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0000320193
20201030
10-K
307
Under payment card rules and obligations, if cardholder information is potentially compromised, the Company could be liable for associated investigatory expenses and could also incur significant fees or fines if the Company fails to follow payment card industry data security standards.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
308
The Company could also experience a significant increase in payment card transaction costs or lose the ability to process payment cards if it fails to follow payment card industry data security standards, which would materially adversely affect the Company’s reputation, financial condition and operating results.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
309
While the Company maintains insurance coverage that is intended to address certain aspects of data security risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
310
Apple Inc. | 2020 Form 10-K | 12 The Company’s business is subject to a variety of U.S. and international laws, rules, policies and other obligations regarding data protection.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
311
The Company is subject to federal, state and international laws relating to the collection, use, retention, security and transfer of PII.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
312
In many cases, these laws apply not only to third-party transactions, but also may restrict transfers of PII among the Company and its international subsidiaries.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
313
Several jurisdictions have passed laws in this area, and other jurisdictions are considering imposing additional restrictions.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
314
These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
315
Complying with emerging and changing international requirements may cause the Company to incur substantial costs or require the Company to change its business practices.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
316
Noncompliance could result in significant penalties or legal liability.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
317
The Company makes statements about its use and disclosure of PII through its privacy policy, information provided on its website and press statements.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
318
Any failure by the Company to comply with these public statements or with other federal, state or international privacy-related or data protection laws and regulations could result in proceedings against the Company by governmental entities or others.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
319
In addition to reputational impacts, penalties could include ongoing audit requirements and significant legal liability.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
320
The Company’s success depends largely on the continued service and availability of key personnel.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
321
Much of the Company’s future success depends on the continued availability and service of key personnel, including its Chief Executive Officer, executive team and other highly skilled employees.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
322
Experienced personnel in the technology industry are in high demand and competition for their talents is intense, especially in Silicon Valley, where most of the Company’s key personnel are located.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
323
The Company’s business can be impacted by political events, international trade disputes, war, terrorism, natural disasters, public health issues, industrial accidents and other business interruptions.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
324
Political events, international trade disputes, war, terrorism, natural disasters, public health issues, industrial accidents and other business interruptions could harm or disrupt international commerce and the global economy, and could have a material adverse effect on the Company and its customers, suppliers, contra...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
325
The Company has a large, global business, and the Company believes that it generally benefits from growth in international trade.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
326
International trade disputes can result in tariffs, sanctions, and other measures that restrict international trade and can adversely affect the Company’s business.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
327
For example, tensions between the U.S. and China have led to a series of tariffs being imposed by the U.S. on imports from China mainland, as well as other business restrictions.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
328
Tariffs may increase the cost of the Company’s products and the components and raw materials that go into making them.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
329
These increased costs adversely impact the gross margin that the Company earns on its products.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
330
Tariffs can also make the Company’s products more expensive for customers, which could make the Company’s products less competitive and reduce consumer demand.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
331
Countries may also adopt other measures, such as controls on imports or exports of goods, technology or data, that could adversely impact the Company’s operations and supply chain and limit the Company’s ability to offer its products and services as designed.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
332
These measures can require the Company to take various actions, including change suppliers, restructure business relationships, and stop offering third-party applications on its platforms.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
333
Changing the Company’s operations in accordance with new or changed trade restrictions may be expensive, time-consuming, disruptive to the Company’s operations and distracting to management.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
334
Trade restrictions may be announced with little or no advance notice and the Company may not be able to effectively mitigate all adverse impacts from such measures.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
335
Political uncertainty surrounding international trade disputes could also have a negative effect on consumer confidence and spending, which could adversely affect the Company’s business.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
336
Many of the Company’s operations and facilities, as well as critical business operations of the Company’s suppliers and contract manufacturers, are in locations that are prone to earthquakes and other natural disasters.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
337
In addition, such operations and facilities are subject to the risk of interruption by fire, power shortages, nuclear power plant accidents and other industrial accidents, terrorist attacks and other hostile acts, labor disputes, public health issues, including pandemics such as the COVID-19 pandemic, and other events ...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
338
