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0000320193
20201030
10-K
807
The Company’s Japanese yen-denominated notes matured during 2020 and the associated net investment hedges were terminated.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
808
For further discussion regarding the Company’s use of derivative instruments, refer to the Derivative Financial Instruments section of Note 3, “Financial Instruments.” The effective interest rates for the Notes include the interest on the Notes, amortization of the discount or premium and, if applicable, adjustments re...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
809
The Company recognized $2.8 billion, $3.2 billion and $3.0 billion of interest cost on its term debt for 2020, 2019 and 2018, respectively.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
810
The future principal payments for the Company’s Notes as of September 26, 2020, are as follows (in millions): As of September 26, 2020 and September 28, 2019, the fair value of the Company’s Notes, based on Level 2 inputs, was $117.1 billion and $107.5 billion, respectively.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
811
Apple Inc. | 2020 Form 10-K | 49 Note 7 - Shareholders’ Equity Share Repurchase Program As of September 26, 2020, the Company was authorized to purchase up to $225 billion of the Company’s common stock under a share repurchase program, of which $168.6 billion had been utilized.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
812
During 2020, the Company repurchased 917 million shares of its common stock for $72.5 billion, including 141 million shares delivered under a $10.0 billion November 2019 accelerated share repurchase arrangement (“ASR”) and 64 million shares delivered under a $6.0 billion May 2020 ASR.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
813
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
814
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 Securities Exchange Act of 1934, as amended (the “Exchange Act”).
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
815
Shares of Common Stock The following table shows the changes in shares of common stock for 2020, 2019 and 2018 (in thousands): Note 8 - Comprehensive Income The Company’s OCI consists of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency, net deferred...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
816
The following table shows the pre-tax amounts reclassified from AOCI into the Consolidated Statements of Operations, and the associated financial statement line items, for 2020 and 2019 (in millions): Apple Inc. | 2020 Form 10-K | 50 The following table shows the changes in AOCI by component for 2020 and 2019 (in milli...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
817
Note 9 - Benefit Plans 2014 Employee Stock Plan In the second quarter of 2014, shareholders approved the 2014 Employee Stock Plan (the “2014 Plan”) and terminated the Company’s authority to grant new awards under the 2003 Employee Stock Plan (the “2003 Plan”).
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
818
The 2014 Plan provides for broad-based equity grants to employees, including executive officers, and permits the granting of RSUs, stock grants, performance-based awards, stock options and stock appreciation rights, as well as cash bonus awards.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
819
RSUs granted under the 2014 Plan generally vest over four years, based on continued employment, and are settled upon vesting in shares of the Company’s common stock on a one-for-one basis.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
820
RSUs granted under the 2014 Plan reduce the number of shares available for grant under the plan by a factor of two times the number of RSUs granted.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
821
RSUs canceled and shares withheld to satisfy tax withholding obligations increase the number of shares available for grant under the 2014 Plan utilizing a factor of two times the number of RSUs canceled or shares withheld.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
822
Currently, all RSUs granted under the 2014 Plan have dividend equivalent rights (“DERs”), which entitle holders of RSUs to the same dividend value per share as holders of common stock.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
823
DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
824
DERs are accumulated and paid when the underlying shares vest.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
825
Upon approval of the 2014 Plan, the Company reserved 1.54 billion shares plus the number of shares remaining that were reserved but not issued under the 2003 Plan.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
826
Shares subject to outstanding awards under the 2003 Plan that expire, are canceled or otherwise terminate, or are withheld to satisfy tax withholding obligations for RSUs, will also be available for awards under the 2014 Plan.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
827
As of September 26, 2020, approximately 808 million shares were reserved for future issuance under the 2014 Plan.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
828
Apple Inc. Non-Employee Director Stock Plan The Apple Inc. Non-Employee Director Stock Plan (the “Director Plan”) is a shareholder-approved plan that (i) permits the Company to grant awards of RSUs or stock options to the Company’s non-employee directors, (ii) provides for automatic initial grants of RSUs upon a non-em...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
829
RSUs granted under the Director Plan reduce the number of shares available for grant under the plan by a factor of two times the number of RSUs granted.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
830
The Director Plan expires on November 12, 2027.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
831
All RSUs granted under the Director Plan are entitled to DERs.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
832
DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
833
DERs are accumulated and paid when the underlying shares vest.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
834
As of September 26, 2020, approximately 4 million shares were reserved for future issuance under the Director Plan.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
835
Apple Inc. | 2020 Form 10-K | 51 Rule 10b5-1 Trading Plans During the three months ended September 26, 2020, Section 16 officers Katherine L. Adams, Timothy D. Cook, Chris Kondo, Luca Maestri, Deirdre O’Brien and Jeffrey Williams had equity trading plans in place in accordance with Rule 10b5-1(c)(1) under the Exchange ...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
836
An equity trading plan is a written document that pre-establishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including shares acquired under the Company’s employee and director equity plans.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
837
Employee Stock Purchase Plan The Employee Stock Purchase Plan (the “Purchase Plan”) is a shareholder-approved plan under which substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
838
An employee’s payroll deductions under the Purchase Plan are limited to 10% of the employee’s compensation and employees may not purchase more than $25,000 of stock during any calendar year.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
839
As of September 26, 2020, approximately 107 million shares were reserved for future issuance under the Purchase Plan.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
840
401(k) Plan The Company’s 401(k) Plan is a deferred salary arrangement under Section 401(k) of the Internal Revenue Code.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
841
Under the 401(k) Plan, participating U.S. employees may defer a portion of their pre-tax earnings, up to the IRS annual contribution limit ($19,500 for calendar year 2020).
