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UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K (Mark One)☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended September 29, 2018 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193... | APPL_4Q18.pdf |
Large accelerated filer ☒ Accelerated filer ☐Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financialaccounti... | APPL_4Q18.pdf |
Apple Inc. Form 10-K For the Fiscal Year Ended September 29, 2018 TABLE OF CONTENTS Page Part I Item 1. Business 1 Item 1A. Risk Factors 8 Item 1B. Unresolved Staff Comments 17 Item 2. Properties 18 Item 3. Legal Proceedings 18 Item 4. Mine Safety Disclosures 18 Part II Item 5. Market for Registrant's Common Equity, ... | APPL_4Q18.pdf |
This Annual Report on Form 10-K (“Form 10-K”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995,that involve risks and uncertainties. Many of the forward-looking statements are located in Part II, Item 7 of this Form 10-K under the heading “Management's Disc... | APPL_4Q18.pdf |
i Padi Pad is the Company's line of multi-purpose tablets based on its i OS operating system, which includes i Pad Pro ®, i Pad and i Pad mini ®. i Pad includes Siri,Apple Pay and Touch ID. In March 2018, the Company released a new 9. 7-inch i Pad with Apple Pencil ® compatibility. In October 2018, the Companyintroduce... | APPL_4Q18.pdf |
i Cloudi Cloud is the Company's cloud service which stores music, photos, contacts, calendars, mail, documents and more, keeping them up-to-date and availableacross multiple i OS devices, Mac and Windows personal computers and Apple TV. i Cloud services include i Cloud Drive ®, i Cloud Photos, Family Sharing, Find My i... | APPL_4Q18.pdf |
Markets and Distribution The Company's customers are primarily in the consumer, small and mid-sized business, education, enterprise and government markets. The Company sells itsproducts and resells third-party products in most of its major markets directly to consumers and small and mid-sized businesses through its ret... | APPL_4Q18.pdf |
The Company's services also face substantial competition, including from companies that have significant resources and experience and have establishedservice offerings with large customer bases. The Company competes with business models that provide content to users for free. The Company also competeswith illegitimate ... | APPL_4Q18.pdf |
The Company regularly files patent applications to protect innovations arising from its research, development and design, and is currently pursuing thousands ofpatent applications around the world. Over time, the Company has accumulated a large portfolio of issued patents, including utility patents, design patents ando... | APPL_4Q18.pdf |
Available Information The Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Secur ities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the Securities and Exchange Commissi... | APPL_4Q18.pdf |
Item 1A. Risk Factors The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Form10-K. The following information should be read in conjunction with Part II, Item 7, “Management's Discussion and Analysis of Financial Con... | APPL_4Q18.pdf |
The Company has a minority market share in the global smartphone, tablet and personal computer markets. The Company faces substantial competition inthese markets from companies that have significant technical, marketing, distribution and other resources, as well as established hardware, software and digitalcontent supp... | APPL_4Q18.pdf |
The Company faces substantial inventory and other asset risk in addition to purchase commitment cancellation risk. The Company records a write-down for product and component inventories that have become obsolete or exceed anticipated demand, or for which costexceeds net realizable value. The Company also accrues necess... | APPL_4Q18.pdf |
The Company has invested in manufacturing process equipment, much of which is held at certain of its outsourcing partners, and has made prepayments tocertain of its suppliers associated with long-term supply agreements. While these arrangements help ensure the supply of components and finished goods, ifthese outsourcin... | APPL_4Q18.pdf |
The Company's minority market share in the global smartphone, tablet and personal computer markets could make developers less inclined to develop orupgrade software for the Company's products and more inclined to devote their resources to developing and upgrading software for competitors' products withlarger market sha... | APPL_4Q18.pdf |
The Company is subject to laws and regulations worldwide, changes to which could increase the Company's costs and individually or in theaggregate adversely affect the Company's business. The Company is subject to laws and regulations affecting its domestic and international operations in a number of areas. These U. S. ... | APPL_4Q18.pdf |
