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0000320193
20071115
10-K
1,236
The VAR model consisted of using a Monte Carlo simulation to generate 3,000 random market price paths.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,237
The VAR is the maximum expected loss in fair value, for a given confidence interval, to the Company's foreign exchange portfolio due to adverse movements in rates.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,238
The VAR model is not intended to represent actual losses but is used as a risk estimation and management tool.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,239
The model assumes normal market conditions.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,240
Forecasted transactions, firm commitments, and assets and liabilities denominated in foreign currencies were excluded from the model.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,241
Based on the results of the model, the Company estimates with 95% confidence a maximum one-day loss in fair value of $12.8 million as of September 29, 2007 compared to a maximum one-day loss of $9.2 million as of September 30, 2006.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,242
Because the Company uses foreign currency instruments for hedging purposes, losses incurred on those instruments are generally offset by increases in the fair value of the underlying exposures.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,243
Actual future gains and losses associated with the Company's investment portfolio and derivative positions may differ materially from the sensitivity analyses performed as of September 29, 2007 due to the inherent limitations associated with predicting the changes in the timing and amount of interest rates, foreign cur...
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,244
Item 8.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,245
Financial Statements and Supplementary Data Index to Consolidated Financial Statements Page Consolidated Balance Sheets as of September 29, 2007 and September 30, 2006 Consolidated Statements of Operations for the three fiscal years ended September 29, 2007 Consolidated Statements of Shareholders' Equity for the three ...
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,246
CONSOLIDATED BALANCE SHEETS (In millions, except share amounts) See accompanying Notes to Consolidated Financial Statements.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,247
CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except share and per share amounts) (1)Includes stock-based compensation expense, which was allocated as follows: See accompanying Notes to Consolidated Financial Statements.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,248
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except share amounts which are in thousands) See accompanying Notes to Consolidated Financial Statements.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,249
CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) See accompanying Notes to Consolidated Financial Statements.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,250
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1-Summary of Significant Accounting Policies Apple Inc. and its wholly-owned subsidiaries (collectively "Apple" or the "Company") design, manufacture, and market personal computers, portable digital music players, and mobile communication devices and sells a variety of re...
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,251
The Company sells its products worldwide through its online stores, its retail stores, its direct sales force, and third-party wholesalers, resellers, and value-added resellers.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,252
In addition, the Company sells a variety of third-party Mac, iPod and iPhone compatible products including application software, printers, storage devices, speakers, headphones, and various other accessories and supplies through its online and retail stores.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,253
The Company sells to education, consumer, creative professional, business, and government customers.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,254
Basis of Presentation and Preparation The accompanying consolidated financial statements include the accounts of the Company.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,255
Intercompany accounts and transactions have been eliminated.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,256
The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,257
Actual results could differ materially from those estimates.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,258
Certain prior year amounts in the consolidated financial statements and notes thereto have been reclassified to conform to the current year presentation.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,259
The Company's fiscal year is the 52 or 53-week period that ends on the last Saturday of September.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,260
The Company's first quarter of fiscal year 2007 contained 13 weeks and the first quarter of fiscal year 2006 contained 14 weeks.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,261
The Company's fiscal year 2007 ended on September 29, 2007 and included 52 weeks, while fiscal year 2006 included 53 weeks and fiscal year 2005 included 52 weeks.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,262
Unless otherwise stated, references to particular years or quarters refer to the Company's fiscal years ended in September and the associated quarters of those fiscal years.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,263
Financial Instruments Cash Equivalents and Short-term Investments All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,264
Highly liquid investments with maturities greater than three months at the date of purchase are classified as short-term investments.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,265
The Company's debt and marketable equity securities have been classified and accounted for as available-for-sale.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,266
Management determines the appropriate classification of its investments in debt and marketable equity securities at the time of purchase and reevaluates the available-for-sale designations as of each balance sheet date.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,267
These securities are carried at fair value, with the unrealized gains and losses, net of taxes, reported as a component of shareholders' equity.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,268
The cost of securities sold is based upon the specific identification method.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,269
Derivative Financial Instruments The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,270
Derivatives that are not defined as hedges in Statement of Financial Accounting Standards ("SFAS") No.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,271
133, Accounting for Derivative Instruments and Hedging Activities, as amended, must be adjusted to fair value through earnings.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,272
For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income in shareholders' equity and reclassified in...
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,273
The ineffective portion of the gain or loss on the derivative instrument is recognized in current earnings.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,274
To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,275
For derivative instruments that hedge the exposure to changes in the fair value of an asset or a liability and that are designated as fair value hedges, the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in earnings ...
