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0000320193
20100125
10-K/A
809
The Company’s business and financial performance could also be adversely affected depending on the time required to obtain sufficient quantities from the original source, or to identify and obtain sufficient quantities from an alternative source.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
810
Continued availability of these components at acceptable prices, or at all, may be affected if those suppliers decided to concentrate on the production of common components instead of components customized to meet the Company’s requirements.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
811
Significant portions of the Company’s Mac computers, iPhones, iPods, logic boards and other assembled products are now manufactured by outsourcing partners, primarily in various parts of Asia.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
812
A significant concentration of this outsourced manufacturing is currently performed by only a few of the Company’s outsourcing partners, often in single locations.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
813
Certain of these outsourcing partners are the sole-sourced supplier of components and manufacturing outsourcing for many of the Company’s key products including but not limited to final assembly of substantially all of the Company’s portable Mac computers, iPhones, iPods and most of the Company’s desktop products.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
814
Although the Company works closely with its outsourcing partners on manufacturing schedules, the Company’s operating results could be adversely affected if its outsourcing partners were unable to meet their production commitments.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
815
The Company’s purchase commitments typically cover its requirements for periods ranging from 30 to 150 days.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
816
Long-Term Supply Agreements The Company has entered into prepaid long-term supply agreements to secure the supply of certain inventory components.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
817
During the first quarter of 2009, a long-term supply agreement with Intel Corporation was terminated and the remaining prepaid balance of $167 million was repaid to the Company.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
818
During the second and fourth quarters of 2009, the Company made a prepayment of $500 million to LG Display for the purchase of LCD panels and a prepayment of $500 million to Toshiba to purchase NAND flash memory, respectively.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
819
As of September 26, 2009, the Company had a total of $1.2 billion of inventory component prepayments outstanding.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
820
Contingencies The Company is subject to certain other legal proceedings and claims that have arisen in the ordinary course of business and have not been fully adjudicated, which are discussed in Part I, Item 3 of this Form 10-K under the heading “Legal Proceedings.” In the opinion of management, the Company does not ha...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
821
However, the results of legal proceedings cannot be predicted with certainty.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
822
If the Company failed to prevail in any of these legal matters or if several of these legal matters were resolved against the Company in the same reporting period, the operating results of a particular reporting period could be materially adversely affected.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
823
Production and marketing of products in certain states and countries may subject the Company to environmental, product safety and other regulations including, in some instances, the requirement to provide customers the ability to return product at the end of its useful life, and place responsibility for environmentally...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
824
Such laws and regulations have been passed in several jurisdictions in which the Company operates, including various countries within Europe and Asia and certain states and provinces within North America.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
825
Although the Company does not anticipate any material adverse effects in the future based on the nature of its operations and the thrust of such laws, there is no assurance that such existing laws or future laws will not materially adversely affect the Company’s financial condition or operating results.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
826
Note 10 - Segment Information and Geographic Data The Company reports segment information based on the “management” approach.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
827
The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
828
The Company manages its business primarily on a geographic basis.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
829
Accordingly, the Company determined its operating segments, which are generally based on the nature and location of its customers, to be the Americas, Europe, Japan, Asia-Pacific, Retail and FileMaker operations.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
830
The Company’s reportable operating segments consist of Americas, Europe, Japan and Retail operations.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
831
Other operating segments include Asia Pacific, which encompasses Australia and Asia except for Japan and the Company’s FileMaker, Inc. subsidiary.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
832
The Americas, Europe, Japan and Asia Pacific segments exclude activities related to the Retail segment.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
833
The Americas segment includes both North and South America.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
834
The Europe segment includes European countries, as well as the Middle East and Africa.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
835
The Retail segment operates Apple-owned retail stores in the U.S. and in international markets.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
836
Each reportable operating segment provides similar hardware and software products and similar services to the same types of customers.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
837