Global climate change could result in certain types of natural disasters occurring more frequently or with more intense effects.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
339
Such events could make it difficult or impossible for the Company to manufacture and deliver products to its customers, create delays and inefficiencies in the Company’s supply and manufacturing chain, and result in slowdowns and outages to the Company’s service offerings.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
340
Following an interruption to its business, the Company could require substantial recovery time, experience significant expenditures to resume operations, and lose significant sales.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
341
Because the Company relies on single or limited sources for the supply and manufacture of many critical components, a business interruption affecting such sources would exacerbate any negative consequences to the Company.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
342
Apple Inc. | 2020 Form 10-K | 13 The Company’s operations are also subject to the risks of industrial accidents at its suppliers and contract manufacturers.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
343
While the Company’s suppliers are required to maintain safe working environments and operations, an industrial accident could occur and could result in disruption to the Company’s business and harm to the Company’s reputation.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
344
Major public health issues, including pandemics such as the COVID-19 pandemic, have adversely affected, and could in the future adversely affect, the Company due to their impact on the global economy and demand for consumer products; the imposition of protective public safety measures, such as stringent employee travel...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
345
While the Company maintains insurance coverage for certain types of losses, such insurance coverage may be insufficient to cover all losses that may arise.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
346
The Company expects its quarterly net sales and operating results to fluctuate.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
347
The Company’s profit margins vary across its products, services, geographic segments and distribution channels.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
348
For example, the gross margins on the Company’s products and services vary significantly and can change over time.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
349
The Company’s gross margins are subject to volatility and downward pressure due to a variety of factors, including: continued industry-wide global product pricing pressures and product pricing actions that the Company may take in response to such pressures; increased competition; the Company’s ability to effectively st...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
350
These and other factors could have a materially adverse impact on the Company’s financial condition and operating results.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
351
The Company has historically experienced higher net sales in its first quarter compared to other quarters in its fiscal year due in part to seasonal holiday demand.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
352
Additionally, new product and service introductions can significantly impact net sales, cost of sales and operating expenses.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
353
Further, the Company generates a significant portion of its net sales from a single product and a decline in demand for that product could significantly impact quarterly net sales.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
354
The Company could also be subject to unexpected developments, such as lower-than-anticipated demand for the Company’s products or services, issues with new product or service introductions, information technology system failures or network disruptions, or failure of one of the Company’s logistics, components supply, or...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
355
The Company’s stock price is subject to volatility.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
356
The Company’s stock price has experienced substantial price volatility in the past and may continue to do so in the future.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
357
Additionally, the Company, the technology industry and the stock market as a whole have experienced extreme stock price and volume fluctuations that have affected stock prices in ways that may have been unrelated to these companies’ operating performance.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
358
Price volatility over a given period may cause the average price at which the Company repurchases its stock to exceed the stock’s price at a given point in time.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
359
The Company believes its stock price should reflect expectations of future growth and profitability.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
360
The Company also believes its stock price should reflect expectations that its cash dividend will continue at current levels or grow, and that its current share repurchase program will be fully consummated.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
361
Future dividends are subject to declaration by the Company’s Board of Directors, and the Company’s share repurchase program does not obligate it to acquire any specific number of shares.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
362
If the Company fails to meet expectations related to future growth, profitability, dividends, share repurchases or other market expectations, its stock price may decline significantly, which could have a material adverse impact on investor confidence and employee retention.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
363
The Company’s financial performance is subject to risks associated with changes in the value of the U.S. dollar relative to local currencies.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
364
The Company’s primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar-denominated sales, cost of sales and operating expenses worldwide.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
365
Gross margins on the Company’s products in foreign countries and on products that include components obtained from foreign suppliers could be materially adversely affected by foreign currency exchange rate fluctuations.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
366
The weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of the Company’s foreign currency-denominated sales and earnings, and generally leads the Company to raise international pricing, potentially reducing demand for the Company’s products.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
367
In some circumstances, for competitive or other reasons, the Company may decide not to raise international pricing to offset the U.S. dollar’s strengthening, which would adversely affect the U.S. dollar value of the gross margins the Company earns on foreign currency-denominated sales.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
368
