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0000320193
20211029
10-K
341
Except as described in Part I, Item 3 of this Form 10-K under the heading “Legal Proceedings” and in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 10, “Commitments and Contingencies” under the heading “Contingencies,” in the opinion of management, there was not at least a r...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
342
Apple Inc. | 2021 Form 10-K | 13 The outcome of litigation or government investigations is inherently uncertain.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
343
If one or more legal matters were resolved against the Company or an indemnified third party in a reporting period for amounts above management’s expectations, the Company’s results of operations and financial condition for that reporting period could be materially adversely affected.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
344
Further, such an outcome can result in significant compensatory, punitive or trebled monetary damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief against the Company, and can require the Company to change its business practices and limit the Company’s ability to offer certain p...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
345
While the Company maintains insurance coverage for certain types of claims, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
346
The Company is subject to complex and changing laws and regulations worldwide, which exposes the Company to potential liabilities, increased costs and other adverse effects on the Company’s business.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
347
The Company’s global operations are subject to complex and changing laws and regulations on subjects, including antitrust; privacy, data security and data localization; consumer protection; advertising, sales, billing and e-commerce; product liability; intellectual property ownership and infringement; digital platforms...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
348
Compliance with these laws and regulations is onerous and expensive, increasing the cost of conducting the Company’s global operations.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
349
Changes to laws and regulations can adversely affect the Company’s business by increasing the Company’s costs, limiting the Company’s ability to offer a product or service to customers, requiring changes to the Company’s supply chain and business practices or otherwise making the Company’s products and services less at...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
350
The Company has implemented policies and procedures designed to ensure compliance with applicable laws and regulations, but there can be no assurance the Company’s employees, contractors or agents will not violate such laws and regulations or the Company’s policies and procedures.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
351
If the Company is found to have violated laws and regulations, it could materially adversely affect the Company’s business, reputation, results of operations and financial condition.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
352
Regulatory changes and other actions that materially adversely affect the Company’s business may be announced with little or no advance notice and the Company may not be able to effectively mitigate all adverse impacts from such measures.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
353
The technology industry, including, in some instances, the Company, is subject to intense media, political and regulatory scrutiny, which exposes the Company to increasing regulation, government investigations, legal actions and penalties.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
354
From time to time, the Company has made changes to its App Store, including actions taken in response to competition, market and legal conditions.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
355
The Company may make further business changes in the future.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
356
New legislative initiatives, such as the proposed EU Digital Markets Act, could, if enacted, require further changes.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
357
These changes could include how and to what extent the Company charges developers for access to its platforms and manages distribution of apps outside of the App Store.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
358
The Company is also currently subject to antitrust investigations in various jurisdictions around the world, which can result in legal proceedings and claims against the Company that could, individually or in the aggregate, have a materially adverse impact on the Company’s business, results of operations and financial ...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
359
For example, the Company is the subject of investigations in Europe and other jurisdictions relating to App Store terms and conditions.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
360
If such investigations result in adverse findings against the Company, the Company could be exposed to significant fines and may be required to make changes to its App Store business, all of which could materially adversely affect the Company’s business, results of operations and financial condition.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
361
The Company is also subject to litigation relating to the App Store, which has resulted in changes to the Company’s business practices, and may in the future result in further changes.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
362
Further, the Company has commercial relationships with other companies in the technology industry that are or may become subject to investigations and litigation that, if resolved against those other companies, could adversely affect the Company’s commercial relationships with those business partners and materially adv...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
363
For example, the Company earns revenue from licensing arrangements with other companies to offer their search services on the Company’s platforms and apps, and certain of these arrangements are currently subject to government investigations and legal proceedings.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
364
There can be no assurance the Company’s business will not be materially adversely affected, individually or in the aggregate, by the outcomes of such investigations, litigation or changes to laws and regulations in the future.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
365
Changes to the Company’s business practices to comply with new laws and regulations or in connection with other legal proceedings could negatively impact the reputation of the Company’s products for privacy and security and otherwise adversely affect the experience for users of the Company’s products and services, and ...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
366
Apple Inc. | 2021 Form 10-K | 14 The Company’s business is subject to a variety of U.S. and international laws, rules, policies and other obligations regarding data protection.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
367
The Company is subject to federal, state and international laws relating to the collection, use, retention, security and transfer of various types of personal information.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
368
In many cases, these laws apply not only to third-party transactions, but also restrict transfers of personal information among the Company and its international subsidiaries.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
369
Several jurisdictions have passed laws in this area, and additional jurisdictions are considering imposing additional restrictions or have laws that are pending.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
370
These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
