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0000320193 | 20141027 | 10-K | 726 | In the third quarter of 2014 and 2013, the Company issued $12.0 billion and $17.0 billion of long-term debt, respectively. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 727 | The debt issuances included floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $29.0 billion (collectively the “Notes”). | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 728 | The Company has entered, and may enter in the future, into interest rate swaps to manage interest rate risk on the Notes. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 729 | Interest rate swaps allow the Company to effectively convert fixed-rate payments into floating-rate payments or floating-rate payments into fixed-rate payments. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 730 | In the third quarter of 2014, the Company entered into interest rate swaps with an aggregate notional amount of $9.0 billion, which effectively converted most of the fixed-rate notes into floating-rate notes, and in the third quarter of 2013, the Company entered into interest rate swaps with an aggregate notional amoun... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 731 | Capital Return Program
In April 2014, the Company’s Board of Directors increased the share repurchase program authorization from $60 billion to $90 billion of the Company’s common stock, of which $67.9 billion had been utilized as of September 27, 2014. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 732 | The share repurchase program is expected to be completed by the end of December 2015. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 733 | 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 | 734 | Under the program, shares may be repurchased in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 735 | Apple Inc. | 2014 Form 10-K | 36
The increase to the Company’s share repurchase program authorization resulted in a total capital return program of over $130 billion. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 736 | The Company expects to complete the capital return program by the end of December 2015 by paying dividends and dividend equivalents, repurchasing shares and remitting withheld taxes related to net share settlement of restricted stock units. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 737 | To assist in funding its capital return program, the Company expects to access the debt markets, both domestically and internationally. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 738 | The following table presents the Company’s dividends, dividend equivalents, share repurchases and net share settlement activity from the start of the capital return program in August 2012 through September 2014 (in millions):
Off-Balance Sheet Arrangements and Contractual Obligations
The Company has not entered into an... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 739 | The following table presents certain payments due by the Company under contractual obligations with minimum firm commitments as of September 27, 2014, and excludes amounts already recorded on the Consolidated Balance Sheet, except for long-term debt (in millions):
Operating Leases
The Company’s major facility leases ar... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 740 | Leases for retail space are for terms ranging from five to 20 years, the majority of which are for 10 years, and often contain multi-year renewal options. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 741 | As of September 27, 2014, the Company’s total future minimum lease payments under noncancelable operating leases were $5.0 billion, of which $3.6 billion related to leases for retail space. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 742 | Apple Inc. | 2014 Form 10-K | 37
Purchase Commitments
The Company utilizes several outsourcing partners to manufacture sub-assemblies for the Company’s products and to perform final assembly and testing of finished products. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 743 | These outsourcing partners acquire components and build product based on demand information supplied by the Company, which typically covers periods up to 150 days. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 744 | The Company also obtains individual components for its products from a wide variety of individual suppliers. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 745 | Consistent with industry practice, the Company acquires components through a combination of purchase orders, supplier contracts and open orders based on projected demand information. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 746 | 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 | 747 | Other Obligations
The Company’s other obligations were comprised mainly of commitments to acquire capital assets, including product tooling and manufacturing process equipment and commitments related to advertising, R&D, Internet and telecommunications services and other obligations. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 748 | The Company’s other non-current liabilities in the Consolidated Balance Sheets consist primarily of deferred tax liabilities, gross unrecognized tax benefits and the related gross interest and penalties. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 749 | As of September 27, 2014, the Company had non-current deferred tax liabilities of $20.3 billion. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 750 | Additionally, as of September 27, 2014, the Company had gross unrecognized tax benefits of $4.0 billion and an additional $630 million for gross interest and penalties classified as non-current liabilities. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 751 | At this time, the Company is unable to make a reasonably reliable estimate of the timing of payments in individual years in connection with these tax liabilities; therefore, such amounts are not included in the above contractual obligation table. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 752 | Indemnification
The Company generally does not indemnify end-users of its operating system and application software against legal claims that the software infringes third-party intellectual property rights. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 753 | Other agreements entered into by the Company sometimes include indemnification provisions under which the Company could be subject to costs and/or damages in the event of an infringement claim against the Company or an indemnified third-party. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 754 | However, the Company has not been required to make any significant payments resulting from such an infringement claim asserted against it or an indemnified third-party. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 755 | In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss with respect to indemnification of end-users of its operating system or application software for infringement of third-party intellectual property rights. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 756 | The Company did not record a liability for infringement costs related to indemnification as of September 27, 2014 or September 28, 2013. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 757 | The Company has entered into indemnification agreements with its directors and executive officers. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 758 | Under these agreements, the Company has agreed to indemnify such individuals to the fullest extent permitted by law against liabilities that arise by reason of their status as directors or officers and to advance expenses incurred by such individuals in connection with related legal proceedings. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 759 | It is not possible to determine the maximum potential amount of payments the Company could be required to make under these agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each claim. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 760 | However, the Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations and payments made under these agreements historically have not been material. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 761 | Apple Inc. | 2014 Form 10-K | 38
