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0000320193
20211029
10-K
641
Note 2 - Revenue Recognition Net sales consist of revenue from the sale of iPhone, Mac, iPad, Services and other products.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
642
The Company recognizes revenue at the amount to which it expects to be entitled when control of the products or services is transferred to its customers.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
643
Control is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products or services are transferred to its customers.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
644
For most of the Company’s Products net sales, control transfers when products are shipped.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
645
For the Company’s Services net sales, control transfers over time as services are delivered.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
646
Payment for Products and Services net sales is collected within a short period following transfer of control or commencement of delivery of services, as applicable.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
647
The Company records reductions to Products net sales related to future product returns, price protection and other customer incentive programs based on the Company’s expectations and historical experience.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
648
For arrangements with multiple performance obligations, which represent promises within an arrangement that are distinct, the Company allocates revenue to all distinct performance obligations based on their relative stand-alone selling prices (“SSPs”).
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
649
When available, the Company uses observable prices to determine SSPs.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
650
When observable prices are not available, SSPs are established that reflect the Company’s best estimates of what the selling prices of the performance obligations would be if they were sold regularly on a stand-alone basis.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
651
The Company’s process for estimating SSPs without observable prices considers multiple factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, where applicable, prices charged by the Company for similar offerings, market trends in the pricing for similar...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
652
The Company has identified up to three performance obligations regularly included in arrangements involving the sale of iPhone, Mac, iPad and certain other products.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
653
The first performance obligation, which represents the substantial portion of the allocated sales price, is the hardware and bundled software delivered at the time of sale.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
654
The second performance obligation is the right to receive certain product-related bundled services, which include iCloud®, Siri and Maps.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
655
The third performance obligation is the right to receive, on a when-and-if-available basis, future unspecified software upgrades relating to the software bundled with each device.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
656
The Company allocates revenue and any related discounts to these performance obligations based on their relative SSPs.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
657
Because the Company lacks observable prices for the undelivered performance obligations, the allocation of revenue is based on the Company’s estimated SSPs.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
658
Revenue allocated to the delivered hardware and bundled software is recognized when control has transferred to the customer, which generally occurs when the product is shipped.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
659
Revenue allocated to the product-related bundled services and unspecified software upgrade rights is deferred and recognized on a straight-line basis over the estimated period they are expected to be provided.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
660
Cost of sales related to delivered hardware and bundled software, including estimated warranty costs, are recognized at the time of sale.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
661
Costs incurred to provide product-related bundled services and unspecified software upgrade rights are recognized as cost of sales as incurred.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
662
For certain long-term service arrangements, the Company has performance obligations for services it has not yet delivered.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
663
For these arrangements, the Company does not have a right to bill for the undelivered services.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
664
The Company has determined that any unbilled consideration relates entirely to the value of the undelivered services.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
665
Accordingly, the Company has not recognized revenue, and has elected not to disclose amounts, related to these undelivered services.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
666
For the sale of third-party products where the Company obtains control of the product before transferring it to the customer, the Company recognizes revenue based on the gross amount billed to customers.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
667
The Company considers multiple factors when determining whether it obtains control of third-party products including, but not limited to, evaluating if it can establish the price of the product, retains inventory risk for tangible products or has the responsibility for ensuring acceptability of the product.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
668
For third-party applications sold through the App Store and certain digital content sold through the Company’s other digital content stores, the Company does not obtain control of the product before transferring it to the customer.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
669
Therefore, the Company accounts for such sales on a net basis by recognizing in Services net sales only the commission it retains.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
670
The Company has elected to record revenue net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded within other current liabilities until remitted to the relevant government authority.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
671
Apple Inc. | 2021 Form 10-K | 36 Deferred Revenue As of September 25, 2021 and September 26, 2020, the Company had total deferred revenue of $11.9 billion and $10.2 billion, respectively.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
672
As of September 25, 2021, the Company expects 64% of total deferred revenue to be realized in less than a year, 26% within one-to-two years, 8% within two-to-three years and 2% in greater than three years.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
673
Disaggregated Revenue Net sales disaggregated by significant products and services for 2021, 2020 and 2019 were as follows (in millions): (1)Products net sales include amortization of the deferred value of unspecified software upgrade rights, which are bundled in the sales price of the respective product.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
674
(2)Wearables, Home and Accessories net sales include sales of AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and accessories.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
675
(3)Services net sales include sales from the Company’s advertising, AppleCare, cloud, digital content, payment and other services.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
676
Services net sales also include amortization of the deferred value of services bundled in the sales price of certain products.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