371
Complying with emerging and changing requirements causes the Company to incur substantial costs and has required and may in the future require the Company to change its business practices.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
372
Noncompliance could result in significant penalties or legal liability.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
373
The Company makes statements about its use and disclosure of personal information through its privacy policy, information provided on its website, press statements and other privacy notices provided to customers.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
374
Any failure by the Company to comply with these public statements or with other federal, state or international privacy or data protection laws and regulations could result in inquiries or proceedings against the Company by governmental entities or others.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
375
In addition to reputational impacts, penalties could include ongoing audit requirements and significant legal liability.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
376
In addition to the risks generally relating to the collection, use, retention, security and transfer of personal information, the Company is also subject to specific obligations relating to information considered sensitive under applicable laws, such as health data, financial data and biometric data.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
377
Health data is subject to additional privacy, security and breach notification requirements, and the Company is subject to audit by governmental authorities regarding the Company’s compliance with these obligations.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
378
If the Company fails to adequately comply with these rules and requirements, or if health data is handled in a manner not permitted by law or under the Company’s agreements with healthcare institutions, the Company can be subject to litigation or government investigations, and can be liable for associated investigatory...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
379
Financial data, such as payment card data, is also subject to additional requirements.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
380
Under payment card rules and obligations, if cardholder information is potentially compromised, the Company can be liable for associated investigatory expenses and can also incur significant fees or fines if the Company fails to follow payment card industry data security standards.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
381
The Company could also experience a significant increase in payment card transaction costs or lose the ability to process payment cards if it fails to follow payment card industry data security standards, which would materially adversely affect the Company’s business, reputation, results of operations and financial con...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
382
Financial Risks The Company expects its quarterly net sales and results of operations to fluctuate.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
383
The Company’s profit margins vary across its products, services, geographic segments and distribution channels.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
384
For example, the gross margins on the Company’s products and services vary significantly and can change over time.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
385
The Company’s gross margins are subject to volatility and downward pressure due to a variety of factors, including: continued industry-wide global product pricing pressures and product pricing actions that the Company may take in response to such pressures; increased competition; the Company’s ability to effectively st...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
386
These and other factors could have a materially adverse impact on the Company’s results of operations and financial condition.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
387
The Company has historically experienced higher net sales in its first quarter compared to other quarters in its fiscal year due in part to seasonal holiday demand.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
388
Additionally, new product and service introductions can significantly impact net sales, cost of sales and operating expenses.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
389
Further, the Company generates a significant portion of its net sales from a single product and a decline in demand for that product could significantly impact quarterly net sales.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
390
The Company could also be subject to unexpected developments, such as lower-than-anticipated demand for the Company’s products or services, issues with new product or service introductions, information technology system failures or network disruptions, or failure of one of the Company’s logistics, components supply, or...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
391
The Company’s financial performance is subject to risks associated with changes in the value of the U.S. dollar relative to local currencies.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
392
The Company’s primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar-denominated sales, cost of sales and operating expenses worldwide.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
393
Gross margins on the Company’s products in foreign countries and on products that include components obtained from foreign suppliers could be materially adversely affected by foreign currency exchange rate fluctuations.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
394
Apple Inc. | 2021 Form 10-K | 15 The weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of the Company’s foreign currency-denominated sales and earnings, and generally leads the Company to raise international pricing, potentially reducing demand for the Company’s product...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
395
In some circumstances, for competitive or other reasons, the Company may decide not to raise international pricing to offset the U.S. dollar’s strengthening, which would adversely affect the U.S. dollar value of the gross margins the Company earns on foreign currency-denominated sales.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
396
Conversely, a strengthening of foreign currencies relative to the U.S. dollar, while generally beneficial to the Company’s foreign currency-denominated sales and earnings, could cause the Company to reduce international pricing and incur losses on its foreign currency derivative instruments, thereby limiting the benefi...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
397
Additionally, strengthening of foreign currencies may increase the Company’s cost of product components denominated in those currencies, thus adversely affecting gross margins.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
398
The Company uses derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
399
The use of such hedging activities may not be effective to 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.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
400
The Company is exposed to credit risk and fluctuations in the values of its investment portfolio.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
401
The Company’s investments can be negatively affected by changes in liquidity, credit deterioration, financial results, market and economic conditions, political risk, sovereign risk, interest rate fluctuations or other factors.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
402
As a result, the value and liquidity of the Company’s cash, cash equivalents, and marketable and non-marketable securities may fluctuate substantially.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
403