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) and the Company’s discussion and analysis of its financial condition and operating results require the Com... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 762 | Note 1, “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 763 | Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 764 | Actual results may differ from these estimates and such differences may be material. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 765 | Management believes the Company’s critical accounting policies and estimates are those related to revenue recognition, valuation and impairment of marketable securities, inventory valuation and valuation of manufacturing-related assets and estimated purchase commitment cancellation fees, warranty costs, income taxes an... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 766 | Management considers these policies critical because they are both important to the portrayal of the Company’s financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 767 | The Company’s senior management has reviewed these critical accounting policies and related disclosures with the Audit and Finance Committee of the Company’s Board of Directors. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 768 | Revenue Recognition
Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications, accessories, and service and support contracts. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 769 | The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 770 | Product is considered delivered to the customer once it has been shipped and title, risk of loss and rewards of ownership have been transferred. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 771 | For most of the Company’s product sales, these criteria are met at the time the product is shipped. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 772 | For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 773 | The Company recognizes revenue from the sale of hardware products, software bundled with hardware that is essential to the functionality of the hardware and third-party digital content sold on the iTunes Store in accordance with general revenue recognition accounting guidance. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 774 | The Company recognizes revenue in accordance with industry specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software products, (ii) sales of software upgrades and (iii) sales of software bundled with hardware not essential to the functionality of the hardware. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 775 | For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality, undelivered software elements that relate to the hardware product’s essential software and/or undelivered non-software services, the Company allocates revenue to all deliverables based on... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 776 | In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of selling price (“ESP”). | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 777 | VSOE generally exists only when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 778 | ESPs reflect the Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 779 | For sales of qualifying versions of iOS devices, Mac and Apple TV, the Company has indicated it may from time to time provide future unspecified software upgrades and features free of charge to customers. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 780 | The Company also provides various non-software services to owners of qualifying versions of iOS devices and Mac. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 781 | Because the Company has neither VSOE nor TPE for the unspecified software upgrade rights or the non-software services, revenue is allocated to these rights and services based on the Company’s ESPs. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 782 | Revenue allocated to the unspecified software upgrade rights and non-software services based on the Company’s ESPs is deferred and recognized on a straight-line basis over the estimated period the software upgrades and non-software services are expected to be provided for each of these devices, which ranges from two to... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 783 | Apple Inc. | 2014 Form 10-K | 39
The Company’s process for determining ESPs involves management’s judgment and considers multiple factors that may vary over time depending upon the unique facts and circumstances related to each deliverable. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 784 | Should future facts and circumstances change, the Company’s ESPs and the future rate of related amortization for software upgrades and non-software services related to future sales of these devices could change. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 785 | Factors subject to change include the unspecified software upgrade rights offered, the estimated value of unspecified software upgrade rights, the estimated or actual costs incurred to provide non-software services and the estimated period software upgrades and non-software services are expected to be provided. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 786 | The Company records reductions to revenue for estimated commitments related to price protection and other customer incentive programs. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 787 | For transactions involving price protection, the Company recognizes revenue net of the estimated amount to be refunded, provided the refund amount can be reasonably and reliably estimated and the other conditions for revenue recognition have been met. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 788 | The Company’s policy requires that, if refunds cannot be reliably estimated, revenue is not recognized until reliable estimates can be made or the price protection lapses. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 789 | For the Company’s other customer incentive programs, the estimated cost is recognized at the later of the date at which the Company has sold the product or the date at which the program is offered. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 790 | The Company also records reductions to revenue for expected future product returns based on the Company’s historical experience. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 791 | Future market conditions and product transitions may require the Company to increase customer incentive programs that could result in reductions to future revenue. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 792 | Additionally, certain customer incentive programs require management to estimate the number of customers who will actually redeem the incentive. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 793 | Management’s estimates are based on historical experience and the specific terms and conditions of particular incentive programs. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 794 | If a greater than estimated proportion of customers redeems such incentives, the Company would be required to record additional reductions to revenue, which would have an adverse impact on the Company’s results of operations. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 795 | Valuation and Impairment of Marketable Securities
