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0000320193
20141027
10-K
426
The Company’s success depends largely on the continued service and availability of key personnel.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
427
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
428
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
429
The Company’s business may be impacted by political events, war, terrorism, public health issues, natural disasters and other business interruptions.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
430
War, terrorism, geopolitical uncertainties, public health issues and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a material adverse effect on the Company, its suppliers, logistics providers, manufacturing vendors and...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
431
The Company’s business operations are subject to interruption by, among others, natural disasters, whether as a result of climate change or otherwise, fire, power shortages, nuclear power plant accidents, terrorist attacks and other hostile acts, labor disputes, public health issues and other events beyond its control.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
432
Such events could decrease demand for the Company’s products, make it difficult or impossible for the Company to make and deliver products to its customers, including channel partners, or to receive components from its suppliers, and create delays and inefficiencies in the Company’s supply chain.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
433
Should major public health issues, including pandemics, arise, the Company could be adversely affected by more stringent employee travel restrictions, additional limitations in freight services, governmental actions limiting the movement of products between regions, delays in production ramps of new products and disrup...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
434
The majority of the Company’s R&D activities, its corporate headquarters, information technology systems and other critical business operations, including certain component suppliers and manufacturing vendors, are in locations that could be affected by natural disasters.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
435
In the event of a natural disaster, the Company could incur significant losses, require substantial recovery time and experience significant expenditures in order to resume operations.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
436
Apple Inc. | 2014 Form 10-K | 17 The Company expects its quarterly revenue and operating results to fluctuate.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
437
The Company’s profit margins vary across its products and distribution channels.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
438
The Company’s software, accessories, and service and support contracts generally have higher gross margins than certain of the Company’s other products.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
439
Gross margins on the Company’s hardware products vary across product lines and can change over time as a result of product transitions, pricing and configuration changes, and component, warranty, and other cost fluctuations.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
440
The Company’s direct sales generally have higher associated gross margins than its indirect sales through its channel partners.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
441
In addition, the Company’s gross margin and operating margin percentages, as well as overall profitability, may be materially adversely impacted as a result of a shift in product, geographic or channel mix, component cost increases, the strengthening U.S. dollar, price competition, or the introduction of new products, ...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
442
The Company has typically experienced higher net sales in its first quarter compared to other quarters due in part to seasonal holiday demand.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
443
Additionally, new product introductions can significantly impact net sales, product costs and operating expenses.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
444
The Company could be subject to unexpected developments late in a quarter, such as lower-than-anticipated demand for the Company’s products, issues with new product introductions, an internal systems failure, or failure of one of the Company’s logistics, components supply, or manufacturing partners.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
445
The Company’s stock price is subject to volatility.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
446
The Company’s stock price has experienced substantial price volatility in the past and may continue to do so in the future.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
447
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
448
Price volatility over a given period may cause the average price at which the Company repurchases its own stock to exceed the stock’s price at a given point in time.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
449
The Company believes its stock price reflects expectations of future growth and profitability.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
450
The Company also believes its stock price reflects expectations that its cash dividend will continue at current levels or grow and that its current share repurchase program will be fully consummated.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
451
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
452
If the Company fails to meet any of these 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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
453
The Company’s financial performance is subject to risks associated with changes in the value of the U.S. dollar versus local currencies.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
454
The Company’s primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar denominated sales and operating expenses worldwide.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
455
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
456
Margins on sales of the Company’s products in foreign countries and on sales of products that include components obtained from foreign suppliers, could be materially adversely affected by foreign currency exchange rate fluctuations.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
457
In some circumstances, for competitive or other reasons, the Company may decide not to raise local prices to fully offset the dollar’s strengthening, or at all, which would adversely affect the U.S. dollar value of the Company’s foreign currency denominated sales and earnings.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
458
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 instruments, thereby limiting the benefi...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
459
Additionally, strengthening of foreign currencies may also increase the Company’s cost of product components denominated in those currencies, thus adversely affecting gross margins.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
460
The Company uses derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
461
The use of such hedging activities may not 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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
462
Apple Inc. | 2014 Form 10-K | 18 The Company is exposed to credit risk and fluctuations in the market values of its investment portfolio.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
463
Given the global nature of its business, the Company has both domestic and international investments.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
464
Credit ratings and pricing of the Company’s investments can be negatively affected by liquidity, credit deterioration, financial results, economic risk, political risk, sovereign risk or other factors.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
465
As a result, the value and liquidity of the Company’s cash, cash equivalents and marketable securities may fluctuate substantially.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
466
Therefore, although the Company has not realized any significant losses on its cash, cash equivalents and marketable securities, future fluctuations in their value could result in a significant realized loss.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
467
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
468
The Company distributes its products through third-party cellular network carriers, wholesalers, retailers and value-added resellers.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
469
The Company also sells its products directly to small and mid-sized businesses and education, enterprise and government customers.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
470
A substantial majority of the Company’s outstanding trade receivables are not covered by collateral, third-party financing arrangements or credit insurance.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
471
The Company’s exposure to credit and collectability risk on its trade receivables is higher in certain international markets and its ability to mitigate such risks may be limited.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
472
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
473
In addition, the Company has made prepayments associated with long-term supply agreements to secure supply of inventory components.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
474