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
842
The Company matches 50% to 100% of each employee’s contributions, depending on length of service, up to a maximum of 6% of the employee’s eligible earnings.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
843
Restricted Stock Units A summary of the Company’s RSU activity and related information for 2020, 2019 and 2018, is as follows: The fair value as of the respective vesting dates of RSUs was $10.8 billion, $8.6 billion and $7.6 billion for 2020, 2019 and 2018, respectively.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
844
The majority of RSUs that vested in 2020, 2019 and 2018 were net share settled such that the Company withheld shares with a value equivalent to the employees’ obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
845
The total shares withheld were approximately 56 million, 59 million and 64 million for 2020, 2019 and 2018, respectively, and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
846
Total payments for the employees’ tax obligations to taxing authorities were $3.9 billion, $3.0 billion and $2.7 billion in 2020, 2019 and 2018, respectively.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
847
Apple Inc. | 2020 Form 10-K | 52 Share-Based Compensation The following table shows share-based compensation expense and the related income tax benefit included in the Consolidated Statements of Operations for 2020, 2019 and 2018 (in millions): As of September 26, 2020, the total unrecognized compensation cost related ...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
848
Note 10 - Commitments and Contingencies Accrued Warranty and Guarantees The following table shows changes in the Company’s accrued warranties and related costs for 2020, 2019 and 2018 (in millions): The Company offers an iPhone Upgrade Program, which is available to customers who purchase a qualifying iPhone in the U.S...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
849
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.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
850
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 net sales.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
851
Concentrations in the Available Sources of Supply of Materials and Product Although most components essential to the Company’s business are generally available from multiple sources, certain components are currently obtained from single or limited sources.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
852
The Company also competes for various components with other participants in the markets for smartphones, personal computers, tablets and other electronic devices.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
853
Therefore, many components used by the Company, including those that are available from multiple sources, are at times subject to industry-wide shortage and significant commodity pricing fluctuations.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
854
The Company uses some custom components that are not commonly used by its competitors, and new products introduced by the Company often utilize custom components available from only one source.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
855
When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or their manufacturing capacities have increased.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
856
The continued availability of these components at acceptable prices, or at all, may be affected if suppliers decide to concentrate on the production of common components instead of components customized to meet the Company’s requirements.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
857
The Company has entered into agreements for the supply of many components; however, there can be no guarantee that the Company will be able to extend or renew these agreements on similar terms, or at all.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
858
Substantially all of the Company’s hardware products are manufactured by outsourcing partners that are located primarily in Asia, with some Mac computers manufactured in the U.S. and Ireland.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
859
Apple Inc. | 2020 Form 10-K | 53 Unconditional Purchase Obligations The Company has entered into certain off-balance sheet commitments that require the future purchase of goods or services (“unconditional purchase obligations”).
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
860
The Company’s unconditional purchase obligations primarily consist of payments for supplier arrangements, Internet and telecommunication services, intellectual property licenses and content creation.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
861
Future payments under noncancelable unconditional purchase obligations having a remaining term in excess of one year as of September 26, 2020, are as follows (in millions): Contingencies The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not ...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
862
The outcome of litigation is inherently uncertain.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
863
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
864
In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss greater than a recorded accrual, concerning loss contingencies for asserted legal and other claims, except for the following matters: VirnetX VirnetX, Inc. (“VirnetX”) filed a ...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
865
On April 11, 2018, a jury returned a verdict against the Company and awarded damages of $503 million.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
866
The Company appealed the verdict to the U.S. Court of Appeals for the Federal Circuit, which remanded the case back to the U.S. District Court for the Eastern District of Texas, where it is scheduled for a re-trial in October 2020.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
867
The Company has challenged the validity of the patents at issue in the re-trial at the U.S. Patent and Trademark Office (the “PTO”), and the PTO has declared the patents invalid, subject to further appeal by VirnetX.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
868
iOS Performance Management Cases Various civil litigation matters have been filed in state and federal courts in the U.S. and in various international jurisdictions alleging violation of consumer protection laws, fraud, computer intrusion and other causes of action related to the Company’s performance management featur...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
869
The claims seek monetary damages and other non-monetary relief.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
870
On April 5, 2018, several U.S. federal actions were consolidated through a Multidistrict Litigation process into a single action in the U.S. District Court for the Northern District of California (the “Northern California District Court”).
