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0000320193
20141027
10-K
226
Because of the following factors, as well as other factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future per...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
227
Global and regional economic conditions could materially adversely affect the Company.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
228
The Company’s operations and performance depend significantly on global and regional economic conditions.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
229
Uncertainty about global and regional economic conditions poses a risk as consumers and businesses may postpone spending in response to tighter credit, higher unemployment, financial market volatility, government austerity programs, negative financial news, declines in income or asset values and/or other factors.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
230
These worldwide and regional economic conditions could have a material adverse effect on demand for the Company’s products and services.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
231
Demand also could differ materially from the Company’s expectations as a result of currency fluctuations because the Company generally raises prices on goods and services sold outside the U.S. to correspond with the effect of a strengthening of the U.S. dollar.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
232
Other factors that could influence worldwide or regional demand include increases in fuel and other energy costs, conditions in the real estate and mortgage markets, unemployment, labor and healthcare costs, access to credit, consumer confidence and other macroeconomic factors affecting consumer spending behavior.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
233
These and other economic factors could materially adversely affect demand for the Company’s products and services.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
234
In the event of financial turmoil affecting the banking system and financial markets, additional consolidation of the financial services industry, or significant financial service institution failures, there could be a new or incremental tightening in the credit markets, low liquidity and extreme volatility in fixed in...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
235
This could have a number of effects on the Company’s business, including the insolvency or financial instability of outsourcing partners or suppliers or their inability to obtain credit to finance development and/or manufacture products resulting in product delays; inability of customers, including channel partners, to...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
236
Other income and expense also could vary materially from expectations depending on gains or losses realized on the sale or exchange of financial instruments; impairment charges resulting from revaluations of debt and equity securities and other investments; interest rates; cash balances; volatility in foreign exchange ...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
237
Increased volatility in the financial markets and overall economic uncertainty would increase the risk of the actual amounts realized in the future on the Company’s financial instruments differing significantly from the fair values currently assigned to them.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
238
Apple Inc. | 2014 Form 10-K | 9 Global markets for the Company’s products and services are highly competitive and subject to rapid technological change, and the Company may be unable to compete effectively in these markets.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
239
The Company’s products and services compete in highly competitive global markets characterized by aggressive price cutting and resulting downward pressure on gross margins, frequent introduction of new products, short product life cycles, evolving industry standards, continual improvement in product price/performance c...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
240
The Company’s ability to compete successfully depends heavily on its ability to ensure a continuing and timely introduction of innovative new products and technologies to the marketplace.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
241
The Company believes it is unique in that it designs and develops nearly the entire solution for its products, including the hardware, operating system, numerous software applications and related services.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
242
As a result, the Company must make significant investments in R&D.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
243
The Company currently holds a significant number of patents and copyrights and has registered and/or has applied to register numerous patents, trademarks and service marks.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
244
In contrast, many of the Company’s competitors seek to compete primarily through aggressive pricing and very low cost structures, and emulating the Company’s products and infringing on its intellectual property.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
245
If the Company is unable to continue to develop and sell innovative new products with attractive margins or if competitors infringe on the Company’s intellectual property, the Company’s ability to maintain a competitive advantage could be adversely affected.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
246
The Company markets certain mobile communication and media devices based on the iOS mobile operating system and also markets related third-party digital content and applications.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
247
The Company faces substantial competition in these markets from companies that have significant technical, marketing, distribution and other resources, as well as established hardware, software and digital content supplier relationships; and the Company has a minority market share in the smartphone market.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
248
Additionally, the Company faces significant price competition as competitors reduce their selling prices and attempt to imitate the Company’s product features and applications within their own products or, alternatively, collaborate with each other to offer solutions that are more competitive than those they currently ...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
249
The Company also competes with illegitimate ways to obtain third-party digital content and applications and with business models that include content provided to users for free.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
250
Some of the Company’s competitors have greater experience, product breadth and distribution channels than the Company.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
251
Because some current and potential competitors have substantial resources and/or experience and a lower cost structure, they may be able to provide products and services at little or no profit or even at a loss.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
252
The Company also expects competition to intensify as competitors attempt to imitate the Company’s approach to providing components seamlessly within their individual offerings or work collaboratively to offer integrated solutions.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
253
The Company’s financial condition and operating results depend substantially on the Company’s ability to continually improve iOS and iOS devices in order to maintain their functional and design advantages.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
254
The Company is the only authorized maker of hardware using OS X, which has a minority market share in the personal computer market.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
255
This market has been contracting and is dominated by computer makers using competing operating systems, most notably Windows.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
256