Investment in new business strategies and acquisitions could disrupt the Company's ongoing business and present risks not originallycontemplated. The Company has invested, and in the future may invest, in new business strategies or acquisitions. Such endeavors may involve significant risks anduncertainties, including d... | APPL_4Q18.pdf |
Under payment card rules and obligations, if cardholder information is potentially compromised, the Company could be liable for associated investigatoryexpenses and could also incur significant fees or fines if the Company fails to follow payment card industry data security standards. The Company could alsoexperience a... | APPL_4Q18.pdf |
The Company's operations are also subject to the risks of industrial accidents at its suppliers and contract manufacturers. While the Company's suppliers arerequired to maintain safe working environments and operations, an industrial accident could occur and could result in disruption to the Company's business andharm ... | APPL_4Q18.pdf |
The Company is exposed to credit risk and fluctuations in the market values of its investment portfolio. The Company's investments can be negatively affected by liquidity, credit deterioration, financial results, market and economic conditions, political risk,sovereign risk, interest rate fluctuations or other factors.... | APPL_4Q18.pdf |
Item 2. Properties The Company's headquarters are located in Cupertino, California. As of September 29, 2018, the Company owned 16. 5 million square feet and leased24. 3 million square feet of building space, primarily in the U. S. Additionally, the Company owned a total of 7,376 acres of land, primarily in the U. S. A... | APPL_4Q18.pdf |
PART IIItem 5. 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. Holders As of October 26, 2018, there were 23,712 shareholders of record. Purchases of Equity ... | APPL_4Q18.pdf |
Company Stock Performance The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend-reinvested basis, for the Company, the S&P 500 Index,the S&P Information Technology Index and the Dow Jones U. S. Technology Supersector Index for the five years ended September 29, 2018. Th... | APPL_4Q18.pdf |
Item 6. Selected Financial Data The information set forth below for the five years ended September 29, 2018, is not necessarily indicative of results of future operations, and should be read inconjunction with Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” and t... | APPL_4Q18.pdf |
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section and other parts of this Annual Report on Form 10-K (“Form 10-K”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties... | APPL_4Q18.pdf |
Sales Data The following table shows net sales by reportable segment and net sales and unit sales by product for 2018, 2017 and 2016 (dollars in millions and units inthousands): 2018 Change 2017 Change 2016 Net Sales by Reportable Se gment: Americas $ 112,093 16 % $96,600 12 % $86,613 Europe 6... | APPL_4Q18.pdf |
Product Performancei Phone The following table presents i Phone net sales and unit sales information for 2018, 2017 and 2016 (dollars in millions and units in tho usands): 2018 Change 2017 Change 2016 Net sales $ 166,699 18 % $141,319 3 % $136,700 Percentage of total net sales 63 % 62 % 63 %Unit sales... | APPL_4Q18.pdf |
Services The following table prese nts Services net sales information for 2018, 2017 and 2016 (dollars in millions): 2018 Change 2017 Change 2016 Net sales $ 37,190 24 % $29,980 23 % $24,348 Percentage of total net sales 14 % 13 % 11 %The year-over-year growth in Services net sales in 2018 was due p... | APPL_4Q18.pdf |
Greater China The following table prese nts Greater China net sales information for 2018, 2017 and 2016 (dollars in millions): 2018 Change 2017 Change 2016 Net sales $ 51,942 16 % $44,764 (8 )% $48,492 Percentage of total net sales 20 % 20 % 22 %Greater China net sales increased during 2018 compared... | APPL_4Q18.pdf |
Gross margin increased in 2017 compared to 2016 due primarily to a shift in mix to Services and an overall increase in product volumes. Gross marginpercentage decreased year-over-year due primarily to higher product costs, partially offset by a favorable shift in mix to Services. The weakness in foreigncurrencies relat... | APPL_4Q18.pdf |
Provision for Income Taxes Provision for income ta xes and effective tax rates for 2018, 2017 and 2016 were as follows (dollars in millions): 2018 2017 2016 Provision for income taxes $ 13,372 $15,738 $15,685 Effective tax rate 18. 3 % 24. 6 % 25. 6 %On December 22, 2017, the U. S. enacted the Tax Cuts and Jo... | APPL_4Q18.pdf |
Income Taxes In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The Compa... | APPL_4Q18.pdf |
Liquidity and Capital Resources The following table presents selected financial information and statistics as of and for the years ended September 29, 2018, September 30, 2017 and September 24, 2016 (in millions): 2018 2017 2016 Cash, cash equivalents a nd marketable securities (1) $ 237,100 $268,895 $237,585... | APPL_4Q18.pdf |
