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0000320193
20181105
10-K
671
On May 1, 2018, the Company announced the Board of Directors had authorized a new program to repurchase up to $100 billion of the Company’s common stock.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
672
The remaining $29.0 billion repurchased during 2018 was in connection with the new share repurchase program.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
673
The Company’s new share repurchase program does not obligate it to acquire any specific number of shares.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
674
Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
675
On May 1, 2018, the Company also announced the Board of Directors raised the Company’s quarterly cash dividend from $0.63 to $0.73 per share, beginning with the dividend paid during the third quarter of 2018.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
676
The Company intends to increase its dividend on an annual basis, subject to declaration by the Board of Directors.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
677
The Company plans to use current cash and cash generated from ongoing operating activities to fund its share repurchase program and quarterly cash dividend.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
678
Contractual Obligations The following table presents certain payments due by the Company as of September 29, 2018, and excludes amounts already recorded on the Consolidated Balance Sheet, except for term debt and the deemed repatriation tax payable (in millions): (1) Represents amount expected to be paid under manufact...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
679
Operating Leases The Company’s retail store and other facility leases typically have original terms not exceeding 10 years and generally contain multi-year renewal options.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
680
Manufacturing Purchase Obligations The Company utilizes several outsourcing partners to manufacture sub-assemblies for the Company’s products and to perform final assembly and testing of finished products.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
681
These outsourcing partners acquire components and build product based on demand information supplied by the Company, which typically covers periods up to 150 days.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
682
The Company also obtains individual components for its products from a wide variety of individual suppliers.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
683
Other Purchase Obligations The Company’s other purchase obligations consist of noncancelable obligations to acquire capital assets, including product tooling and manufacturing process equipment, and noncancelable obligations related to advertising, licensing, R&D, internet and telecommunications services, content creat...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
684
Apple Inc. | 2018 Form 10-K | 31 Deemed Repatriation Tax Payable As of September 29, 2018, a significant portion of the other non-current liabilities in the Company’s Consolidated Balance Sheet consisted of the deemed repatriation tax payable imposed by the Act.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
685
The Company plans to pay the deemed repatriation tax payable in installments in accordance with the Act.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
686
Other Non-Current Liabilities The Company’s remaining other non-current liabilities primarily consist of items for which the Company is unable to make a reasonably reliable estimate of the timing of payments; therefore, such amounts are not included in the above contractual obligation table.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
687
Indemnification Agreements entered into by the Company may include indemnification provisions which may subject the Company to costs and damages in the event of a claim against an indemnified third party.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
688
Except as disclosed in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 9, “Commitments and Contingencies” under the heading “Contingencies,” in the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a mater...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
689
The Company offers an iPhone Upgrade Program, which is available to customers who purchase a qualifying iPhone in the U.S., the U.K. and mainland China.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
690
The iPhone Upgrade Program provides customers the right to trade in that iPhone for a specified amount when purchasing a new iPhone, provided certain conditions are met.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
691
The Company accounts for the trade-in right as a guarantee liability and recognizes arrangement revenue net of the fair value of such right, with subsequent changes to the guarantee liability recognized within revenue.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
692
The Company has entered into indemnification agreements with its directors and executive officers.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
693
Under these agreements, the Company has agreed to indemnify such individuals to the fullest extent permitted by law against liabilities that arise by reason of their status as directors or officers of the Company, and to advance expenses incurred by such individuals in connection with related legal proceedings.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
694
It is not possible to determine the maximum potential amount of payments the Company could be required to make under these agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each claim.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
695
While the Company maintains directors and officers liability insurance coverage, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
696
Critical Accounting Policies and Estimates The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgmen...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
697
Note 1, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
698
Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
699
Actual results may differ from these estimates, and such differences may be material.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
700
Management believes the Company’s critical accounting policies and estimates are those related to revenue recognition, valuation and impairment of marketable securities, inventory valuation, valuation of manufacturing-related assets and estimation of purchase commitment cancellation fees, warranty costs, income taxes, ...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
701
Management considers these policies critical because they are both important to the portrayal of the Company’s financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
702
The Company’s senior management has reviewed these critical accounting policies and related disclosures with the Audit and Finance Committee of the Company’s Board of Directors.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
703
Apple Inc. | 2018 Form 10-K | 32 Revenue Recognition Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications, accessories, and service and support contracts.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
704
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.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
705
Product is considered delivered to the customer once it has been shipped and title, risk of loss and rewards of ownership have been transferred.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
706
For most of the Company’s product sales, these criteria are met at the time the product is shipped.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
707
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 retains a portion of the risk of loss on these sales during transit.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
708
For payment terms in excess of the Company’s standard payment terms, revenue is recognized as payments become due unless the Company has positive evidence that the sales price is fixed or determinable, such as a successful history of collection, without concession, on comparable arrangements.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
709
The Company recognizes revenue from the sale of hardware products, software bundled with hardware that is essential to the functionality of the hardware and third-party digital content sold on the iTunes Store in accordance with general revenue recognition accounting guidance.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
710
The Company recognizes revenue in accordance with industry-specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software products, (ii) sales of software upgrades and (iii) sales of software bundled with hardware not essential to the functionality of the hardware.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
711
For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality, undelivered software elements that relate to the hardware product’s essential software and/or undelivered non-software services, the Company allocates revenue to all deliverables based on...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
712
In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of selling price (“ESP”).