677
(4)Includes $6.7 billion of revenue recognized in 2021 that was included in deferred revenue as of September 26, 2020, $5.0 billion of revenue recognized in 2020 that was included in deferred revenue as of September 28, 2019, and $5.9 billion of revenue recognized in 2019 that was included in deferred revenue as of Sep...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
678
The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 11, “Segment Information and Geographic Data” for 2021, 2020 and 2019.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
679
Apple Inc. | 2021 Form 10-K | 37 Note 3 - Financial Instruments Cash, Cash Equivalents and Marketable Securities The following tables show the Company’s cash, cash equivalents and marketable securities by significant investment category as of September 25, 2021 and September 26, 2020 (in millions): (1)Level 1 fair valu...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
680
(2)Level 2 fair value estimates are based on 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 subst...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
681
(3)As of September 25, 2021 and September 26, 2020, total marketable securities included $17.9 billion and $18.6 billion, respectively, that was restricted from general use, related to the State Aid Decision (refer to Note 5, “Income Taxes”) and other agreements.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
682
Apple Inc. | 2021 Form 10-K | 38 The Company may sell certain of its marketable debt securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
683
The following table shows the fair value of the Company’s non-current marketable debt securities, by contractual maturity, as of September 25, 2021 (in millions): The Company typically invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
684
The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
685
Fair values were determined for each individual security in the investment portfolio.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
686
Derivative Instruments and Hedging The Company may use derivative instruments to partially offset its business exposure to foreign exchange and interest rate risk.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
687
However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations or the prohibitive economic cost of hedging particular exposures.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
688
There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange or interest rates.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
689
Foreign Exchange Risk To protect gross margins from fluctuations in foreign currency exchange rates, the Company may enter into forward contracts, option contracts or other instruments, and may designate these instruments as cash flow hedges.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
690
The Company generally hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
691
To protect the Company’s foreign currency-denominated term debt or marketable securities from fluctuations in foreign currency exchange rates, the Company may enter into forward contracts, cross-currency swaps or other instruments.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
692
The Company designates these instruments as either cash flow or fair value hedges.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
693
As of September 25, 2021, the Company’s hedged term debt- and marketable securities-related foreign currency transactions are expected to be recognized within 21 years.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
694
The Company may also enter into derivative instruments that are not designated as accounting hedges to protect gross margins from certain fluctuations in foreign currency exchange rates, as well as to offset a portion of the foreign currency exchange gains and losses generated by the remeasurement of certain assets and...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
695
Interest Rate Risk To protect the Company’s term debt or marketable securities from fluctuations in interest rates, the Company may enter into interest rate swaps, options or other instruments.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
696
The Company designates these instruments as either cash flow or fair value hedges.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
697
The notional amounts of the Company’s outstanding derivative instruments as of September 25, 2021 and September 26, 2020 were as follows (in millions): The gross fair values of the Company’s derivative assets and liabilities were not material as of September 25, 2021 and September 26, 2020.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
698
The gains and losses recognized in OCI and amounts reclassified from AOCI to net income for the Company’s derivative instruments designated as cash flow hedges were not material in 2021, 2020 and 2019.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
699
Apple Inc. | 2021 Form 10-K | 39 The carrying amounts of the Company’s hedged items in fair value hedges as of September 25, 2021 and September 26, 2020 were as follows (in millions): The gains and losses on the Company’s derivative instruments designated as fair value hedges and the related hedged item adjustments wer...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
700
Accounts Receivable Trade Receivables The Company has considerable trade receivables outstanding with its third-party cellular network carriers, wholesalers, retailers, resellers, small and mid-sized businesses and education, enterprise and government customers.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
701
The Company generally does not require collateral from its customers; however, the Company will require collateral or third-party credit support in certain instances to limit credit risk.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
702
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.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
703
These credit-financing arrangements are directly between the third-party financing company and the end customer.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
704
As such, the Company generally does not assume any recourse or credit risk sharing related to any of these arrangements.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
705
As of both September 25, 2021 and September 26, 2020, the Company had no customers that individually represented 10% or more of total trade receivables.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
706
The Company’s cellular network carriers accounted for 42% of total trade receivables as of September 25, 2021.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
707
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 subassemblies or assemble final products for the Company.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
708
The Company purchases these components directly from suppliers.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
709
As of September 25, 2021, the Company had three vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 52%, 11% and 11%.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
710
As of September 26, 2020, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 57% and 11%.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
711
Note 4 - Consolidated Financial Statement Details The following tables show the Company’s consolidated financial statement details as of September 25, 2021 and September 26, 2020 (in millions): Property, Plant and Equipment, Net Other Non-Current Liabilities Apple Inc. | 2021 Form 10-K | 40 Other Income/(Expense), Net ...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
712
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate (21% in 2021, 2020 and 2019) to income before provision for income taxes for 2021, 2020 and 2019, is as follows (dollars in millions): Apple Inc. | 2021 Form 10-K | 41 Deferred Tax Assets and L...
