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0000320193
20141027
10-K
1,226
The Company also offers a 90-day basic warranty for its service parts used to repair the Company’s hardware products.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,227
The Company provides currently for the estimated cost that may be incurred under its basic limited product warranties at the time related revenue is recognized.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,228
Factors considered in determining appropriate accruals for product warranty obligations include the size of the installed base of products subject to warranty protection, historical and projected warranty claim rates, historical and projected cost-per-claim and knowledge of specific product failures that are outside of...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,229
The Company assesses the adequacy of its pre-existing warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in future estimates.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,230
The following table shows changes in the Company’s accrued warranties and related costs for 2014, 2013 and 2012 (in millions): 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
1,231
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
1,232
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
1,233
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
1,234
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
1,235
The Company has entered into indemnification agreements with its directors and executive officers.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,236
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
1,237
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
1,238
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
1,239
Apple Inc. | 2014 Form 10-K | 74 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, a number of components are currently obtained from single or limited sources.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,240
In addition, the Company competes for various components with other participants in the markets for mobile communication and media devices and personal computers.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,241
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 pricing fluctuations that could materially adversely affect the Company’s financial condition and operating results.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,242
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,243
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
1,244
If the Company’s supply of components for a new or existing product were delayed or constrained, or if an outsourcing partner delayed shipments of completed products to the Company, the Company’s financial condition and operating results could be materially adversely affected.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,245
The Company’s business and financial performance could also be materially adversely affected depending on the time required to obtain sufficient quantities from the original source, or to identify and obtain sufficient quantities from an alternative source.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,246
Continued availability of these components at acceptable prices, or at all, may be affected if those suppliers concentrated 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
1,247
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,248
Therefore, the Company remains subject to significant risks of supply shortages and price increases that could materially adversely affect its financial condition and operating results.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,249
Substantially all of the Company’s hardware products are manufactured by outsourcing partners that are located primarily in Asia.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,250
A significant concentration of this manufacturing is currently performed by a small number of outsourcing partners, often in single locations.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,251
Certain of these outsourcing partners are the sole-sourced suppliers of components and manufacturers for many of the Company’s products.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,252
Although the Company works closely with its outsourcing partners on manufacturing schedules, the Company’s operating results could be adversely affected if its outsourcing partners were unable to meet their production commitments.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,253
The Company’s purchase commitments typically cover its requirements for periods up to 150 days.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,254
Other Off-Balance Sheet Commitments Operating Leases The Company leases various equipment and facilities, including retail space, under noncancelable operating lease arrangements.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,255
The Company does not currently utilize any other off-balance sheet financing arrangements.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,256
The major facility leases are typically for terms not exceeding 10 years and generally contain multi-year renewal options.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,257
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
1,258
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
1,259
Rent expense under all operating leases, including both cancelable and noncancelable leases, was $717 million, $645 million and $488 million in 2014, 2013 and 2012, respectively.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,260
Future minimum lease payments under noncancelable operating leases having remaining terms in excess of one year as of September 27, 2014, are as follows (in millions): Apple Inc. | 2014 Form 10-K | 75 Other Commitments The Company utilizes several outsourcing partners to manufacture sub-assemblies for the Company’s pro...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,261
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
1,262
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
1,263
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
1,264
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
1,265
As of September 27, 2014, the Company had outstanding off-balance sheet third-party manufacturing commitments and component purchase commitments of $24.5 billion.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,266
In addition to the off-balance sheet commitments mentioned above, the Company had outstanding obligations of $3.4 billion as of September 27, 2014, which consisted mainly of commitments to acquire capital assets, including product tooling and manufacturing process equipment, and commitments related to advertising, R&D,...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,267
Contingencies The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully adjudicated.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,268
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
1,269
However, the outcome of litigation is inherently uncertain.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,270
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
1,271
Apple Inc. v. Samsung Electronics Co., Ltd, et al.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,272
On August 24, 2012, a jury returned a verdict awarding the Company $1.05 billion in its lawsuit against Samsung Electronics Co., Ltd and affiliated parties in the United States District Court, Northern District of California, San Jose Division.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,273
On March 6, 2014, the District Court entered final judgment in favor of the Company in the amount of approximately $930 million.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,274
Because the award is now subject to appeal, the Company has not recognized the award in its results of operations.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,275
VirnetX, Inc. v. Apple Inc. et al.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,276
On August 11, 2010, VirnetX, Inc. filed an action against the Company alleging that certain of its products infringed on four patents relating to network communications technology.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,277
On November 6, 2012, a jury returned a verdict against the Company, and awarded damages of $368 million.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,278
On September 16, 2014, the Court of Appeals for the Federal Circuit affirmed the District Court’s decision in part, reversed in part, and vacated the damages award.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,279
The case has been remanded for further proceedings.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,280