Therefore, although the Company has not realized any significant losses on its cash, cash equivalents, and marketable and non-marketable securities, future fluctuations in their value could result in significant losses and could have a material adverse impact on the Company’s results of operations and financial conditi...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
404
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.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
405
The Company distributes its products through third-party cellular network carriers, wholesalers, retailers and resellers.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
406
The Company also sells its products directly to small and mid-sized businesses and education, enterprise and government customers.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
407
A substantial majority of the Company’s outstanding trade receivables are not covered by collateral, third-party bank support or financing arrangements, or credit insurance, and a significant portion of the Company’s trade receivables can be concentrated within cellular network carriers or other resellers.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
408
The Company’s exposure to credit and collectibility risk on its trade receivables is higher in certain international markets and its ability to mitigate such risks may be limited.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
409
The Company also has unsecured vendor non-trade receivables resulting from purchases of components by outsourcing partners and other vendors that manufacture subassemblies or assemble final products for the Company.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
410
In addition, the Company has made prepayments associated with long-term supply agreements to secure supply of inventory components.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
411
As of September 25, 2021, the Company’s vendor non-trade receivables and prepayments related to long-term supply agreements were concentrated among a few individual vendors located primarily in Asia.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
412
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.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
413
The Company is subject to changes in tax rates, the adoption of new U.S. or international tax legislation and exposure to additional tax liabilities.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
414
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.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
415
Due to economic and political conditions, tax laws and tax rates for income taxes and other non-income taxes in various jurisdictions may be subject to significant change.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
416
The Company’s effective tax rates are 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, the introduction of new taxes, or changes in tax laws or their interpretation, including in the U.S. and Ireland.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
417
The Company is also subject to the examination of its tax returns and other tax matters by the U.S. Internal Revenue Service and other tax authorities and governmental bodies.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
418
The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for taxes.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
419
There can be no assurance as to the outcome of these examinations.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
420
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 business, results of operations and financial condition could be materially adversely affected.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
421
Apple Inc. | 2021 Form 10-K | 16 General Risks The price of the Company’s stock is subject to volatility.
0000320193-21-000105/full-submission.txt
0000320193
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10-K
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The Company’s stock has experienced substantial price volatility in the past and may continue to do so in the future.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
423
Additionally, the Company, the technology industry and the stock market as a whole have, from time to time, experienced extreme stock price and volume fluctuations that have affected stock prices in ways that may have been unrelated to these companies’ operating performance.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
424
Price volatility may cause the average price at which the Company repurchases its stock in a given period to exceed the stock’s price at a given point in time.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
425
The Company believes the price of its stock should reflect expectations of future growth and profitability.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
426
The Company also believes the price of its stock should reflect expectations that its cash dividend will continue at current levels or grow, and that its current share repurchase program will be fully consummated.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
427
Future dividends are subject to declaration by the Company’s Board of Directors, and the Company’s share repurchase program does not obligate it to acquire any specific number of shares.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
428
If the Company fails to meet expectations related to future growth, profitability, dividends, share repurchases or other market expectations, the price of the Company’s stock may decline significantly, which could have a material adverse impact on investor confidence and employee retention.
0000320193-21-000105/full-submission.txt
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10-K
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Item 1B.
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Unresolved Staff Comments None.
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Item 2.
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Properties The Company’s headquarters are located in Cupertino, California.
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10-K
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As of September 25, 2021, the Company owned or leased facilities and land for corporate functions, R&D, data centers, retail and other purposes at locations throughout the U.S. and in various places outside the U.S.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
434
The Company believes its existing facilities and equipment, which are used by all reportable segments, are in good operating condition and are suitable for the conduct of its business.
0000320193-21-000105/full-submission.txt
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10-K
435
Item 3.
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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.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
437
The Company’s material legal proceedings are described below and in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 10, “Commitments and Contingencies” under the heading “Contingencies.” The outcome of litigation is inherently uncertain.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
438
If one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
439
The Company settled certain matters during the fourth quarter of 2021 that did not individually or in the aggregate have a material impact on the Company’s financial condition or operating results.
0000320193-21-000105/full-submission.txt
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10-K
440
Epic Games Epic Games, Inc. (“Epic”) filed a lawsuit in the U.S. District Court for the Northern District of California (the “Northern California District Court”) against the Company alleging violations of federal and state antitrust laws and California’s unfair competition law based upon the Company’s operation of its...
0000320193-21-000105/full-submission.txt