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0000320193 | 20201030 | 10-K | 607 | Actual results could differ materially from those estimates. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 608 | Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 609 | The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 610 | The Company’s fiscal years 2020, 2019 and 2018 spanned 52 weeks each. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 611 | An additional week is included in the first fiscal quarter every five or six years to realign the Company’s fiscal quarters with calendar quarters. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 612 | Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 613 | Common Stock Split
On August 28, 2020, the Company effected a four-for-one stock split to shareholders of record as of August 24, 2020. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 614 | All share, restricted stock unit (“RSU”) and per share or per RSU information has been retroactively adjusted to reflect the stock split. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 615 | Recently Adopted Accounting Pronouncements
Leases
At the beginning of the first quarter of 2020, the Company adopted the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Update (“ASU”) No. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 616 | 2016-02, Leases (Topic 842) (“ASU 2016-02”), and additional ASUs issued to clarify and update the guidance in ASU 2016-02 (collectively, the “new leases standard”), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and d... | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 617 | The Company adopted the new leases standard utilizing the modified retrospective transition method, under which amounts in prior periods presented were not restated. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 618 | For contracts existing at the time of adoption, the Company elected to not reassess (i) whether any are or contain leases, (ii) lease classification, and (iii) initial direct costs. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 619 | Upon adoption, the Company recorded $7.5 billion of right-of-use (“ROU”) assets and $8.1 billion of lease liabilities on its Condensed Consolidated Balance Sheet. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 620 | Hedging
At the beginning of the first quarter of 2020, the Company adopted FASB ASU No. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 621 | 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 622 | ASU 2017-12 expands component and fair value hedging, specifies the presentation of the effects of hedging instruments, eliminates the separate measurement and presentation of hedge ineffectiveness, and updates disclosure requirements related to hedging. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 623 | The Company adopted ASU 2017-12 utilizing the modified retrospective transition method. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 624 | Upon adoption, the Company recorded a $136 million increase in accumulated other comprehensive income/(loss) (“AOCI”) and a corresponding decrease in retained earnings in the Condensed Consolidated Statement of Shareholders’ Equity. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 625 | Advertising Costs
Advertising costs are expensed as incurred and included in selling, general and administrative expenses. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 626 | 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. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 627 | Further information regarding share-based compensation can be found in Note 9, “Benefit Plans.”
Apple Inc. | 2020 Form 10-K | 36
Earnings Per Share
The following table shows the computation of basic and diluted earnings per share for 2020, 2019 and 2018 (net income in millions and shares in thousands):
The Company appl... | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 628 | Potentially dilutive securities representing 62 million shares of common stock were excluded from the computation of diluted earnings per share for 2019 because their effect would have been antidilutive. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 629 | Cash Equivalents and Marketable Securities
All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 630 | The Company’s investments in marketable debt securities have been classified and accounted for as available-for-sale. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 631 | The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 632 | Unrealized gains and losses on marketable debt securities classified as available-for-sale are recognized in other comprehensive income/(loss) (“OCI”). | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 633 | The Company’s investments in marketable equity securities are classified based on the nature of the securities and their availability for use in current operations. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 634 | The Company’s marketable equity securities are measured at fair value with gains and losses recognized in other income/(expense), net (“OI&E”). | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 635 | The cost of securities sold is determined using the specific identification method. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 636 | Inventories
Inventories are measured using the first-in, first-out method. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 637 | 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 40 years or the remaining life of the building; between one and five years for machinery and equipment, including product... | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 638 | 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 seven years. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 639 | Depreciation and amortization expense on property and equipment was $9.7 billion, $11.3 billion and $9.3 billion during 2020, 2019 and 2018, respectively. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 640 | Non-cash investing activities involving property, plant and equipment resulted in a net increase/(decrease) to accounts payable and other current liabilities of $(2.9) billion and $3.4 billion during 2019 and 2018, respectively. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 641 | Apple Inc. | 2020 Form 10-K | 37
Non-Marketable Securities
The Company has elected to apply the measurement alternative to equity securities without readily determinable fair values. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 642 | As such, the Company’s non-marketable equity securities are measured at cost, less any impairment, and are adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the same issuer. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 643 | Gains and losses on non-marketable equity securities are recognized in OI&E. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 644 | Restricted Cash and Restricted Marketable Securities