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,276
The net gain or loss on the effective portion of a derivative instrument that is designated as an economic hedge of the foreign currency translation exposure of the net investment in a foreign operation is reported in the same manner as a foreign currency translation adjustment.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,277
For forward contracts designated as net investment hedges, the Company excludes changes in fair value relating to changes in the forward carry component from its definition of effectiveness.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,278
Accordingly, any gains or losses related to this component are recognized in current earnings.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,279
Inventories Inventories are stated at the lower of cost, computed using the first-in, first-out method, or market.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,280
If the cost of the inventories exceeds their market value, provisions are made currently for the difference between the cost and the market value.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,281
The Company's inventories consist primarily of finished goods for all periods presented.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,282
Property, Plant, and Equipment Property, plant, and equipment are stated at cost.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,283
Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building, up to 5 years for equipment, and the shorter of lease terms or 10 years for leasehold improvements.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,284
The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,285
Capitalized costs related to internal-use software are amortized using the straight-line method over the estimated useful lives of the assets, which range from 3 to 5 years.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,286
Depreciation and amortization expense on property and equipment was $249 million, $180 million, and $141 million during 2007, 2006, and 2005, respectively.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,287
Asset Retirement Obligations The Company records obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs in accordance with SFAS No.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,288
143, Accounting for Asset Retirement Obligations.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,289
The Company reviews legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal use of the assets.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,290
If it is determined that a legal obligation exists, the fair value of the liability for an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,291
The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,292
The difference between the gross expected future cash flow and its present value is accreted over the life of the related lease as an operating expense.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,293
All of the Company's existing asset retirement obligations are associated with commitments to return property subject to operating leases to original condition upon lease termination.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,294
The Company's asset retirement liability was $18 million and $15 million as of September 29, 2007 and September 30, 2006, respectively.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,295
Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets The Company reviews property, plant, and equipment and certain identifiable intangibles, excluding goodwill, for impairment in accordance with SFAS No.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,296
144, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,297
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,298
Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted cash flows the assets are expected to generate.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,299
If property, plant, and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair market value.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,300
The Company did not record any material impairments during 2007, 2006, and 2005.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,301
SFAS No.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,302
142, Goodwill and Other Intangible Assets requires that goodwill and intangible assets with indefinite useful lives should not be amortized but rather be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that they may be impaired.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,303
The Company performs its goodwill impairment tests on or about August 31 of each year.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,304
The Company did not recognize any goodwill or intangible asset impairment charges in 2007, 2006, or 2005.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,305
The Company established reporting units based on its current reporting structure.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,306
For purposes of testing goodwill for impairment, goodwill has been allocated to these reporting units to the extent it relates to each reporting unit.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,307
SFAS No.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,308
142 also requires that intangible assets with definite lives be amortized over their estimated useful lives and reviewed for impairment in accordance with SFAS No.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,309
144.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,310
The Company is currently amortizing its acquired intangible assets with definite lives over periods ranging from 2 to 10 years.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,311
Foreign Currency Translation The Company translates the assets and liabilities of its international non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,312
Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,313
Gains and losses from these translations are credited or charged to foreign currency translation included in "accumulated other comprehensive income" in shareholders' equity.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,314
The Company's foreign manufacturing subsidiaries and certain other international 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 histor...
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,315
Gains and losses from these translations were insignificant and have been included in the Company's results of operations.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,316
Revenue Recognition Net sales consist primarily of revenue from the sale of hardware, software, music products, digital content, peripherals, and service and support contracts.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,317
For any product within these groups that either is software, or is considered software-related in accordance with the guidance in Emerging Issues Task Force ("EITF") No.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,318
03-5, Applicability of AICPA Statement of Position 97-2 to Non-Software Deliverables in an Arrangement Containing More-Than-Incidental Software (e.g., Macintosh computers and iPod portable digital music players), the Company accounts for such products in accordance with the revenue recognition provisions of American In...
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,319
97-2, Software Revenue Recognition.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,320
The Company applies Staff Accounting Bulletin ("SAB") No.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,321
104, Revenue Recognition, for products that are not software or software-related, such as digital content sold on the iTunes Store and certain Mac, iPod and iPhone supplies and accessories.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,322
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,323
Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,324
For most of the Company's product sales, these criteria are met at the time the product is shipped.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,325
For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company legally retains a portion of the risk of loss on these sales during transit.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,326
If at the outset of an arrangement the Company determines the arrangement fee is not, or is presumed not to be, fixed or determinable, revenue is deferred and subsequently recognized as amounts become due and payable.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,327
Revenue from service and support contracts is deferred and recognized ratably over the service coverage periods.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,328
These contracts typically include extended phone support, repair services, web-based support resources, diagnostic tools, and extend the service coverage offered under the Company's one-year limited warranty.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,329
The Company sells software and peripheral products obtained from other companies.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,330
The Company establishes its own pricing and retains related inventory risk, is the primary obligor in sales transactions with its customers, and assumes the credit risk for amounts billed to its customers.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,331
Accordingly, the Company recognizes revenue for the sale of products obtained from other companies based on the gross amount billed.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,332
The Company accounts for multiple element arrangements that consist only of software or software-related products in accordance with SOP No.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,333
97-2.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,334
If a multiple-element arrangement includes deliverables that are neither software nor software-related, the Company applies EITF No.
0001047469-07-009340/full-submission.txt
0000320193
20071115
10-K
1,335
00-21, Revenue Arrangements with Multiple Deliverables, to determine if those deliverables constitute separate units of accounting from the SOP No.
0001047469-07-009340/full-submission.txt