As of September 29, 2018, the Company had outstanding floating-and fixed-rate notes with varying maturities for an aggregate principal amount of $104. 2 billion (collectively the “Notes”). During 2018, the Company issued $7. 0 billion and repaid $6. 5 billion of Notes. The Company has entered, and in the future may ent... | APPL_4Q18.pdf |
Deemed Repatriation Tax Payable As of September 29, 2018, a significant portion of the other non-current liabilities in the Company's Consolidated Balance Sheet consisted of the deemedrepatriation tax payable impo sed by the Act. The Company plans to pay the deemed repatriation tax payable in installments in accordance... | APPL_4Q18.pdf |
Revenue Recognition Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications, accessories, and service and support contracts. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determina... | APPL_4Q18.pdf |
Valuation and Impairment of Marketable Securities The Company's investments in available-for-sale securities are reported at fair value. Unrealized gains and losses related to changes in the fair value ofsecurities are generally recognized in accumulated other comprehensive income, net of tax, in the Company's Consolid... | APPL_4Q18.pdf |
Management believes it is more likely than not that forecasted income, including income that may be generated as a result of certain tax planning strategies,together with future reversals of existing taxable temporary differences, will be sufficient to recover the Company's deferred tax assets. In the event that the Co... | APPL_4Q18.pdf |
As of September 29, 2018 and September 30, 2017, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregatecarrying amount of $102. 5 billion and $103. 7 billion, respectively. The Company has entered, and in the future may enter, into interest rate swaps to manageinterest rate ... | APPL_4Q18.pdf |
Item 8. Financial Statement s and Supplementary Data Index to Consolidated Financial Statements Page Consolidated Statements of Operation s for the years ended September 29, 2018, September 30, 2017 and September 24, 2016 38 Consolidated Statements of Comp rehensive Income for the years ended September 29, 2018, Sep... | APPL_4Q18.pdf |
Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except nu mber of shares which are reflected in thousands and per share amounts) Years ended September 29, 2018 September 30, 2017 September 24, 2016 Net sales $ 265,595 $229,234 $215,639 Cost of sales 163,756 141,048 131,376 Gross margin 101... | APPL_4Q18.pdf |
Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Years ended September 29, 2018 September 30, 2017 September 24, 2016 Net income $ 59,531 $48,351 $45,687 Other comprehensive incom e/(loss): Change in foreign currency tran slation, net of tax effects of $(1), $(77) and $8,respe... | APPL_4Q18.pdf |
Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except nu mber of shares which are reflected in thousands and par value) September 29, 2018 September 30, 2017 ASSETS: Current assets: Cash and cash equivalents $ 25,913 $20,289 Marketable securities 40,388 53,892 Accounts receivable, net 23,186 17,874 Inv... | APPL_4Q18.pdf |
Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except nu mber of shares which are reflected in thousands and per share amounts) Common Stock and Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income/(Loss) Total Shareholders'Equity Shares Amount Balan... | APPL_4Q18.pdf |
Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Years ended September 29, 2018 September 30, 2017 September 24, 2016 Cash and cash equivalents, beginning of the year $20,289 $20,484 $21,120 Operating activities: Net income 59,531 48,351 45,687 Adjustments to reconcile net income to cas... | APPL_4Q18.pdf |
Apple Inc. Notes to Consolidated Financial Statements Note 1-Summary of Significan t Accounting Policies Apple Inc. and its wholly-owned subsidiaries (collectively “Apple” or the “Company”) designs, manufactures and markets mobile communication and mediadevices and personal computers, and sells a variety of related sof... | APPL_4Q18.pdf |
The Company records deferred revenue when it receives payments in advance of the delivery of products or the performance of services. This includes amountsthat have been deferred for unspecified and specified software upgrade rights and non-software services that are attached to hardware and software products. The Comp... | APPL_4Q18.pdf |
Share-Based Compensation The Company generally measures share-based compensation based on the closing price of the Company's common stock on the date of grant, and recognizesexpense on a straight-line basis for its estimate of equity awards that will ultimately vest. Further information regarding share-based compensati... | APPL_4Q18.pdf |
Fair Value Measurements The Company's valuation techniques used to measure the fair value of money market funds and certain marketable equity securities are derived from quotedprices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of the Company's debt inst... | APPL_4Q18.pdf |
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