The Company’s investments in available-for-sale securities are reported at fair value. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 796 | Unrealized gains and losses related to changes in the fair value of securities are recognized in accumulated other comprehensive income, net of tax, in the Company’s Consolidated Balance Sheets. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 797 | Changes in the fair value of available-for-sale securities impact the Company’s net income only when such securities are sold or an other-than-temporary impairment is recognized. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 798 | Realized gains and losses on the sale of securities are determined by specific identification of each security’s cost basis. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 799 | The Company regularly reviews its investment portfolio to determine if any security is other-than-temporarily impaired, which would require the Company to record an impairment charge in the period any such determination is made. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 800 | In making this judgment, the Company evaluates, among other things, the duration and extent to which the fair value of a 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 more likely than not be required to sell, the secur... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 801 | The Company’s assessment on whether a security is other-than-temporarily impaired could change in the future due to new developments or changes in assumptions related to any particular security. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 802 | Inventory Valuation and Valuation of Manufacturing-Related Assets and Estimated Purchase Commitment Cancellation Fees
The Company must order components for its products and build inventory in advance of product shipments and has invested in manufacturing process equipment, including capital assets held at its suppliers... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 803 | In addition, the Company has made prepayments to certain of its suppliers associated with long-term supply agreements to secure supply of inventory components. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 804 | The Company records a write-down for inventories of components and products, including third-party products held for resale, which have become obsolete or are in excess of anticipated demand or net realizable value. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 805 | The Company performs a detailed review of inventory that considers multiple factors including demand forecasts, product life cycle status, product development plans, current sales levels and component cost trends. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 806 | The Company also reviews its manufacturing-related capital assets and inventory prepayments for impairment whenever events or circumstances indicate the carrying amount of such assets may not be recoverable. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 807 | If the Company determines that an asset is not recoverable, it records an impairment loss equal to the amount by which the carrying value of such an asset exceeds its fair value. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 808 | Apple Inc. | 2014 Form 10-K | 40
The industries in which the Company competes are subject to a rapid and unpredictable pace of product and component obsolescence and demand changes. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 809 | In certain circumstances the Company may be required to record additional write-downs of inventory, inventory prepayments and/or manufacturing-related capital assets. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 810 | These circumstances include future demand or market conditions for the Company’s products being less favorable than forecasted, unforeseen technological changes or changes to the Company’s product development plans that negatively impact the utility of any of these assets, or significant deterioration in the financial ... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 811 | Such write-downs would adversely affect the Company’s results of operations in the period when the write-downs were recorded. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 812 | The Company records accruals for estimated cancellation fees related to component orders that have been cancelled or are expected to be cancelled. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 813 | Consistent with industry practice, the Company acquires components 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 | 814 | 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 | 815 | Purchase commitments typically cover the Company’s forecasted component and manufacturing requirements for periods up to 150 days. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 816 | If there is an abrupt and substantial decline in demand for one or more of the Company’s products, if the Company’s product development plans change, or if there is an unanticipated change in technological requirements for any of the Company’s products, then the Company may be required to record additional accruals for... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 817 | Warranty Costs
The Company provides for the estimated cost of warranties at the time the related revenue is recognized based on historical and projected warranty claim rates, historical and projected cost-per-claim and knowledge of specific product failures that are outside of the Company’s typical experience. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 818 | Each quarter, the Company re-evaluates these estimates to assess the adequacy of its recorded warranty liabilities considering the size of the installed base of products subject to warranty protection and adjusts the amounts as necessary. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 819 | If actual product failure rates or repair costs differ from estimates, revisions to the estimated warranty liabilities would be required and could materially affect the Company’s results of operations. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 820 | Income Taxes
The Company records a tax provision for the anticipated tax consequences of the reported results of operations. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 821 | The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax cred... | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 822 | Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 823 | The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 824 | The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. | 0001193125-14-383437/full-submission.txt |
0000320193 | 20141027 | 10-K | 825 | The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. | 0001193125-14-383437/full-submission.txt |
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