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0000320193
20181105
10-K
871
Advertising Costs Advertising costs are expensed as incurred and included in selling, general and administrative expenses.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
872
Apple Inc. | 2018 Form 10-K | 44 Share-Based Compensation The Company generally measures share-based compensation based on the closing price of the Company’s common stock on the date of grant, and recognizes expense on a straight-line basis for its estimate of equity awards that will ultimately vest.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
873
Further information regarding share-based compensation can be found in Note 8, “Benefit Plans.” During the first quarter of 2018, the Company adopted the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Update (“ASU”) No.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
874
2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which modified certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification in the statement of cash flows.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
875
Historically, excess tax benefits or deficiencies from the Company’s equity awards were recorded as additional paid-in capital in its Consolidated Balance Sheets and were classified as a financing activity in its Consolidated Statements of Cash Flows.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
876
Beginning in 2018, the Company records any excess tax benefits or deficiencies from its equity awards as part of the provision for income taxes in its Consolidated Statements of Operations in the reporting periods in which equity vesting occurs.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
877
The Company elected to apply the cash flow classification requirements related to excess tax benefits retrospectively to all periods presented, which resulted in an increase to cash generated by operating activities in the Consolidated Statements of Cash Flows of $627 million and $407 million for 2017 and 2016, respect...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
878
Earnings Per Share The following table shows the computation of basic and diluted earnings per share for 2018, 2017 and 2016 (net income in millions and shares in thousands): Cash Equivalents and Marketable Securities All highly liquid investments with maturities of three months or less at the date of purchase are clas...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
879
The Company’s marketable debt and equity securities have been classified and accounted for as available-for-sale.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
880
The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
881
Marketable equity securities, including mutual funds, are classified as short-term based on the nature of the securities and their availability for use in current operations.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
882
The cost of securities sold is determined using the specific identification method.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
883
Inventories Inventories are computed using the first-in, first-out method.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
884
Property, Plant and Equipment Depreciation on property, plant and equipment is recognized on a straight-line basis over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building; between one and five years for machinery and equipment, includ...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
885
Capitalized costs related to internal-use software are amortized on a straight-line basis over the estimated useful lives of the assets, which range from three to five years.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
886
Depreciation and amortization expense on property and equipment was $9.3 billion, $8.2 billion and $8.3 billion during 2018, 2017 and 2016, respectively.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
887
During 2018, non-cash investing activities involving property, plant and equipment resulted in a net increase to accounts payable and other current liabilities of $3.4 billion.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
888
Apple Inc. | 2018 Form 10-K | 45 Fair Value Measurements The Company’s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities are derived from quoted prices in active markets for identical assets or liabilities.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
889
The valuation techniques used to measure the fair value of the Company’s debt instruments and all other financial instruments, which generally have counterparties with high credit ratings, are based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable ma...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
890
Note 2 - Financial Instruments Cash, Cash Equivalents and Marketable Securities The following tables show the Company’s cash and available-for-sale securities by significant investment category as of September 29, 2018 and September 30, 2017 (in millions): Apple Inc. | 2018 Form 10-K | 46 (1) Level 1 fair value estimat...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
891
(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 subs...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
892
(3) As of September 29, 2018, total cash, cash equivalents and marketable securities included $20.3 billion that was restricted from general use, related to the State Aid Decision (refer to Note 4, “Income Taxes”) and other agreements.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
893
The Company may sell certain of its marketable securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
894
The maturities of the Company’s long-term marketable securities generally range from one to five years.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
895
The following tables show information about the Company’s marketable securities that had been in a continuous unrealized loss position for less than 12 months and for 12 months or greater as of September 29, 2018 and September 30, 2017 (in millions): Apple Inc. | 2018 Form 10-K | 47 The Company typically invests in hig...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
896
The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
897
Fair values were determined for each individual security in the investment portfolio.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
898
When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and the Company’s intent to sell, or whe...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
899
As of September 29, 2018, the Company does not consider any of its investments to be other-than-temporarily impaired.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
900
Derivative Financial Instruments The Company may use derivatives to partially offset its business exposure to foreign currency and interest rate risk on expected future cash flows, net investments in certain foreign subsidiaries, and certain existing assets and liabilities.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
