Apple - Annual Report PDF

TableofContents
UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549

Form10K

(MarkOne)
ANNUALREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934
ForthefiscalyearendedSeptember26,2015
or
TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934
Forthetransitionperiodfromto
CommissionFileNumber:00136743

AppleInc.
(ExactnameofRegistrantasspecifiedinitscharter)

California 942404110
(Stateorotherjurisdictionofincorporationororganization) (I.R.S.EmployerIdentificationNo.)
1InfiniteLoop
Cupertino,California 95014
(Addressofprincipalexecutiveoffices) (ZipCode)
(408)9961010
(Registrantstelephonenumber,includingareacode)

SecuritiesregisteredpursuanttoSection12(b)oftheAct:
CommonStock,$0.00001parvaluepershare TheNASDAQStockMarketLLC
1.000%Notesdue2022 NewYorkStockExchangeLLC
(Titleofclass) (Nameofexchangeonwhichregistered)
SecuritiesregisteredpursuanttoSection12(g)oftheAct:None

IndicatebycheckmarkiftheRegistrantisawellknownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.
YesNo
IndicatebycheckmarkiftheRegistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.
YesNo
IndicatebycheckmarkwhethertheRegistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934during
thepreceding12months(orforsuchshorterperiodthattheRegistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirements
forthepast90days.
YesNo
IndicatebycheckmarkwhethertheRegistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredto
besubmittedandpostedpursuanttoRule405ofRegulationST(232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthat
theRegistrantwasrequiredtosubmitandpostsuchfiles).
YesNo
IndicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoItem405ofRegulationSK(229.405ofthischapter)isnotcontainedherein,andwillnot
becontained,tothebestoftheRegistrantsknowledge,indefinitiveproxyorinformationstatementsincorporatedbyreferenceinPartIIIofthisForm10Kor
anyamendmenttothisForm10K.
IndicatebycheckmarkwhethertheRegistrantisalargeacceleratedfiler,anacceleratedfiler,anonacceleratedfiler,orasmallerreportingcompany.Seethe
definitionsoflargeacceleratedfiler,acceleratedfilerandsmallerreportingcompanyinRule12b2oftheExchangeAct.

Large accelerated filer Acceleratedfiler

Nonaccelerated filer
(Donotcheckifasmallerreportingcompany) Smallerreportingcompany