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
713
VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
714
ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
715
For sales of iPhone, iPad, Mac and certain other products, the Company has indicated it may from time to time provide future unspecified software upgrades to the device’s essential software and/or non-software services free of charge.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
716
Because the Company has neither VSOE nor TPE for the unspecified software upgrade rights or the non-software services, revenue is allocated to these rights and services based on the Company’s ESPs.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
717
Revenue allocated to the unspecified software upgrade rights and non-software services based on the Company’s ESPs is deferred and recognized on a straight-line basis over the estimated period the software upgrades and non-software services are expected to be provided.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
718
The Company’s process for determining ESPs involves management’s judgment and considers multiple factors that may vary over time depending upon the unique facts and circumstances related to each deliverable.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
719
Should future facts and circumstances change, the Company’s ESPs and the future rate of related amortization for unspecified software upgrades and non-software services related to future sales of these devices could change.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
720
Factors subject to change include the unspecified software upgrade rights and non-software services offered, the estimated value of unspecified software upgrade rights and non-software services and the estimated period unspecified software upgrades and non-software services are expected to be provided.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
721
The Company records reductions to revenue for estimated commitments related to price protection and other customer incentive programs.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
722
For transactions involving price protection, the Company recognizes revenue net of the estimated amount to be refunded, provided the refund amount can be reasonably and reliably estimated and the other conditions for revenue recognition have been met.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
723
The Company’s policy requires that, if refunds cannot be reliably estimated, revenue is not recognized until reliable estimates can be made or the price protection lapses.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
724
For the Company’s other customer incentive programs, the estimated cost is recognized at the later of the date at which the Company has sold the product or the date at which the program is offered.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
725
The Company also records reductions to revenue for expected future product returns based on the Company’s historical experience.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
726
Future market conditions and product transitions may require the Company to increase customer incentive programs that could result in reductions to future revenue.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
727
Additionally, certain customer incentive programs require management to estimate the number of customers who will actually redeem the incentive.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
728
Management’s estimates are based on historical experience and the specific terms and conditions of particular incentive programs.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
729
If a greater than estimated proportion of customers redeems such incentives, the Company would be required to record additional reductions to revenue, which would have an adverse impact on the Company’s operating results.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
730
Apple Inc. | 2018 Form 10-K | 33 Valuation and Impairment of Marketable Securities The Company’s investments in available-for-sale securities are reported at fair value.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
731
Unrealized gains and losses related to changes in the fair value of securities are generally recognized in accumulated other comprehensive income, net of tax, in the Company’s Consolidated Balance Sheets.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
732
Changes in the fair value of available-for-sale securities impact the Company’s net income only when such securities are sold or an other-than-temporary impairment is recognized.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
733
Realized gains and losses on the sale of securities are determined by specific identification of each security’s cost basis.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
734
The Company regularly reviews its investment portfolio to determine if any security is other-than-temporarily impaired, which would require the Company to record an impairment charge in the period any such determination is made.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
735
In making this determination, the Company evaluates, among other things, the duration and extent to which the fair value of a security is less than its cost; the financial condition of the issuer and any changes thereto; and the Company’s intent to sell, or whether it will more likely than not be required to sell, the ...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
736
The Company’s assessment of whether a security is other-than-temporarily impaired could change in the future due to new developments or changes in assumptions related to any particular security, which would have an adverse impact on the Company’s financial condition and operating results.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
737
Inventory Valuation, Valuation of Manufacturing-Related Assets and Estimation of Purchase Commitment Cancellation Fees The Company purchases components and builds inventory in advance of product shipments and invests in manufacturing-related assets, including capital assets held at its suppliers’ facilities.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
738
In addition, the Company makes prepayments to certain of its suppliers associated with long-term supply agreements to secure supply of inventory.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
739
The Company performs a regular review of inventory that considers multiple factors including demand forecasts, product life cycle status, product development plans, current sales levels and component cost trends.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