The accounting policies of the various segments are the same as those described in Note 1, “Summary of Significant Accounting Policies.” The Company evaluates the performance of its operating segments based on net sales and operating income.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
838
Net sales for geographic segments are generally based on the location of customers, while Retail segment net sales are based on sales from the Company’s retail stores.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
839
Operating income for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
840
Advertising expenses are generally included in the geographic segment in which the expenditures are incurred.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
841
Operating income for each segment excludes other income and expense and certain expenses managed outside the operating segments.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
842
Costs excluded from segment operating income include various corporate expenses, such as manufacturing costs and variances not included in standard costs, research and development, corporate marketing expenses, stock-based compensation expense, income taxes, various nonrecurring charges, and other separately managed ge...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
843
The Company does not include intercompany transfers between segments for management reporting purposes.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
844
Segment assets exclude corporate assets, such as cash, short-term and long-term investments, manufacturing and corporate facilities, miscellaneous corporate infrastructure, goodwill and other acquired intangible assets.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
845
Except for the Retail segment, capital asset purchases for long-lived assets are not reported to management by segment.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
846
Cash payments for capital asset purchases by the Retail segment were $369 million, $389 million and $294 million for 2009, 2008 and 2007, respectively.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
847
The Company has certain retail stores that have been designed and built to serve as high-profile venues to promote brand awareness and serve as vehicles for corporate sales and marketing activities.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
848
Because of their unique design elements, locations and size, these stores require substantially more investment than the Company’s more typical retail stores.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
849
The Company allocates certain operating expenses associated with its high-profile stores to corporate marketing expense to reflect the estimated Company-wide benefit.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
850
The allocation of these operating costs to corporate expense is based on the amount incurred for a high-profile store in excess of that incurred by a more typical Company retail location.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
851
The Company had opened a total of 11 high-profile stores as of September 26, 2009.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
852
Expenses allocated to corporate marketing resulting from the operations of high-profile stores were $65 million, $53 million and $39 million for 2009, 2008 and 2007, respectively.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
853
Summary information by operating segment for the three years ended September 26, 2009 is as follows (in millions): (a) The Americas asset figures do not include fixed assets held in the U.S.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
854
Such fixed assets are not allocated specifically to the Americas segment and are included in the corporate assets figures below.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
855
(b) Retail segment depreciation and asset figures reflect the cost and related depreciation of its retail stores and related infrastructure.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
856
(c) Other Segments include Asia-Pacific and FileMaker.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
857
A reconciliation of the Company’s segment operating income and assets to the consolidated financial statements for the three years ended September 26, 2009 is as follows (in millions): (a) Other corporate expenses include research and development, corporate marketing expenses, manufacturing costs and variances not incl...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
858
No single country outside of the U.S. accounted for more than 10% of net sales in 2009, 2008 or 2007.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
859
One of the Company’s customers accounted for 11% of net sales in 2009; there was no single customer that accounted for more than 10% of net sales in 2008 or 2007.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
860
Net sales and long-lived assets related to the U.S. and international operations for the three years ended September 26, 2009, are as follows (in millions): Information regarding net sales by product for the three years ended September 26, 2009, is as follows (in millions): (a) Includes iMac, Mac mini, Mac Pro and Xser...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
861
(b) Includes MacBook, MacBook Air and MacBook Pro product lines.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
862
(c) Consists of iTunes Store sales and iPod services, and Apple-branded and third-party iPod accessories.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
863
(d) Derived from handset sales, carrier agreements, and Apple-branded and third-party iPhone accessories.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
864
(e) Includes sales of displays, wireless connectivity and networking solutions, and other hardware accessories.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
865
(f) Includes sales of Apple-branded operating system and application software, third-party software, AppleCare and Internet services.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
866
Note 11 - Related Party Transactions and Certain Other Transactions The Company entered into a Reimbursement Agreement with its CEO, Steve Jobs, for the reimbursement of expenses incurred by Mr. Jobs in the operation of his private plane when used for Apple business.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
867
The Company recognized a total of approximately $4,000, $871,000 and $776,000 in expenses pursuant to the Reimbursement Agreement during 2009, 2008 and 2007, respectively.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