IndicatebycheckmarkwhethertheRegistrantisashellcompany(asdefinedinRule12b2oftheAct).
YesNo
The aggregate market value of the voting and nonvoting stock held by nonaffiliates of the Registrant, as of March 27, 2015, the last business day of the
Registrants most recently completed second fiscal quarter, was approximately $709,923,000,000. Solely for purposes of this disclosure, shares of common
stockheldbyexecutiveofficersanddirectorsoftheRegistrantasofsuchdatehavebeenexcludedbecausesuchpersonsmaybedeemedtobeaffiliates.This
determinationofexecutiveofficersanddirectorsasaffiliatesisnotnecessarilyaconclusivedeterminationforanyotherpurposes.
5,575,331,000sharesofcommonstockwereissuedandoutstandingasofOctober9,2015.
DOCUMENTSINCORPORATEDBYREFERENCE
PortionsoftheRegistrantsdefinitiveproxystatementrelatingtoits2016annualmeetingofshareholders(the2016ProxyStatement)areincorporatedby
reference into Part III of this Annual Report on Form 10K where indicated. The 2016 Proxy Statement will be filed with the U.S. Securities and Exchange
Commissionwithin120daysaftertheendofthefiscalyeartowhichthisreportrelates.
TableofContents
AppleInc.
Form10K
FortheFiscalYearEndedSeptember26,2015
TABLEOFCONTENTS
Page
PartI
Item1. Business
1
Item1A. RiskFactors
8
Item1B. UnresolvedStaffComments
18
Item2. Properties
18
Item3. LegalProceedings
18
Item4. MineSafetyDisclosures
18
PartII
Item5. MarketforRegistrantsCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities
19
Item6. SelectedFinancialData
22
Item7. ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations
23
Item7A. QuantitativeandQualitativeDisclosuresAboutMarketRisk
36
Item8. FinancialStatementsandSupplementaryData
38
Item9. ChangesinandDisagreementsWithAccountantsonAccountingandFinancialDisclosure
71
Item9A. ControlsandProcedures
71
Item9B. OtherInformation
71
PartIII
Item10. Directors,ExecutiveOfficersandCorporateGovernance
72
Item11. ExecutiveCompensation
72
Item12. SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters
72
Item13. CertainRelationshipsandRelatedTransactionsandDirectorIndependence
72
Item14. PrincipalAccountingFeesandServices
72
PartIV
Item15. Exhibits,FinancialStatementSchedules
73
TableofContents
ThisAnnualReportonForm10K(Form10K)containsforwardlookingstatements,withinthemeaningofthePrivateSecuritiesLitigation
ReformActof1995,thatinvolverisksanduncertainties.ManyoftheforwardlookingstatementsarelocatedinPartII,Item7ofthisForm
10K under the heading Managements Discussion and Analysis of Financial Condition and Results of Operations. Forwardlooking
statementsprovidecurrentexpectationsoffutureeventsbasedoncertainassumptionsandincludeanystatementthatdoesnotdirectly
relatetoanyhistoricalorcurrentfact.Forwardlookingstatementscanalsobeidentifiedbywordssuchasfuture,anticipates,believes,
estimates,expects,intends,will,would,could,can,may,andsimilarterms.Forwardlookingstatementsarenotguaranteesof
futureperformanceandtheCompanysactualresultsmaydiffersignificantlyfromtheresultsdiscussedintheforwardlookingstatements.
Factorsthatmightcausesuchdifferencesinclude,butarenotlimitedto,thosediscussedinPartI,Item1AofthisForm10Kunder the
headingRiskFactors,whichareincorporatedhereinbyreference.AllinformationpresentedhereinisbasedontheCompanysfiscal
calendar.Unlessotherwisestated,referencestoparticularyears,quarters,monthsorperiodsrefertotheCompanysfiscalyearsendedin
Septemberandtheassociatedquarters,monthsandperiodsofthosefiscalyears.EachofthetermstheCompanyandAppleasused
hereinreferscollectivelytoAppleInc.anditswhollyownedsubsidiaries,unlessotherwisestated.TheCompanyassumesnoobligationto
reviseorupdateanyforwardlookingstatementsforanyreason,exceptasrequiredbylaw.
PARTI
Item1. Business
CompanyBackground
The Company designs, manufactures and markets mobile communication and media devices, personal computers and portable digital
music players, and sells a variety of related software, services, accessories, networking solutions and thirdparty digital content and
applications.TheCompanysproductsandservicesincludeiPhone,iPad,Mac,iPod,AppleWatch,AppleTV,aportfolioof
consumerandprofessionalsoftwareapplications,iOS,OSXandwatchOSoperatingsystems,iCloud,ApplePayandavarietyof
accessory,serviceandsupportofferings.InSeptember2015,theCompanyannouncedanewAppleTV,tvOSoperatingsystemand
AppleTVAppStore,whichareexpectedtobeavailablebytheendofOctober2015.TheCompanysellsanddeliversdigitalcontentand
applicationsthroughtheiTunesStore ,AppStore,MacAppStore,iBooksStoreandAppleMusic(collectivelyInternetServices).
The Company sells its products worldwide through its retail stores, online stores and direct sales force, as well as through thirdparty
cellular network carriers, wholesalers, retailers and valueadded resellers. In addition, the Company sells a variety of thirdparty Apple
compatible products, including application software and various accessories through its online and retail stores. The Company sells to
consumers,smallandmidsizedbusinessesandeducation,enterpriseandgovernmentcustomers.TheCompanysfiscalyearisthe52or
53weekperiodthatendsonthelastSaturdayofSeptember.TheCompanyisaCaliforniacorporationestablishedin1977.
BusinessStrategy
TheCompanyiscommittedtobringingthebestuserexperiencetoitscustomersthroughitsinnovativehardware,softwareandservices.
The Companys business strategy leverages its unique ability to design and develop its own operating systems, hardware, application
software and services to provide its customers products and solutions with innovative design, superior easeofuse and seamless
integration. As part of its strategy, the Company continues to expand its platform for the discovery and delivery of digital content and
applicationsthroughitsInternetServices,whichallowscustomerstodiscoveranddownloaddigitalcontent,iOS,MacandAppleWatch
applications, and books through either a Mac or Windowsbased computer or through iPhone, iPad and iPod touch devices (iOS
devices)andAppleWatch.TheCompanyalsosupportsacommunityforthedevelopmentofthirdpartysoftwareandhardwareproducts
and digital content that complement the Companys offerings. The Company believes a highquality buying experience with
knowledgeablesalespersonswhocanconveythevalueoftheCompanysproductsandservicesgreatlyenhancesitsabilitytoattractand
retaincustomers.Therefore,theCompanysstrategyalsoincludesbuildingandexpandingitsownretailandonlinestoresanditsthird
party distribution network to effectively reach more customers and provide them with a highquality sales and postsales support
experience.TheCompanybelievesongoinginvestmentinresearchanddevelopment(R&D),marketingandadvertisingiscriticaltothe
developmentandsaleofinnovativeproductsandtechnologies.
AppleInc.|2015Form10K|1
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BusinessOrganization
TheCompanymanagesitsbusinessprimarilyonageographicbasis.In2015,theCompanychangeditsreportableoperatingsegmentsas
managementbeganreportingbusinessperformanceandmakingdecisionsprimarilyonageographicbasis,includingtheresultsofits
retailstoresineachrespectivegeographicsegment.Accordingly,theCompanysreportableoperatingsegmentsconsistoftheAmericas,
Europe, Greater China, Japan and Rest of Asia Pacific. The Americas segment includes both North and South America. The Europe
segmentincludesEuropeancountries,aswellasIndia,theMiddleEastandAfrica.TheGreaterChinasegmentincludes China, Hong
KongandTaiwan.TheRestofAsiaPacificsegmentincludesAustraliaandthoseAsiancountriesnotincludedintheCompanysother
reportableoperatingsegments.Althougheachreportableoperatingsegmentprovidessimilarhardwareandsoftwareproductsandsimilar
services, they are managed separately to better align with the location of the Companys customers and distribution partners and the
uniquemarketdynamicsofeachgeographicregion.FurtherinformationregardingtheCompanysreportableoperatingsegmentsmaybe
foundinPartII,Item7ofthisForm10KunderthesubheadingSegmentOperatingPerformance,andinPartII,Item8ofthisForm10Kin
theNotestoConsolidatedFinancialStatementsinNote11,SegmentInformationandGeographicData.
Products
iPhone
iPhone is the Companys line of smartphones based on its iOS operating system. iPhone includes Siri , a voice activated intelligent
assistant, and Apple Pay and Touch ID on qualifying devices. In September 2015, the Company introduced iPhone 6s and 6s Plus,
featuring3DTouch,whichsensesforcetoaccessfeaturesandinteractwithcontentandapps.iPhoneworkswiththeiTunesStore,App
StoreandiBooksStoreforpurchasing,organizingandplayingdigitalcontentandapps.iPhoneiscompatiblewithbothMacandWindows
personalcomputersandApplesiCloudservices,whichprovidesynchronizationacrossusersdevices.
iPad
iPadistheCompanyslineofmultipurposetabletsbasedonitsiOSoperatingsystem,whichincludesiPadAir andiPadmini.iPad
includes Siri and also includes Touch ID on qualifying devices. In September 2015, the Company announced the new iPad Pro,
featuringa12.9inchRetinadisplay,whichisexpectedtobeavailableinNovember2015.iPadworkswiththeiTunesStore,AppStore
andiBooksStoreforpurchasing,organizingandplayingdigitalcontentandapps.iPadiscompatiblewithbothMacandWindowspersonal
computersandApplesiCloudservices.
Mac
Mac is the Companys line of desktop and portable personal computers based on its OS X operating system. The Companys desktop
computersincludeiMac,21.5iMacwithRetina4KDisplay,27iMacwithRetina5KDisplay,MacProandMacmini.TheCompanys
portablecomputersincludeMacBook,MacBookAir,MacBookProandMacBookProwithRetinadisplay.
OperatingSystemSoftware
iOS
iOSistheCompanysMultiTouchoperatingsystemthatservesasthefoundationforiOSdevices.DevicesrunningiOSarecompatible
withbothMacandWindowspersonalcomputersandApplesiCloudservices.InSeptember2015,theCompanyreleasediOS9,which
providesmoresearchabilitiesandimprovedSirifeatures.iOS9alsointroducednewmultitaskingfeaturesdesignedspecificallyforiPad,
includingSlideOverandSplitView,whichallowuserstoworkwithtwoappssimultaneously,andPictureinPicturethatallowsusersto
watchavideowhileusinganotherapplication.
OSX
OS X is the Companys Mac operating system and is built on an opensource UNIXbased foundation and provides an intuitive and
integratedcomputerexperience.SupportforiCloudisbuiltintoOSXsouserscanaccesscontentandinformationfromMac,iOSdevices
andothersupporteddevicesandaccessdownloadedcontentandappsfromtheiTunesStore.OSXElCapitan,releasedinSeptember
2015,isthe12 th major release of OS X and incorporates additional window management features, including Split View and the new
SpacesBarinMissionControl,whichprovidesusersanintuitivewaytogroupapplications.
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watchOS
watchOSistheCompanysoperatingsystemforAppleWatch.ReleasedinSeptember2015,watchOS2isthefirstmajorsoftwareupdate
forAppleWatch,providinguserswithnewfeatures,includingnewwatchfaces,theabilitytoaddthirdpartyappinformationonwatchfaces,
TimeTravel,andadditionalcommunicationcapabilitiesinMail,FriendsandDigitalTouch.watchOS2alsogivesdeveloperstheabilityto
buildnativeappsforAppleWatch.
tvOS
InSeptember2015,theCompanyannouncedtvOS,itsoperatingsystemforthenewAppleTV,whichisexpectedtobeavailableattheend
ofOctober2015.ThetvOSoperatingsystemisbasedontheCompanysiOSplatformandwillenabledeveloperstocreatenewappsand
gamesspecificallyforAppleTVanddeliverthemtocustomersthroughthenewAppleTVAppStore.
ApplicationSoftware
TheCompanysapplicationsoftwareincludesiLife ,iWork andvariousothersoftware,includingFinalCutPro ,Logic ProXand
FileMakerPro.iLifeistheCompanysconsumerorienteddigitallifestylesoftwareapplicationsuiteincludedwithallMaccomputersand
featuresiMovie ,adigitalvideoeditingapplication,andGarageBand ,amusiccreationapplicationthatallowsuserstoplay,record
andcreatemusic.iWork is the Companys integrated productivity suite included with all Mac computers and is designed to help users
create,presentandpublishdocumentsthroughPages ,presentationsthroughKeynote andspreadsheetsthroughNumbers .The
CompanyalsohasMultiTouchversionsofiLifeandiWorkapplicationsdesignedspecificallyforuseoniOSdevices,whichareavailable
asfreedownloadsforallnewiPhonesandiPads.
Services
InternetServices
The iTunes Store, available for iOS devices, Mac and Windows personal computers and Apple TV, allows customers to purchase and
downloadmusicandTVshows,rentorpurchasemoviesanddownloadfreepodcasts.TheAppStore,availableforiOSdevices,allows
customers to discover and download apps and purchase inapp content. The Mac App Store, available for Mac computers, allows
customerstodiscover,downloadandinstallMacapplications.TheiBooksStore,availableforiOSdevicesandMaccomputers,featurese
booksfrommajorandindependentpublishers.AppleMusicoffersusersacuratedlisteningexperiencewithondemandradiostationsthat
evolvebasedonausersplayordownloadactivityandasubscriptionbasedinternetstreamingservicethatalsoprovidesunlimitedaccess
totheAppleMusiclibrary.InSeptember2015,theCompanyannouncedtheAppleTVAppStore,whichprovidescustomersaccessto
appsandgamesspecificallyforthenewAppleTV.
iCloud
iCloudistheCompanyscloudservicewhichstoresmusic,photos,contacts,calendars,mail,documentsandmore,keepingthemupto
date and available across multiple iOS devices, Mac and Windows personal computers and Apple TV. iCloud services include iCloud
DriveSM,iCloudPhotoLibrary,FamilySharing,FindMyiPhone,FindMyFriends,Notes,iCloudKeychain andiCloudBackupforiOS
devices.
AppleCare
AppleCareoffersarangeofsupportoptionsfortheCompanyscustomers.Theseincludeassistancethatisbuiltintosoftwareproducts,
printedandelectronicproductmanuals,onlinesupportincludingcomprehensiveproductinformationaswellastechnicalassistance,the
AppleCare Protection Plan (APP) and the AppleCare+ Protection Plan (AC+). APP is a feebased service that typically extends the
servicecoverageofphonesupport,hardwarerepairsanddedicatedwebbasedsupportresourcesforMac,AppleTVanddisplayproducts.
AC+isafeebasedserviceofferingadditionalcoverageundersomecircumstancesforinstancesofaccidentaldamageinadditiontothe
servicesofferedbyAPPandisavailableincertaincountriesforiPhone,iPad,AppleWatchandiPod.
ApplePay
ApplePayistheCompanysmobilepaymentserviceavailableintheU.S.andU.K.thatoffersaneasy,secureandprivatewaytopay.
ApplePayallowsuserstopayforpurchasesinstoresacceptingcontactlesspaymentsandtopayforpurchaseswithinparticipatingapps
onqualifyingdevices.ApplePayacceptscreditanddebitcardsacrossmajorcardnetworksandalsosupportsrewardprogramsandstore
issuedcreditanddebitcards.
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OtherProducts
Accessories
TheCompanysellsavarietyofApplebrandedandthirdpartyMaccompatibleandiOScompatibleaccessories,includingAppleTV,Apple
Watch,headphones,displays,storagedevices,Beatsproducts,andvariousotherconnectivityandcomputingproductsandsupplies.
AppleTV
AppleTVconnectstoconsumersTVsandenablesthemtoaccessdigitalcontentdirectlyforstreaminghighdefinitionvideo,playingmusic
andgames,andviewingphotos.ContentfromAppleMusicandothermediaservicesarealsoavailableonAppleTV.AppleTVallows
streamingdigitalcontentfromMacandWindowspersonalcomputersthroughHomeShareandthroughAirPlay fromcompatibleMac
andiOSdevices.InSeptember2015,theCompanyannouncedthenewAppleTVrunningontheCompanystvOSoperatingsystemand
basedonappsbuiltforthetelevision.Additionally,thenewAppleTVremotefeaturesSiri,allowinguserstosearchandaccesscontentwith
theirvoice.ThenewAppleTVisexpectedtobeavailableattheendofOctober2015.
AppleWatch
AppleWatchisapersonalelectronicdevicethatcombinesthewatchOSuserinterfaceandtechnologiescreatedspecificallyforasmaller
device,includingtheDigitalCrown,auniquenavigationtoolthatallowsuserstoseamlesslyscroll,zoomandnavigate,andForceTouch,a
technologythatsensesthedifferencebetweenatapandapressandallowsuserstoaccesscontrolswithinapps.AppleWatchenables
userstocommunicateinnewwaysfromtheirwrist,tracktheirhealthandfitnessthroughactivityandworkoutapps,andincludesSiriand
ApplePay.
iPod
iPodistheCompanyslineofportabledigitalmusicandmediaplayers,whichincludesiPodtouch,iPodnano andiPodshuffle .All
iPods work with iTunes to purchase and synchronize content. iPod touch, based on the Companys iOS operating system, is a flash
memorybasediPodthatworkswiththeiTunesStore,AppStoreandiBooksStoreforpurchasingandplayingdigitalcontentandapps.
DeveloperPrograms
TheCompanysdeveloperprogramssupportappdeveloperswithbuilding,testinganddistributingappsforiOS,Mac,AppleWatchandthe
newAppleTV.Developerprogrammembershipprovidesaccesstobetasoftware,theabilitytointegrateadvancedappcapabilities(e.g.,
iCloud,GameCenterandApplePay),distributionontheAppStore,accesstoAppAnalytics,andcodeleveltechnicalsupport.Developer
programs also exist for businesses creating apps for internal use (the Apple Developer Enterprise Program) and developers creating
accessoriesforAppledevices(theMFiProgram).Alldevelopers,eventhosewhoarenotdeveloperprogrammembers,cansigninwith
theirAppleIDtopostontheAppleDeveloperForumsanduseXcode,theCompanysintegrateddevelopmentenvironmentforcreating
appsforAppleplatforms.Xcodeincludesprojectmanagementtoolsanalysistoolstocollect,displayandcompareappperformancedata
simulationtoolstolocallyrun,testanddebugappsandtoolstosimplifythedesignanddevelopmentofuserinterfaces.Alldevelopersalso
haveaccesstoextensivetechnicaldocumentationandsamplecode.
MarketsandDistribution
TheCompanyscustomersareprimarilyintheconsumer,smallandmidsizedbusiness,education,enterpriseandgovernmentmarkets.
TheCompanysellsitsproductsandresellsthirdpartyproductsinmostofitsmajormarketsdirectlytoconsumersandsmallandmidsized
businesses through its retail and online stores and its direct sales force. The Company also employs a variety of indirect distribution
channels,suchasthirdpartycellularnetworkcarriers,wholesalers,retailersandvalueaddedresellers.During2015,theCompanysnet
salesthroughitsdirectandindirectdistributionchannelsaccountedfor26%and74%,respectively,oftotalnetsales.
The Company believes that sales of its innovative and differentiated products are enhanced by knowledgeable salespersons who can
conveythevalueofthehardwareandsoftwareintegrationanddemonstratetheuniquesolutionsthatareavailableonitsproducts.The
Company further believes providing direct contact with its targeted customers is an effective way to demonstrate the advantages of its
productsoverthoseofitscompetitorsandprovidingahighqualitysalesandaftersalessupportexperienceiscriticaltoattractingnewand
retainingexistingcustomers.
Toensureahighqualitybuyingexperienceforitsproductsinwhichserviceandeducationareemphasized,theCompanycontinuesto
buildandimproveitsdistributioncapabilitiesbyexpandingthenumberofitsownretailstoresworldwide.TheCompanysretailstoresare
typicallylocatedathightrafficlocationsinqualityshoppingmallsandurbanshoppingdistricts.Byoperatingitsownstoresandlocating
themindesirablehightrafficlocationstheCompanyisbetterpositionedtoensureahighqualitycustomerbuyingexperienceandattract
newcustomers.ThestoresaredesignedtosimplifyandenhancethepresentationandmarketingoftheCompanysproductsandrelated
solutions.Theretailstoresemployexperiencedandknowledgeablepersonnelwhoprovideproductadvice,serviceandtrainingandoffer
awideselectionofthirdpartyhardware,softwareandotheraccessoriesthatcomplementtheCompanysproducts.
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TheCompanyhasalsoinvestedinprogramstoenhanceresellersalesbyplacinghighqualityApplefixtures,merchandisingmaterialsand
otherresourceswithinselectedthirdpartyresellerlocations.ThroughtheApplePremiumResellerProgram,certainthirdpartyresellers
focusontheAppleplatformbyprovidingahighlevelofproductexpertise,integrationandsupportservices.
TheCompanyiscommittedtodeliveringsolutionstohelpeducatorsteachandstudentslearn.TheCompanybelieveseffectiveintegration
oftechnologyintoclassroominstructioncanresultinhigherlevelsofstudentachievementandhasdesignedarangeofproducts,services
andprogramstoaddresstheneedsofeducationcustomers.TheCompanyalsosupportsmobilelearningandrealtimedistributionof,and
accessto,educationrelatedmaterialsthroughiTunesU,aplatformthatallowsstudentsandteacherstoshareanddistributeeducational
media online. The Company sells its products to the education market through its direct sales force, select thirdparty resellers and its
onlineandretailstores.
TheCompanyalsosellsitshardwareandsoftwareproductstoenterpriseandgovernmentcustomersineachofitsreportableoperating
segments.TheCompanysproductsaredeployedinthesemarketsbecauseoftheirperformance,productivity,easeofuseandseamless
integration into information technology environments. The Companys products are compatible with thousands of thirdparty business
applicationsandservices,anditstoolsenablethedevelopmentandsecuredeploymentofcustomapplicationsaswellasremotedevice
administration.
Nosinglecustomeraccountedformorethan10%ofnetsalesin2015,2014or2013.
Competition
ThemarketsfortheCompanysproductsandservicesarehighlycompetitiveandtheCompanyisconfrontedbyaggressivecompetitionin
allareasofitsbusiness.Thesemarketsarecharacterizedbyfrequentproductintroductionsandrapidtechnologicaladvancesthathave
substantially increased the capabilities and use of mobile communication and media devices, personal computers and other digital
electronicdevices.TheCompanyscompetitorsthatsellmobiledevicesandpersonalcomputersbasedonotheroperatingsystemshave
aggressively cut prices and lowered their product margins to gain or maintain market share. The Companys financial condition and
operatingresultscanbeadverselyaffectedbytheseandotherindustrywidedownwardpressuresongrossmargins.Principalcompetitive
factors important to the Company include price, product features (including security features), relative price and performance, product
qualityandreliability,designinnovation,astrongthirdpartysoftwareandaccessoriesecosystem,marketinganddistributioncapability,
serviceandsupportandcorporatereputation.
The Company is focused on expanding its market opportunities related to personal computers and mobile communication and media
devices.Thesemarketsarehighlycompetitiveandincludemanylarge,wellfundedandexperiencedparticipants.TheCompanyexpects
competitioninthesemarketstointensifysignificantlyascompetitorsattempttoimitatesomeofthefeaturesoftheCompanysproductsand
applicationswithintheirownproductsor,alternatively,collaboratewitheachothertooffersolutionsthataremorecompetitivethanthose
they currently offer. These markets are characterized by aggressive pricing practices, frequent product introductions, evolving design
approachesandtechnologies,rapidadoptionoftechnologicalandproductadvancementsbycompetitorsandpricesensitivityonthepart
ofconsumersandbusinesses.
TheCompanysdigitalcontentserviceshavefacedsignificantcompetitionfromothercompaniespromotingtheirowndigitalmusicand
contentproductsandservices,includingthoseofferingfreepeertopeermusicandvideoservices.
TheCompanysfuturefinancialconditionandoperatingresultsdependontheCompanysabilitytocontinuetodevelopandoffernew
innovativeproducts and services in each of the markets in which it competes. The Company believes it offers superior innovation and
integrationoftheentiresolutionincludingthehardware(iOSdevices,Mac,AppleWatchandAppleTV),software(iOS,OSX,watchOSand
tvOS),onlineservicesanddistributionofdigitalcontentandapplications(InternetServices).SomeoftheCompanyscurrentandpotential
competitorshavesubstantialresourcesandmaybeabletoprovidesuchproductsandservicesatlittleornoprofitorevenatalossto
competewiththeCompanysofferings.
SupplyofComponents
AlthoughmostcomponentsessentialtotheCompanysbusinessaregenerallyavailablefrommultiplesources,anumberofcomponents
arecurrentlyobtainedfromsingleorlimitedsources.Inaddition,theCompanycompetesforvariouscomponentswithotherparticipantsin
themarketsformobilecommunicationandmediadevicesandpersonalcomputers.Therefore,manycomponentsusedbytheCompany,
includingthosethatareavailablefrommultiplesources,areattimessubjecttoindustrywideshortageandsignificantpricingfluctuations
thatcouldmateriallyadverselyaffecttheCompanysfinancialconditionandoperatingresults.
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The Company uses some custom components that are not commonly used by its competitors, and the Company often utilizes custom
componentsavailablefromonlyonesource.Whenacomponentorproductusesnewtechnologies,initialcapacityconstraintsmayexist
untilthesuppliersyieldshavematuredormanufacturingcapacityhasincreased.IftheCompanyssupplyofcomponentsweredelayedor
constrained,orifanoutsourcingpartnerdelayedshipmentsofcompletedproductstotheCompany,theCompanysfinancialconditionand
operating results could be materially adversely affected. The Companys business and financial performance could also be materially
adverselyaffecteddependingonthetimerequiredtoobtainsufficientquantitiesfromtheoriginalsource,ortoidentifyandobtainsufficient
quantitiesfromanalternativesource.Continuedavailabilityofthesecomponentsatacceptableprices,oratall,maybeaffectedifthose
suppliers concentrated on the production of common components instead of components customized to meet the Companys
requirements.
TheCompanyhasenteredintoagreementsforthesupplyofmanycomponentshowever,therecanbenoguaranteethattheCompanywill
beabletoextendorrenewtheseagreementsonsimilarterms,oratall.Therefore,theCompanyremainssubjecttosignificantrisksof
supplyshortagesandpriceincreasesthatcouldmateriallyadverselyaffectitsfinancialconditionandoperatingresults.
WhilesomeMaccomputersaremanufacturedintheU.S.andIreland,substantiallyalloftheCompanyshardwareproductsarecurrently
manufactured by outsourcing partners that are located primarily in Asia. A significant concentration of this manufacturing is currently
performedbyasmallnumberofoutsourcingpartners,ofteninsinglelocations.Certainoftheseoutsourcingpartnersarethesolesourced
suppliersofcomponentsandmanufacturersformanyoftheCompanysproducts.AlthoughtheCompanyworkscloselywithitsoutsourcing
partnersonmanufacturingschedules,theCompanysoperatingresultscouldbeadverselyaffectedifitsoutsourcingpartnerswereunable
tomeettheirproductioncommitments.TheCompanyspurchasecommitmentstypicallycoveritsrequirementsforperiodsupto150days.
ResearchandDevelopment
Because the industries in which the Company competes are characterized by rapid technological advances, the Companys ability to
compete successfully depends heavily upon its ability to ensure a continual and timely flow of competitive products, services and
technologiestothemarketplace.TheCompanycontinuestodevelopnewtechnologiestoenhanceexistingproductsandtoexpandthe
rangeofitsproductofferingsthroughR&D,licensingofintellectualpropertyandacquisitionofthirdpartybusinessesandtechnology.Total
R&Dexpensewas$8.1billion,$6.0billionand$4.5billionin2015,2014and2013,respectively.
Patents,Trademarks,CopyrightsandLicenses
TheCompanycurrentlyholdsrightstopatentsandcopyrightsrelatingtocertainaspectsofitshardwaredevices,accessories,softwareand
services.TheCompanyhasregisteredorhasappliedfortrademarksandservicemarksintheU.S.andanumberofforeigncountries.
Although the Company believes the ownership of such patents, copyrights, trademarks and service marks is an important factor in its
business and that its success does depend in part on such ownership, the Company relies primarily on the innovative skills, technical
competenceandmarketingabilitiesofitspersonnel.
TheCompanyregularlyfilespatentapplicationstoprotectinnovationsarisingfromitsresearch,developmentanddesign,andiscurrently
pursuingthousandsofpatentapplicationsaroundtheworld.Overtime,theCompanyhasaccumulatedalargeportfolioofissuedpatents
aroundtheworld.TheCompanyholdscopyrightsrelatingtocertainaspectsofitsproductsandservices.Nosinglepatentorcopyrightis
solelyresponsibleforprotectingtheCompanysproducts.TheCompanybelievesthedurationofitspatentsisadequaterelativetothe
expectedlivesofitsproducts.
ManyoftheCompanysproductsaredesignedtoincludeintellectualpropertyobtainedfromthirdparties.Itmaybenecessaryinthefuture
toseekorrenewlicensesrelatingtovariousaspectsofitsproducts,processesandservices.WhiletheCompanyhasgenerallybeenable
toobtainsuchlicensesoncommerciallyreasonabletermsinthepast,thereisnoguaranteethatsuchlicensescouldbeobtainedinthe
futureonreasonabletermsoratall.BecauseoftechnologicalchangesintheindustriesinwhichtheCompanycompetes,currentextensive
patentcoverageandtherapidrateofissuanceofnewpatents,itispossiblethatcertaincomponentsoftheCompanysproducts,processes
andservicesmayunknowinglyinfringeexistingpatentsorintellectualpropertyrightsofothers.Fromtimetotime,theCompanyhasbeen
notifiedthatitmaybeinfringingcertainpatentsorotherintellectualpropertyrightsofthirdparties.
ForeignandDomesticOperationsandGeographicData
During2015,theCompanysdomesticandinternationalnetsalesaccountedfor35%and65%,respectively,oftotalnetsales.Information
regardingfinancialdatabygeographicsegmentissetforthinPartII,Item7ofthisForm10KunderthesubheadingSegmentOperating