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
713
The Company has elected to record certain deferred tax assets and liabilities in connection with the minimum tax on certain foreign earnings created by the U.S. Tax Cuts and Jobs Act of 2017 (the “Act”).
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
714
As of September 25, 2021, the Company had $2.6 billion in foreign tax credit carryforwards in Ireland and $1.6 billion in California research and development credit carryforwards, both of which can be carried forward indefinitely.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
715
A valuation allowance has been recorded for the tax credit carryforwards and a portion of other temporary differences.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
716
Uncertain Tax Positions As of September 25, 2021, the total amount of gross unrecognized tax benefits was $15.5 billion, of which $6.6 billion, if recognized, would impact the Company’s effective tax rate.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
717
As of September 26, 2020, the total amount of gross unrecognized tax benefits was $16.5 billion, of which $8.8 billion, if recognized, would have impacted the Company’s effective tax rate.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
718
The aggregate change in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2021, 2020 and 2019, is as follows (in millions): The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction and many state and foreign jurisdictions.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
719
Tax years after 2015 for the U.S. federal jurisdiction, and after 2014 in certain major foreign jurisdictions, remain subject to examination.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
720
Although the timing of resolution and/or closure of examinations is not certain, the Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease in the next 12 months by as much as $1.2 billion.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
721
Apple Inc. | 2021 Form 10-K | 42 Interest and Penalties The Company includes interest and penalties related to income tax matters within the provision for income taxes.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
722
As of September 25, 2021 and September 26, 2020, the total amount of gross interest and penalties accrued was $1.5 billion and $1.4 billion, respectively.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
723
The Company recognized interest and penalty expense of $219 million, $85 million and $73 million in 2021, 2020 and 2019, respectively.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
724
European Commission State Aid Decision On August 30, 2016, the European Commission announced its decision that Ireland granted state aid to the Company by providing tax opinions in 1991 and 2007 concerning the tax allocation of profits of the Irish branches of two subsidiaries of the Company (the “State Aid Decision”).
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
725
The State Aid Decision ordered Ireland to calculate and recover additional taxes from the Company for the period June 2003 through December 2014.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
726
Irish legislative changes, effective as of January 2015, eliminated the application of the tax opinions from that date forward.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
727
The recovery amount was calculated to be €13.1 billion, plus interest of €1.2 billion.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
728
The Company and Ireland appealed the State Aid Decision to the General Court of the Court of Justice of the European Union (the “General Court”).
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
729
On July 15, 2020, the General Court annulled the State Aid Decision.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
730
On September 25, 2020, the European Commission appealed the General Court’s decision to the European Court of Justice.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
731
The Company believes that any incremental Irish corporate income taxes potentially due related to the State Aid Decision would be creditable against U.S. taxes, subject to any foreign tax credit limitations in the Act.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
732
On an annual basis, the Company may request approval from the Irish Minister for Finance to reduce the recovery amount for certain taxes paid to other countries.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
733
As of September 25, 2021, the adjusted recovery amount was €12.7 billion, excluding interest.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
734
The adjusted recovery amount plus interest is funded into escrow, where it will remain restricted from general use pending the conclusion of all legal proceedings.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
735
Refer to the Cash, Cash Equivalents and Marketable Securities section of Note 3, “Financial Instruments” for more information.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
736
Note 6 - Leases The Company has lease arrangements for certain equipment and facilities, including retail, corporate, manufacturing and data center space.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
737
These leases typically have original terms not exceeding 10 years and generally contain multiyear renewal options, some of which are reasonably certain of exercise.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
738
The Company’s lease arrangements may contain both lease and nonlease components.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
739
The Company has elected to combine and account for lease and nonlease components as a single lease component for leases of retail, corporate, and data center facilities.
0000320193-21-000105/full-submission.txt
0000320193
20211029
10-K
740
Payments under the Company’s lease arrangements may be fixed or variable, and variable lease payments are primarily based on purchases of output of the underlying leased assets.
0000320193-21-000105/full-submission.txt