In the market for personal computers and accessories, the Company faces a significant number of competitors, many of which have broader product lines, lower priced products and a larger installed customer base.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
257
Historically, consolidation in this market has resulted in larger competitors.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
258
Price competition has been particularly intense as competitors selling Windows-based personal computers have aggressively cut prices and lowered product margins.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
259
An increasing number of Internet-enabled devices that include software applications and are smaller and simpler than traditional personal computers compete for market share with the Company’s existing products.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
260
The Company’s financial condition and operating results also depend on its ability to continually improve the Mac platform to maintain its functional and design advantages.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
261
There can be no assurance the Company will be able to continue to provide products and services that compete effectively.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
262
Apple Inc. | 2014 Form 10-K | 10 To remain competitive and stimulate customer demand, the Company must successfully manage frequent product introductions and transitions.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
263
Due to the highly volatile and competitive nature of the industries in which the Company competes, the Company must continually introduce new products, services and technologies, enhance existing products and services, and effectively stimulate customer demand for new and upgraded products.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
264
The success of new product introductions depends on a number of factors including, but not limited to, timely and successful product development, market acceptance, the Company’s ability to manage the risks associated with new product production ramp-up issues, the availability of application software for new products,...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
265
Accordingly, the Company cannot determine in advance the ultimate effect of new product introductions and transitions.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
266
The Company depends on the performance of distributors, carriers and other resellers.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
267
The Company distributes its products through cellular network carriers, wholesalers, national and regional retailers, and value-added resellers, many of whom distribute products from competing manufacturers.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
268
The Company also sells its products and third-party products in most of its major markets directly to education, enterprise and government customers, and consumers and small and mid-sized businesses through its online and retail stores.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
269
Carriers providing cellular network service for iPhone typically subsidize users’ purchases of the device.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
270
There is no assurance that such subsidies will be continued at all or in the same amounts upon renewal of the Company’s agreements with these carriers or in agreements the Company enters into with new carriers.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
271
Many resellers have narrow operating margins and have been adversely affected in the past by weak economic conditions.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
272
Some resellers have perceived the expansion of the Company’s direct sales as conflicting with their business interests as distributors and resellers of the Company’s products.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
273
Such a perception could discourage resellers from investing resources in the distribution and sale of the Company’s products or lead them to limit or cease distribution of those products.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
274
The Company has invested and will continue to invest in programs to enhance reseller sales, including staffing selected resellers’ stores with Company employees and contractors, and improving product placement displays.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
275
These programs could require a substantial investment while providing no assurance of return or incremental revenue.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
276
The financial condition of these resellers could weaken, these resellers could stop distributing the Company’s products, or uncertainty regarding demand for the Company’s products could cause resellers to reduce their ordering and marketing of the Company’s products.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
277
The Company faces substantial inventory and other asset risk in addition to purchase commitment cancellation risk.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
278
The Company records a write-down for product and component inventories that have become obsolete or exceed anticipated demand or net realizable value and accrues necessary cancellation fee reserves for orders of excess products and components.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
279
The Company also reviews its long-lived assets, including capital assets held at its suppliers’ facilities and inventory prepayments, for impairment whenever events or circumstances indicate the carrying amount of an asset may not be recoverable.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
280
If the Company determines that impairment has occurred, it records a write-down equal to the amount by which the carrying value of the assets exceeds its fair value.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
281
Although the Company believes its provisions related to inventory, capital assets, inventory prepayments and other assets and purchase commitments are currently adequate, no assurance can be given that the Company will not incur additional related charges given the rapid and unpredictable pace of product obsolescence i...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
282
The Company must order components for its products and build inventory in advance of product announcements and shipments.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
283
Consistent with industry practice, components are normally acquired through a combination of purchase orders, supplier contracts and open orders, in each case based on projected demand.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
284
Where appropriate, the purchases are applied to inventory component prepayments that are outstanding with the respective supplier.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
285
Purchase commitments typically cover forecasted component and manufacturing requirements for periods up to 150 days.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
286
Because the Company’s markets are volatile, competitive and subject to rapid technology and price changes, there is a risk the Company will forecast incorrectly and order or produce excess or insufficient amounts of components or products, or not fully utilize firm purchase commitments.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
287
Apple Inc. | 2014 Form 10-K | 11 Future operating results depend upon the Company’s ability to obtain components in sufficient quantities.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
288
Because the Company currently obtains components from single or limited sources, the Company is subject to significant supply and pricing risks.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
289
Many components, including those that are available from multiple sources, are at times subject to industry-wide shortages and significant commodity pricing fluctuations.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
290