The Company considers cash and marketable securities to be restricted when withdrawal or general use is legally restricted. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 645 | The Company reports restricted cash as other assets in the Consolidated Balance Sheets, and determines current or non-current classification based on the expected duration of the restriction. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 646 | The Company reports restricted marketable securities as current or non-current marketable securities in the Consolidated Balance Sheets based on the classification of the underlying securities. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 647 | Fair Value Measurements
The fair values of the Company’s money market funds and certain marketable equity securities are based on quoted prices in active markets for identical assets. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 648 | 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... | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 649 | Note 2 - Revenue Recognition
Net sales consist of revenue from the sale of iPhone, Mac, iPad, Services and other products. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 650 | The Company recognizes revenue at the amount to which it expects to be entitled when control of the products or services is transferred to its customers. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 651 | Control is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products or services are transferred to its customers. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 652 | For most of the Company’s Products net sales, control transfers when products are shipped. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 653 | For the Company’s Services net sales, control transfers over time as services are delivered. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 654 | Payment for Products and Services net sales is collected within a short period following transfer of control or commencement of delivery of services, as applicable. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 655 | The Company records reductions to Products net sales related to future product returns, price protection and other customer incentive programs based on the Company’s expectations and historical experience. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 656 | For arrangements with multiple performance obligations, which represent promises within an arrangement that are distinct, the Company allocates revenue to all distinct performance obligations based on their relative stand-alone selling prices (“SSPs”). | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 657 | When available, the Company uses observable prices to determine SSPs. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 658 | When observable prices are not available, SSPs are established that reflect the Company’s best estimates of what the selling prices of the performance obligations would be if they were sold regularly on a stand-alone basis. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 659 | The Company’s process for estimating SSPs without observable prices considers multiple factors that may vary depending upon the unique facts and circumstances related to each performance obligation including, where applicable, prices charged by the Company for similar offerings, market trends in the pricing for similar... | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 660 | The Company has identified up to three performance obligations regularly included in arrangements involving the sale of iPhone, Mac, iPad and certain other products. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 661 | The first performance obligation, which represents the substantial portion of the allocated sales price, is the hardware and bundled software delivered at the time of sale. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 662 | The second performance obligation is the right to receive certain product-related bundled services, which include iCloud, Siri and Maps. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 663 | The third performance obligation is the right to receive, on a when-and-if-available basis, future unspecified software upgrades relating to the software bundled with each device. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 664 | The Company allocates revenue and any related discounts to these performance obligations based on their relative SSPs. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 665 | Because the Company lacks observable prices for the undelivered performance obligations, the allocation of revenue is based on the Company’s estimated SSPs. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 666 | Revenue allocated to the delivered hardware and bundled software is recognized when control has transferred to the customer, which generally occurs when the product is shipped. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 667 | Revenue allocated to the product-related bundled services and unspecified software upgrade rights is deferred and recognized on a straight-line basis over the estimated period they are expected to be provided. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 668 | Cost of sales related to delivered hardware and bundled software, including estimated warranty costs, are recognized at the time of sale. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 669 | Costs incurred to provide product-related bundled services and unspecified software upgrade rights are recognized as cost of sales as incurred. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 670 | For certain long-term service arrangements, the Company has performance obligations for services it has not yet delivered. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 671 | For these arrangements, the Company does not have a right to bill for the undelivered services. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 672 | The Company has determined that any unbilled consideration relates entirely to the value of the undelivered services. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 673 | Accordingly, the Company has not recognized revenue, and has elected not to disclose amounts, related to these undelivered services. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 674 | Apple Inc. | 2020 Form 10-K | 38