Performance,andinPartII,Item8ofthisForm10KintheNotestoConsolidatedFinancialStatementsinNote11,SegmentInformation
andGeographicData.
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WhilesomeMaccomputersaremanufacturedintheU.S.andIreland,substantiallyalloftheCompanyshardwareproductsarecurrently
manufactured by outsourcing partners that are located primarily in Asia. The supply and manufacture of a number of components is
performed by solesourced outsourcing partners in the U.S., Asia and Europe. Margins on sales of the Companys products in foreign
countriesandonsalesofproductsthatincludecomponentsobtainedfromforeignsuppliers,canbeadverselyaffectedbyforeigncurrency
exchange rate fluctuations and by international trade regulations, including tariffs and antidumping penalties. Information regarding
concentrationintheavailablesourcesofsupplyofmaterialsandproductsissetforthinPartII,Item8ofthisForm10Kin the Notes to
ConsolidatedFinancialStatementsinNote10,CommitmentsandContingencies.
BusinessSeasonalityandProductIntroductions
TheCompanyhashistoricallyexperiencedhighernetsalesinitsfirstquartercomparedtootherquartersinitsfiscalyeardueinpartto
seasonal holiday demand. Additionally, new product introductions can significantly impact net sales, product costs and operating
expenses.ProductintroductionscanalsoimpacttheCompanysnetsalestoitsindirectdistributionchannelsasthesechannelsarefilled
withnewproductinventoryfollowingaproductintroduction,andoften,channelinventoryofaparticularproductdeclinesasthenextrelated
major product launch approaches. Net sales can also be affected when consumers and distributors anticipate a product introduction.
However,neitherhistoricalseasonalpatternsnorhistoricalpatternsofproductintroductionsshouldbeconsideredreliableindicatorsofthe
Companysfuturepatternofproductintroductions,futurenetsalesorfinancialperformance.
Warranty
TheCompanyoffersalimitedpartsandlaborwarrantyonmostofitshardwareproducts.Thebasicwarrantyperiodistypicallyoneyear
fromthedateofpurchasebytheoriginalenduser.TheCompanyalsooffersa90daybasicwarrantyforitsservicepartsusedtorepairthe
Companys hardware products. In certain jurisdictions, local law requires that manufacturers guarantee their products for a period
prescribedby statute, typically at least two years. In addition, where available, consumers may purchase APP or AC+, which extends
servicecoverageonmanyoftheCompanyshardwareproducts.
Backlog
In the Companys experience, the actual amount of product backlog at any particular time is not a meaningful indication of its future
business prospects. In particular, backlog often increases immediately following new product introductions as customers anticipate
shortages.Backlogisoftenreducedoncecustomersbelievetheycanobtainsufficientsupply.Becauseoftheforegoing,backlogshould
notbeconsideredareliableindicatoroftheCompanysabilitytoachieveanyparticularlevelofrevenueorfinancialperformance.
Employees
AsofSeptember26,2015,theCompanyhadapproximately110,000fulltimeequivalentemployees.
AvailableInformation
TheCompanysAnnualReportonForm10K,QuarterlyReportsonForm10Q,CurrentReportsonForm8K,andamendmentstoreports
filedpursuanttoSections13(a)and15(d)oftheSecuritiesExchangeActof1934,asamended(theExchangeAct),arefiledwiththe
SecuritiesandExchangeCommission(theSEC).TheCompanyissubjecttotheinformationalrequirementsoftheExchangeActandfiles
orfurnishesreports,proxystatementsandotherinformationwiththeSEC.SuchreportsandotherinformationfiledbytheCompanywith
theSECareavailablefreeofchargeontheCompanyswebsiteatinvestor.apple.com/sec.cfmwhen such reports are available on the
SECswebsite.ThepublicmayreadandcopyanymaterialsfiledbytheCompanywiththeSECattheSECsPublicReferenceRoomat
100FStreet,NE,Room1580,Washington,DC20549.ThepublicmayobtaininformationontheoperationofthePublicReferenceRoom
bycallingtheSECat1800SEC0330.TheSECmaintainsaninternetsitethatcontainsreports,proxyandinformationstatementsand
other information regarding issuers that file electronically with the SEC at www.sec.gov . The contents of these websites are not
incorporatedintothisfiling.Further,theCompanysreferencestowebsiteURLsareintendedtobeinactivetextualreferencesonly.
TableofContents
Item1A. RiskFactors
Thefollowingdiscussionofriskfactorscontainsforwardlookingstatements.Theseriskfactorsmaybeimportanttounderstandingother
statementsinthisForm10K.ThefollowinginformationshouldbereadinconjunctionwithPartII,Item7,ManagementsDiscussionand
AnalysisofFinancialConditionandResultsofOperationsandtheconsolidatedfinancialstatementsandrelatednotesinPartII,Item8,
FinancialStatementsandSupplementaryDataofthisForm10K.
Thebusiness,financialconditionandoperatingresultsoftheCompanycanbeaffectedbyanumberoffactors,whethercurrentlyknownor
unknown,includingbutnotlimitedtothosedescribedbelow,anyoneormoreofwhichcould,directlyorindirectly,causetheCompanys
actualfinancialconditionandoperatingresultstovarymateriallyfrompast,orfromanticipatedfuture,financialconditionandoperating
results. Any of these factors, in whole or in part, could materially and adversely affect the Companys business, financial condition,
operatingresultsandstockprice.
Becauseofthefollowingfactors,aswellasotherfactorsaffectingtheCompanysfinancialconditionandoperatingresults,pastfinancial
performanceshouldnotbeconsideredtobeareliableindicatoroffutureperformance,andinvestorsshouldnotusehistoricaltrendsto
anticipateresultsortrendsinfutureperiods.
GlobalandregionaleconomicconditionscouldmateriallyadverselyaffecttheCompany.
TheCompanysoperationsandperformancedependsignificantlyonglobalandregionaleconomicconditions.Uncertaintyaboutglobal
andregionaleconomicconditionsposesariskasconsumersandbusinessesmaypostponespendinginresponsetotightercredit,higher
unemployment, financial market volatility, government austerity programs, negative financial news, declines in income or asset values
and/or other factors. These worldwide and regional economic conditions could have a material adverse effect on demand for the
Companys products and services. Demand also could differ materially from the Companys expectations as a result of currency
fluctuationsbecausetheCompanygenerallyraisespricesongoodsandservicessoldoutsidetheU.S.tocorrespondwiththeeffectofa
strengtheningoftheU.S.dollar.Otherfactorsthatcouldinfluenceworldwideorregionaldemandincludechangesinfuelandotherenergy
costs, conditions in the real estate and mortgage markets, unemployment, labor and healthcare costs, access to credit, consumer
confidenceandothermacroeconomicfactorsaffectingconsumerspendingbehavior.Theseandothereconomicfactorscouldmaterially
adverselyaffectdemandfortheCompanysproductsandservices.
In the event of financial turmoil affecting the banking system and financial markets, additional consolidation of the financial services
industry,orsignificantfinancialserviceinstitutionfailures,therecouldbetighteninginthecreditmarkets,lowliquidityandextremevolatility
in fixed income, credit, currency and equity markets. This could have a number of effects on the Companys business, including the
insolvency or financial instability of outsourcing partners or suppliers or their inability to obtain credit to finance development and/or
manufactureproductsresultinginproductdelaysinabilityofcustomers,includingchannelpartners,toobtaincredittofinancepurchasesof
theCompanysproductsfailureofderivativecounterpartiesandotherfinancialinstitutionsandrestrictionsontheCompanysabilityto
issuenewdebt.Otherincomeandexpensealsocouldvarymateriallyfromexpectationsdependingongainsorlossesrealizedonthesale
orexchangeoffinancialinstrumentsimpairmentchargesresultingfromrevaluationsofdebtandequitysecuritiesandotherinvestments
changes in interest rates increases or decreases in cash balances volatility in foreign exchange rates and changes in fair value of
derivativeinstruments.Increasedvolatilityinthefinancialmarketsandoveralleconomicuncertaintywouldincreasetheriskoftheactual
amountsrealizedinthefutureontheCompanysfinancialinstrumentsdifferingsignificantlyfromthefairvaluescurrentlyassignedtothem.
GlobalmarketsfortheCompanysproductsandservicesarehighlycompetitiveandsubjecttorapidtechnologicalchange,andthe
Companymaybeunabletocompeteeffectivelyinthesemarkets.
The Companys products and services compete in highly competitive global markets characterized by aggressive price cutting and
resulting downward pressure on gross margins, frequent introduction of new products, short product life cycles, evolving industry
standards,continualimprovementinproductprice/performancecharacteristics,rapidadoptionoftechnologicalandproductadvancements
bycompetitorsandpricesensitivityonthepartofconsumers.
TheCompanysabilitytocompetesuccessfullydependsheavilyonitsabilitytoensureacontinuingandtimelyintroductionofinnovative
newproducts,servicesandtechnologiestothemarketplace.TheCompanybelievesitisuniqueinthatitdesignsanddevelopsnearlythe
entiresolutionforitsproducts,includingthehardware,operatingsystem,numeroussoftwareapplicationsandrelatedservices.Asaresult,
theCompanymustmakesignificantinvestmentsinR&D.TheCompanycurrentlyholdsasignificantnumberofpatentsandcopyrightsand
has registered and/or has applied to register numerous patents, trademarks and service marks. In contrast, many of the Companys
competitorsseektocompeteprimarilythroughaggressivepricingandverylowcoststructures,andemulatingtheCompanysproductsand
infringing on its intellectual property. If the Company is unable to continue to develop and sell innovative new products with attractive
marginsorifcompetitorsinfringeontheCompanysintellectualproperty,theCompanysabilitytomaintainacompetitiveadvantagecould
beadverselyaffected.
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TheCompanymarketscertainmobilecommunicationandmediadevicesbasedontheiOSmobileoperatingsystemandalsomarkets
relatedthirdpartydigitalcontentandapplications.TheCompanyfacessubstantialcompetitioninthesemarketsfromcompaniesthathave
significanttechnical,marketing,distributionandotherresources,aswellasestablishedhardware, software and digital content supplier
relationshipsandtheCompanyhasaminoritymarketshareintheglobalsmartphonemarket.Additionally,theCompanyfacessignificant
pricecompetitionascompetitorsreducetheirsellingpricesandattempttoimitatetheCompanysproductfeaturesandapplicationswithin
theirownproductsor,alternatively,collaboratewitheachothertooffersolutionsthataremorecompetitivethanthosetheycurrentlyoffer.
The Company competes with business models that include content provided to users for free. The Company also competes with
illegitimate ways to obtain thirdparty digital content and applications. Some of the Companys competitors have greater experience,
productbreadthanddistributionchannelsthantheCompany.Becausesomecurrentandpotentialcompetitorshavesubstantialresources
and/orexperienceandalowercoststructure,theymaybeabletoprovideproductsandservicesatlittleornoprofitorevenataloss.The
Company also expects competition to intensify as competitors attempt to imitate the Companys approach to providing components
seamlessly within their individual offerings or work collaboratively to offer integrated solutions. The Companys financial condition and
operating results depend substantially on the Companys ability to continually improve iOS and iOS devices in order to maintain their
functionalanddesignadvantages.
TheCompanyistheonlyauthorizedmakerofhardwareusingOSX,whichhasaminoritymarketshareinthepersonalcomputermarket.
Thismarkethasbeencontractingandisdominatedbycomputermakersusingcompetingoperatingsystems,mostnotablyWindows.Inthe
market for personal computers and accessories, the Company faces a significant number of competitors, many of which have broader
productlines,lowerpricedproductsandalargerinstalledcustomerbase.Historically,consolidationinthismarkethasresultedinlarger
competitors.PricecompetitionhasbeenparticularlyintenseascompetitorssellingWindowsbasedpersonalcomputershaveaggressively
cut prices and lowered product margins. An increasing number of internetenabled devices that include software applications and are
smallerandsimplerthantraditionalpersonalcomputerscompeteformarketsharewiththeCompanysexistingproducts.TheCompanys
financialconditionandoperatingresultsalsodependonitsabilitytocontinuallyimprovetheMacplatformtomaintainitsfunctionaland
designadvantages.
TherecanbenoassurancetheCompanywillbeabletocontinuetoprovideproductsandservicesthatcompeteeffectively.
To remain competitive and stimulate customer demand, the Company must successfully manage frequent product introductions
andtransitions.
Due to the highly volatile and competitive nature of the industries in which the Company competes, the Company must continually
introducenewproducts, services and technologies, enhance existing products and services, effectively stimulate customer demand for
newandupgradedproductsandsuccessfullymanagethetransitiontothesenewandupgradedproducts.Thesuccessofnewproduct
introductionsdependsonanumberoffactorsincluding,butnotlimitedto,timelyandsuccessfulproductdevelopment,marketacceptance,
theCompanysabilitytomanagetherisksassociatedwithnewproductproductionrampupissues,theavailabilityofapplicationsoftware
fornewproducts,theeffectivemanagementofpurchasecommitmentsandinventorylevelsinlinewithanticipatedproductdemand,the
availabilityofproductsinappropriatequantitiesandatexpectedcoststomeet anticipated demand and the risk that new products may
havequalityorotherdefectsordeficienciesintheearlystagesofintroduction.Accordingly,theCompanycannotdetermineinadvancethe
ultimateeffectofnewproductintroductionsandtransitions.
TheCompanydependsontheperformanceofdistributors,carriersandotherresellers.
The Company distributes its products through cellular network carriers, wholesalers, national and regional retailers and valueadded
resellers,manyofwhomdistributeproductsfromcompetingmanufacturers.TheCompanyalsosellsitsproductsandthirdpartyproductsin
mostofitsmajormarketsdirectlytoeducation,enterpriseandgovernmentcustomersandconsumersandsmallandmidsizedbusinesses
throughitsonlineandretailstores.
CarriersprovidingcellularnetworkserviceforiPhonetypicallysubsidizeuserspurchasesofthedevice.Thereisnoassurancethatsuch
subsidieswillbecontinuedatallorinthesameamountsuponrenewaloftheCompanysagreementswiththesecarriersorinagreements
theCompanyentersintowithnewcarriers.
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Manyresellershavenarrowoperatingmarginsandhavebeenadverselyaffectedinthepastbyweakeconomicconditions.Someresellers
haveperceivedtheexpansionoftheCompanysdirectsalesasconflictingwiththeirbusinessinterestsasdistributorsandresellersofthe
Companysproducts.SuchaperceptioncoulddiscourageresellersfrominvestingresourcesinthedistributionandsaleoftheCompanys
productsorleadthemtolimitorceasedistributionofthoseproducts.TheCompanyhasinvestedandwillcontinuetoinvestinprogramsto
enhance reseller sales, including staffing selected resellers stores with Company employees and contractors, and improving product
placement displays. These programs could require a substantial investment while providing no assurance of return or incremental
revenue. The financial condition of these resellers could weaken, these resellers could stop distributing the Companys products, or
uncertaintyregardingdemandforsomeoralloftheCompanysproductscouldcauseresellerstoreducetheirorderingandmarketingof
theCompanysproducts.
TheCompanyfacessubstantialinventoryandotherassetriskinadditiontopurchasecommitmentcancellationrisk.
TheCompanyrecordsawritedownforproductandcomponentinventoriesthathavebecomeobsoleteorexceedanticipateddemandor
netrealizablevalueandaccruesnecessarycancellationfeereservesforordersofexcessproductsandcomponents.TheCompanyalso
reviewsitslonglivedassets,includingcapitalassetsheldatitssuppliersfacilitiesandinventoryprepayments,forimpairmentwhenever
eventsorcircumstancesindicatethecarryingamountofanassetmaynotberecoverable.IftheCompanydeterminesthatimpairmenthas
occurred, it records a writedown equal to the amount by which the carrying value of the assets exceeds its fair value. Although the
Companybelievesitsprovisionsrelatedtoinventory,capitalassets,inventoryprepaymentsandotherassetsandpurchasecommitments
are currently adequate, no assurance can be given that the Company will not incur additional related charges given the rapid and
unpredictablepaceofproductobsolescenceintheindustriesinwhichtheCompanycompetes.
The Company must order components for its products and build inventory in advance of product announcements and shipments.
Consistentwithindustrypractice, components are normally acquired through a combination of purchase orders, supplier contracts and
open orders, in each case based on projected demand. Where appropriate, the purchases are applied to inventory component
prepayments that are outstanding with the respective supplier. Purchase commitments typically cover forecasted component and
manufacturingrequirementsforperiodsupto150days.BecausetheCompanysmarketsarevolatile,competitive and subject to rapid
technologyandpricechanges,thereisarisktheCompanywillforecastincorrectlyandorderorproduceexcessorinsufficientamountsof
componentsorproducts,ornotfullyutilizefirmpurchasecommitments.
FutureoperatingresultsdependupontheCompanysabilitytoobtaincomponentsinsufficientquantities.
Because the Company currently obtains components from single or limited sources, the Company is subject to significant supply and
pricingrisks.Manycomponents,includingthosethatareavailablefrommultiplesources,areattimessubjecttoindustrywideshortages
andsignificantcommoditypricingfluctuations.WhiletheCompanyhasenteredintoagreementsforthesupplyofmanycomponents,there
canbenoassurancethattheCompanywillbeabletoextendorrenewtheseagreementsonsimilarterms,oratall.Anumberofsuppliers
of components may suffer from poor financial conditions, which can lead to business failure for the supplier or consolidation within a
particular industry, further limiting the Companys ability to obtain sufficient quantities of components. The effects of global or regional
economicconditionsontheCompanyssuppliers,describedinGlobalandregionaleconomicconditionscouldmateriallyadverselyaffect
theCompanyabove,alsocouldaffecttheCompanysabilitytoobtaincomponents.Therefore,theCompanyremainssubjecttosignificant
risksofsupplyshortagesandpriceincreases.
TheCompanyandotherparticipantsinthemarketsformobilecommunicationandmediadevicesandpersonalcomputersalsocompete
forvariouscomponentswithotherindustriesthathaveexperiencedincreaseddemandfortheirproducts.TheCompanyusessomecustom
componentsthatarenotcommontotherestoftheseindustries.TheCompanysnewproductsoftenutilizecustomcomponentsavailable
fromonlyonesource.Whenacomponentorproductusesnewtechnologies,initialcapacityconstraintsmayexistuntilthesuppliersyields
havematuredormanufacturingcapacityhasincreased.Continuedavailabilityofthesecomponentsatacceptableprices,oratall,maybe
affectedforanynumberofreasons,includingifthosesuppliersdecidetoconcentrateontheproductionofcommoncomponentsinsteadof
componentscustomizedtomeettheCompanysrequirements.Thesupplyofcomponentsforaneworexistingproductcouldbedelayedor
constrained,orakeymanufacturingvendorcoulddelayshipmentsofcompletedproductstotheCompany.
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TheCompanydependsoncomponentandproductmanufacturingandlogisticalservicesprovidedbyoutsourcingpartners,manyof
whicharelocatedoutsideoftheU.S.
SubstantiallyalloftheCompanysmanufacturingisperformedinwholeorinpartbyafewoutsourcingpartnerslocatedprimarilyinAsia.
TheCompanyhasalsooutsourcedmuchofitstransportationandlogisticsmanagement.Whilethesearrangementsmayloweroperating
costs,theyalsoreducetheCompanysdirectcontroloverproductionanddistribution.Itisuncertainwhateffectsuchdiminishedcontrolwill
have on the quality or quantity of products or services, or the Companys flexibility to respond to changing conditions. Although
arrangementswiththesepartnersmaycontainprovisionsforwarrantyexpensereimbursement,theCompanymayremainresponsibleto
theconsumerforwarrantyserviceintheeventofproductdefectsandcouldexperienceanunanticipatedproductdefectorwarrantyliability.
WhiletheCompanyreliesonitspartnerstoadheretoitssuppliercodeofconduct,materialviolationsofthesuppliercodeofconductcould
occur.
The Company relies on solesourced outsourcing partners in the U.S., Asia and Europe to supply and manufacture many critical
components, and on outsourcing partners primarily located in Asia, for final assembly of substantially all of the Companys hardware
products.AnyfailureofthesepartnerstoperformmayhaveanegativeimpactontheCompanyscostorsupplyofcomponentsorfinished
goods.Inaddition,manufacturingorlogisticsintheselocationsortransittofinaldestinationsmaybedisruptedforavarietyofreasons
including,butnotlimitedto,naturalandmanmadedisasters,informationtechnologysystemfailures,commercialdisputes,militaryactions
oreconomic,business,labor,environmental,publichealth,orpoliticalissues.
TheCompanyhasinvested in manufacturing process equipment, much of which is held at certain of its outsourcing partners, and has
madeprepaymentstocertainofitssuppliersassociatedwithlongtermsupplyagreements.Whilethesearrangementshelpensurethe
supply of components and finished goods, if these outsourcing partners or suppliers experience severe financial problems or other
disruptionsintheirbusiness,suchcontinuedsupplycouldbereducedorterminatedandthenetrealizablevalueoftheseassetscouldbe
negativelyimpacted.
TheCompanysproductsandservicesmayexperiencequalityproblemsfromtimetotimethatcanresultindecreasedsalesand
operatingmarginandharmtotheCompanysreputation.
The Company sells complex hardware and software products and services that can contain design and manufacturing defects.
Sophisticatedoperatingsystemsoftwareandapplications,suchasthosesoldbytheCompany,oftencontainbugsthatcanunexpectedly
interfere with the softwares intended operation. The Companys online services may from time to time experience outages, service
slowdowns,orerrors.DefectsmayalsooccurincomponentsandproductstheCompanypurchasesfromthirdparties.Therecanbeno
assurancetheCompanywillbeabletodetectandfixalldefectsinthehardware,softwareandservicesitsells.Failuretodosocouldresult
inlostrevenue,significantwarrantyandotherexpensesandharmtotheCompanysreputation.
The Company relies on access to thirdparty digital content, which may not be available to the Company on commercially
reasonabletermsoratall.
TheCompanycontractswithnumerousthirdpartiestooffertheirdigitalcontent.Thisincludestherighttosellcurrentlyavailable music,
movies,TVshowsandbooks.Thelicensingorotherdistributionarrangementswiththesethirdpartiesareforrelativelyshorttermsanddo
notguaranteethecontinuationorrenewalofthesearrangementsonreasonableterms,ifatall.Somethirdpartycontentprovidersand
distributorscurrentlyorinthefuturemayoffercompetingproductsandservices,andcouldtakeactiontomakeitmoredifficultorimpossible
fortheCompanytolicenseorotherwisedistributetheircontentinthefuture.Othercontentowners,providersordistributorsmayseekto
limittheCompanysaccessto,orincreasethecostof,suchcontent.TheCompanymaybeunabletocontinuetoofferawidevarietyof
contentatreasonablepriceswithacceptableusagerules,orcontinuetoexpanditsgeographicreach.Failuretoobtaintherighttomake
availablethirdpartydigitalcontent,ortomakeavailablesuchcontentoncommerciallyreasonableterms,couldhaveamaterialadverse
impactontheCompanysfinancialconditionandoperatingresults.
Some thirdparty digital content providers require the Company to provide digital rights management and other security solutions. If
requirementschange,theCompanymayhavetodeveloporlicensenewtechnologytoprovidethesesolutions.Thereisnoassurancethe
Companywillbeabletodeveloporlicensesuchsolutionsatareasonablecostandinatimelymanner.Inaddition,certaincountrieshave
passedormayproposeandadoptlegislationthatwouldforcetheCompanytolicenseitsdigitalrightsmanagement,whichcouldlessen
theprotectionofcontentandsubjectittopiracyandalsocouldnegativelyaffectarrangementswiththeCompanyscontentproviders.
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TheCompanysfutureperformancedependsinpartonsupportfromthirdpartysoftwaredevelopers.
TheCompanybelievesdecisionsbycustomerstopurchaseitshardwareproductsdependinpartontheavailabilityofthirdpartysoftware
applicationsandservices.Thereisnoassurancethatthirdpartydeveloperswillcontinuetodevelopandmaintainsoftwareapplications
andservicesfortheCompanysproducts.Ifthirdpartysoftwareapplicationsandservicesceasetobedevelopedandmaintainedforthe
Companysproducts,customersmaychoosenottobuytheCompanysproducts.
WithrespecttoitsMacproducts,theCompanybelievestheavailabilityofthirdpartysoftwareapplicationsandservicesdependsinparton
thedevelopersperceptionandanalysisoftherelativebenefitsofdeveloping,maintainingandupgradingsuchsoftwarefortheCompanys
productscomparedtoWindowsbasedproducts.ThisanalysismaybebasedonfactorssuchasthemarketpositionoftheCompanyandits
products, the anticipated revenue that may be generated, expected future growth of Mac sales and the costs of developing such
applications and services. If the Companys minority share of the global personal computer market causes developers to question the
Macsprospects,developerscouldbelessinclinedtodeveloporupgradesoftwarefortheCompanysMacproductsandmoreinclinedto
devotetheirresourcestodevelopingandupgradingsoftwareforthelargerWindowsmarket.
With respect to iOS devices, the Company relies on the continued availability and development of compelling and innovative software
applications, which are distributed through a single distribution channel, the App Store. iOS devices are subject to rapid technological
change,and,ifthirdpartydevelopersareunabletoorchoosenottokeepupwiththispaceofchange,thirdpartyapplicationsmightnot
successfullyoperateandmayresultindissatisfiedcustomers.AswithapplicationsfortheCompanysMacproducts,theavailabilityand
developmentoftheseapplicationsalsodependondevelopersperceptionsandanalysisoftherelativebenefitsofdeveloping,maintaining
or upgrading software for the Companys iOS devices rather than its competitors platforms, such as Android. If developers focus their
effortsonthesecompetingplatforms,theavailabilityandqualityofapplicationsfortheCompanysiOSdevicesmaysuffer.
The Company relies on access to thirdparty intellectual property, which may not be available to the Company on commercially
reasonabletermsoratall.
ManyoftheCompanysproductsincludethirdpartyintellectualproperty,whichrequireslicensesfromthosethirdparties.Basedonpast
experienceandindustrypractice,theCompanybelievessuchlicensesgenerallycanbeobtainedonreasonableterms.Thereis,however,
no assurance that the necessary licenses can be obtained on acceptable terms or at all. Failure to obtain the right to use thirdparty
intellectual property, or to use such intellectual property on commercially reasonable terms, could preclude the Company from selling
certainproductsorotherwisehaveamaterialadverseimpactontheCompanysfinancialconditionandoperatingresults.
TheCompanycouldbeimpactedbyunfavorableresultsoflegalproceedings,suchasbeingfoundtohaveinfringedonintellectual
propertyrights.
TheCompanyissubjecttovariouslegalproceedingsandclaimsthathavenotyetbeenfullyresolvedandthathavearisenintheordinary
courseofbusiness,andadditionalclaimsmayariseinthefuture.
Forexample,technologycompanies,includingmanyoftheCompanyscompetitors,frequentlyenterintolitigationbasedonallegationsof
patentinfringementorotherviolationsofintellectualpropertyrights.Inaddition,patentholdingcompaniesseektomonetizepatentsthey
havepurchasedorotherwiseobtained.AstheCompanyhasgrown,theintellectualpropertyrightsclaimsagainstithaveincreasedand
maycontinuetoincrease.Inparticular,theCompanyscellularenabledproductscompetewithproductsfrommobilecommunicationand
media device companies that hold significant patent portfolios, and the number of patent claims against the Company has significantly
increased. The Company is vigorously defending infringement actions in courts in a number of U.S. jurisdictions and before the U.S.
InternationalTradeCommission,aswellasinternationallyinvariouscountries.Theplaintiffsintheseactionsfrequentlyseekinjunctions
andsubstantialdamages.
Regardlessofthescopeorvalidityofsuchpatentsorotherintellectualpropertyrights,orthemeritsofanyclaimsbypotentialoractual
litigants, the Company may have to engage in protracted litigation. If the Company is found to infringe one or more patents or other
intellectualpropertyrights,regardlessofwhetheritcandevelopnoninfringingtechnology,itmayberequiredtopaysubstantialdamages
orroyaltiestoathirdparty,oritmaybesubjecttoatemporaryorpermanentinjunctionprohibitingtheCompanyfrommarketingorselling
