) In May 2016, the Company entered into an accelerated share repurchase arrangement ("ASR") to purchase up to $6.0 billion of the Company's common stock.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
490
In August 2016, the purchase period for this ASR ended and an additional 12.3 million shares were delivered and retired.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
491
In total, 60.5 million shares were delivered under this ASR at an average repurchase price of $99.25.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
492
(3) In August 2016, the Company entered into a new ASR to purchase up to $3.0 billion of the Company’s common stock.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
493
In exchange for an up-front payment of $3.0 billion, the financial institution party to the arrangement committed to deliver shares to the Company during the ASR’s purchase period, which will end in or before November 2016.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
494
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
495
Apple Inc. | 2016 Form 10-K | 19 Company Stock Performance The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend reinvested basis, for the Company, the S&P 500 Index, the S&P Information Technology Index and the Dow Jones U.S. Technology Supersector Index for the five y...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
496
The graph assumes $100 was invested in each of the Company’s common stock, the S&P 500 Index, the S&P Information Technology Index and the Dow Jones U.S. Technology Supersector Index as of the market close on September 23, 2011.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
497
Note that historic stock price performance is not necessarily indicative of future stock price performance.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
498
* $100 invested on 9/23/11 in stock or index, including reinvestment of dividends.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
499
Data points are the last day of each fiscal year for the Company’s common stock and September 30th for indexes.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
500
Copyright© 2016 S&P, a division of McGraw Hill Financial.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
501
All rights reserved.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
502
Copyright© 2016 Dow Jones & Co. All rights reserved.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
503
Apple Inc. | 2016 Form 10-K | 20 Item 6.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
504
Selected Financial Data The information set forth below for the five years ended September 24, 2016, is not necessarily indicative of results of future operations, and should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the cons...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
505
(1) Includes current and long-term portion of term debt.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
506
(2) Other long-term obligations excludes non-current deferred revenue.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
507
Apple Inc. | 2016 Form 10-K | 21 Item 7.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
508
Management’s Discussion and Analysis of Financial Condition and Results of Operations This section and other parts of this Annual Report on Form 10-K (“Form 10-K”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
509
Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
510
Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
511
Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
512
Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors,” which are incorporated herein by reference.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
513
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in Part II, Item 8 of this Form 10-K. All information presented herein is based on the Company’s fiscal calendar.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
514
Unless otherwise stated, references to particular years, quarters, months or periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
515
Each of the terms the “Company” and “Apple” as used herein refers collectively to Apple Inc. and its wholly-owned subsidiaries, unless otherwise stated.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
516
The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
517
Overview and Highlights The Company designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
518
The Company’s products and services include iPhone®, iPad®, Mac®, iPod®, Apple Watch®, Apple TV®, a portfolio of consumer and professional software applications, iOS, macOS™, watchOS® and tvOS™ operating systems, iCloud®, Apple Pay® and a variety of accessory, service and support offerings.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
519
The Company sells and delivers digital content and applications through the iTunes Store®, App Store®, Mac App Store, TV App Store, iBooks Store™ and Apple Music® (collectively “Internet Services”).
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
520
The Company sells its products worldwide through its retail stores, online stores and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers and value-added resellers.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
521
In addition, the Company sells a variety of third-party Apple compatible products, including application software and various accessories through its retail and online stores.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
522
The Company sells to consumers, small and mid-sized businesses and education, enterprise and government customers.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
523
Fiscal 2016 Highlights Net sales declined 8% or $18.1 billion during 2016 compared to 2015, primarily driven by a year-over-year decrease in iPhone net sales and the effect of weakness in most foreign currencies relative to the U.S. dollar, partially offset by an increase in Services.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
524
In April 2016, the Company announced a significant increase to its capital return program by raising the expected total size of the program from $200 billion to $250 billion through March 2018.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
525
This included increasing its share repurchase authorization from $140 billion to $175 billion and raising its quarterly dividend from $0.52 to $0.57 per share beginning in May 2016.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
526
During 2016, the Company spent $29.0 billion to repurchase shares of its common stock and paid dividends and dividend equivalents of $12.2 billion.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
527
Additionally, the Company issued $23.9 billion of U.S. dollar-denominated term debt and A$1.4 billion of Australian dollar-denominated term debt during 2016.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
528
Fiscal 2015 Highlights Net sales rose 28% or $50.9 billion during 2015 compared to 2014, driven by a year-over-year increase in iPhone net sales.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
529
iPhone net sales and unit sales in 2015 increased in all of the Company’s reportable operating segments.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
530
The Company also experienced year-over-year net sales increases in Mac, Services and Other Products.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
531
Apple Watch, which launched during the third quarter of 2015, accounted for more than 100% of the year-over-year growth in net sales of Other Products.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
532
Net sales growth during 2015 was partially offset by the effect of weakness in most foreign currencies relative to the U.S. dollar and lower iPad net sales.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
533
Total net sales increased in each of the Company’s reportable operating segments, with particularly strong growth in Greater China where year-over-year net sales increased 84%.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
534
In April 2015, the Company announced a significant increase to its capital return program by raising the expected total size of the program to $200 billion through March 2017.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
535
This included increasing its share repurchase authorization to $140 billion and raising its quarterly dividend to $0.52 per share beginning in May 2015.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
536
During 2015, the Company spent $36.0 billion to repurchase shares of its common stock and paid dividends and dividend equivalents of $11.6 billion.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
537
Additionally, the Company issued $14.5 billion of U.S. dollar-denominated, €4.8 billion of euro-denominated, SFr1.3 billion of Swiss franc-denominated, £1.3 billion of British pound-denominated, A$2.3 billion of Australian dollar-denominated and ¥250.0 billion of Japanese yen-denominated term debt during 2015.
0001628280-16-020309/full-submission.txt