868
All expenses recognized pursuant to the Reimbursement Agreement have been included in selling, general and administrative expenses in the Consolidated Statements of Operations.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
869
Note 12 - Selected Quarterly Financial Information (Unaudited) The following tables set forth a summary of the Company’s quarterly financial information for each of the four quarters ended September 26, 2009, September 27, 2008 and September 29, 2007 (in millions, except per share amounts in thousands): Basic and dilut...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
870
Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings per share.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
871
The following tables present the effects of the retrospective adoption of the new accounting principles on the Company’s previously reported quarterly financial information as of September 26, 2009, September 27, 2008 and September 29, 2007 (in millions, expect per share amounts in thousands): REPORT OF ERNST & YOUNG L...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
872
These financial statements are the responsibility of the Company’s management.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
873
Our responsibility is to express an opinion on these financial statements based on our audit.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
874
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
875
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
876
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
877
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
878
We believe that our audit provides a reasonable basis for our opinion.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
879
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Apple Inc. at September 26, 2009, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting p...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
880
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Apple Inc.’s internal control over financial reporting as of September 26, 2009, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organiz...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
881
As discussed in Notes 1 and 2 to the consolidated financial statements, Apple Inc. has retrospectively adopted the Financial Accounting Standards Board’s amended accounting standards related to revenue recognition for arrangements with multiple deliverables and arrangements that include software elements.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
882
/s/ Ernst & Young LLP San Jose, California October 27, 2009, except for the retrospective adoption of the amended accounting standards discussed in Notes 1 and 2 to the consolidated financial statements, as to which the date is January 25, 2010 REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
883
Apple Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
884
Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
885
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
886
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
887
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
888
We believe that our audit provides a reasonable basis for our opinion.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
889
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
890
A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are rec...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
891
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
892
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
893
In our opinion, Apple Inc. maintained, in all material respects, effective internal control over financial reporting as of September 26, 2009, based on the COSO criteria.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
894
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of Apple Inc. as of and for the year ended September 26, 2009 and our report dated October 27, 2009, except for the retrospective adoption of the amended account...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
895
/s/ Ernst & Young LLP San Jose, California October 27, 2009 REPORT OF KPMG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders Apple Inc.: We have audited the accompanying consolidated balance sheet of Apple Inc. and subsidiaries (the Company) as of September 27, 2008, and the rel...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
896
These consolidated financial statements are the responsibility of the Company’s management.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
897
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
898
We conducted our audits in accordance with generally accepted auditing standards of the Public Company Accounting Oversight Board (United States).
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
899
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
900
An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
901
We believe that our audits provide a reasonable basis for our opinion.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
902
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Apple Inc. and subsidiaries as of September 27, 2008 and the results of their operations and their cash flows for the years ended September 27, 2008 and September 29, 2007 in confo...
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
903
As discussed in Note 1 to the consolidated financial statements, effective September 30, 2007, the Company adopted the Financial Accounting Standards Board Interpretation No.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
904
48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
905
109.
0001193125-10-012091/full-submission.txt
0000320193
20100125
10-K/A
906
As discussed in Notes 1 and 2, the consolidated financial statements as of September 27, 2008 and for the years ended September 27, 2008 and September 29, 2007 have been restated to give effect to the retroactive adoption of the Financial Accounting Standards Board’s amended accounting standards related to revenue reco...
0001193125-10-012091/full-submission.txt
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10-K/A
907
/s/ KPMG LLP Mountain View, California November 4, 2008, except as to Notes 1 and 2, which are as of January 25, 2010.
0001193125-10-012091/full-submission.txt
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908
PART IV Item 15.
0001193125-10-012091/full-submission.txt