certainproducts.
Incertaincases,theCompanymayconsiderthedesirabilityofenteringintolicensingagreements,althoughnoassurancecanbegiven
thatsuchlicensescanbeobtainedonacceptabletermsorthatlitigationwillnotoccur.Theselicensesmayalsosignificantlyincreasethe
Companysoperatingexpenses.
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Regardless of the merit of particular claims, litigation may be expensive, timeconsuming, disruptive to the Companys operations and
distractingtomanagement.Inrecognitionoftheseconsiderations,theCompanymayenterintoarrangementstosettlelitigation.
Inmanagementsopinion,thereisnotatleastareasonablepossibilitytheCompanymayhaveincurredamaterialloss,oramaterialloss
inexcessofarecordedaccrual,withrespecttolosscontingencies,includingmattersrelatedtoinfringementofintellectualpropertyrights.
However,theoutcomeoflitigationisinherentlyuncertain.
Althoughmanagementconsidersthelikelihoodofsuchanoutcometoberemote,ifoneormorelegalmatterswereresolvedagainstthe
Companyinareportingperiodforamountsinexcessofmanagementsexpectations,theCompanysconsolidatedfinancialstatementsfor
thatreportingperiodcouldbemateriallyadverselyaffected.Further,suchanoutcomecouldresultinsignificantcompensatory,punitiveor
trebledmonetarydamages,disgorgementofrevenueorprofits,remedialcorporatemeasuresorinjunctivereliefagainsttheCompanythat
couldmateriallyadverselyaffectitsfinancialconditionandoperatingresults.
TheCompanyissubjecttolawsandregulationsworldwide,changestowhichcouldincreasetheCompanyscostsandindividually
orintheaggregateadverselyaffecttheCompanysbusiness.
TheCompanyissubjecttolawsandregulationsaffectingitsdomesticandinternationaloperationsinanumberofareas.TheseU.S.and
foreign laws and regulations affect the Companys activities including, but not limited to, in areas of labor, advertising, digital content,
consumerprotection,realestate,billing, ecommerce, promotions, quality of services, telecommunications, mobile communications and
media,television,intellectualpropertyownershipandinfringement,tax,importandexportrequirements,anticorruption,foreignexchange
controlsandcashrepatriationrestrictions,dataprivacyrequirements,anticompetition,environmental,healthandsafety.
By way of example, laws and regulations related to mobile communications and media devices in the many jurisdictions in which the
Company operates are extensive and subject to change. Such changes could include, among others, restrictions on the production,
manufacture,distributionanduseofdevices,lockingdevicestoacarriersnetwork,ormandatingtheuseofdevicesonmorethanone
carriersnetwork.Thesedevicesarealsosubjecttocertificationandregulationbygovernmentalandstandardizationbodies,aswellasby
cellularnetworkcarriersforuseontheirnetworks.Thesecertificationprocessesareextensiveandtimeconsuming,andcouldresultin
additionaltestingrequirements,productmodifications,ordelaysinproductshipmentdates,orcouldprecludetheCompanyfromselling
certainproducts.
Compliance with these laws, regulations and similar requirements may be onerous and expensive, and they may be inconsistent from
jurisdictiontojurisdiction,furtherincreasingthecostofcomplianceanddoingbusiness.Anysuchcosts,whichmayriseinthefutureasa
result of changes in these laws and regulations or in their interpretation, could individually or in the aggregate make the Companys
productsandserviceslessattractivetotheCompanyscustomers,delaytheintroductionofnewproductsinoneormoreregions,orcause
the Company to change or limit its business practices. The Company has implemented policies and procedures designed to ensure
compliancewithapplicablelawsandregulations,buttherecanbenoassurancethattheCompanysemployees,contractors,oragentswill
notviolatesuchlawsandregulationsortheCompanyspoliciesandprocedures.
TheCompanysbusinessissubjecttotherisksofinternationaloperations.
TheCompanyderivesasignificantportionofitsrevenueandearningsfromitsinternationaloperations.CompliancewithapplicableU.S.
andforeignlawsandregulations,suchasimportandexportrequirements,anticorruptionlaws,taxlaws,foreignexchangecontrolsand
cashrepatriationrestrictions,dataprivacyrequirements,environmentallaws,laborlawsandanticompetitionregulations,increasesthe
costsofdoingbusinessinforeignjurisdictions.AlthoughtheCompanyhasimplementedpoliciesandprocedurestocomplywiththese
lawsandregulations,aviolationbytheCompanysemployees,contractors,oragentscouldneverthelessoccur.Violationsoftheselaws
andregulationscouldmateriallyadverselyaffecttheCompanysbrand,internationalgrowtheffortsandbusiness.
The Company also could be significantly affected by other risks associated with international activities including, but not limited to,
economic and labor conditions, increased duties, taxes and other costs and political instability. Margins on sales of the Companys
products in foreign countries, and on sales of products that include components obtained from foreign suppliers, could be materially
adverselyaffectedbyinternationaltraderegulations,includingduties,tariffsandantidumpingpenalties.TheCompanyisalsoexposedto
credit and collectability risk on its trade receivables with customers in certain international markets. There can be no assurance the
Companycaneffectivelylimititscreditriskandavoidlosses.
TableofContents
TheCompanysretailstoreshaverequiredandwillcontinuetorequireasubstantialinvestmentandcommitmentofresourcesand
aresubjecttonumerousrisksanduncertainties.
The Companys retail stores have required substantial investment in equipment and leasehold improvements, information systems,
inventory and personnel. The Company also has entered into substantial operating lease commitments for retail space. Certain stores
havebeendesignedandbuilttoserveashighprofilevenuestopromotebrandawarenessandserveasvehiclesforcorporatesalesand
marketingactivities.Becauseoftheiruniquedesignelements,locationsandsize,thesestoresrequiresubstantiallymoreinvestmentthan
theCompanysmoretypicalretailstores.DuetothehighcoststructureassociatedwiththeCompanysretailstores,adeclineinsalesor
theclosureorpoorperformanceofindividualormultiplestorescouldresultinsignificantleaseterminationcosts,writeoffsofequipment
andleaseholdimprovementsandseverancecosts.
Manyfactorsuniquetoretailoperations,someofwhicharebeyondtheCompanyscontrol,poserisksanduncertainties.Theserisksand
uncertaintiesinclude,butarenotlimitedto,macroeconomicfactorsthatcouldhaveanadverseeffectongeneralretailactivity,aswellas
theCompanysinabilitytomanagecostsassociatedwithstoreconstructionandoperation,theCompanysfailuretomanagerelationships
with its existing retail partners, more challenging environments in managing retail operations outside the U.S., costs associated with
unanticipatedfluctuationsinthevalueofretailinventory,andtheCompanysinabilitytoobtainandrenewleasesinqualityretaillocations
atareasonablecost.
Investment in new business strategies and acquisitions could disrupt the Companys 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 and uncertainties, including distraction of management from current operations, greater than expected liabilities and
expenses,inadequatereturnofcapitalandunidentifiedissuesnotdiscoveredintheCompanysduediligence.Thesenewventuresare
inherentlyriskyandmaynotbesuccessful.
TheCompanysbusinessandreputationmaybeimpactedbyinformationtechnologysystemfailuresornetworkdisruptions.
The Company may be subject to information technology system failures and network disruptions. These may be caused by natural
disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic
breakins, or other events or disruptions. System redundancy may be ineffective or inadequate, and the Companys disaster recovery
planningmaynotbesufficientforalleventualities.Suchfailuresordisruptionscould,amongotherthings,preventaccesstotheCompanys
onlinestoresandservices,precluderetailstoretransactions,compromiseCompanyorcustomerdata,andresultindelayedorcancelled
orders. System failures and disruptions could also impede the manufacturing and shipping of products, delivery of online services,
transactionsprocessingandfinancialreporting.
TheremaybebreachesoftheCompanysinformationtechnologysystemsthatmateriallydamagebusinesspartnerandcustomer
relationships, curtail or otherwise adversely impact access to online stores and services, or subject the Company to significant
reputational,financial,legalandoperationalconsequences.
TheCompanysbusinessrequiresittouseandstorecustomer,employeeandbusinesspartnerpersonallyidentifiableinformation(PII).
Thismayinclude,amongotherinformation,names,addresses,phonenumbers,emailaddresses,contactpreferences,taxidentification
numbers and payment account information. Although malicious attacks to gain access to PII affect many companies across various
industries,theCompanyisatarelativelygreaterriskofbeingtargetedbecauseofitshighprofileandtheamountofPIIitmanages.
The Company requires user names and passwords in order to access its information technology systems. The Company also uses
encryptionandauthenticationtechnologiesdesignedtosecurethetransmissionandstorageofdataandpreventaccesstoCompanydata
oraccounts.Aswithallcompanies,thesesecuritymeasuresaresubjecttothirdpartysecuritybreaches,employeeerror,malfeasance,
faultypasswordmanagement,orotherirregularities.Forexample,thirdpartiesmayattempttofraudulentlyinduceemployeesorcustomers
into disclosing user names, passwords or other sensitive information, which may in turn be used to access the Companys information
technologysystems.TohelpprotectcustomersandtheCompany,theCompanymonitorsaccountsandsystemsforunusualactivityand
mayfreezeaccountsundersuspiciouscircumstances,whichmayresultinthedelayorlossofcustomerorders.
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TheCompanydevotessignificantresourcestonetworksecurity,dataencryptionandothersecuritymeasurestoprotectitssystemsand
data,butthesesecuritymeasurescannotprovideabsolutesecurity.TotheextenttheCompanywastoexperienceabreachofitssystems
andwasunabletoprotectsensitivedata,suchabreachcouldmateriallydamagebusinesspartnerandcustomerrelationships,andcurtail
orotherwiseadverselyimpactaccesstoonlinestoresandservices.Moreover,ifacomputersecuritybreachaffectstheCompanyssystems
orresultsintheunauthorizedreleaseofPII,theCompanysreputationandbrandcouldbemateriallydamaged,useoftheCompanys
productsandservicescoulddecrease,andtheCompanycouldbeexposedtoariskoflossorlitigationandpossibleliability.Whilethe
Companymaintainsinsurancecoveragethat,subjecttopolicytermsandconditionsandsubjecttoasignificantselfinsuredretention,is
designedtoaddresscertainaspectsofcyberrisks,suchinsurancecoveragemaybeinsufficienttocoveralllossesoralltypesofclaims
thatmayariseinthecontinuallyevolvingareaofcyberrisk.
TheCompanysbusinessissubjecttoavarietyofU.S.andinternationallaws,rules,policiesandotherobligationsregardingdata
protection.
TheCompanyissubjecttofederal,stateandinternationallawsrelatingtothecollection,use,retention,securityandtransferofPII.Inmany
cases,theselawsapplynotonlytothirdpartytransactions,butalsototransfersofinformationbetweentheCompanyanditssubsidiaries,
andamongtheCompany,itssubsidiariesandotherpartieswithwhichtheCompanyhascommercialrelations.Severaljurisdictionshave
passedlawsinthisarea,andotherjurisdictionsareconsideringimposingadditionalrestrictions.Theselawscontinuetodevelopandmay
be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing international requirements may cause the
CompanytoincursubstantialcostsorrequiretheCompanytochangeitsbusinesspractices.Noncompliancecouldresultinpenaltiesor
significantlegalliability.
TheCompanysprivacypolicy,whichincludesrelatedpracticesconcerningtheuseanddisclosureofdata,ispostedonitswebsite.Any
failurebytheCompany,itssuppliersorotherpartieswithwhomtheCompanydoesbusinesstocomplywithitspostedprivacypolicyor
with other federal, state or international privacyrelated or data protection laws and regulations could result in proceedings against the
Companybygovernmentalentitiesorothers.
TheCompanyisalsosubjecttopaymentcardassociationrulesandobligationsunderitscontractswithpaymentcardprocessors.Under
theserulesandobligations,ifinformationiscompromised,theCompanycouldbeliabletopaymentcardissuersforassociatedexpenses
and penalties. In addition, if the Company fails to follow payment card industry security standards, even if no customer information is
compromised,theCompanycouldincursignificantfinesorexperienceasignificantincreaseinpaymentcardtransactioncosts.
TheCompanyssuccessdependslargelyonthecontinuedserviceandavailabilityofkeypersonnel.
MuchoftheCompanysfuturesuccessdependsonthecontinuedavailabilityandserviceofkeypersonnel,includingitsChiefExecutive
Officer,executive team and other highly skilled employees. Experienced personnel in the technology industry are in high demand and
competitionfortheirtalentsisintense,especiallyinSiliconValley,wheremostoftheCompanyskeypersonnelarelocated.
The Companys business may be impacted by political events, war, terrorism, public health issues, natural disasters and other
businessinterruptions.
War,terrorism,geopoliticaluncertainties,publichealthissuesandotherbusinessinterruptionshavecausedandcouldcausedamageor
disruptiontointernationalcommerceandtheglobaleconomy,andthuscouldhaveamaterialadverseeffectontheCompany,itssuppliers,
logisticsproviders,manufacturingvendorsandcustomers,includingchannelpartners.TheCompanysbusinessoperationsaresubjectto
interruptionby,amongothers,naturaldisasters,whetherasaresultofclimatechangeorotherwise,fire,powershortages,nuclearpower
plant accidents, terrorist attacks and other hostile acts, labor disputes, public health issues and other events beyond its control. Such
eventscoulddecreasedemandfortheCompanysproducts,makeitdifficultorimpossiblefortheCompanytomakeanddeliverproductsto
its customers, including channel partners, or to receive components from its suppliers, and create delays and inefficiencies in the
Companys supply chain. 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
productsbetweenregions,delaysinproductionrampsofnewproductsanddisruptionsintheoperationsoftheCompanysmanufacturing
vendors and component suppliers. The majority of the Companys R&D activities, its corporate headquarters, information technology
systemsandothercriticalbusinessoperations,includingcertaincomponentsuppliers and manufacturing vendors, are in locations that
couldbeaffectedbynaturaldisasters.Intheeventofanaturaldisaster,theCompanycouldincursignificantlosses,requiresubstantial
recoverytimeandexperiencesignificantexpendituresinordertoresumeoperations.
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TheCompanyexpectsitsquarterlyrevenueandoperatingresultstofluctuate.
TheCompanysprofitmarginsvaryacrossitsproductsanddistributionchannels.TheCompanyssoftware,accessories,andserviceand
supportcontractsgenerallyhavehighergrossmarginsthancertainoftheCompanysotherproducts.GrossmarginsontheCompanys
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. The Companys direct sales generally have higher associated gross
marginsthanitsindirectsalesthroughitschannelpartners.Inaddition,theCompanysgrossmarginandoperatingmarginpercentages,as
wellasoverallprofitability,maybemateriallyadverselyimpactedasaresultofashiftinproduct,geographicorchannelmix,component
costincreases,thestrengtheningU.S.dollar,pricecompetition,ortheintroductionofnewproducts,includingthosethathavehighercost
structureswithflatorreducedpricing.
TheCompanyhastypicallyexperiencedhighernetsalesinitsfirstquartercomparedtootherquartersdueinparttoseasonalholiday
demand. Additionally, new product introductions can significantly impact net sales, product costs and operating expenses. Further, the
Companygeneratesamajorityofitsnetsalesfromasingleproductandadeclineindemandforthatproductcouldsignificantlyimpact
quarterly net sales. The Company could also be subject to unexpected developments late in a quarter, such as lowerthananticipated
demandfortheCompanysproducts,issueswithnewproductintroductions,aninternalsystemsfailure,orfailureofoneoftheCompanys
logistics,componentssupply,ormanufacturingpartners.
TheCompanysstockpriceissubjecttovolatility.
TheCompanysstockpricehasexperiencedsubstantialpricevolatilityinthepastandmaycontinuetodosointhefuture.Additionally,the
Company,thetechnologyindustryandthestockmarketasawholehaveexperiencedextremestockpriceandvolumefluctuationsthat
haveaffectedstockpricesinwaysthatmayhavebeenunrelatedtothesecompaniesoperatingperformance.Pricevolatilityoveragiven
periodmaycausetheaveragepriceatwhichtheCompanyrepurchasesitsownstocktoexceedthestockspriceatagivenpointintime.
TheCompanybelievesitsstockpriceshouldreflectexpectationsoffuturegrowthandprofitability.TheCompanyalsobelievesitsstock
priceshouldreflectexpectationsthatitscashdividendwillcontinueatcurrentlevelsorgrowandthatitscurrentsharerepurchaseprogram
willbefullyconsummated.FuturedividendsaresubjecttodeclarationbytheCompanysBoardofDirectors,andtheCompanysshare
repurchaseprogramdoesnotobligateittoacquireanyspecificnumberofshares.IftheCompanyfailstomeetexpectationsrelatedto
futuregrowth,profitability,dividends,sharerepurchasesorothermarketexpectations,itsstockpricemaydeclinesignificantly,whichcould
haveamaterialadverseimpactoninvestorconfidenceandemployeeretention.
The Companys financial performance is subject to risks associated with changes in the value of the U.S. dollar versus local
currencies.
The Companys primary exposure to movements in foreign currency exchange rates relates to nonU.S. dollardenominated sales and
operatingexpensesworldwide.WeakeningofforeigncurrenciesrelativetotheU.S.dollaradverselyaffectstheU.S.dollarvalueofthe
Companysforeigncurrencydenominatedsalesandearnings,andgenerallyleadstheCompanytoraiseinternationalpricing,potentially
reducingdemandfortheCompanysproducts.MarginsonsalesoftheCompanysproductsinforeigncountriesandonsalesofproducts
that include components obtained from foreign suppliers, could be materially adversely affected by foreign currency exchange rate
fluctuations.Insomecircumstances,forcompetitiveorotherreasons,theCompanymaydecidenottoraiselocalpricestofullyoffsetthe
dollarsstrengthening,oratall,whichwouldadverselyaffecttheU.S.dollarvalueoftheCompanysforeigncurrencydenominatedsales
andearnings.Conversely,astrengtheningofforeigncurrenciesrelativetotheU.S.dollar,whilegenerallybeneficialtotheCompanys
foreigncurrencydenominatedsalesandearnings,couldcausetheCompanytoreduceinternationalpricingandincurlossesonitsforeign
currency derivative instruments, thereby limiting the benefit. Additionally, strengthening of foreign currencies may also increase the
Companyscostofproductcomponentsdenominatedinthosecurrencies,thusadverselyaffectinggrossmargins.
The Company uses derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to
fluctuations in foreign currency exchange rates. The use of such hedging activities may not offset any, or more than a portion, of the
adversefinancialeffectsofunfavorablemovementsinforeignexchangeratesoverthelimitedtimethehedgesareinplace.
TheCompanyisexposedtocreditriskandfluctuationsinthemarketvaluesofitsinvestmentportfolio.
Giventheglobalnatureofitsbusiness,theCompanyhasbothdomesticandinternationalinvestments.Creditratingsandpricingofthe
Companysinvestmentscanbenegativelyaffectedbyliquidity,creditdeterioration,financialresults,economicrisk,politicalrisk,sovereign
riskorotherfactors.Asaresult,thevalueandliquidityoftheCompanyscash,cashequivalentsandmarketablesecuritiesmayfluctuate
substantially. Therefore, although the Company has not realized any significant losses on its cash, cash equivalents and marketable
securities,futurefluctuationsintheirvaluecouldresultinasignificantrealizedloss.
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TheCompanyisexposedtocreditriskonitstradeaccountsreceivable,vendornontradereceivablesandprepaymentsrelatedto
longtermsupplyagreements,andthisriskisheightenedduringperiodswheneconomicconditionsworsen.
TheCompanydistributesitsproductsthroughthirdpartycellularnetworkcarriers,wholesalers,retailersandvalueaddedresellers.The
Company also sells its products directly to small and midsized businesses and education, enterprise and government customers. A
substantialmajorityoftheCompanysoutstandingtradereceivablesarenotcoveredbycollateral,thirdpartyfinancingarrangements or
creditinsurance.TheCompanysexposuretocreditandcollectabilityriskonitstradereceivablesishigherincertaininternationalmarkets
and its ability to mitigate such risks may be limited. The Company also has unsecured vendor nontrade receivables resulting from
purchasesofcomponentsbyoutsourcingpartnersandothervendorsthatmanufacturesubassembliesorassemblefinalproductsforthe
Company.Inaddition,theCompanyhasmadeprepaymentsassociatedwithlongtermsupplyagreementstosecuresupplyofinventory
components.AsofSeptember26,2015,asignificantportionoftheCompanystradereceivableswasconcentratedwithincellularnetwork
carriers,anditsvendornontradereceivablesandprepaymentsrelatedtolongtermsupplyagreementswereconcentratedamongafew
individualvendorslocatedprimarilyinAsia.WhiletheCompanyhasprocedurestomonitorandlimitexposuretocreditriskonitstradeand
vendornontradereceivables,aswellaslongtermprepayments,therecanbenoassurancesuchprocedureswilleffectivelylimititscredit
riskandavoidlosses.
TheCompanycouldbesubjecttochangesinitstaxrates,theadoptionofnewU.S.orinternationaltaxlegislationorexposureto
additionaltaxliabilities.
The Company is subject to taxes in the U.S. and numerous foreign jurisdictions, including Ireland, where a number of the Companys
subsidiariesareorganized.Duetoeconomicandpoliticalconditions,taxratesinvariousjurisdictionsmaybesubjecttosignificantchange.
The Companys 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.Forexample,inJune2014,theEuropeanCommissionopenedaformalinvestigationofIrelandtoexaminewhetherdecisionsby
thetaxauthoritieswithregardtothecorporateincometaxtobepaidbytwooftheCompanysIrishsubsidiariescomplywithEuropean
Union rules on state aid. If the European Commission were to conclude against Ireland, it could require Ireland to recover from the
Companypasttaxescoveringaperiodofupto10yearsreflectiveofthedisallowedstateaid,andsuchamountcouldbematerial.
TheCompanyisalsosubjecttotheexaminationofitstaxreturnsandothertaxmattersbytheInternalRevenueServiceandothertax
authorities and governmental bodies. The Company regularly assesses the likelihood of an adverse outcome resulting from these
examinationstodeterminetheadequacyofitsprovisionfortaxes.Therecanbenoassuranceastotheoutcomeoftheseexaminations.If
theCompanyseffectivetaxratesweretoincrease,particularlyintheU.S.orIreland,oriftheultimatedeterminationoftheCompanys
taxesowedisforanamountinexcessofamountspreviouslyaccrued,theCompanysfinancialcondition,operatingresultsandcashflows
couldbeadverselyaffected.
TableofContents
Item1B. UnresolvedStaffComments
None.
Item2. Properties
TheCompanysheadquartersarelocatedinCupertino,California.AsofSeptember26,2015,theCompanyownedorleased25.6million
square feet of building space, primarily in the U.S. The Company also owned or leased building space in various locations, including
throughoutEurope,China,SingaporeandJapan.Ofthetotalownedorleasedbuildingspace18.5millionsquarefeetwasleasedbuilding
space,whichincludesapproximately5.3millionsquarefeetrelatedtoretailstorespace.Additionally,theCompanyownsatotalof1,757
acresoflandinvariouslocations.
AsofSeptember26,2015,theCompanyownedamanufacturingfacilityinCork,Irelandthatalsohousedacustomersupportcallcenter
facilitiesinElkGrove,Californiathatincludedwarehousinganddistributionoperationsandacustomersupportcallcenterandafacilityin
Mesa,Arizona.TheCompanyalsoownedlandinAustin,Texaswhereitisexpandingitsexistingofficespaceandcustomersupportcall
center. In addition, the Company owned facilities and land for R&D and corporate functions in San Jose, California and Cupertino,
California,includinglandthatisbeingdevelopedfortheCompanyssecondcorporatecampus.TheCompanyalsoowneddatacentersin
Newark, California Maiden, North Carolina Prineville, Oregon and Reno, Nevada. Outside the U.S., the Company owned additional
facilitiesforvariouspurposes.
TheCompanybelievesitsexistingfacilitiesandequipment,whichareusedbyalloperatingsegments,areingoodoperatingconditionand
are suitable for the conduct of its business. The Company has invested in internal capacity and strategic relationships with outside
manufacturingvendorsandcontinuestomakeinvestmentsincapitalequipmentasneededtomeetanticipateddemandforitsproducts.
Item3. LegalProceedings
TheCompanyissubjecttothelegalproceedingsandclaimsdiscussedbelowaswellascertainotherlegalproceedingsandclaimsthat
havenotbeenfullyresolvedandthathavearisenintheordinarycourseofbusiness.Intheopinionofmanagement,therewasnotatleast
areasonablepossibilitytheCompanymayhaveincurredamaterialloss,oramateriallossinexcessofarecordedaccrual,withrespectto
loss contingencies for asserted legal and other claims. However, the outcome of legal proceedings and claims brought against the
Companyissubjecttosignificantuncertainty.Therefore,althoughmanagementconsidersthelikelihoodofsuchanoutcometoberemote,
ifoneormoreoftheselegalmatterswereresolvedagainsttheCompanyinareportingperiodforamountsinexcessofmanagements
expectations,theCompanysconsolidatedfinancialstatementsforthatreportingperiodcouldbemateriallyadverselyaffected.Seetherisk
factorTheCompanycouldbeimpactedbyunfavorableresultsoflegalproceedings,suchasbeingfoundtohaveinfringedonintellectual
propertyrightsinPartI,Item1AofthisForm10KundertheheadingRiskFactors.TheCompanysettledcertainmattersduringthefourth
quarter of 2015 that did not individually or in the aggregate have a material impact on the Companys financial condition or operating
results.
AppleeBooksAntitrustLitigation(UnitedStatesofAmericav.AppleInc.,etal.)
OnApril11,2012,theU.S.DepartmentofJusticefiledacivilantitrustactionagainsttheCompanyandfivemajorbookpublishersinthe
U.S.DistrictCourtfortheSouthernDistrictofNewYork,alleginganunreasonablerestraintofinterstatetradeandcommerceinviolationof
1 of the Sherman Act and seeking, among other things, injunctive relief, the District Courts declaration that the Companys agency
agreementswiththepublishersarenullandvoidand/ortheDistrictCourtsreformationofsuchagreements.OnJuly10,2013,theDistrict
Courtfound,followingabenchtrial,thattheCompanyconspiredtorestraintradeinviolationof1oftheShermanActandrelevantstate
statutestotheextentthoselawsarecongruentwith1oftheShermanAct.TheDistrictCourtenteredapermanentinjunction,whichtook
effectonOctober6,2013andwillbeineffectforfiveyearsunlessthejudgmentisoverturnedonappeal.TheCompanyhastakenthe
necessary steps to comply with the terms of the District Courts order, including renegotiating agreements with the five major eBook
publishers, updating its antitrust training program and completing a twoyear monitorship with a courtappointed antitrust compliance
monitor,whoseappointmenttheDistrictCourtendedinOctober2015.TheCompanyappealedtheDistrictCourtsdecision.Pursuanttoa
settlementagreementreachedinJune2014,anydamagestheCompanymaybeobligatedtopaywillbedeterminedbytheoutcomeofthe
finaladjudicationfollowingexhaustionofallappeals.
Item4. MineSafetyDisclosures
Notapplicable.
TableofContents
PARTII
Item5. MarketforRegistrantsCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities
TheCompanyscommonstockistradedontheNASDAQStockMarketLLC(NASDAQ)underthesymbolAAPL.
PriceRangeofCommonStock
ThepricerangepershareofcommonstockpresentedbelowrepresentsthehighestandlowestintradaysalespricesfortheCompanys
commonstockontheNASDAQduringeachquarterofthetwomostrecentyears.
FourthQuarter ThirdQuarter SecondQuarter FirstQuarter
2015pricerangepershare
$ 132.97$92.00$ 134.54$123.10$ 133.60$104.63$ 119.75$95.18
2014pricerangepershare
$ 103.74$92.09$ 95.05$73.05$ 80.18$70.51$ 82.16$67.77
Holders
AsofOctober9,2015,therewere25,924shareholdersofrecord.
Dividends
TheCompanypaidatotalof$11.4billionand$11.0billionindividendsduring2015and2014,respectively,andexpectstopayquarterly
dividendsof$0.52percommonshareeachquarter,subjecttodeclarationbytheBoardofDirectors.TheCompanyalsoplanstoincrease
itsdividendonanannualbasis,subjecttodeclarationbytheBoardofDirectors.
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PurchasesofEquitySecuritiesbytheIssuerandAffiliatedPurchasers
SharerepurchaseactivityduringthethreemonthsendedSeptember26,2015wasasfollows(inmillions,exceptnumberofshares,which
arereflectedinthousands,andpershareamounts):
TotalNumber Approximate
ofShares DollarValueof
Purchased SharesThat
asPartof MayYetBe
Average Publicly Purchased
TotalNumber Price Announced Underthe
ofShares PaidPer Plansor Plansor
Periods Purchased Share Programs Programs(1)
June28,2015toAugust1,2015:

May2015ASR
9,973(2) (2) 9,973(2)
Openmarketandprivatelynegotiatedpurchases
15,882 $ 124.66 15,882
August2,2015toAugust29,2015:

68,526 $ 114.15 68,526
August30,2015toSeptember26,2015:

37,394 $ 112.94 37,394
Total
131,775 $ 36,024
(1)
In 2012, the Companys Board of Directors authorized a program to repurchase up to $10 billion of the Companys common stock
beginningin2013.TheCompanysBoardofDirectorsincreasedtheauthorizationtorepurchasetheCompanyscommonstockto$60
billioninApril2013,to$90billioninApril2014andto$140billioninApril2015.AsofSeptember26,2015,$104billionofthe$140billion
had been utilized. The remaining $36 billion in the table represents the amount available to repurchase shares under the authorized
repurchaseprogramasofSeptember26,2015.TheCompanyssharerepurchaseprogramdoesnotobligateittoacquireanyspecific
numberofshares.Undertheprogram,sharesmayberepurchasedinprivatelynegotiatedand/oropenmarkettransactions,including
underplanscomplyingwithRule10b51undertheExchangeAct.
(2)
In May 2015, the Company entered into an accelerated share repurchase arrangement (ASR) to purchase up to $6.0 billion of the
Companyscommonstock.InJuly2015,thepurchaseperiodforthisASRendedandanadditional10.0millionsharesweredelivered
andretired.Intotal,48.3millionnetsharesweredeliveredunderthisASRatanaveragerepurchasepriceof$124.24.
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CompanyStockPerformance
The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend reinvested basis, for the
Company,theS&P500Index,theS&PInformationTechnologyIndexandtheDowJonesU.S.TechnologySupersectorIndexforthefive
yearsendedSeptember26,2015.Thegraphassumes$100wasinvestedineachoftheCompanyscommonstock,theS&P500Index,
theS&PInformationTechnologyIndexandtheDowJonesU.S.TechnologySupersectorIndexasofthemarketcloseonSeptember24,
2010.Notethathistoricstockpriceperformanceisnotnecessarilyindicativeoffuturestockpriceperformance.
*
$100investedon9/25/10instockorindex,includingreinvestmentofdividends.Datapointsarethelastdayofeachfiscalyearforthe
CompanyscommonstockandSeptember30thforindexes.
Copyright 2015S&P,adivisionofMcGrawHillFinancial.Allrightsreserved.
Copyright 2015DowJones&Co.Allrightsreserved.
September September September September September September

2010 2011 2012 2013 2014 2015
AppleInc.
$ 100 $ 138 $ 229 $ 170 $ 254 $ 294
S&P500Index
$ 100 $ 101 $ 132 $ 157 $ 188 $ 187
S&PInformationTechnologyIndex
$ 100 $ 104 $ 137 $ 147 $ 190 $ 194
DowJonesU.S.TechnologySupersector
Index
$ 100 $ 103 $ 134 $ 141 $ 183 $ 183
TableofContents
Item6. SelectedFinancialData
TheinformationsetforthbelowforthefiveyearsendedSeptember26,2015,isnotnecessarilyindicativeofresultsoffutureoperations,
and should be read in conjunction with Part II, Item 7, Managements Discussion and Analysis of Financial Condition and Results of
Operations and the consolidated financial statements and related notes thereto included in Part II, Item 8 of this Form 10K to fully
understandfactorsthatmayaffectthecomparabilityoftheinformationpresentedbelow(inmillions,exceptnumberofshares,whichare
reflectedinthousands,andpershareamounts).
2015 2014 2013 2012 2011
Netsales
$ 233,715 $ 182,795 $ 170,910 $ 156,508 $ 108,249
Netincome
$ 53,394 $ 39,510 $ 37,037 $ 41,733 $ 25,922
Earningspershare:

Basic
$ 9.28 $ 6.49 $ 5.72 $ 6.38 $ 4.01
Diluted
$ 9.22 $ 6.45 $ 5.68 $ 6.31 $ 3.95
Cashdividendsdeclaredpershare
$ 1.98 $ 1.82 $ 1.64 $ 0.38 $ 0
Sharesusedincomputingearningspershare:

Basic
5,753,421 6,085,572 6,477,320 6,543,726 6,469,806
Diluted
5,793,069 6,122,663 6,521,634 6,617,483 6,556,514

Totalcash,cashequivalentsandmarketablesecurities
$ 205,666 $ 155,239 $ 146,761 $ 121,251 $ 81,570
Totalassets
$ 290,479 $ 231,839 $ 207,000 $ 176,064 $ 116,371
Commercialpaper
$ 8,499 $ 6,308 $ 0 $ 0 $ 0
Totaltermdebt(2)
$ 55,963 $ 28,987 $ 16,960 $ 0 $ 0
Otherlongtermobligations(1)
$ 33,427 $ 24,826 $ 20,208 $ 16,664 $ 10,100
Totalliabilities
$ 171,124 $ 120,292 $ 83,451 $ 57,854 $ 39,756
Totalshareholdersequity
$ 119,355 $ 111,547 $ 123,549 $ 118,210 $ 76,615
(1)
Otherlongtermobligationsexcludenoncurrentdeferredrevenue.
(2)
Includescurrentandlongtermportionoftermdebt.
TableofContents
Item7. ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations
ThissectionandotherpartsofthisAnnualReportonForm10K(Form10K)containforwardlookingstatements,withinthemeaningof
the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forwardlooking statements provide current
expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or
currentfact.Forwardlookingstatementscanalsobeidentifiedbywordssuchasfuture,anticipates,believes,estimates,expects,
intends, plans, predicts, will, would, could, can, may, and similar terms. Forwardlooking statements are not guarantees of
futureperformanceandtheCompanysactualresultsmaydiffersignificantlyfromtheresultsdiscussedintheforwardlookingstatements.
Factorsthatmightcausesuchdifferencesinclude,butarenotlimitedto,thosediscussedinPartI,Item1AofthisForm10Kunderthe
heading Risk Factors, which are incorporated herein by reference. The following discussion should be read in conjunction with the
consolidatedfinancialstatementsandnotestheretoincludedinPartII,Item8ofthisForm10K.Allinformationpresentedhereinisbased
on the Companys fiscal calendar. Unless otherwise stated, references to particular years, quarters, months or periods refer to the
CompanysfiscalyearsendedinSeptemberandtheassociatedquarters,monthsandperiodsofthosefiscalyears.Eachofthetermsthe
CompanyandAppleasusedhereinreferscollectivelytoAppleInc.anditswhollyownedsubsidiaries,unlessotherwisestated.The
Companyassumesnoobligationtoreviseorupdateanyforwardlookingstatementsforanyreason,exceptasrequiredbylaw.
OverviewandHighlights
The Company designs, manufactures and markets mobile communication and media devices, personal computers and portable digital
music players, and sells a variety of related software, services, accessories, networking solutions and thirdparty digital content and
applications.TheCompanysellsitsproductsworldwidethroughitsretailstores,onlinestoresanddirectsalesforce,aswellasthrough
thirdpartycellularnetworkcarriers,wholesalers,retailersandvalueaddedresellers.Inaddition,theCompanysellsavarietyofthirdparty
Applecompatibleproducts,includingapplicationsoftwareandvariousaccessoriesthroughitsonlineandretailstores.TheCompanysells
toconsumers,smallandmidsizedbusinessesandeducation,enterpriseandgovernmentcustomers.
Fiscal2015Highlights
Netsalesrose28%or$50.9billionduring2015comparedto2014,drivenbya52%yearoveryearincreaseiniPhonenetsales.iPhone
netsalesandunitsalesin2015increasedinalloftheCompanysreportableoperatingsegments.TheCompanyalsoexperiencedyear
overyearnetsalesincreasesinMac ,ServicesandOtherProducts.AppleWatch ,whichlaunchedduringthethirdquarterof2015,
accountedformorethan100%oftheyearoveryeargrowthinnetsalesofOtherProducts.Netsalesgrowthduring2015waspartially
offsetbytheeffectofweaknessinmostforeigncurrenciesrelativetotheU.S.dollarandloweriPadnetsales.Totalnetsalesincreasedin
eachoftheCompanysreportableoperatingsegments,withparticularlystronggrowthinGreaterChinawhere yearoveryear net sales
increased84%.
InApril2015,theCompanyannouncedasignificantincreasetoitscapitalreturnprogrambyraisingtheexpectedtotalsizeoftheprogram
to$200billionthroughMarch2017.Thisincludedincreasingitssharerepurchaseauthorizationto$140billionandraisingitsquarterly
dividendto$0.52persharebeginninginMay2015.During2015,theCompanyspent$36.0billiontorepurchasesharesofitscommon
stock and paid dividends and dividend equivalents of $11.6 billion. Additionally, the Company issued $14.5 billion of U.S. dollar
denominated, 4.8 billion of eurodenominated, SFr1.3 billion of Swiss francdenominated, 1.3 billion of British pounddenominated,
A$2.3billionofAustraliandollardenominatedand250.0billionofJapaneseyendenominatedtermdebtduring2015.
Fiscal2014Highlights
Netsalesrose7%or$11.9billionduring2014comparedto2013.ThiswasdrivenbyincreasesinnetsalesofiPhone,MacandServices.
NetsalesandunitsalesincreasedforiPhoneprimarilyduetothesuccessfulintroductionofiPhone5sand5cinthelatterhalfofcalendar
year2013,thesuccessfullaunchofiPhone6and6Plusbeginninginthefourthquarterof2014,andexpandeddistribution.Macnetsales
andunitsalesincreasedprimarilyduetostrongdemandforMacBookAir andMacBookPro whichwereupdatedin2014withfaster
processorsandofferedatlowerprices.NetsalesofServicesgrewprimarilyduetoincreasedrevenuefromsalesthroughtheAppStore ,
AppleCareandlicensing.GrowthintheseareaswaspartiallyoffsetbytheyearoveryeardeclineinnetsalesforiPadduetolowerunit
salesinmanymarkets,andadeclineinnetsalesofOtherProducts.AlloftheCompanysoperatingsegmentsotherthantheRestofAsia
Pacific segment experienced increased net sales in 2014, with growth being strongest in the Greater China and Japan operating
segments.
During 2014, the Company completed various business acquisitions, including the acquisitions of Beats Music, LLC, which offers a
subscriptionstreamingmusicservice,andBeatsElectronics,LLC,whichmakesBeatsheadphones,speakersandaudiosoftware.
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InApril2014,theCompanyincreaseditssharerepurchaseauthorizationto$90billionandthequarterlydividendwasraisedto$0.47per
common share, resulting in an overall increase in its capital return program from $100 billion to over $130 billion. During 2014, the
Companyutilized$45billiontorepurchaseitscommonstockandpaiddividendsanddividendequivalentsof$11.1billion.TheCompany
alsoissued$12.0billionoflongtermdebtduring2014,withvaryingmaturitiesthrough2044,andlaunchedacommercialpaperprogram,
with$6.3billionoutstandingasofSeptember27,2014.
SalesData
Thefollowingtableshowsnetsalesbyoperatingsegmentandnetsalesandunitsalesbyproductduring2015,2014and2013(dollarsin
millionsandunitsinthousands):
2015 Change 2014 Change 2013
NetSalesbyOperatingSegment:

Americas
$ 93,864 17%$ 80,095 4%$ 77,093
Europe
50,337 14% 44,285 8% 40,980
GreaterChina
58,715 84% 31,853 18% 27,016
Japan
15,706 3% 15,314 11% 13,782
RestofAsiaPacific
15,093 34% 11,248 (7)% 12,039
Totalnetsales
$ 233,715 28%$ 182,795 7%$ 170,910

NetSalesbyProduct:

iPhone(1)
$ 155,041 52%$ 101,991 12%$ 91,279
iPad(1)
23,227 (23)% 30,283 (5)% 31,980
Mac(1)
25,471 6% 24,079 12% 21,483
Services(2)
19,909 10% 18,063 13% 16,051
OtherProducts(1)(3)
10,067 20% 8,379 (17)% 10,117
Totalnetsales
$ 233,715 28%$ 182,795 7%$ 170,910
UnitSalesbyProduct:

iPhone
231,218 37% 169,219 13% 150,257
iPad
54,856 (19)% 67,977 (4)% 71,033
Mac
20,587 9% 18,906 16% 16,341
(1)
Includesdeferralsandamortizationofrelatedsoftwareupgraderightsandnonsoftwareservices.

(2)
Includes revenue from the iTunes Store , App Store, Mac App Store, iBooks Store and Apple Music (collectively Internet
Services),AppleCare,ApplePay ,licensingandotherservices.
(3)
IncludessalesofAppleTV ,AppleWatch,Beatsproducts,iPodandApplebrandedandthirdpartyaccessories.
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ProductPerformance
iPhone
The following table presents iPhone net sales and unit sales information for 2015, 2014 and 2013 (dollars in millions and units in
thousands):
Netsales
$ 155,041 52%$ 101,991 12%$ 91,279
Percentageoftotalnetsales
66% 56% 53%
Unitsales
231,218 37% 169,219 13% 150,257
TheyearoveryeargrowthiniPhonenetsalesandunitsalesduring2015primarilyresultedfromstrongdemandforiPhone6and6Plus
during2015.Overallaveragesellingprices(ASPs)foriPhoneincreasedby11%during2015comparedto2014,dueprimarilytothe
introductionofiPhone6and6PlusinSeptember2014,partiallyoffsetbytheeffectofweaknessinmostforeigncurrenciesrelativetothe
U.S.dollar.
TheyearoveryeargrowthiniPhonenetsalesandunitsalesin2014resultedprimarilyfromthesuccessfulintroductionofnewiPhonesin
the latter half of calendar year 2013, the successful launch of iPhone 6 and 6 Plus beginning in September 2014, and expanded
distribution.iPhoneunitsalesgrewinalloftheCompanysoperatingsegments,whileiPhonenetsalesgrewinallsegmentsexceptRest
ofAsiaPacific.OverallASPsforiPhonewererelativelyflatin2014comparedto2013,withgrowthinASPsintheAmericassegmentbeing
offsetbyadeclineinASPsintheGreaterChina,JapanandRestofAsiaPacificsegments.
iPad
ThefollowingtablepresentsiPadnetsalesandunitsalesinformationfor2015,2014and2013(dollarsinmillionsandunitsinthousands):
Netsales
$ 23,227 (23)%$ 30,283 (5)%$ 31,980
10% 17% 19%
Unitsales
54,856 (19)% 67,977 (4)% 71,033
NetsalesandunitsalesforiPaddeclinedduring2015comparedto2014.TheCompanybelievesthedeclineiniPadsalesisdueinpartto
alongerrepurchasecycleforiPadsandsomelevelofcannibalizationfromtheCompanysotherproducts.iPadASPsdeclinedby5%
during2015comparedto2014,primarilyasaresultoftheeffectofweaknessinmostforeigncurrenciesrelativetotheU.S.dollaranda
shiftinmixtolowerpricediPads.
NetsalesandunitsalesforiPaddeclinedin2014comparedto2013.iPadnetsalesandunitsalesgrewintheGreaterChinaandJapan
segmentsbutthisgrowthwasmorethanoffsetbyadeclineinallothersegments.OveralliPadASPswererelativelyflatin2014compared
to2013withashiftinmixtohigherpricediPadsbeingoffsetbytheOctober2013pricereductionofiPadmini.ASPsincreasedinthe
JapanandRestofAsiaPacificsegmentsbutwereslightlydowninothersegments.
Mac
ThefollowingtablepresentsMacnetsalesandunitsalesinformationfor2015,2014and2013(dollarsinmillionsandunitsinthousands):
Netsales
$ 25,471 6%$ 24,079 12%$ 21,483
11% 13% 13%
Unitsales
20,587 9% 18,906 16% 16,341
The yearoveryear growth in Mac net sales and unit sales during 2015 was driven by strong demand for Mac portables. Mac ASPs
declined3%during2015comparedto2014largelyduetotheeffectofweaknessinmostforeigncurrenciesrelativetotheU.S.dollar.
TheyearoveryeargrowthinMacnetsalesandunitsalesfor2014wasprimarilydrivenbyincreasedsalesofMacBookAir,MacBookPro
and Mac Pro. Mac net sales and unit sales increased in all of the Companys operating segments. Mac ASPs decreased during 2014
comparedto2013primarilyduetopricereductionsoncertainMacmodelsandashiftinmixtowardsMacportablesystems.
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Services
ThefollowingtablepresentsnetsalesinformationofServicesfor2015,2014and2013(dollarsinmillions):
Netsales
$ 19,909 10%$ 18,063 13%$ 16,051
9% 10% 9%
TheincreaseinnetsalesofServicesduring2015comparedto2014wasprimarilyduetogrowthfromInternetServicesandlicensing.The
AppStore,includedwithinInternetServices,generatedstrongyearoveryearnetsalesgrowthof29%.
TheincreaseinnetsalesofServicesin2014comparedto2013wasprimarilyduetogrowthinnetsalesfromInternetServices,AppleCare
andlicensing.InternetServicesgeneratedatotalof$10.2billioninnetsalesduring2014comparedto$9.3billionduring2013.Growthin
netsalesfromInternetServiceswasdrivenbyincreasesinrevenuefromappsalesreflectingcontinuedgrowthintheinstalledbaseofiOS
devicesandtheexpandedofferingsofiOSappsandrelatedinapppurchases.Thiswaspartiallyoffsetbyadeclineinsalesofdigital
music.
SegmentOperatingPerformance
The Company manages its business primarily on a geographic basis. The Companys reportable operating segments consist of the
Americas,Europe,GreaterChina,JapanandRestofAsiaPacific.TheAmericassegmentincludesbothNorthandSouthAmerica.The
EuropesegmentincludesEuropeancountries,aswellasIndia,theMiddleEastandAfrica.TheGreaterChinasegmentincludesChina,
HongKongandTaiwan.TheRestofAsiaPacificsegmentincludesAustraliaandthoseAsiancountriesnotincludedintheCompanys
otherreportableoperatingsegments.Although,eachreportableoperatingsegmentprovidessimilarhardwareandsoftwareproductsand
similarservices,theyaremanagedseparatelytobetteralignwiththelocationoftheCompanyscustomersanddistributionpartnersand
theuniquemarketdynamicsofeachgeographicregion.FurtherinformationregardingtheCompanysreportableoperatingsegmentscan
be found in Part II, Item 8 of this Form 10K in the Notes to Consolidated Financial Statements in Note 11, Segment Information and
GeographicData.
Americas
ThefollowingtablepresentsAmericasnetsalesinformationfor2015,2014and2013(dollarsinmillions):
Netsales
$ 93,864 17%$ 80,095 4%$ 77,093
40% 44% 45%
TheyearoveryeargrowthinAmericasnetsalesduring2015wasdrivenprimarilybygrowthinnetsalesandunitsalesofiPhone,partially
offsetbyadeclineinnetsalesandunitsalesofiPad.
ThegrowthintheAmericassegmentin2014wasduetoincreasednetsalesofiPhone,MacandServicesthatwaspartiallyoffsetbya
declineinnetsalesofiPadandOtherProductsandweaknessinforeigncurrenciesrelativetotheU.S.dollarcomparedto2013.iPhone
growthresultedprimarilyfromthesuccessfulintroductionofiPhone5sand5cinSeptember2013andthesuccessfullaunchofiPhone6
and6PlusinSeptember2014.MacgrowthwasdrivenprimarilybyincreasednetsalesandunitsalesofMacBookAirandMacPro.
Europe
ThefollowingtablepresentsEuropenetsalesinformationfor2015,2014and2013(dollarsinmillions):
Netsales
$ 50,337 14%$ 44,285 8%$ 40,980
22% 24% 24%
TheyearoveryearincreaseinEuropenetsalesduring2015wasdrivenprimarilybygrowthinnetsalesandunitsalesofiPhone,partially
offsetbytheeffectofweaknessinforeigncurrenciesrelativetotheU.S.dollarandadeclineinnetsalesandunitsalesofiPad.
ThegrowthintheEuropesegmentin2014wasduetoincreasednetsalesofiPhone,MacandServices,aswellasstrengthinEuropean
currenciesrelativetotheU.S.dollar,partiallyoffsetbyadeclineinnetsalesofiPad.iPhonegrowthresultedprimarilyfromthesuccessful
introductionofiPhone5sand5cinthesecondhalfofcalendar2013andthesuccessfullaunchofiPhone6and6Plusinover20countries
inEuropeinSeptember2014.MacgrowthwasdrivenprimarilybyincreasednetsalesandunitsalesofMacBookAir,MacBookProand
MacPro.
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GreaterChina
ThefollowingtablepresentsGreaterChinanetsalesinformationfor2015,2014and2013(dollarsinmillions):
Netsales
$ 58,715 84%$ 31,853 18%$ 27,016
25% 17% 16%
GreaterChinaexperiencedstrongyearoveryearincreasesinnetsalesduring2015drivenprimarilybyiPhonesales.
TheGreaterChinasegmentexperiencedyearoveryeargrowthinnetsalesin2014thatwassignificantlyhigherthanthegrowthratefor
theCompanyoverall.GreaterChinagrowthwasdrivenbyhigherunitsalesandnetsalesofallmajorproductcategories,inadditionto
highernetsalesofServices.GrowthinnetsalesandunitsalesofiPhonewasespeciallystrong,drivenbythesuccessfullaunchofiPhone
5s and 5c in Mainland China and Hong Kong in September 2013, the successful launch of iPhone 6 and 6 Plus in Hong Kong in
September2014,increaseddemandfortheCompanysentrypricediPhonesandtheadditionofasignificantnewcarrierinthesecond
quarterof2014.
Japan
ThefollowingtablepresentsJapannetsalesinformationfor2015,2014and2013(dollarsinmillions):
Netsales
$ 15,706 3%$ 15,314 11%$ 13,782
7% 8% 8%
TheyearoveryearincreaseinJapannetsalesduring2015wasdrivenprimarilybygrowthinServiceslargelyassociatedwithstrongApp
Storesales,partiallyoffsetbytheeffectofweaknessintheJapaneseyenrelativetotheU.S.dollar.
In 2014 the Japan segment generated yearoveryear increases in net sales and unit sales of every major product category and
experiencedgrowthinnetsalesofServices.TheyearoveryeargrowthiniPhonewasdrivenbythesuccessfullaunchofiPhone5sand5c
inSeptember2013,thesuccessfullaunchofiPhone6and6PlusinSeptember2014,increaseddemandfortheCompanysentrypriced
iPhonesandtheadditionofasignificantnewcarrierinthefourthquarterof2013.Thesepositivefactorswerepartiallyoffsetbyweakness
intheJapaneseYenrelativetotheU.S.dollar.
RestofAsiaPacific
ThefollowingtablepresentsRestofAsiaPacificnetsalesinformationfor2015,2014and2013(dollarsinmillions):
Netsales
$ 15,093 34%$ 11,248 (7)%$ 12,039
6% 6% 7%
TheyearoveryearincreaseinRestofAsiaPacificnetsalesduring2015primarilyreflectsstronggrowthinnetsalesand unit sales of