901
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.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
902
There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
903
To protect gross margins from fluctuations in foreign currency exchange rates, certain of the Company’s subsidiaries whose functional currency is the U.S. dollar may hedge a portion of forecasted foreign currency revenue, and subsidiaries whose functional currency is not the U.S. dollar may hedge a portion of forecaste...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
904
The Company may enter into forward contracts, option contracts or other instruments to manage this risk and may designate these instruments as cash flow hedges.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
905
The Company generally hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
906
To protect the net investment in a foreign operation from fluctuations in foreign currency exchange rates, the Company may enter into foreign currency forward and option contracts to offset a portion of the changes in the carrying amounts of these investments due to fluctuations in foreign currency exchange rates.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
907
In addition, the Company may use non-derivative financial instruments, such as its foreign currency-denominated debt, as hedges of its net investments in certain foreign subsidiaries.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
908
In both of these cases, the Company designates these instruments as net investment hedges.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
909
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.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
910
These instruments may offset a portion of the foreign currency remeasurement gains or losses, or changes in fair value.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
911
The Company may designate these instruments as either cash flow or fair value hedges.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
912
As of September 29, 2018, the Company’s hedged term debt- and marketable securities-related foreign currency transactions are expected to be recognized within 24 years.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
913
The Company may also enter into non-designated foreign currency contracts to offset a portion of the foreign currency exchange gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
914
To protect the Company’s foreign currency-denominated term debt or marketable securities from fluctuations in interest rates, the Company may enter into interest rate swaps, options or other instruments.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
915
These instruments may offset a portion of the changes in interest income or expense, or changes in fair value.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
916
The Company designates these instruments as either cash flow or fair value hedges.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
917
As of September 29, 2018, the Company’s hedged interest rate transactions are expected to be recognized within 9 years.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
918
Cash Flow Hedges The effective portions of cash flow hedges are recorded in accumulated other comprehensive income/(loss) (“AOCI”) until the hedged item is recognized in earnings.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
919
Deferred gains and losses associated with cash flow hedges of foreign currency revenue are recognized as a component of net sales in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of inventory purchases are recognized as a component of cost of sales in th...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
920
Deferred gains and losses associated with cash flow hedges of interest income or expense are recognized in other income/(expense), net in the same period as the related income or expense is recognized.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
921
For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
922
The ineffective portions and amounts excluded from the effectiveness testing of cash flow hedges are recognized in other income/(expense), net.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
923
Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
924
Deferred gains and losses in AOCI associated with such derivative instruments are reclassified into other income/(expense), net in the period of de-designation.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
925
Any subsequent changes in fair value of such derivative instruments are reflected in other income/(expense), net unless they are re-designated as hedges of other transactions.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
926
Apple Inc. | 2018 Form 10-K | 48 Net Investment Hedges The effective portions of net investment hedges are recorded in other comprehensive income/(loss) (“OCI”) as a part of the cumulative translation adjustment.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
927
The ineffective portions and amounts excluded from the effectiveness testing of net investment hedges are recognized in other income/(expense), net.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
928
For forward exchange contracts designated as net investment hedges, the Company excludes changes in fair value relating to changes in the forward carry component from its definition of effectiveness.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
929
Accordingly, any gains or losses related to this forward carry component are recognized in earnings in the current period.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
930
Fair Value Hedges Gains and losses related to changes in fair value hedges are recognized in earnings along with a corresponding loss or gain related to the change in value of the underlying hedged item in the same line in the Consolidated Statements of Operations.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
931
Non-Designated Derivatives Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
932
As a result, during 2018, the Company recognized a gain of $20 million in net sales, a gain of $85 million in cost of sales and a loss of $198 million in other income/(expense), net.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
933
During 2017, the Company recognized a gain of $20 million in net sales, a loss of $40 million in cost of sales and a gain of $606 million in other income/(expense), net.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
934
The Company records all derivatives in the Consolidated Balance Sheets at fair value.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
935
The Company’s accounting treatment for these derivative instruments is based on its hedge designation.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
936
The following tables show the Company’s derivative instruments at gross fair value as of September 29, 2018 and September 30, 2017 (in millions): (1) The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets and other non-current assets in the Consolidated B...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
