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0000320193
20161026
10-K
938
When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use to price ...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
939
Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 - Quoted prices in active marke...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
940
Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
941
Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
942
Apple Inc. | 2016 Form 10-K | 48 The Company’s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
943
The valuation techniques used to measure the fair value of the Company’s debt instruments and all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observab...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
944
In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
945
The Company has not elected the fair value option for any eligible financial instruments.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
946
Foreign Currency Translation and Remeasurement The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
947
Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
948
Gains and losses from these translations are recognized in foreign currency translation included in AOCI in shareholders’ equity.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
949
The Company’s subsidiaries that use the U.S. dollar as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end of each period, and inventories, property and nonmonetary assets and liabilities at historical rates.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
950
Note 2 - Financial Instruments Cash, Cash Equivalents and Marketable Securities The following tables show the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short-...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
951
The maturities of the Company’s long-term marketable securities generally range from one to five years.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
952
The Company considers the declines in market value of its marketable securities investment portfolio to be temporary in nature.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
953
The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
954
The policy generally requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
955
Fair values were determined for each individual security in the investment portfolio.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
956
When evaluating an investment for other-than-temporary impairment the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and the Company’s intent to sell, or whet...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
957
As of September 24, 2016, the Company does not consider any of its investments to be other-than-temporarily impaired.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
958
Derivative Financial Instruments The Company may use derivatives to partially offset its business exposure to foreign currency and interest rate risk on expected future cash flows, on net investments in certain foreign subsidiaries and on certain existing assets and liabilities.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
959
However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
960
There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
961
To help protect gross margins from fluctuations in foreign currency exchange rates, certain of the Company’s subsidiaries whose functional currency is the U.S. dollar may hedge a portion of forecasted foreign currency revenue, and subsidiaries whose functional currency is not the U.S. dollar and who sell in local curre...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
962
The Company may enter into forward contracts, option contracts or other instruments to manage this risk and may designate these instruments as cash flow hedges.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
963
The Company typically hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
964
Apple Inc. | 2016 Form 10-K | 50 To help protect the net investment in a foreign operation from adverse changes in foreign currency exchange rates, the Company may enter into foreign currency forward and option contracts to offset the changes in the carrying amounts of these investments due to fluctuations in foreign c...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
965
In addition, the Company may use non-derivative financial instruments, such as its foreign currency-denominated debt, as economic hedges of its net investments in certain foreign subsidiaries.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
966
In both of these cases, the Company designates these instruments as net investment hedges.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
967
The Company may also enter into non-designated foreign currency contracts to partially offset the foreign currency exchange gains and losses generated by the re-measurement of certain assets and liabilities denominated in non-functional currencies.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
968
The Company may enter into interest rate swaps, options, or other instruments to manage interest rate risk.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
969
These instruments may offset a portion of changes in income or expense, or changes in fair value of the Company’s term debt or investments.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
970
The Company designates these instruments as either cash flow or fair value hedges.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
971
The Company’s hedged interest rate transactions as of September 24, 2016 are expected to be recognized within 10 years.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
972
Cash Flow Hedges The effective portions of cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
973
Deferred gains and losses associated with cash flow hedges of foreign currency revenue are recognized as a component of net sales in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of inventory purchases are recognized as a component of cost of sales in th...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
974
Deferred gains and losses associated with cash flow hedges of interest income or expense are recognized in other income/(expense), net in the same period as the related income or expense is recognized.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
975
The ineffective portions and amounts excluded from the effectiveness testing of cash flow hedges are recognized in other income/(expense), net.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
976
Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
977
Deferred gains and losses in AOCI associated with such derivative instruments are reclassified immediately into other income/(expense), net.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
978
Any subsequent changes in fair value of such derivative instruments are reflected in other income/(expense), net unless they are re-designated as hedges of other transactions.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
979
Net Investment Hedges The effective portions of net investment hedges are recorded in other comprehensive income (“OCI”) as a part of the cumulative translation adjustment.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
980
The ineffective portions and amounts excluded from the effectiveness testing of net investment hedges are recognized in other income/(expense), net.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
981
Fair Value Hedges Gains and losses related to changes in fair value hedges are recognized in earnings along with a corresponding loss or gain related to the change in value of the underlying hedged item.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
982
Non-Designated Derivatives Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
983
The Company records all derivatives in the Consolidated Balance Sheets at fair value.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
984
The Company’s accounting treatment for these derivative instruments is based on its hedge designation.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
985
The following tables show the Company’s derivative instruments at gross fair value as of September 24, 2016 and September 26, 2015 (in millions): Apple Inc. | 2016 Form 10-K | 51 (1) The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets in the Consolidat...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
986
(2) The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued expenses in the Consolidated Balance Sheets.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
987
The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow, net investment and fair value hedges on OCI and the Consolidated Statements of Operations for 2016, 2015 and 2014 (in millions): Apple Inc. | 2016 Form 10-K | 52 The following table...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
988
The credit risk amounts represent the Company’s gross exposure to potential accounting loss on derivative instruments that are outstanding or unsettled if all counterparties failed to perform according to the terms of the contract, based on then-current currency or interest rates at each respective date.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
989
The Company’s exposure to credit loss and market risk will vary over time as currency and interest rates change.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
990
Although the table above reflects the notional and credit risk amounts of the Company’s derivative instruments, it does not reflect the gains or losses associated with the exposures and transactions that the instruments are intended to hedge.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
991
The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
992
The Company generally enters into master netting arrangements, which are designed to reduce credit risk by permitting net settlement of transactions with the same counterparty.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
993
To further limit credit risk, the Company generally enters into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
994
The Company presents its derivative assets and derivative liabilities at their gross fair values in its Consolidated Balance Sheets.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
995
The net cash collateral received by the Company related to derivative instruments under its collateral security arrangements was $163 million as of September 24, 2016 and $1.0 billion as of September 26, 2015, which were recorded as accrued expenses in the Consolidated Balance Sheets.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
996
Under master netting arrangements with the respective counterparties to the Company’s derivative contracts, the Company is allowed to net settle transactions with a single net amount payable by one party to the other.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
997
As of September 24, 2016 and September 26, 2015, the potential effects of these rights of set-off associated with the Company’s derivative contracts, including the effects of collateral, would be a reduction to both derivative assets and derivative liabilities of $1.5 billion and $2.2 billion, respectively, resulting i...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
998
Accounts Receivable Trade Receivables The Company has considerable trade receivables outstanding with its third-party cellular network carriers, wholesalers, retailers, value-added resellers, small and mid-sized businesses and education, enterprise and government customers.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
999
The Company generally does not require collateral from its customers; however, the Company will require collateral in certain instances to limit credit risk.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,000
In addition, when possible, the Company attempts to limit credit risk on trade receivables with credit insurance for certain customers or by requiring third-party financing, loans or leases to support credit exposure.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,001
These credit-financing arrangements are directly between the third-party financing company and the end customer.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,002
As such, the Company generally does not assume any recourse or credit risk sharing related to any of these arrangements.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,003
As of September 24, 2016 and September 26, 2015, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 10% and 12%, respectively.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,004
The Company’s cellular network carriers accounted for 63% and 71% of trade receivables as of September 24, 2016 and September 26, 2015, respectively.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,005
Vendor Non-Trade Receivables The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these vendors who manufacture sub-assemblies or assemble final products for the Company.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,006
The Company purchases these components directly from suppliers.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,007