iPhone,partiallyoffsetbytheeffectofweaknessinforeigncurrenciesrelativetotheU.S.dollarandadeclineinnetsalesandunitsalesof
iPad.
NetsalesintheRestofAsiaPacificsegmentdeclinedin2014comparedto2013duetoyearoveryearreductionsinnetsalesinallmajor
productcategoriesexceptMacandreductionsinunitsalesofiPad.Netsalesin2014werealsonegativelyaffectedbytheweaknessin
severalforeigncurrenciesrelativetotheU.S.dollar,includingtheAustraliandollar.
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GrossMargin
Grossmarginfor2015,2014and2013isasfollows(dollarsinmillions):
2015 2014 2013
Netsales
$ 233,715$ 182,795$ 170,910
Costofsales
140,089 112,258 106,606
Grossmargin
$ 93,626$ 70,537$ 64,304
Grossmarginpercentage
40.1% 38.6% 37.6%
Theyearoveryearincreaseinthegrossmarginpercentagein2015wasdrivenprimarilybyafavorableshiftinmixtoproductswithhigher
margins and, to a lesser extent, by improved leverage on fixed costs from higher net sales. These positive factors were partially offset
primarilybyhigherproductcoststructuresand,toalesserextent,bytheeffectofweaknessinmostforeigncurrenciesrelativetotheU.S.
dollar.
Theyearoveryearincreaseinthegrossmarginpercentagein2014wasdrivenbymultiplefactorsincludinglowercommoditycosts,a
favorableshiftinmixtoproductswithhighermarginsandimprovedleverageonfixedcostsfromhighernetsales,whichwaspartiallyoffset
bytheweaknessinseveralforeigncurrenciesrelativetotheU.S.dollar,pricereductionsonselectproductsandhighercoststructureson
certainnewproducts.
TheCompanyanticipatesgrossmarginduringthefirstquarterof2016tobebetween39%and40%.Theforegoingstatementregarding
theCompanysexpectedgrossmarginpercentageinthefirstquarterof2016isforwardlookingandcoulddifferfromactualresults.The
Companysfuturegrossmarginscanbeimpactedbymultiplefactorsincluding,butnotlimitedto,thosesetforthinPartI,Item1Aofthis
Form10KundertheheadingRiskFactorsandthosedescribedinthisparagraph.Ingeneral,theCompanybelievesgrossmarginswill
remainunderdownwardpressureduetoavarietyoffactors,includingcontinuedindustrywideglobalproductpricingpressures,increased
competition,compressedproductlifecycles,producttransitions,potentialincreasesinthecostofcomponents,andpotentialstrengthening
oftheU.S.dollar,aswellaspotentialincreasesinthecostsofoutsidemanufacturingservicesandapotentialshiftintheCompanyssales
mixtowardsproductswithlowergrossmargins.Inresponsetocompetitivepressures,theCompanyexpectsitwillcontinuetotakeproduct
pricingactions,whichwouldadverselyaffectgrossmargins.GrossmarginscouldalsobeaffectedbytheCompanysabilitytomanage
product quality and warranty costs effectively and to stimulate demand for certain of its products. Due to the Companys significant
internationaloperations,itsfinancialconditionandoperatingresults,includinggrossmargins,couldbesignificantlyaffectedbyfluctuations
inexchangerates.
OperatingExpenses
Operatingexpensesfor2015,2014and2013areasfollows(dollarsinmillions):
Researchanddevelopment
$ 8,067 34%$ 6,041 35%$ 4,475
3% 3% 3%
Selling,generalandadministrative
$ 14,329 19%$ 11,993 11%$ 10,830
6% 7% 6%
Totaloperatingexpenses
$ 22,396 24%$ 18,034 18%$ 15,305
10% 10% 9%
ResearchandDevelopment
TheyearoveryeargrowthinR&Dexpensein2015and2014wasdrivenprimarilybyanincreaseinheadcountandrelatedexpenses,
includingsharebasedcompensationcosts,andmaterialcoststosupportexpandedR&Dactivities.TheCompanycontinuestobelievethat
focusedinvestmentsinR&Darecriticaltoitsfuturegrowthandcompetitivepositioninthemarketplaceandaredirectlyrelatedtotimely
developmentofnewandupdatedproductsthatarecentraltotheCompanyscorebusinessstrategy.
Selling,GeneralandAdministrative
Theyearoveryeargrowthinselling,generalandadministrativeexpensein2015and2014wasprimarilyduetoincreasedheadcountand
relatedexpenses,includingsharebasedcompensationcosts,andhigherspendingonmarketingandadvertising.
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OtherIncome/(Expense),Net
Otherincome/(expense),netfor2015,2014and2013areasfollows(dollarsinmillions):
Interestanddividendincome
$ 2,921 $ 1,795 $ 1,616
Interestexpense
(733) (384) (136)
Otherexpense,net
(903) (431) (324)
Totalotherincome/(expense),net
$ 1,285 31%$ 980 (15)%$ 1,156
Theincreaseinotherincome/(expense),netduring2015comparedto2014wasdueprimarilytohigherinterestincome,partiallyoffsetby
higher expenses associated with foreign exchange activity and higher interest expense on debt. The decrease in other income and
expenseduring2014comparedto2013wasdueprimarilytohigherinterestexpenseondebtandhigherexpensesassociatedwithforeign
exchange rate movements, partially offset by lower premium expenses on foreign exchange contracts and higher interest income. The
weightedaverageinterestrateearnedbytheCompanyonitscash,cashequivalentsandmarketablesecuritieswas1.49%,1.11%and
1.03%in2015,2014and2013,respectively.
ProvisionforIncomeTaxes
Provisionforincometaxesandeffectivetaxratesfor2015,2014and2013areasfollows(dollarsinmillions):
2015 2014 2013
Provisionforincometaxes
$ 19,121$ 13,973$ 13,118
Effectivetaxrate
26.4% 26.1% 26.2%
TheCompanyseffectivetaxratesfor2015,2014and2013differfromthestatutoryfederalincometaxrateof35%dueprimarilytocertain
undistributedforeignearnings,asubstantialportionofwhichwasgeneratedbysubsidiariesorganizedinIreland,forwhichnoU.S.taxes
are provided when such earnings are intended to be indefinitely reinvested outside the U.S. The higher effective tax rate during 2015
comparedto2014wasdueprimarilytohigherforeigntaxes.Theeffectivetaxratein2014comparedto2013wasrelativelyflat.
AsofSeptember26,2015,theCompanyhaddeferredtaxassetsarisingfromdeductibletemporarydifferences,taxlossesandtaxcredits
of$7.8billionanddeferredtaxliabilitiesof$24.1billion.Managementbelievesitismorelikelythannotthatforecastedincome,including
incomethatmaybegeneratedasaresultofcertaintaxplanningstrategies,togetherwithfuturereversalsofexistingtaxabletemporary
differences,willbesufficienttofullyrecoverthedeferredtaxassets.TheCompanywillcontinuetoevaluatetherealizabilityofdeferredtax
assetsquarterlybyassessingtheneedforandtheamountofavaluationallowance.
TheU.S.InternalRevenueServiceiscurrentlyexaminingtheyears2010through2012,andallyearspriorto2010areclosed.Inaddition,
the Company is subject to audits by state, local and foreign tax authorities. In major states and major foreign jurisdictions, the years
subsequent to 2003 generally remain open and could be subject to examination by the taxing authorities. Management believes that
adequate provisions have been made for any adjustments that may result from tax examinations. However, the outcome of tax audits
cannot be predicted with certainty. If any issues addressed in the Companys tax audits are resolved in a manner not consistent with
managementsexpectations,theCompanycouldberequiredtoadjustitsprovisionforincometaxesintheperiodsuchresolutionoccurs.
OnJune11,2014,theEuropeanCommissionissuedanopeningdecisioninitiatingaformalinvestigationagainstIrelandforallegedstate
aidtotheCompany.TheopeningdecisionconcernstheallocationofprofitsfortaxationpurposesoftheIrishbranchesoftwosubsidiaries
oftheCompany.TheCompanybelievestheEuropeanCommissionsassertionsarewithoutmerit.IftheEuropeanCommissionwereto
concludeagainstIreland,theEuropeanCommissioncouldrequireIrelandtorecoverfromtheCompanypasttaxescoveringaperiodofup
to10yearsreflectiveofthedisallowedstateaid.Whilesuchamountcouldbematerial,asofSeptember26,2015theCompanyisunableto
estimatetheimpact.
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RecentAccountingPronouncements
InMay2014,theFinancialAccountingStandardsBoard(FASB)issuedAccountingStandardsUpdate(ASU)No.201409,Revenue
from Contracts with Customers (Topic 606) (ASU 201409), which amends the existing accounting standards for revenue recognition.
ASU201409isbasedonprinciplesthatgoverntherecognitionofrevenueatanamountanentityexpectstobeentitledwhenproductsare
transferredtocustomers.
TheoriginaleffectivedateforASU201409wouldhaverequiredtheCompanytoadoptbeginninginitsfirstquarterof2018.InAugust
2015, the FASB issued ASU No. 201514, Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date, which
deferstheeffectivedateofASU201409foroneyearandpermitsearlyadoptionasearlyastheoriginaleffectivedateofASU201409.
Accordingly,theCompanymayadoptthestandardineitheritsfirstquarterof2018or2019.Thenewrevenuestandardmaybeapplied
retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The
Company is currently evaluating the timing of its adoption and the impact of adopting the new revenue standard on its consolidated
financialstatements.
LiquidityandCapitalResources
ThefollowingtablepresentsselectedfinancialinformationandstatisticsasofandfortheyearsendedSeptember26,2015,September27,
2014andSeptember28,2013(inmillions):
2015 2014 2013
Cash,cashequivalentsandmarketablesecurities
$205,666$155,239$146,761
Property,plantandequipment,net
$ 22,471$ 20,624$ 16,597
Commercialpaper
$ 8,499$ 6,308$ 0
Totaltermdebt
$ 55,963$ 28,987$ 16,960
Workingcapital
$ 8,768$ 5,083$ 29,628

Cashgeneratedbyoperatingactivities
$ 81,266$ 59,713$ 53,666
Cashusedininvestingactivities
$ (56,274)$ (22,579)$ (33,774)
Cashusedinfinancingactivities
$ (17,716)$ (37,549)$ (16,379)
TheCompanybelievesitsexistingbalancesofcash,cashequivalentsandmarketablesecuritieswillbesufficienttosatisfy its working

capitalneeds,capitalassetpurchases,outstandingcommitmentsandotherliquidityrequirementsassociatedwithitsexistingoperations
overthenext12months.TheCompanycurrentlyanticipatesthecashusedforfuturedividends,thesharerepurchaseprogramanddebt
repaymentswillcomefromitscurrentdomesticcash,cashgeneratedfromongoingU.S.operatingactivitiesandfromborrowings.
As of September 26, 2015 and September 27, 2014, the Companys cash, cash equivalents and marketable securities held by foreign
subsidiarieswere$186.9billionand$137.1billion,respectively,andaregenerallybasedinU.S.dollardenominatedholdings.Amounts
heldbyforeignsubsidiariesaregenerallysubjecttoU.S.incometaxationonrepatriationtotheU.S.TheCompanysmarketablesecurities
investmentportfolioisinvestedprimarilyinhighlyratedsecuritiesanditsinvestmentpolicygenerallylimitstheamountofcreditexposureto
any one issuer. The policy requires investments generally to be investment grade with the objective of minimizing the potential risk of
principalloss.
During2015,cashgeneratedfromoperatingactivitiesof$81.3billionwasaresultof$53.4billionofnetincome,noncashadjustmentsto
netincomeof$16.2billionandanincreaseinthenetchangeinoperatingassetsandliabilitiesof$11.7billion.Cashusedininvesting
activitiesof$56.3billionduring2015consistedprimarilyofcashusedforpurchasesofmarketablesecurities,netofsalesandmaturities,of
$44.4billionandcashusedtoacquireproperty,plantandequipmentof$11.2billion.Cash used in financing activities of $17.7 billion
during2015consistedprimarilyofcashusedtorepurchasecommonstockof$35.3billionandcashusedtopaydividendsanddividend
equivalentsof$11.6billion,partiallyoffsetbynetproceedsfromtheissuanceoftermdebtof$27.1billion.
During2014,cashgeneratedfromoperatingactivitiesof$59.7billionwasaresultof$39.5billionofnetincome,noncashadjustmentsto
netincomeof$13.2billionandanincreaseinnetchangeinoperatingassetsandliabilitiesof$7.0billion.Cashusedininvestingactivities
of$22.6billionduring2014consistedprimarilyofcashusedforpurchasesofmarketablesecurities,netofsalesandmaturities,of$9.0
billioncashusedtoacquireproperty,plantandequipmentof$9.6billionandcashpaidforbusinessacquisitions,netofcashacquired,of
$3.8billion.Cashusedinfinancingactivitiesof$37.5billionduring2014consistedprimarilyofcashusedtorepurchasecommonstockof
$45.0billionandcashusedtopaydividendsanddividendequivalentsof$11.1billion,partiallyoffsetbynetproceedsfromtheissuanceof
termdebtandcommercialpaperof$12.0billionand$6.3billion,respectively.
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CapitalAssets
The Companys capital expenditures were $11.2 billion during 2015. The Company anticipates utilizing approximately $15.0 billion for
capitalexpendituresduring2016,whichincludesproducttoolingandmanufacturingprocessequipmentdatacenterscorporatefacilities
andinfrastructure,includinginformationsystemshardware,softwareandenhancementsandretailstorefacilities.
Debt
In2014,theBoardofDirectorsauthorizedtheCompanytoissueunsecuredshorttermpromissorynotes(CommercialPaper)pursuantto
acommercialpaperprogram.TheCompanyintendstousethenetproceedsfromthecommercialpaperprogramforgeneralcorporate
purposes,includingdividendsandshare repurchases. As of September 26, 2015, the Company had $8.5 billion of Commercial Paper
outstanding,withaweightedaverageinterestrateof0.14%andmaturitiesgenerallylessthanninemonths.
AsofSeptember26,2015,theCompanyhasoutstandingfloatingandfixedratenotesforanaggregateprincipalamountof$55.7billion
(collectivelytheNotes).TheCompanyhasentered,andinthefuturemayenter,intointerestrateswapstomanageinterestrateriskonthe
Notes.Inaddition,theCompanyhasentered,andinthefuturemayenter,intocurrencyswapstomanage foreign currency risk on the
Notes.ThefutureprincipalpaymentsfortheCompanysNotesasofSeptember26,2015areasfollows(inmillions):
2016
$ 2,500
2017
3,500
2018
6,000
2019
3,775
2020
5,581
Thereafter
34,345
Totaltermdebt
$55,701
FurtherinformationregardingtheCompanysdebtissuancesandrelatedhedgingactivitycanbefoundinPartII,Item8ofthisForm10Kin
theNotestotheConsolidatedFinancialStatementsinNote2,FinancialInstrumentsandNote6,Debt.
CapitalReturnProgram
InApril2015,theCompanysBoardofDirectorsincreasedthesharerepurchaseprogramauthorizationfrom$90billionto$140billionof
theCompanyscommonstock,increasingtheexpectedtotalsizeofthecapitalreturnprogramto$200billion.TheCompanyexpectsto
executethe capital return program by the end of March 2017 by paying dividends and dividend equivalents, repurchasing shares and
remittingwithheldtaxesrelatedtonetsharesettlementofrestrictedstockunits.Toassistinfundingitscapitalreturnprogram,theCompany
expectstocontinuetoaccessthedebtmarkets,bothdomesticallyandinternationally.AsofSeptember26,2015,$104billionoftheshare
repurchaseprogramhasbeenutilized.TheCompanyssharerepurchaseprogramdoesnotobligateittoacquireanyspecificnumberof
shares. Under the program, shares may be repurchased in privately negotiated or open market transactions, including under plans
complyingwithRule10b51undertheSecuritiesExchangeActof1934,asamended.
InApril2015,theCompanysBoardofDirectorsraisedthequarterlycashdividendby11%.TheCompanyplanstoincreaseitsdividendon
anannualbasissubjecttodeclarationbytheBoardofDirectors.
ThefollowingtablepresentstheCompanysdividends,dividendequivalents,sharerepurchasesandnetsharesettlementactivityfromthe
startofthecapitalreturnprograminAugust2012throughSeptember26,2015(inmillions):
Dividendsand OpenMarket TaxesRelated

Dividend AcceleratedShare Share toSettlementof
EquivalentsPaid Repurchases Repurchases EquityAwards Total
2015
$ 11,561$ 6,000$ 30,026$ 1,499$ 49,086
11,126 21,000 24,000 1,158 57,284
2014
2013
10,564 13,950 9,000 1,082 34,596
2012
2,488 0 0 56 2,544
Total
$ 35,739$ 40,950$ 63,026$ 3,795$ 143,510
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OffBalanceSheetArrangementsandContractualObligations
The Company has not entered into any transactions with unconsolidated entities whereby the Company has financial guarantees,
subordinatedretainedinterests,derivativeinstruments,orothercontingentarrangementsthatexposetheCompanytomaterialcontinuing
risks,contingentliabilities,oranyotherobligationunderavariableinterestinanunconsolidatedentitythatprovidesfinancing,liquidity,
marketrisk,orcreditrisksupporttotheCompany,orengagesinleasing,hedging,orR&DserviceswiththeCompany.
ThefollowingtablepresentscertainpaymentsduebytheCompanyundercontractualobligationswithminimumfirmcommitmentsasof
September26,2015,andexcludesamountsalreadyrecordedontheConsolidatedBalanceSheet,exceptfortermdebt(inmillions):
PaymentsDuein PaymentsDuein PaymentsDuein PaymentsDuein