Apple Inc. | 2014 Form 10-K | 76 Note 11 - Segment Information and Geographic Data The Company reports segment information based on the “management” approach.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,281
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.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,282
The Company manages its business primarily on a geographic basis.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,283
The Company’s reportable operating segments consist of the Americas, Europe, Greater China, Japan, Rest of Asia Pacific and Retail operations.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,284
The Americas segment includes both North and South America.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,285
The Europe segment includes European countries, as well as India, the Middle East and Africa.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,286
The Greater China segment includes China, Hong Kong and Taiwan.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,287
The Rest of Asia Pacific segment includes Australia and Asian countries, other than those countries included in the Company’s other operating segments.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,288
The results of the Company’s geographic segments do not include results of the Retail segment.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,289
Each operating segment provides similar hardware and software products and similar services.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,290
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 operating segments based on net sales and operating income.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,291
Net sales for geographic segments are generally based on the location of customers, while Retail segment net sales are based on sales through the Company’s retail stores.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,292
Operating income for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,293
Advertising expenses are generally included in the geographic segment in which the expenditures are incurred.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,294
Operating income for each segment excludes other income and expense and certain expenses managed outside the operating segments.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,295
Costs excluded from segment operating income include various corporate expenses such as R&D, corporate marketing expenses, share-based compensation expense, income taxes, various nonrecurring charges, other separately managed general and administrative costs and certain manufacturing period expenses.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,296
The Company does not include intercompany transfers between segments for management reporting purposes.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,297
Segment assets include receivables and inventories, and for the Retail segment also includes capital assets.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,298
Segment assets exclude corporate assets, such as cash and cash equivalents, short-term and long-term marketable securities, vendor non-trade receivables, other long-term investments, manufacturing and corporate facilities, product tooling and manufacturing process equipment, miscellaneous corporate infrastructure, good...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,299
Except for the Retail segment, capital asset purchases for long-lived assets are not reported to management by segment and therefore are excluded from the geographic segment assets and instead included in corporate assets.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,300
Cash payments for capital asset purchases by the Retail segment were $484 million, $495 million and $858 million for 2014, 2013 and 2012, respectively.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,301
The Company’s total depreciation and amortization was $7.9 billion, $6.8 billion and $3.3 billion in 2014, 2013 and 2012, respectively, of which $441 million, $382 million and $319 million was related to the Retail segment in the respective years.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,302
Depreciation and amortization on segment assets included in the geographic segments was not significant.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,303
As the Company continues to expand its business, management believes collaboration across its online, Retail and indirect channels is integral to better serve its customers and optimize its financial results.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,304
Beginning in the first quarter of 2015, management will be assessing business performance and making decisions on a geographic basis, including the results of its retail stores in each respective geographic segment.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,305
Accordingly, the Company will be changing its reportable segments to align with the way the business is managed.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,306
The Company’s reportable operating segments will consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific operations, and the Retail segment will no longer be classified as a separate reportable segment.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,307
The historical segment data for prior periods will be reclassified to reflect this change beginning in the Quarterly Report on Form 10-Q for the quarter ending December 27, 2014.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,308
Apple Inc. | 2014 Form 10-K | 77 The following table shows information by operating segment for 2014, 2013 and 2012 (in millions): A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2014, 2013 and 2012, is as follows (in millions): (1) Amount excludes research an...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,309
Apple Inc. | 2014 Form 10-K | 78 The following table shows total assets by segment and reconciliation to the Consolidated Balance Sheets as of September 27, 2014 and September 28, 2013 (in millions): The U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2014, 2013 and...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,310
There was no single customer that accounted for more than 10% of net sales in 2014, 2013 or 2012.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,311
Net sales for 2014, 2013 and 2012 and long-lived assets as of September 27, 2014 and September 28, 2013 are as follows (in millions): (1) China includes Hong Kong.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,312
Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,313
Apple Inc. | 2014 Form 10-K | 79 Information regarding net sales by product for 2014, 2013 and 2012, is as follows (in millions): (1) Includes deferrals and amortization of related non-software services and software upgrade rights.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,314
(2) Includes revenue from the iTunes Store, the App Store, the Mac App Store, the iBooks Store, AppleCare, licensing and other services.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,315
(3) Includes sales of Apple-branded and third-party accessories for iPhone, iPad, Mac and iPod.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,316
Note 12 - Selected Quarterly Financial Information (Unaudited) The following tables show a summary of the Company’s quarterly financial information for each of the four quarters of 2014 and 2013 (in millions, except per share amounts): (1) Basic and diluted earnings per share are computed independently for each of the ...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,317
Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings per share.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,318
Apple Inc. | 2014 Form 10-K | 80 REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Shareholders of Apple Inc. We have audited the accompanying consolidated balance sheets of Apple Inc. as of September 27, 2014 and September 28, 2013, and the related consolidated state...
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,319
These financial statements are the responsibility of the Company’s management.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,320
Our responsibility is to express an opinion on these financial statements based on our audits.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,321
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,322
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,323
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,324
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
0001193125-14-383437/full-submission.txt
0000320193
20141027
10-K
1,325
We believe that our audits provide a reasonable basis for our opinion.
0001193125-14-383437/full-submission.txt