937
(2) The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as other current liabilities and other non-current liabilities in the Consolidated Balance Sheets.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
938
The Company classifies cash flows related to derivative financial instruments as operating activities in its Consolidated Statements of Cash Flows.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
939
Apple Inc. | 2018 Form 10-K | 49 The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow, net investment and fair value hedges in OCI and the Consolidated Statements of Operations for 2018, 2017 and 2016 (in millions): The following table...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
940
The credit risk amounts represent the Company’s gross exposure to potential accounting loss on derivative instruments that are outstanding or unsettled if all counterparties failed to perform according to the terms of the contract, based on then-current currency or interest rates at each respective date.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
941
The Company’s exposure to credit loss and market risk will vary over time as currency and interest rates change.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
942
Although the table above reflects the notional and credit risk amounts of the Company’s derivative instruments, it does not reflect the gains or losses associated with the exposures and transactions that the instruments are intended to hedge.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
943
The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
944
Apple Inc. | 2018 Form 10-K | 50 The Company generally enters into master netting arrangements, which are designed to reduce credit risk by permitting net settlement of transactions with the same counterparty.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
945
To further limit credit risk, the Company generally enters into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
946
The Company presents its derivative assets and derivative liabilities at their gross fair values in its Consolidated Balance Sheets.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
947
As of September 29, 2018, the net cash collateral posted by the Company related to derivative instruments under its collateral security arrangements was $1.0 billion, which was recorded as other current assets in the Condensed Consolidated Balance Sheet.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
948
As of September 30, 2017, the net cash collateral received by the Company related to derivative instruments under its collateral security arrangements was $35 million, which was recorded as other current liabilities in the Consolidated Balance Sheet.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
949
Under master netting arrangements with the respective counterparties to the Company’s derivative contracts, the Company is allowed to net settle transactions with a single net amount payable by one party to the other.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
950
As of September 29, 2018 and September 30, 2017, the potential effects of these rights of set-off associated with the Company’s derivative contracts, including the effects of collateral, would be a reduction to both derivative assets and derivative liabilities of $2.1 billion and $1.4 billion, respectively, resulting i...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
951
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.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
952
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.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
953
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.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
954
These credit-financing arrangements are directly between the third-party financing company and the end customer.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
955
As such, the Company generally does not assume any recourse or credit risk sharing related to any of these arrangements.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
956
As of September 29, 2018, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 10%.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
957
As of September 30, 2017, the Company had two customers that individually represented 10% or more of total trade receivables, each of which accounted for 10%.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
958
The Company’s cellular network carriers accounted for 59% of total trade receivables as of both September 29, 2018 and September 30, 2017.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
959
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 sub-assemblies or assemble final products for the Company.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
960
The Company purchases these components directly from suppliers.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
961
As of September 29, 2018, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 62% and 12%.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
962
As of September 30, 2017, the Company had three vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 42%, 19% and 10%.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
963
Note 3 - Consolidated Financial Statement Details The following tables show the Company’s consolidated financial statement details as of September 29, 2018 and September 30, 2017 (in millions): Property, Plant and Equipment, Net Apple Inc. | 2018 Form 10-K | 51 Other Non-Current Liabilities Other Income/(Expense), Net ...
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
964
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
965
The Act also created a new minimum tax on certain future foreign earnings.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
966
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
967
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
968
Deferred Tax Balances As a result of the Act, the Company remeasured certain deferred tax assets and liabilities based on the revised rates at which they are expected to reverse, including items for which the related income tax effects were originally recognized in OCI.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
969
In addition, the Company elected to record certain deferred tax assets and liabilities related to the new minimum tax on certain future foreign earnings.
0000320193-18-000145/full-submission.txt
0000320193
20181105
10-K
970
Of the $2.0 billion recognized related to the remeasurement of net deferred tax assets and liabilities, $1.2 billion is a provisional estimate that incorporates assumptions based upon the most recent interpretations of the Act and may change as the Company continues to analyze the impact of additional implementation gu...
0000320193-18-000145/full-submission.txt