As of September 27, 2014, a significant portion of the Company’s trade receivables was concentrated within cellular network carriers, and its vendor non-trade receivables and prepayments related to long-term supply agreements were concentrated among a few individual vendors located primarily in Asia.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
475
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
476
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
477
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
478
Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
479
The Company’s future 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, or changes in tax laws or their interpretation, including in the U.S. and Ireland.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
480
For example, in June 2014, the European Commission opened a formal investigation to examine whether decisions by the tax authorities in Ireland with regard to the corporate income tax to be paid by two of the Company’s Irish subsidiaries comply with European Union rules on state aid.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
481
If the European Commission were to take a final decision against Ireland, it could require changes to existing tax rulings that, in turn, could increase the Company’s taxes in the future.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
482
The European Commission could also require Ireland to recover from the Company past taxes reflective of the disallowed state aid.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
483
The Company is also subject to the examination of its tax returns and other tax matters by the Internal Revenue Service and other tax authorities and governmental bodies.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
484
The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for taxes.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
485
There can be no assurance as to the outcome of these examinations.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
486
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 operating results, cash flows and financial condition could be adversely affected.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
487
Item 1B.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
488
Unresolved Staff Comments None.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
489
Apple Inc. | 2014 Form 10-K | 19 Item 2.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
490
Properties The Company’s headquarters are located in Cupertino, California.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
491
As of September 27, 2014, the Company owned or leased 19.7 million square feet of building space, primarily in the U.S.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
492
The Company also owned or leased building space in various locations, including throughout Europe, China, Singapore and Japan.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
493
Of the total owned or leased building space 13.6 million square feet was leased building space, which includes approximately 4.9 million square feet related to retail store space.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
494
Additionally, the Company owns a total of 1,486 acres of land in various locations.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
495
As of September 27, 2014, the Company owned a manufacturing facility in Cork, Ireland that also housed a customer support call center; facilities in Elk Grove, California that included warehousing and distribution operations and a customer support call center; and a manufacturing facility in Mesa, Arizona.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
496
The Company also owned land in Austin, Texas where it is expanding its existing office space and customer support call center.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
497
In addition, the Company owned facilities for R&D and corporate functions in Cupertino, California, including land that is being developed for the Company’s second corporate campus.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
498
The Company also owned data centers in Newark, California; Maiden, North Carolina; Prineville, Oregon; and Reno, Nevada.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
499
Outside the U.S., the Company owned additional facilities for various purposes.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
500
The Company believes its existing facilities and equipment, which are used by all operating segments, are in good operating condition and are suitable for the conduct of its business.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
501
The Company has invested in internal capacity and strategic relationships with outside manufacturing vendors and continues to make investments in capital equipment as needed to meet anticipated demand for its products.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
502
Item 3.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
503
Legal Proceedings The Company is subject to the various legal proceedings and claims discussed below as well as certain other legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
504
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 in excess of a recorded accrual, with respect to loss contingencies.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
505
However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
506
Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be ma...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
507
See the risk factor “The Company could be impacted by unfavorable results of legal proceedings, such as being found to have infringed on intellectual property rights” in Part I, Item 1A of this Form 10-K under the heading “Risk Factors.” The Company settled certain matters during the fourth quarter of 2014 that did not...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
508
The Apple iPod iTunes Antitrust Litigation (formerly Charoensak v. Apple Computer, Inc. and Tucker v. Apple Computer, Inc.) These related cases were filed on January 3, 2005 and July 21, 2006 in the United States District Court for the Northern District of California on behalf of a purported class of direct purchasers ...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
509
Plaintiffs are seeking unspecified compensatory and punitive damages for the class, treble damages, injunctive relief, disgorgement of revenues and/or profits and attorneys fees.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
510
Plaintiffs are also seeking digital rights management free versions of any songs downloaded from iTunes or an order requiring the Company to license its digital rights management to all competing music players.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
511
The cases are set for trial in November 2014.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
512
Apple Inc. | 2014 Form 10-K | 20 Apple eBooks Antitrust Litigation (United States of America v. Apple Inc., et al.)
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
513
On April 11, 2012, the U.S. Department of Justice filed a civil antitrust action against the Company and five major book publishers in the U.S. District Court for the Southern District of New York, alleging an unreasonable restraint of interstate trade and commerce in violation of §1 of the Sherman Act and seeking, amo...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
514
On July 10, 2013, the District Court found, following a bench trial, that the Company conspired to restrain trade in violation of §1 of the Sherman Act and relevant state statutes to the extent those laws are congruent with §1 of the Sherman Act.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
515
The District Court entered a permanent injunction, which took effect on October 6, 2013 and will be in effect for five years unless the judgment is overturned on appeal.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
516
The Company has taken the necessary steps to comply with the terms of the District Court’s order, including renegotiating agreements with the five major eBook publishers, updating its antitrust training program and hiring an antitrust compliance monitor.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
517
The Company appealed the District Court’s decision.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
518
Pursuant to a settlement agreement reached by the parties in June 2014, any damages the Company may be obligated to pay will be determined by the outcome of the appellate decision.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
519
Item 4.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
520
Mine Safety Disclosures Not applicable.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
521
PART II Item 5.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
522
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common stock is traded on the NASDAQ Stock Market LLC (“NASDAQ”) under the symbol AAPL.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
523
Price Range of Common Stock The price range per share of common stock presented below represents the highest and lowest intraday sales prices for the Company’s common stock on the NASDAQ during each quarter of the two most recent years.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
524
On June 6, 2014, the Company effected a seven-for-one stock split to shareholders of record as of June 2, 2014.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
525
All share and per share information has been retroactively adjusted to reflect the stock split.
0001193125-14-383437/full-submission.txt