Vendor non-trade receivables from two of the Company’s vendors accounted for 47% and 21% of total vendor non-trade receivables as of September 24, 2016 and three of the Company’s vendors accounted for 38%, 18% and 14% of total vendor non-trade receivables as of September 26, 2015.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,008
Apple Inc. | 2016 Form 10-K | 53 Note 3 - Consolidated Financial Statement Details The following tables show the Company’s consolidated financial statement details as of September 24, 2016 and September 26, 2015 (in millions): Property, Plant and Equipment, Net Other Non-Current Liabilities Other Income/(Expense), Net ...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,009
The following table summarizes the components of gross and net acquired intangible asset balances as of September 24, 2016 and September 26, 2015 (in millions): Apple Inc. | 2016 Form 10-K | 54 Amortization expense related to acquired intangible assets was $1.5 billion, $1.3 billion and $1.1 billion in 2016, 2015 and 2...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,010
As of September 24, 2016, the remaining weighted-average amortization period for acquired intangible assets is 3.4 years.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,011
The expected annual amortization expense related to acquired intangible assets as of September 24, 2016, is as follows (in millions): Note 5 - Income Taxes The provision for income taxes for 2016, 2015 and 2014, consisted of the following (in millions): The foreign provision for income taxes is based on foreign pre-tax...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,012
The Company’s consolidated financial statements provide for any related tax liability on undistributed earnings that the Company does not intend to be indefinitely reinvested outside the U.S.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,013
Substantially all of the Company’s undistributed international earnings intended to be indefinitely reinvested in operations outside the U.S. were generated by subsidiaries organized in Ireland, which has a statutory tax rate of 12.5%.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,014
As of September 24, 2016, U.S. income taxes have not been provided on a cumulative total of $109.8 billion of such earnings.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,015
The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be $35.9 billion.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,016
As of September 24, 2016 and September 26, 2015, $216.0 billion and $186.9 billion, respectively, of the Company’s cash, cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,017
Amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S. Apple Inc. | 2016 Form 10-K | 55 A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate (35% in 2016, 2015 and 2014) to income before pro...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,018
For RSUs, the Company receives an income tax benefit upon the award’s vesting equal to the tax effect of the underlying stock’s fair market value.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,019
The Company had net excess tax benefits from equity awards of $379 million, $748 million and $706 million in 2016, 2015 and 2014, respectively, which were reflected as increases to common stock.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,020
As of September 24, 2016 and September 26, 2015, the significant components of the Company’s deferred tax assets and liabilities were (in millions): Deferred tax assets and liabilities reflect the effects of tax losses, credits and the future income tax effects of temporary differences between the consolidated financia...
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,021
Uncertain Tax Positions Tax positions are evaluated in a two-step process.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,022
The Company first determines whether it is more likely than not that a tax position will be sustained upon examination.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,023
If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,024
The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,025
The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as non-current liabilities in the Consolidated Balance Sheets.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,026
As of September 24, 2016, the total amount of gross unrecognized tax benefits was $7.7 billion, of which $2.8 billion, if recognized, would affect the Company’s effective tax rate.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,027
As of September 26, 2015, the total amount of gross unrecognized tax benefits was $6.9 billion, of which $2.5 billion, if recognized, would affect the Company’s effective tax rate.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,028
Apple Inc. | 2016 Form 10-K | 56 The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2016, 2015 and 2014, is as follows (in millions): The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,029
As of September 24, 2016 and September 26, 2015, the total amount of gross interest and penalties accrued was $1.0 billion and $1.3 billion, respectively, which is classified as non-current liabilities in the Consolidated Balance Sheets.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,030
In connection with tax matters, the Company recognized interest and penalty expense in 2016, 2015 and 2014 of $295 million, $709 million and $40 million, respectively.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,031
The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,032
During the fourth quarter of 2016, the Company reached a partial settlement with the U.S. Internal Revenue Service (the “IRS”) on its examination of the years 2010 through 2012.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,033
In connection with this settlement, the Company recognized a tax benefit in the fourth quarter of 2016 that was not significant to its consolidated financial statements.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,034
All years prior to 2013 are closed, except for the years 2010 through 2012 relating to R&D tax credits.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,035
In addition, the Company is subject to audits by state, local and foreign tax authorities.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,036
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.
0001628280-16-020309/full-submission.txt
0000320193
20161026
10-K
1,037
The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations.
0001628280-16-020309/full-submission.txt