740
If the Company determines inventories of components and products, including third-party products held for resale, have become obsolete or are in excess of anticipated demand or net realizable value, it records a write-down of the inventories.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
741
The Company also reviews its manufacturing-related capital assets and inventory prepayments for impairment whenever events or circumstances indicate the carrying amount of such assets may not be recoverable.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
742
If the Company determines that an asset is not recoverable, it records an impairment loss equal to the amount by which the carrying value of such an asset exceeds its fair value.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
743
Any write-downs and/or impairments the Company may be required to record would adversely affect the Company’s financial condition and operating results.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
744
The Company accrues for estimated purchase commitment cancellation fees related to inventory orders that have been canceled or are expected to be canceled.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
745
Manufacturing purchase obligations cover the Company’s forecasted component and manufacturing requirements, typically for periods up to 150 days.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
746
If there is an abrupt and substantial decline in demand for one or more of the Company’s products, a change in the Company’s product development plans, or an unanticipated change in technological requirements for any of the Company’s products, the Company may be required to record accruals for cancellation fees that wo...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
747
Warranty Costs The Company accrues the estimated cost of warranties in the period the related revenue is recognized based on historical and projected warranty claim rates, historical and projected cost per claim and knowledge of specific product failures outside of the Company’s typical experience.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
748
The Company regularly reviews these estimates and adjusts the amounts as necessary.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
749
If actual product failure rates or repair costs differ from estimates, revisions to the estimated warranty liabilities would be required and could materially affect the Company’s financial condition and operating results.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
750
Income Taxes The Company records a tax provision for the anticipated tax consequences of its reported operating results.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
751
The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax cred...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
752
Deferred tax assets and liabilities are measured using the currently enacted tax rates that will be in effect for the years in which those tax assets and liabilities are expected to be realized or settled.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
753
The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
754
The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
755
The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
756
Apple Inc. | 2018 Form 10-K | 34 Management believes it is more likely than not that forecasted income, including income that may be generated as a result of certain tax planning strategies, together with future reversals of existing taxable temporary differences, will be sufficient to recover the Company’s deferred ta...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
757
In the event that the Company determines all or part of its net deferred tax assets are not realizable in the future, the Company will record an adjustment to the valuation allowance and a corresponding charge to earnings in the period such determination is made.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
758
In addition, the calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of GAAP and complex tax laws.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
759
Resolution of these uncertainties in a manner inconsistent with management’s expectations could have a material impact on the Company’s financial condition and operating results.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
760
On December 22, 2017, the U.S. enacted the Act, which significantly changed U.S. tax law.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
761
The Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on previously deferred foreign income.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
762
The Act also created a new minimum tax on certain future foreign earnings.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
763
The impact of the Act increased the Company’s provision for income taxes by $1.5 billion during 2018.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
764
This increase was composed of $2.0 billion related to the remeasurement of net deferred tax assets and liabilities and $1.2 billion associated with the deemed repatriation tax, partially offset by a $1.7 billion impact the deemed repatriation tax had on the Company’s unrecognized tax benefits.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
765
Certain amounts reported by the Company related to the Act are provisional estimates in accordance with the SEC Staff Accounting Bulletin No.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
766
118.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
767
Resolution of the Act’s effects different from the assumptions made by the Company could have a material impact on the Company’s financial condition and operating results.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
768
Legal and Other Contingencies As discussed 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 9, “Commitments and Contingencies,” the Company is subject to various legal proceedings and claims that ...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
769
The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable, the determination of which requires significant judgment.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
770
Except as described in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 9, “Commitments and Contingencies” under the heading “Contingencies,” in the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a mater...
0000320193-18-000145/full-submission.txt