For the sale of third-party products where the Company obtains control of the product before transferring it to the customer, the Company recognizes revenue based on the gross amount billed to customers. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 675 | The Company considers multiple factors when determining whether it obtains control of third-party products including, but not limited to, evaluating if it can establish the price of the product, retains inventory risk for tangible products or has the responsibility for ensuring acceptability of the product. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 676 | For third-party applications sold through the App Store and certain digital content sold through the Company’s other digital content stores, the Company does not obtain control of the product before transferring it to the customer. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 677 | Therefore, the Company accounts for such sales on a net basis by recognizing in Services net sales only the commission it retains. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 678 | The Company has elected to record revenue net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded within other current liabilities until remitted to the relevant government authority. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 679 | Deferred Revenue
As of September 26, 2020 and September 28, 2019, the Company had total deferred revenue of $10.2 billion and $8.1 billion, respectively. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 680 | As of September 26, 2020, the Company expects 65% of total deferred revenue to be realized in less than a year, 25% within one-to-two years, 8% within two-to-three years and 2% in greater than three years. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 681 | Disaggregated Revenue
Net sales disaggregated by significant products and services for 2020, 2019 and 2018 were as follows (in millions):
(1)Products net sales include amortization of the deferred value of unspecified software upgrade rights, which are bundled in the sales price of the respective product. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 682 | (2)Wearables, Home and Accessories net sales include sales of AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and Apple-branded and third-party accessories. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 683 | (3)Services net sales include sales from the Company’s advertising, AppleCare, digital content and other services. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 684 | Services net sales also include amortization of the deferred value of Maps, Siri, and free iCloud storage and Apple TV+ services, which are bundled in the sales price of certain products. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 685 | (4)Includes $5.0 billion of revenue recognized in 2020 that was included in deferred revenue as of September 28, 2019, $5.9 billion of revenue recognized in 2019 that was included in deferred revenue as of September 29, 2018, and $5.8 billion of revenue recognized in 2018 that was included in deferred revenue as of Sep... | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 686 | The Company’s proportion of net sales by disaggregated revenue source was generally consistent for each reportable segment in Note 11, “Segment Information and Geographic Data” for 2020, 2019 and 2018. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 687 | Apple Inc. | 2020 Form 10-K | 39
Note 3 - Financial Instruments
Cash, Cash Equivalents and Marketable Securities
The following tables show the Company’s cash and marketable securities by significant investment category as of September 26, 2020 and September 28, 2019 (in millions):
(1)Level 1 fair value estimates are ba... | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 688 | (2)Level 2 fair value estimates are based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for subst... | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 689 | (3)As of September 26, 2020 and September 28, 2019, total marketable securities included $18.6 billion and $18.9 billion, respectively, that was restricted from general use, related to the State Aid Decision (refer to Note 5, “Income Taxes”) and other agreements. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 690 | Apple Inc. | 2020 Form 10-K | 40
The Company may sell certain of its marketable debt securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 691 | The maturities of the Company’s non-current marketable debt securities generally range from one to five years. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 692 | The Company typically invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 693 | The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 694 | Fair values were determined for each individual security in the investment portfolio. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 695 | When evaluating a marketable debt security for other-than-temporary impairment, the Company reviews factors such as the duration and extent to which the fair value of the 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 m... | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 696 | As of September 26, 2020, the Company does not consider any of its marketable debt securities to be other-than-temporarily impaired. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 697 | Non-Marketable Securities
The Company holds non-marketable equity securities of certain privately held companies without readily determinable fair values. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 698 | As of September 26, 2020 and September 28, 2019, the Company’s non-marketable equity securities had a carrying value of $2.8 billion and $2.9 billion, respectively. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 699 | Restricted Cash
A reconciliation of the Company’s cash and cash equivalents in the Consolidated Balance Sheets to cash, cash equivalents and restricted cash in the Consolidated Statements of Cash Flows as of September 26, 2020 and September 28, 2019 is as follows (in millions):
The Company’s restricted cash primarily c... | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 700 | 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. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 701 | 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. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 702 | 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. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 703 | 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... | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 704 | 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. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 705 | The Company generally hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months. | 0000320193-20-000096/full-submission.txt |
0000320193 | 20201030 | 10-K | 706 | 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. | 0000320193-20-000096/full-submission.txt |
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