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
871
On February 28, 2020, the parties in the Multidistrict Litigation reached a settlement to resolve the U.S. federal and California state class actions.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
872
Under the terms of the settlement, which the Northern California District Court preliminarily approved in May 2020, the Company has agreed to pay up to $500 million in the aggregate to certain U.S. owners of iPhones if certain conditions are met.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
873
The final amount of the settlement will be determined based on the number of consumers who file valid claims and the attorneys’ fee award.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
874
However, the Company has agreed to pay at least $310 million to settle the claims.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
875
In addition to civil litigation, the Company is also responding to governmental investigations and requests for information relating to the performance management feature.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
876
The Company continues to believe that its iPhones were not defective, that the performance management feature introduced with iOS updates 10.2.1 and 11.2 was intended to, and did, improve customers’ user experience, and that the Company did not make any misleading statements or fail to disclose any material information...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
877
The Company has accrued its best estimate for the ultimate resolution of these matters.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
878
French Competition Authority On March 16, 2020, the French Competition Authority (“FCA”) announced its decision that aspects of the Company’s sales and distribution practices in France violate French competition law, and issued a fine of €1.1 billion.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
879
The Company strongly disagrees with the FCA’s decision, and has appealed.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
880
Apple Inc. | 2020 Form 10-K | 54 Optis Optis Wireless Technology, LLC and related entities (“Optis”) filed a lawsuit in the U.S. District Court for the Eastern District of Texas against the Company alleging that certain of the Company’s products infringe on patents owned by Optis.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
881
On August 11, 2020, a jury returned a verdict against the Company and awarded damages of $506 million.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
882
The Company has asked the court to set aside the verdict, where the case remains pending.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
883
Note 11 - Segment Information and Geographic Data The Company reports segment information based on the “management” approach.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
884
The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
885
The Company manages its business primarily on a geographic basis.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
886
The Company’s reportable segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
887
Americas includes both North and South America.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
888
Europe includes European countries, as well as India, the Middle East and Africa.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
889
Greater China includes China mainland, Hong Kong and Taiwan.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
890
Rest of Asia Pacific includes Australia and those Asian countries not included in the Company’s other reportable segments.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
891
Although the reportable segments provide similar hardware and software products and similar services, each one is managed separately to better align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic region.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
892
The accounting policies of the various segments are the same as those described in Note 1, “Summary of Significant Accounting Policies.” The Company evaluates the performance of its reportable segments based on net sales and operating income.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
893
Net sales for geographic segments are generally based on the location of customers and sales through the Company’s retail stores located in those geographic locations.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
894
Operating income for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
895
Advertising expenses are generally included in the geographic segment in which the expenditures are incurred.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
896
Operating income for each segment excludes other income and expense and certain expenses managed outside the reportable segments.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
897
Costs excluded from segment operating income include various corporate expenses such as research and development, corporate marketing expenses, certain share-based compensation expenses, income taxes, various nonrecurring charges and other separately managed general and administrative costs.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
898
The Company does not include intercompany transfers between segments for management reporting purposes.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
899
The following table shows information by reportable segment for 2020, 2019 and 2018 (in millions): Apple Inc. | 2020 Form 10-K | 55 A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2020, 2019 and 2018 is as follows (in millions): The U.S. and China were the onl...
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
900
There was no single customer that accounted for more than 10% of net sales in 2020, 2019 and 2018.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
901
Net sales for 2020, 2019 and 2018 and long-lived assets as of September 26, 2020 and September 28, 2019 were as follows (in millions): (1)China includes Hong Kong and Taiwan.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
902
Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
903
Note 12 - Leases The Company has lease arrangements for certain equipment and facilities, including retail, corporate, manufacturing and data center space.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
904
These leases typically have original terms not exceeding 10 years and generally contain multi-year renewal options, some of which are reasonably certain of exercise.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
905
The Company’s lease arrangements may contain both lease and non-lease components.
0000320193-20-000096/full-submission.txt
0000320193
20201030
10-K
906
The Company has elected to combine and account for lease and non-lease components as a single lease component for leases of retail, corporate, and data center facilities.
0000320193-20-000096/full-submission.txt