Apple Inc. | 2020 Form 10-K | 14 Conversely, a strengthening of foreign currencies relative to the U.S. dollar, while generally beneficial to the Company’s foreign currency-denominated sales and earnings, could cause the Company to reduce international pricing and incur losses on its foreign currency derivative instrum...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
369
Additionally, strengthening of foreign currencies may increase the Company’s cost of product components denominated in those currencies, thus adversely affecting gross margins.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
370
The Company uses derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
371
The use of such hedging activities may not be effective to offset any, or more than a portion, of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
372
The Company is exposed to credit risk and fluctuations in the values of its investment portfolio.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
373
The Company’s investments can be negatively affected by liquidity, credit deterioration, financial results, market and economic conditions, political risk, sovereign risk, interest rate fluctuations or other factors.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
374
As a result, the value and liquidity of the Company’s cash, cash equivalents, and marketable and non-marketable securities may fluctuate substantially.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
375
Therefore, although the Company has not realized any significant losses on its cash, cash equivalents, and marketable and non-marketable securities, future fluctuations in their value could result in significant losses and could have a material adverse impact on the Company’s financial condition and operating results.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
376
The Company is exposed to credit risk on its trade accounts receivable, vendor non-trade receivables and prepayments related to long-term supply agreements, and this risk is heightened during periods when economic conditions worsen.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
377
The Company distributes its products through third-party cellular network carriers, wholesalers, retailers and resellers.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
378
The Company also sells its products directly to small and mid-sized businesses and education, enterprise and government customers.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
379
A substantial majority of the Company’s outstanding trade receivables are not covered by collateral, third-party bank support or financing arrangements, or credit insurance, and a significant portion of the Company’s trade receivables can be concentrated within cellular network carriers or other resellers.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
380
The Company’s exposure to credit and collectibility risk on its trade receivables is higher in certain international markets and its ability to mitigate such risks may be limited.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
381
The Company also has unsecured vendor non-trade receivables resulting from purchases of components by outsourcing partners and other vendors that manufacture sub-assemblies or assemble final products for the Company.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
382
In addition, the Company has made prepayments associated with long-term supply agreements to secure supply of inventory components.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
383
As of September 26, 2020, the Company’s vendor non-trade receivables and prepayments related to long-term supply agreements were concentrated among a few individual vendors located primarily in Asia.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
384
While the Company has procedures to monitor and limit exposure to credit risk on its trade and vendor non-trade receivables, as well as long-term prepayments, there can be no assurance such procedures will effectively limit its credit risk and avoid losses.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
385
The Company could be subject to changes in its tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
386
The Company is subject to taxes in the U.S. and numerous foreign jurisdictions, including Ireland, where a number of the Company’s subsidiaries are organized.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
387
Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
388
The Company’s effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, the introduction of new taxes, or changes in tax laws or their interpretation, including in the U.S. and Ireland.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
389
The Company is also subject to the examination of its tax returns and other tax matters by the U.S. Internal Revenue Service and other tax authorities and governmental bodies.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
390
The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for taxes.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
391
There can be no assurance as to the outcome of these examinations.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
392
If the Company’s effective tax rates were to increase, particularly in the U.S. or Ireland, or if the ultimate determination of the Company’s taxes owed is for an amount in excess of amounts previously accrued, the Company’s financial condition and operating results could be materially adversely affected.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
393
Item 1B.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
394
Unresolved Staff Comments None.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
395
Item 2.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
396
Properties The Company’s headquarters are located in Cupertino, California.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
397
As of September 26, 2020, the Company owned or leased facilities and land for corporate functions, R&D, data centers, retail and other purposes at locations throughout the U.S. and in various places outside the U.S.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
398
The Company believes its existing facilities and equipment, which are used by all reportable segments, are in good operating condition and are suitable for the conduct of its business.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
399
Apple Inc. | 2020 Form 10-K | 15 Item 3.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
400
Legal Proceedings The Company is subject to legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
401
The Company’s material legal proceedings are described in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 10, “Commitments and Contingencies” under the heading “Contingencies.” The outcome of litigation is inherently uncertain.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
402
If one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
403
The Company settled certain matters during the fourth quarter of 2020 that did not individually or in the aggregate have a material impact on the Company’s financial condition or operating results.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
404
Item 4.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
405
Mine Safety Disclosures Not applicable.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
406
Apple Inc. | 2020 Form 10-K | 16 PART II Item 5.
0000320193-20-000096/full-submission.txt