While the Company has entered into agreements for the supply of many components, there can be no assurance that the Company will be able to extend or renew these agreements on similar terms, or at all.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
291
A number of suppliers of components may suffer from poor financial conditions, which can lead to business failure for the supplier or consolidation within a particular industry, further limiting the Company’s ability to obtain sufficient quantities of components.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
292
The follow-on effects from global economic conditions on the Company’s suppliers, described in “Global and regional economic conditions could materially adversely affect the Company” above, also could affect the Company’s ability to obtain components.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
293
Therefore, the Company remains subject to significant risks of supply shortages and price increases.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
294
The Company and other participants in the markets for mobile communication and media devices and personal computers also compete for various components with other industries that have experienced increased demand for their products.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
295
The Company uses some custom components that are not common to the rest of these industries.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
296
The Company’s new products often utilize custom components available from only one source.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
297
When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or manufacturing capacity has increased.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
298
Continued availability of these components at acceptable prices, or at all, may be affected if those suppliers decide to concentrate on the production of common components instead of components customized to meet the Company’s requirements.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
299
The supply of components for a new or existing product could be delayed or constrained, or a key manufacturing vendor could delay shipments of completed products to the Company.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
300
The Company depends on component and product manufacturing and logistical services provided by outsourcing partners, many of whom are located outside of the U.S.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
301
Substantially all of the Company’s manufacturing is performed in whole or in part by a few outsourcing partners located primarily in Asia.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
302
The Company has also outsourced much of its transportation and logistics management.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
303
While these arrangements may lower operating costs, they also reduce the Company’s direct control over production and distribution.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
304
It is uncertain what effect such diminished control will have on the quality or quantity of products or services, or the Company’s flexibility to respond to changing conditions.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
305
Although arrangements with these partners may contain provisions for warranty expense reimbursement, the Company may remain responsible to the consumer for warranty service in the event of product defects and could experience an unanticipated product defect or warranty liability.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
306
While the Company relies on its partners to adhere to its supplier code of conduct, material violations of the supplier code of conduct could occur.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
307
The Company relies on sole-sourced outsourcing partners in the U.S., Asia and Europe to supply and manufacture many critical components, and on outsourcing partners primarily located in Asia, for final assembly of substantially all of the Company’s hardware products.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
308
Any failure of these partners to perform may have a negative impact on the Company’s cost or supply of components or finished goods.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
309
In addition, manufacturing or logistics in these locations or transit to final destinations may be disrupted for a variety of reasons including, but not limited to, natural and man-made disasters, information technology system failures, commercial disputes, military actions or economic, business, labor, environmental, ...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
310
The Company has invested in manufacturing process equipment, much of which is held at certain of its outsourcing partners, and has made prepayments to certain of its suppliers associated with long-term supply agreements.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
311
While these arrangements help ensure the supply of components and finished goods, if these outsourcing partners or suppliers experience severe financial problems or other disruptions in their business, the net realizable value of these assets could be negatively impacted.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
312
The Company’s products and services may experience quality problems from time to time that can result in decreased sales and operating margin and harm to the Company’s reputation.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
313
The Company sells complex hardware and software products and services that can contain design and manufacturing defects.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
314
Sophisticated operating system software and applications, such as those sold by the Company, often contain “bugs” that can unexpectedly interfere with the software’s intended operation.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
315
The Company’s online services may from time to time experience outages, service slowdowns, or errors.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
316
Defects may also occur in components and products the Company purchases from third parties.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
317
There can be no assurance the Company will be able to detect and fix all defects in the hardware, software and services it sells.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
318
Failure to do so could result in lost revenue, significant warranty and other expenses and harm to the Company’s reputation.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
319
Apple Inc. | 2014 Form 10-K | 12 The Company relies on access to third-party digital content, which may not be available to the Company on commercially reasonable terms or at all.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
320
The Company contracts with numerous third parties to offer their digital content through the iTunes Store.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
321
This includes the right to make available music, movies, TV shows and books currently available through the iTunes Store.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
322
The licensing or other distribution arrangements with these third parties are for relatively short terms and do not guarantee the continuation or renewal of these arrangements on reasonable terms, if at all.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
323
Some third-party content providers and distributors currently or in the future may offer competing products and services, and could take action to make it more difficult or impossible for the Company to license or otherwise distribute their content in the future.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
324
Other content owners, providers or distributors may seek to limit the Company’s access to, or increase the cost of, such content.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
325
The Company may be unable to continue to offer a wide variety of content at reasonable prices with acceptable usage rules, or continue to expand its geographic reach.
0001193125-14-383437/full-submission.txt