LessThan1Year 13Years 45Years MoreThan5Years Total
Termdebt
$ 2,500 $ 9,500 $ 9,356 $ 34,345 $ 55,701
Operatingleases
772 1,518 1,389 2,592 6,271
Purchasecommitments
29,464 0 0 0 29,464
Otherobligations
4,553 1,898 53 757 7,261
Total
$ 37,289 $ 12,916 $ 10,798 $ 37,694 $ 98,697
OperatingLeases
TheCompanysmajorfacilityleasesaretypicallyfortermsnotexceeding10yearsandgenerallycontainmultiyearrenewaloptions.Asof
September26,2015,theCompanyhadatotalof463retailstores.Leasesforretailspacearefortermsrangingfromfiveto20years,the
majorityofwhicharefor10years,andoftencontainmultiyearrenewaloptions.AsofSeptember26,2015,theCompanystotalfuture
minimumleasepaymentsundernoncancelableoperatingleaseswere$6.3billion,ofwhich$3.6billionrelatedtoleasesforretailspace.
PurchaseCommitments
The Company utilizes several outsourcing partners to manufacture subassemblies for the Companys products and to perform final
assembly and testing of finished products. These outsourcing partners acquire components and build product based on demand
informationsuppliedbytheCompany,whichtypicallycoversperiodsupto150days.TheCompanyalsoobtainsindividualcomponentsfor
itsproductsfromawidevarietyofindividualsuppliers.Consistentwithindustrypractice,theCompanyacquirescomponentsthrougha
combination of purchase orders, supplier contracts, and open orders based on projected demand information. Where
appropriate, the purchases are applied to inventory component prepayments that are outstanding with the respective supplier. As of
September26,2015,theCompanyhadoutstandingoffbalancesheetthirdpartymanufacturingcommitmentsandcomponentpurchase
commitmentsof$29.5billion.
OtherObligations
TheCompanysotheroffbalancesheetobligationswerecomprisedofcommitmentstoacquirecapitalassets,includingproducttooling
and manufacturing process equipment, and commitments related to inventory prepayments, advertising, licensing, R&D, internet and
telecommunicationsservices,energyandotherobligations.
The Companys other noncurrent liabilities in the Consolidated Balance Sheets consist primarily of deferred tax liabilities, gross
unrecognizedtaxbenefitsandtherelatedgrossinterestandpenalties.AsofSeptember26,2015,theCompanyhadnoncurrentdeferred
taxliabilitiesof$24.1billion.Additionally,asofSeptember26,2015,theCompanyhadgrossunrecognizedtaxbenefitsof$6.9billionand
anadditional$1.3billionforgrossinterestandpenaltiesclassifiedasnoncurrentliabilities.Atthistime,theCompanyisunabletomakea
reasonablyreliableestimateofthetimingofpaymentsinindividualyearsinconnectionwiththesetaxliabilitiestherefore,suchamounts
arenotincludedintheabovecontractualobligationtable.
Indemnification
The Company generally does not indemnify endusers of its operating system and application software against legal claims that the
software infringes thirdparty intellectual property rights. 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
againsttheCompany or an indemnified thirdparty. In the opinion of management, there was not at least a reasonable possibility the
Companymayhaveincurredamateriallosswithrespecttoindemnificationofendusersofitsoperatingsystemorapplicationsoftwarefor
infringement of thirdparty intellectual property rights. The Company did not record a liability for infringement costs related to
indemnificationasofSeptember26,2015orSeptember27,2014.
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InSeptember2015,theCompanyintroducedtheiPhoneUpgradeProgram,whichisavailabletocustomerswhopurchaseaniPhone6s
and6sPlusinoneofitsU.S.physicalretailstoresandactivatethepurchasediPhonewithoneofthefournationalcarriers.TheiPhone
UpgradeProgramprovidescustomerstherighttotradeinthatiPhoneforanewiPhone,providedcertainconditionsaremet.Oneofthe
conditionsofthisprogramrequiresthecustomertofinancetheinitialpurchasepriceoftheiPhonewithathirdpartylender.Uponexercise
ofthetradeinrightandpurchaseofanewiPhone,theCompanysatisfiesthecustomersoutstandingbalanceduetothethirdpartylender
ontheoriginaldevice.TheCompanyaccountsforthetradeinrightasaguaranteeliabilityandrecognizesarrangementrevenuenetofthe
fairvalueofsuchrightwithsubsequentchangestotheguaranteeliabilityrecognizedwithinrevenue.
The Company has entered into indemnification agreements with its directors and executive officers. 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
statusasdirectorsorofficersandtoadvanceexpensesincurredbysuchindividualsinconnectionwithrelatedlegalproceedings.Itisnot
possibletodeterminethemaximumpotentialamountofpaymentstheCompanycouldberequiredtomakeundertheseagreementsdueto
thelimitedhistoryofpriorindemnificationclaimsandtheuniquefactsandcircumstancesinvolvedineachclaim.However,theCompany
maintainsdirectorsandofficersliabilityinsurancecoveragetoreduceitsexposuretosuchobligations.
CriticalAccountingPoliciesandEstimates
ThepreparationoffinancialstatementsandrelateddisclosuresinconformitywithU.S.generallyacceptedaccountingprinciples(GAAP)
andtheCompanysdiscussionandanalysisofitsfinancialconditionandoperatingresultsrequiretheCompanysmanagementtomake
judgments,assumptionsandestimatesthataffecttheamountsreportedinitsconsolidatedfinancialstatementsandaccompanyingnotes.
Note1,SummaryofSignificantAccountingPolicies,oftheNotestoConsolidatedFinancialStatementsinPartII,Item8ofthisForm10K
describesthesignificantaccountingpoliciesandmethodsusedinthepreparationoftheCompanysconsolidatedfinancialstatements.
Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the
circumstances,theresultsofwhichformthebasisformakingjudgmentsaboutthecarryingvaluesofassetsandliabilities.Actualresults
maydifferfromtheseestimates,andsuchdifferencesmaybematerial.
ManagementbelievestheCompanyscriticalaccountingpoliciesandestimatesarethoserelatedtorevenuerecognition,valuationand
impairment of marketable securities, inventory valuation and valuation of manufacturingrelated assets and estimated purchase
commitment cancellation fees, warranty costs, income taxes, and legal and other contingencies. Management considers these policies
critical because they are both important to the portrayal of the Companys financial condition and operating results, and they require
management to make judgments and estimates about inherently uncertain matters. The Companys senior management has reviewed
thesecriticalaccountingpoliciesandrelateddisclosureswiththeAuditandFinanceCommitteeoftheCompanysBoardofDirectors.
RevenueRecognition
Netsalesconsistprimarilyofrevenuefromthesaleofhardware,software,digitalcontentandapplications,accessories,andserviceand
supportcontracts.TheCompanyrecognizesrevenuewhenpersuasiveevidenceofanarrangementexists,deliveryhasoccurred,thesales
priceisfixedordeterminableandcollectionisprobable.Productisconsidereddeliveredtothecustomeronceithasbeenshippedand
title,riskoflossandrewardsofownershiphavebeentransferred.FormostoftheCompanysproductsales,thesecriteriaaremetatthe
timetheproductisshipped.Foronlinesalestoindividuals,forsomesalestoeducationcustomersintheU.S.,andforcertainothersales,
theCompanydefersrevenueuntilthecustomerreceivestheproductbecausetheCompanyretainsaportionoftheriskoflossonthese
salesduringtransit.ForpaymenttermsinexcessoftheCompanysstandardpaymentterms,revenueisrecognizedaspaymentsbecome
dueunlesstheCompanyhaspositiveevidencethatthesalespriceisfixedordeterminable,suchasasuccessfulhistoryofcollection,
without concession, on comparable arrangements. The Company recognizes revenue from the sale of hardware products, software
bundled with hardware that is essential to the functionality of the hardware and thirdparty digital content sold on the iTunes Store in
accordance with general revenue recognition accounting guidance. The Company recognizes revenue in accordance with industry
specificsoftwareaccountingguidanceforthefollowingtypesofsalestransactions:(i)standalonesalesofsoftwareproducts,(ii)salesof
softwareupgradesand(iii)salesofsoftwarebundledwithhardwarenotessentialtothefunctionalityofthehardware.
For multielement arrangements that include hardware products containing software essential to the hardware products functionality,
undelivered software elements that relate to the hardware products essential software and/or undelivered nonsoftware services, the
Companyallocatesrevenuetoalldeliverablesbasedontheirrelativesellingprices.Insuchcircumstances,theCompanyusesahierarchy
todeterminethesellingpricetobeusedforallocatingrevenuetodeliverables:(i)vendorspecificobjectiveevidenceoffairvalue(VSOE),
(ii) thirdparty evidence of selling price (TPE) and (iii) best estimate of selling price (ESP). VSOE generally exists only when the
Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the
Companysbestestimatesofwhatthesellingpricesofelementswouldbeiftheyweresoldregularlyonastandalonebasis.
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For sales of qualifying versions of iOS devices, Mac, Apple Watch and Apple TV, the Company has indicated it may from time to time
providefutureunspecifiedsoftwareupgradestothedevicesessentialsoftwareand/ornonsoftwareservicesfreeofcharge.Becausethe
Company has neither VSOE nor TPE for the unspecified software upgrade rights or the nonsoftware services, revenue is allocated to
theserightsandservicesbasedontheCompanysESPs.Revenueallocatedtotheunspecifiedsoftwareupgraderightsandnonsoftware
services based on the Companys ESPs is deferred and recognized on a straightline basis over the estimated period the software
upgradesandnonsoftwareservicesareexpectedtobeprovided.
TheCompanysprocessfordeterminingESPsinvolvesmanagementsjudgmentandconsidersmultiplefactorsthatmayvaryovertime
depending upon the unique facts and circumstances related to each deliverable. Should future facts and circumstances change, the
CompanysESPsandthefuturerateofrelatedamortizationforunspecifiedsoftwareupgradesandnonsoftwareservicesrelatedtofuture
salesofthesedevicescouldchange.Factorssubjecttochangeincludetheunspecifiedsoftwareupgraderightsandnonsoftwareservices
offered, the estimated value of unspecified software upgrade rights and nonsoftware services and the estimated period unspecified
softwareupgradesandnonsoftwareservicesareexpectedtobeprovided.
TheCompanyrecordsreductionstorevenueforestimatedcommitmentsrelatedtopriceprotectionandothercustomerincentiveprograms.
Fortransactionsinvolvingpriceprotection,theCompanyrecognizesrevenuenetoftheestimatedamounttoberefunded,providedthe
refundamountcanbereasonablyandreliablyestimatedandtheotherconditionsforrevenuerecognitionhavebeenmet.TheCompanys
policyrequiresthat,ifrefundscannotbereliablyestimated,revenueisnotrecognizeduntilreliableestimatescanbemadeortheprice
protectionlapses.FortheCompanysothercustomerincentiveprograms,theestimatedcostisrecognizedatthelaterofthedateatwhich
the Company has sold the product or the date at which the program is offered. The Company also records reductions to revenue for
expected future product returns based on the Companys historical experience. Future market conditions and product transitions may
require the Company to increase customer incentive programs that could result in reductions to future revenue. Additionally, certain
customer incentive programs require management to estimate the number of customers who will actually redeem the incentive.
Managementsestimatesarebasedonhistoricalexperienceandthespecifictermsandconditionsofparticularincentiveprograms.Ifa
greaterthanestimatedproportionofcustomersredeemssuchincentives,theCompanywouldberequiredtorecordadditionalreductions
torevenue,whichwouldhaveanadverseimpactontheCompanysoperatingresults.
ValuationandImpairmentofMarketableSecurities
TheCompanysinvestmentsinavailableforsalesecuritiesarereportedatfairvalue.Unrealizedgainsandlossesrelatedtochangesin
thefairvalueofsecuritiesarerecognizedinaccumulatedothercomprehensiveincome,netoftax,intheCompanysConsolidatedBalance
Sheets.ChangesinthefairvalueofavailableforsalesecuritiesimpacttheCompanysnetincomeonlywhensuchsecuritiesaresoldor
an otherthantemporary impairment is recognized. Realized gains and losses on the sale of securities are determined by specific
identificationofeachsecurityscostbasis.TheCompanyregularlyreviewsitsinvestmentportfoliotodetermineifanysecurityisotherthan
temporarilyimpaired,whichwouldrequiretheCompanytorecordanimpairmentchargeintheperiodanysuchdeterminationismade.In
makingthisjudgment,theCompanyevaluates,amongotherthings,thedurationandextenttowhichthefairvalueofasecurityislessthan
itscostthefinancialconditionoftheissuerandanychangestheretoandtheCompanysintenttosell,orwhetheritwillmorelikelythan
notberequiredtosell,thesecuritybeforerecoveryofitsamortizedcostbasis.TheCompanysassessmentonwhetherasecurityisother
thantemporarily impaired could change in the future due to new developments or changes in assumptions related to any particular
security,whichwouldhaveanadverseimpactontheCompanysoperatingresults.
InventoryValuationandValuationofManufacturingRelatedAssetsandEstimatedPurchaseCommitmentCancellationFees
TheCompanymustpurchasecomponentsandbuildinventoryinadvanceofproductshipmentsandhasinvestedinmanufacturingrelated
assets,includingcapitalassetsheldatitssuppliersfacilities.Inaddition,theCompanyhasmadeprepaymentstocertainofitssuppliers
associated with longterm supply agreements to secure supply of inventory components. The Company records a writedown for
inventoriesofcomponentsandproducts,includingthirdpartyproductsheldforresale,whichhavebecomeobsoleteorareinexcessof
anticipateddemandornetrealizablevalue.TheCompanyperformsadetailedreviewofinventorythatconsidersmultiplefactorsincluding
demandforecasts,productlifecyclestatus,productdevelopmentplans,currentsaleslevelsandcomponentcosttrends.TheCompany
also reviews its manufacturingrelated capital assets and inventory prepayments for impairment whenever events or circumstances
indicatethecarryingamountofsuchassetsmaynotberecoverable.IftheCompanydeterminesthatanassetisnotrecoverable,itrecords
animpairmentlossequaltotheamountbywhichthecarryingvalueofsuchanassetexceedsitsfairvalue.
TheindustriesinwhichtheCompanycompetesaresubjecttoarapidandunpredictablepaceofproductandcomponent obsolescence
and demand changes. In certain circumstances the Company may be required to record additional writedowns of inventory and/or
manufacturingrelatedassets.ThesecircumstancesincludefuturedemandormarketconditionsfortheCompanys products being less
favorable than forecasted, unforeseen technological changes or changes to the Companys product development plans that negatively
impacttheutilityofanyoftheseassets,orsignificantdeteriorationinthefinancialconditionofoneormoreoftheCompanyssuppliersthat
holdanyoftheCompanysmanufacturingrelatedassetsortowhomtheCompanyhasmadeaninventoryprepayment.Suchwritedowns
wouldadverselyaffecttheCompanysfinancialconditionandoperatingresultsintheperiodwhenthewritedownswererecorded.
TableofContents
The Company accrues for estimated cancellation fees related to inventory orders that have been cancelled or are expected to be
cancelled. 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. Where appropriate, the purchases are applied to inventory
component prepayments that are outstanding with the respective supplier. Purchase commitments typically cover the Companys
forecastedcomponentandmanufacturingrequirementsforperiodsupto150days.Ifthereisanabruptandsubstantialdeclineindemand
for one or more of the Companys products, a change in the Companys product development plans, or an unanticipated change in
technologicalrequirementsforanyoftheCompanysproducts,theCompanymayberequiredtorecordadditionalaccrualsforcancellation
feesthatwouldadverselyaffectitsresultsofoperationsintheperiodwhenthecancellationfeesareidentifiedandrecorded.
WarrantyCosts
TheCompanyaccruesfortheestimatedcostofwarrantiesatthetimetherelatedrevenueisrecognizedbasedonhistoricalandprojected
warrantyclaimrates,historicalandprojectedcostperclaimandknowledgeofspecificproductfailuresthatareoutsideoftheCompanys
typical experience. The Company regularly reviews these estimates to assess the adequacy of its recorded warranty liabilities or the
currentinstalledbaseofproductssubjecttowarrantyprotectionandadjuststheamountsasnecessary.Ifactualproductfailureratesor
repair costs differ from estimates, revisions to the estimated warranty liabilities would be required and could materially affect the
Companysfinancialconditionandoperatingresults.
IncomeTaxes
TheCompanyrecordsataxprovisionfortheanticipatedtaxconsequencesofitsreportedoperatingresults.Theprovisionforincometaxes
iscomputedusingtheassetandliabilitymethod,underwhichdeferredtaxassetsandliabilitiesarerecognizedfortheexpectedfuturetax
consequencesoftemporarydifferencesbetweenthefinancialreportingandtaxbasesofassetsandliabilities,andforoperatinglossesand
taxcreditcarryforwards.Deferredtaxassetsandliabilitiesaremeasuredusingthecurrentlyenactedtaxratesthatapplytotaxableincome
ineffectfortheyearsinwhichthosetaxassetsandliabilitiesareexpectedtoberealizedorsettled.TheCompanyrecordsavaluation
allowancetoreducedeferredtaxassetstotheamountthatisbelievedmorelikelythannottoberealized.
TheCompanyrecognizestaxbenefitsfromuncertaintaxpositionsonlyifitismorelikelythannotthatthetaxpositionwillbesustainedon
examinationbythetaxingauthorities,basedonthetechnicalmeritsoftheposition.Thetaxbenefitsrecognizedinthefinancialstatements
fromsuchpositionsarethenmeasuredbasedonthelargestbenefitthathasagreaterthan50%likelihoodofbeingrealizeduponultimate
settlement.
Managementbelievesitismorelikelythannotthatforecastedincome,includingincomethatmaybegeneratedasaresultofcertaintax
planningstrategies,togetherwithfuturereversalsofexistingtaxabletemporarydifferences,willbesufficienttofullyrecoverthedeferredtax
assets.IntheeventthattheCompanydeterminesallorpartofthenetdeferredtaxassetsarenotrealizableinthefuture,theCompanywill
recordanadjustmenttothevaluationallowancethatwouldbechargedtoearningsintheperiodsuchdeterminationismade.Inaddition,
the calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of GAAP and
complex tax laws. Resolution of these uncertainties in a manner inconsistent with managements expectations could have a material
impactontheCompanysfinancialconditionandoperatingresults.
LegalandOtherContingencies
AsdiscussedinPartI,Item3ofthisForm10KundertheheadingLegalProceedingsandinPartII,Item8ofthisForm10KintheNotes
toConsolidatedFinancialStatementsinNote10,CommitmentsandContingencies,theCompanyissubjecttovariouslegalproceedings
andclaimsthatariseintheordinarycourseofbusiness.TheCompanyrecordsaliabilitywhenitisprobablethatalosshasbeenincurred
andtheamountisreasonablyestimable.Thereissignificantjudgmentrequiredinboththeprobabilitydeterminationandastowhetheran
exposurecanbereasonablyestimated.Intheopinionofmanagement,therewasnotatleastareasonablepossibilitytheCompanymay
haveincurredamaterialloss,oramateriallossinexcessofarecordedaccrual,withrespecttolosscontingenciesforassertedlegaland
otherclaims.However,theoutcomeoflegalproceedingsandclaimsbroughtagainsttheCompanyissubjecttosignificantuncertainty.
Therefore,althoughmanagementconsidersthelikelihoodofsuchanoutcometoberemote,ifoneormoreoftheselegalmatterswere
resolvedagainsttheCompanyinareportingperiodforamountsinexcessofmanagementsexpectations,theCompanysconsolidated
financialstatementsforthatreportingperiodcouldbemateriallyadverselyaffected.
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Item7A. QuantitativeandQualitativeDisclosuresAboutMarketRisk
InterestRateandForeignCurrencyRiskManagement
TheCompanyregularlyreviewsitsforeignexchangeforwardandoptionpositionsandinterestrateswaps,bothonastandalone basis
andinconjunctionwithitsunderlyingforeigncurrencyandinterestraterelatedexposures.GiventheeffectivehorizonsoftheCompanys
riskmanagementactivitiesandtheanticipatorynatureoftheexposures,therecanbenoassurancethesepositionswilloffsetmorethana
portionofthefinancialimpactresultingfrommovementsineitherforeignexchangeorinterestrates.Further,therecognitionofthegains
andlossesrelatedtotheseinstrumentsmaynotcoincidewiththetimingofgainsandlossesrelatedtotheunderlyingeconomicexposures
and,therefore,mayadverselyaffecttheCompanysfinancialconditionandoperatingresults.
InterestRateRisk
TheCompanysexposuretochangesininterestratesrelatesprimarilytotheCompanysinvestmentportfolioandoutstandingdebt.While
theCompanyisexposedtoglobalinterestratefluctuations,theCompanysinterestincomeandexpensearemostsensitivetofluctuations
inU.S.interestrates.ChangesinU.S.interestratesaffecttheinterestearnedontheCompanyscash,cashequivalentsandmarketable
securitiesandthefairvalueofthosesecurities,aswellascostsassociatedwithhedgingandinterestpaidontheCompanysdebt.
The Companys investment policy and strategy are focused on preservation of capital and supporting the Companys liquidity
requirements.TheCompanyusesacombinationofinternalandexternalmanagementtoexecuteitsinvestmentstrategyandachieveits
investmentobjectives.TheCompanytypicallyinvestsinhighlyratedsecurities,anditsinvestment policy generally limits the amount of
credit exposure to any one issuer. The policy requires investments generally to be investment grade, with the primary objective of
minimizingthepotentialriskofprincipalloss.ToprovideameaningfulassessmentoftheinterestrateriskassociatedwiththeCompanys
investmentportfolio,theCompanyperformedasensitivityanalysistodeterminetheimpactachangeininterestrateswouldhaveonthe
value of the investment portfolio assuming a 100 basis point parallel shift in the yield curve. Based on investment positions as of
September26,2015andSeptember27,2014,ahypothetical100basispointincreaseininterestratesacrossallmaturitieswouldresultin
a$4.3billionand$3.4billionincrementaldeclineinthefairmarketvalueoftheportfolio,respectively.Suchlosseswouldonlyberealizedif
theCompanysoldtheinvestmentspriortomaturity.
AsofSeptember26,2015andSeptember27,2014,theCompanyhadoutstandingfloatingandfixedratenoteswithvaryingmaturitiesfor
anaggregatecarryingamountof$56.0billionand$29.0billion,respectively.TheCompanyhasentered,andmayenterinthefuture,into
interestrateswapstomanageinterestrateriskonitsoutstandingtermdebt.InterestrateswapsallowtheCompanytoeffectivelyconvert
fixedratepaymentsintofloatingratepaymentsorfloatingratepaymentsintofixedratepayments.Gainsandlossesontheseinstruments
aregenerallyoffsetbythecorrespondinglossesandgainsontherelatedhedginginstrument.A100basispointincreaseinmarketinterest
rateswouldcauseinterestexpenseontheCompanysdebtasofSeptember26,2015andSeptember27,2014toincreaseby$200million
and$110milliononanannualizedbasis,respectively.
Further details regarding the Companys debt is provided in Part II, Item 8 of this Form 10K in the Notes to Consolidated Financial
StatementsinNote6,Debt.
ForeignCurrencyRisk
Ingeneral,theCompanyisanetreceiverofcurrenciesotherthantheU.S.dollar.Accordingly,changesinexchangerates,andinparticular
astrengtheningoftheU.S.dollar,willnegativelyaffecttheCompanysnetsalesandgrossmarginsasexpressedinU.S.dollars.Thereisa
riskthattheCompanywillhavetoadjustlocalcurrencyproductpricingduetocompetitivepressureswhentherehavebeensignificant
volatilityinforeigncurrencyexchangerates.
TheCompanymayenterintoforeigncurrencyforwardandoptioncontractswithfinancialinstitutionstoprotectagainstforeignexchange
risks associated with certain existing assets and liabilities, certain firmly committed transactions, forecasted future cash flows and net
investments in foreign subsidiaries. In addition, the Company has entered, and may enter in the future, into nondesignated foreign
currency contracts to partially offset the foreign currency exchange gains and losses on its foreigndenominated debt issuances. The
Companyspracticeistohedgeaportionofitsmaterialforeignexchangeexposures,typicallyforupto12months.However,theCompany
may choose not to hedge certain foreign exchange exposures for a variety of reasons, including but not limited to accounting
considerationsandtheprohibitiveeconomiccostofhedgingparticularexposures.
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To provide a meaningful assessment of the foreign currency risk associated with certain of the Companys foreign currency derivative
positions,theCompanyperformedasensitivityanalysisusingavalueatrisk(VAR)modeltoassessthepotentialimpactoffluctuationsin
exchange rates. The VAR model consisted of using a Monte Carlo simulation to generate thousands of random market price paths
assumingnormalmarketconditions.TheVARisthemaximumexpectedlossinfairvalue,foragivenconfidenceinterval,totheCompanys
foreigncurrencyderivativepositionsduetoadversemovementsinrates.TheVARmodelisnotintendedtorepresentactuallossesbutis
usedasariskestimationandmanagementtool.Themodelassumesnormalmarketconditions.Forecastedtransactions,firmcommitments
and assets and liabilities denominated in foreign currencies were excluded from the model. Based on the results of the model, the
Companyestimateswith95%confidenceamaximumonedaylossinfairvalueof$342millionasofSeptember26,2015comparedtoa
maximumonedaylossinfairvalueof$240millionasofSeptember27,2014.BecausetheCompanyusesforeigncurrencyinstrumentsfor
hedgingpurposes,thelossinfairvalueincurredonthoseinstrumentsaregenerallyoffsetbyincreasesinthefairvalueoftheunderlying
exposures.
ActualfuturegainsandlossesassociatedwiththeCompanysinvestmentportfolioandderivativepositionsmaydiffermateriallyfromthe
sensitivityanalysesperformedasofSeptember26,2015duetotheinherentlimitationsassociatedwithpredictingthetimingandamountof
changesininterestrates,foreigncurrencyexchangesratesandtheCompanysactualexposuresandpositions.
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Item8. FinancialStatementsandSupplementaryData
IndextoConsolidatedFinancialStatements Page
ConsolidatedStatementsofOperationsfortheyearsendedSeptember26,2015,September27,2014,andSeptember28,
2013
39
ConsolidatedStatementsofComprehensiveIncomefortheyearsendedSeptember26,2015,September27,2014,and
September28,2013
40
ConsolidatedBalanceSheetsasofSeptember26,2015andSeptember27,2014
41
ConsolidatedStatementsofShareholdersEquityfortheyearsendedSeptember26,2015,September27,2014,and
September28,2013
42
ConsolidatedStatementsofCashFlowsfortheyearsendedSeptember26,2015,September27,2014,andSeptember28,
2013
43
NotestoConsolidatedFinancialStatements
44
SelectedQuarterlyFinancialInformation(Unaudited)
68
ReportsofErnst&YoungLLP,IndependentRegisteredPublicAccountingFirm
69
Allfinancialstatementscheduleshavebeenomitted,sincetherequiredinformationisnotapplicableorisnotpresentinamountssufficient
torequiresubmissionoftheschedule,orbecausetheinformationrequiredisincludedintheconsolidatedfinancialstatementsandnotes
thereto.
TableofContents
CONSOLIDATEDSTATEMENTSOFOPERATIONS
(Inmillions,exceptnumberofshareswhicharereflectedinthousandsandpershareamounts)
Yearsended
September26, September27, September28,
2015 2014 2013
Netsales
$ 233,715$ 182,795$ 170,910
Costofsales
140,089 112,258 106,606
Grossmargin
93,626 70,537 64,304
Operatingexpenses:

8,067 6,041 4,475
14,329 11,993 10,830
Totaloperatingexpenses
22,396 18,034 15,305
Operatingincome
71,230 52,503 48,999
Otherincome/(expense),net
1,285 980 1,156
Incomebeforeprovisionforincometaxes
72,515 53,483 50,155
19,121 13,973 13,118
Netincome
$ 53,394$ 39,510$ 37,037
Earningspershare:

Basic
$ 9.28$ 6.49$ 5.72
Diluted
$ 9.22$ 6.45$ 5.68

Sharesusedincomputingearningspershare:

Basic
5,753,421 6,085,572 6,477,320
Diluted
5,793,069 6,122,663 6,521,634
Cashdividendsdeclaredpershare
$ 1.98$ 1.82$ 1.64
SeeaccompanyingNotestoConsolidatedFinancialStatements.
TableofContents
CONSOLIDATEDSTATEMENTSOFCOMPREHENSIVEINCOME
(Inmillions)
Yearsended
2015 2014 2013
Netincome
$ 53,394$ 39,510$ 37,037
Othercomprehensiveincome/(loss):

Changeinforeigncurrencytranslation,netoftaxeffectsof$201,$50and$35,
respectively
(411) (137) (112)
Changeinunrealizedgains/lossesonderivativeinstruments:

Changeinfairvalueofderivatives,netoftaxbenefit/(expense)of$(441),$(297)and
$(351),respectively
2,905 1,390 522
Adjustmentfornet(gains)/lossesrealizedandincludedinnetincome,netoftax
expense/(benefit)of$630,$(36)and$255,respectively
(3,497) 149 (458)
Totalchangeinunrealizedgains/lossesonderivativeinstruments,netoftax
(592) 1,539 64
Changeinunrealizedgains/lossesonmarketablesecurities:

Changeinfairvalueofmarketablesecurities,netoftaxbenefit/(expense)of$264,
$(153)and$458,respectively
(483) 285 (791)
Adjustmentfornet(gains)/lossesrealizedandincludedinnetincome,netoftax
expense/(benefit)of$(32),$71and$82,respectively
59 (134) (131)
Totalchangeinunrealizedgains/lossesonmarketablesecurities,netoftax
(424) 151 (922)
Totalothercomprehensiveincome/(loss)
(1,427) 1,553 (970)
Totalcomprehensiveincome
$ 51,967$ 41,063$ 36,067
TableofContents
CONSOLIDATEDBALANCESHEETS
(Inmillions,exceptnumberofshareswhicharereflectedinthousandsandparvalue)
September26, September27,
2015 2014
ASSETS:
Currentassets:

Cashandcashequivalents
$ 21,120$ 13,844
Shorttermmarketablesecurities
20,481 11,233
Accountsreceivable,lessallowancesof$82and$86,respectively
16,849 17,460
Inventories
2,349 2,111
Deferredtaxassets
5,546 4,318
Vendornontradereceivables
13,494 9,759
Othercurrentassets
9,539 9,806
Totalcurrentassets
89,378 68,531
Longtermmarketablesecurities
164,065 130,162
Property,plantandequipment,net
22,471 20,624
Goodwill
5,116 4,616
Acquiredintangibleassets,net
3,893 4,142
Otherassets
5,556 3,764
Totalassets
$ 290,479$ 231,839
LIABILITIESANDSHAREHOLDERSEQUITY:
Currentliabilities:

Accountspayable
$ 35,490$ 30,196
Accruedexpenses
25,181 18,453
Deferredrevenue
8,940 8,491
Commercialpaper
8,499 6,308
Currentportionoflongtermdebt 2,500 0
Totalcurrentliabilities
80,610 63,448
Deferredrevenue,noncurrent
3,624 3,031
Longtermdebt
53,463 28,987
Othernoncurrentliabilities
33,427 24,826
Totalliabilities
171,124 120,292
Commitmentsandcontingencies

Shareholdersequity:

Commonstockandadditionalpaidincapital,$0.00001parvalue:12,600,000sharesauthorized
5,578,753and5,866,161sharesissuedandoutstanding,respectively
27,416 23,313
Retainedearnings
92,284 87,152
Accumulatedothercomprehensiveincome
(345) 1,082
Totalshareholdersequity
119,355 111,547
Totalliabilitiesandshareholdersequity
$ 290,479$ 231,839
TableofContents
CONSOLIDATEDSTATEMENTSOFSHAREHOLDERSEQUITY
(Inmillions,exceptnumberofshareswhicharereflectedinthousands)
Accumulated
CommonStockand Other Total
AdditionalPaidInCapital Retained Comprehensive Shareholders
Shares Amount Earnings Income/(Loss) Equity
BalancesasofSeptember29,2012
6,574,458 $ 16,422 $ 101,289 $ 499 $ 118,210
Netincome
0 0 37,037 0 37,037
Othercomprehensiveincome/(loss)
0 0 0 (970) (970)
Dividendsanddividendequivalents
declared
0 0 (10,676) 0 (10,676)
Repurchaseofcommonstock
(328,837) 0 (22,950) 0 (22,950)
Sharebasedcompensation
0 2,253 0 0 2,253
Commonstockissued,netofshares
withheldforemployeetaxes
48,873 (143) (444) 0 (587)
Taxbenefitfromequityawards,
includingtransferpricing
adjustments
0 1,232 0 0 1,232
6,294,494 19,764 104,256 (471) 123,549
Netincome
0 0 39,510 0 39,510
0 0 0 1,553 1,553
declared
0 0 (11,215) 0 (11,215)
(488,677) 0 (45,000) 0 (45,000)
0 2,863 0 0 2,863
60,344 (49) (399) 0 (448)
adjustments
0 735 0 0 735
5,866,161 23,313 87,152 1,082 111,547
Netincome
0 0 53,394 0 53,394
0 0 0 (1,427) (1,427)
declared
0 0 (11,627) 0 (11,627)
(325,032) 0 (36,026) 0 (36,026)
0 3,586 0 0 3,586
37,624 (231) (609) 0 (840)
adjustments
0 748 0 0 748
5,578,753 $ 27,416 $ 92,284 $ (345) $ 119,355
TableofContents
CONSOLIDATEDSTATEMENTSOFCASHFLOWS
(Inmillions)
Yearsended
2015 2014 2013
Cashandcashequivalents,beginningoftheyear
$ 13,844 $ 14,259 $ 10,746
Operatingactivities:

Netincome
53,394 39,510 37,037
Adjustmentstoreconcilenetincometocashgeneratedbyoperating
activities:

Depreciationandamortization
11,257 7,946 6,757
Sharebasedcompensationexpense
3,586 2,863 2,253
Deferredincometaxexpense
1,382 2,347 1,141
Changesinoperatingassetsandliabilities:

Accountsreceivable,net
611 (4,232) (2,172)
Inventories
(238) (76) (973)
Vendornontradereceivables
(3,735) (2,220) 223
Othercurrentandnoncurrentassets
(179) 167 1,080
Accountspayable
5,400 5,938 2,340
Deferredrevenue
1,042 1,460 1,459
Othercurrentandnoncurrentliabilities
8,746 6,010 4,521
Cashgeneratedbyoperatingactivities
81,266 59,713 53,666
Investingactivities:

Purchasesofmarketablesecurities
(166,402) (217,128) (148,489)
Proceedsfrommaturitiesofmarketablesecurities
14,538 18,810 20,317
Proceedsfromsalesofmarketablesecurities
107,447 189,301 104,130
Paymentsmadeinconnectionwithbusinessacquisitions,net
(343) (3,765) (496)
(11,247) (9,571) (8,165)
Paymentsforacquisitionofproperty,plantandequipment
Paymentsforacquisitionofintangibleassets
(241) (242) (911)
Other
(26) 16 (160)
Cashusedininvestingactivities
(56,274) (22,579) (33,774)
Financingactivities:

Proceedsfromissuanceofcommonstock
543 730 530
Excesstaxbenefitsfromequityawards
749 739 701
Taxespaidrelatedtonetsharesettlementofequityawards
(1,499) (1,158) (1,082)
Dividendsanddividendequivalentspaid
(11,561) (11,126) (10,564)
(35,253) (45,000) (22,860)
Proceedsfromissuanceoftermdebt,net
27,114 11,960 16,896
Changeincommercialpaper,net
2,191 6,306 0
Cashusedinfinancingactivities
(17,716) (37,549) (16,379)
Increase/(decrease)incashandcashequivalents
7,276 (415) 3,513
Cashandcashequivalents,endoftheyear
$ 21,120 $ 13,844 $ 14,259
Supplementalcashflowdisclosure:

Cashpaidforincometaxes,net
$ 13,252 $ 10,026 $ 9,128
Cashpaidforinterest
$ 514 $ 339 $ 0
TableofContents
Note1SummaryofSignificantAccountingPolicies
Apple Inc. and its whollyowned subsidiaries (collectively Apple or the Company) designs, manufactures and markets mobile
communicationandmediadevices,personalcomputersandportabledigitalmusicplayers,andsellsavarietyofrelatedsoftware,services,
accessories,networkingsolutionsandthirdpartydigitalcontentandapplications.TheCompanysellsitsproductsworldwidethroughits
retailstores,onlinestoresanddirectsalesforce,aswellasthroughthirdpartycellularnetworkcarriers,wholesalers,retailersandvalue
added resellers. In addition, the Company sells a variety of thirdparty Applecompatible products, including application software and
variousaccessoriesthroughitsonlineandretailstores.TheCompanysellstoconsumers,smallandmidsizedbusinessesandeducation,
enterpriseandgovernmentcustomers.
BasisofPresentationandPreparation
TheaccompanyingconsolidatedfinancialstatementsincludetheaccountsoftheCompany.Intercompanyaccountsandtransactionshave
beeneliminated.IntheopinionoftheCompanysmanagement,theconsolidatedfinancialstatementsreflectalladjustments,whichare
normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these consolidated financial
statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and
assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could
differmateriallyfromthoseestimates.
TheCompanysfiscalyearisthe52or53weekperiodthatendsonthelastSaturdayofSeptember.TheCompanysfiscalyears2015,
2014and2013endedonSeptember26,2015,September27,2014andSeptember28,2013,respectively.Anadditionalweekisincluded
inthefirstfiscalquarterapproximatelyeverysixyearstorealignfiscalquarterswithcalendarquarters.Fiscalyears2015,2014and2013
eachspanned52weeks.Unlessotherwisestated,referencestoparticularyears,quarters,monthsandperiodsrefertotheCompanys
fiscalyearsendedinSeptemberandtheassociatedquarters,monthsandperiodsofthosefiscalyears.
RevenueRecognition
Netsalesconsistprimarilyofrevenuefromthesaleofhardware,software,digitalcontentandapplications,accessories,andserviceand
supportcontracts.TheCompanyrecognizesrevenuewhenpersuasiveevidenceofanarrangementexists,deliveryhasoccurred,thesales
priceisfixedordeterminableandcollectionisprobable.Productisconsidereddeliveredtothecustomeronceithasbeenshippedand
title,riskoflossandrewardsofownershiphavebeentransferred.FormostoftheCompanysproductsales,thesecriteriaaremetatthe
timetheproductisshipped.Foronlinesalestoindividuals,forsomesalestoeducationcustomersintheU.S.,andforcertainothersales,
theCompanydefersrevenueuntilthecustomerreceivestheproductbecausetheCompanyretainsaportionoftheriskoflossonthese
salesduringtransit.ForpaymenttermsinexcessoftheCompanysstandardpaymentterms,revenueisrecognizedaspaymentsbecome
dueunlesstheCompanyhaspositiveevidencethatthesalespriceisfixedordeterminable,suchasasuccessfulhistoryofcollection,
without concession, on comparable arrangements. The Company recognizes revenue from the sale of hardware products, software
bundled with hardware that is essential to the functionality of the hardware and thirdparty digital content sold on the iTunes Store in
accordance with general revenue recognition accounting guidance. The Company recognizes revenue in accordance with industry
specificsoftwareaccountingguidanceforthefollowingtypesofsalestransactions:(i)standalonesalesofsoftwareproducts,(ii)salesof
softwareupgradesand(iii)salesofsoftwarebundledwithhardwarenotessentialtothefunctionalityofthehardware.
Forthesaleofmostthirdpartyproducts,theCompanyrecognizesrevenuebasedonthegrossamountbilledtocustomersbecausethe
Companyestablishesitsownpricingforsuchproducts,retainsrelatedinventoryriskforphysicalproducts,istheprimary obligor to the
customerandassumesthecreditriskforamountsbilledtoitscustomers.ForthirdpartyapplicationssoldthroughtheAppStoreandMac
AppStoreandcertaindigitalcontentsoldthroughtheiTunesStore,theCompanydoesnotdeterminethesellingpriceoftheproductsand
isnottheprimaryobligortothecustomer.Therefore,theCompanyaccountsforsuchsalesonanetbasisbyrecognizinginnetsalesonly
thecommissionitretainsfromeachsale.TheportionofthegrossamountbilledtocustomersthatisremittedbytheCompanytothirdparty
appdevelopersandcertaindigitalcontentownersisnotreflectedintheCompanysConsolidatedStatementsofOperations.
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TheCompanyrecordsdeferredrevenuewhenitreceivespaymentsinadvanceofthedeliveryofproductsortheperformanceofservices.
Thisincludesamountsthathavebeendeferredforunspecifiedandspecifiedsoftwareupgraderightsandnonsoftwareservicesthatare
attachedtohardwareandsoftwareproducts.TheCompanysellsgiftcardsredeemableatitsretailandonlinestores,andalsosellsgift
cards redeemable on iTunes Store, App Store, Mac App Store and iBooks Store for the purchase of digital content and software. The
Companyrecordsdeferredrevenueuponthesaleofthecard,whichisrelieveduponredemptionofthecardbythecustomer.Revenue
from AppleCare service and support contracts is deferred and recognized over the service coverage periods. AppleCare service and
support contracts typically include extended phone support, repair services, webbased support resources and diagnostic tools offered
undertheCompanysstandardlimitedwarranty.
TheCompanyrecordsreductionstorevenueforestimatedcommitmentsrelatedtopriceprotectionandothercustomerincentiveprograms.
For transactions involving price protection, the Company recognizes revenue net of the estimated amount to be refunded. For the
Companysothercustomerincentiveprograms,theestimatedcostoftheseprogramsisrecognizedatthelaterofthedateatwhichthe
Companyhassoldtheproductorthedateatwhichtheprogramisoffered.TheCompanyalsorecordsreductionstorevenueforexpected
futureproductreturnsbasedontheCompanyshistoricalexperience.Revenueisrecordednetoftaxescollectedfromcustomersthatare
remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government
authority.
RevenueRecognitionforArrangementswithMultipleDeliverables
For multielement arrangements that include hardware products containing software essential to the hardware products functionality,
undelivered software elements that relate to the hardware products essential software, and undelivered nonsoftware services, the
Companyallocatesrevenuetoalldeliverablesbasedontheirrelativesellingprices.Insuchcircumstances,theCompanyusesahierarchy
todeterminethesellingpricetobeusedforallocatingrevenuetodeliverables:(i)vendorspecificobjectiveevidenceoffairvalue(VSOE),
(ii) thirdparty evidence of selling price (TPE) and (iii) best estimate of selling price (ESP). VSOE generally exists only when the
Company sells the deliverable separately and is the price actually charged by the Company for that deliverable. ESPs reflect the
Companysbestestimatesofwhatthesellingpricesofelementswouldbeiftheyweresoldregularlyonastandalonebasis.Formulti
elementarrangementsaccountedforinaccordancewithindustryspecificsoftwareaccountingguidance,theCompanyallocatesrevenue
toalldeliverablesbasedontheVSOEofeachelement,andifVSOEdoesnotexistrevenueisrecognizedwhenelementslackingVSOE
aredelivered.
For sales of qualifying versions of iPhone, iPad and iPod touch (iOS devices), Mac, Apple Watch and Apple TV, the Company has
indicateditmay from time to time provide future unspecified software upgrades to the devices essential software and/or nonsoftware
servicesfreeofcharge.TheCompanyhasidentifieduptothreedeliverablesregularlyincludedinarrangementsinvolvingthesaleofthese
devices.Thefirstdeliverable,whichrepresentsthesubstantialportionoftheallocatedsalesprice,isthehardwareandsoftwareessential
to the functionality of the hardware device delivered at the time of sale. The second deliverable is the embedded right included with
qualifying devices to receive on a whenandifavailable basis, future unspecified software upgrades relating to the products essential
software.Thethirddeliverableisthenonsoftwareservicestobeprovidedtoqualifyingdevices.TheCompanyallocatesrevenuebetween
thesedeliverablesusingtherelativesellingpricemethod.BecausetheCompanyhasneitherVSOEnorTPEforthesedeliverables,the
allocationofrevenueisbasedontheCompanysESPs.Revenueallocatedtothedeliveredhardwareandtherelatedessentialsoftwareis
recognizedatthetimeofsaleprovidedtheotherconditionsforrevenuerecognitionhavebeenmet.Revenueallocatedtotheembedded
unspecifiedsoftwareupgraderightsandthenonsoftwareservicesisdeferredandrecognizedonastraightlinebasisovertheestimated
periodthesoftwareupgradesandnonsoftwareservicesareexpectedtobeprovided.Costofsalesrelatedtodeliveredhardwareand
relatedessentialsoftware,includingestimatedwarrantycosts,arerecognizedatthetimeofsale.Costsincurredtoprovidenonsoftware
services are recognized as cost of sales as incurred, and engineering and sales and marketing costs are recognized as operating
expensesasincurred.
TheCompanysprocessfordeterminingitsESPfordeliverableswithoutVSOEorTPEconsidersmultiplefactorsthatmayvarydepending
upontheuniquefactsandcircumstancesrelatedtoeachdeliverableincluding,whereapplicable,priceschargedbytheCompanyand
markettrendsinthepricingforsimilarofferings,productspecificbusinessobjectives,lengthoftimeaparticularversionofadevicehas
beenavailable,estimatedcosttoprovidethenonsoftwareservicesandtherelativeESPoftheupgraderightsandnonsoftwareservices
ascomparedtothetotalsellingpriceoftheproduct.
BeginninginSeptember2015,theCompanyreducedthecombinedESPsforiOSdevicesandMacbetween$5and$10toreflect the
increaseincompetitiveoffersforsimilarproductsatlittletonocostforusers,whichreducestheamounttheCompanycouldreasonably
chargeforthesedeliverablesonastandalonebasis.
ShippingCosts
Amountsbilledtocustomersrelatedtoshippingandhandlingareclassifiedasrevenue,andtheCompanysshippingandhandlingcosts
areclassifiedascostofsales.
TableofContents
WarrantyCosts
TheCompanygenerallyprovidesfortheestimatedcostofhardwareandsoftwarewarrantiesatthetimetherelatedrevenueisrecognized.
TheCompanyassessestheadequacyofitsaccruedwarrantyliabilitiesandadjuststheamountsasnecessarybasedonactualexperience
andchangesinfutureestimates.
SoftwareDevelopmentCosts
Research and development (R&D) costs are expensed as incurred. Development costs of computer software to be sold, leased, or
otherwisemarketedaresubjecttocapitalizationbeginningwhenaproductstechnologicalfeasibilityhasbeenestablishedandending
when a product is available for general release to customers. In most instances, the Companys products are released soon after
technologicalfeasibilityhasbeenestablishedandasaresultsoftwaredevelopmentcostswereexpensedasincurred.
AdvertisingCosts
Advertisingcostsareexpensedasincurredandincludedinselling,generalandadministrativeexpenses.Advertisingexpensewas$1.8
billion,$1.2billionand$1.1billionfor2015,2014and2013,respectively.
SharebasedCompensation
TheCompanyrecognizesexpenserelatedtosharebasedpaymenttransactionsinwhichitreceivesemployeeservicesinexchangefor
(a)equityinstrumentsoftheCompanyor(b)liabilitiesthatarebasedonthefairvalueoftheCompanysequityinstrumentsorthatmaybe
settledbytheissuanceofsuchequityinstruments.Sharebasedcompensationcostforrestrictedstockandrestrictedstockunits(RSUs)is
measuredbasedontheclosingfairmarketvalueoftheCompanyscommonstockonthedateofgrant.TheCompanyrecognizesshare
basedcompensationcostovertheawardsrequisiteserviceperiodonastraightlinebasisfortimebasedRSUsandonagradedbasisfor
RSUs that are contingent on the achievement of performance conditions. The Company recognizes a benefit from sharebased
compensation in the Consolidated Statements of Shareholders Equity if an excess tax benefit is realized. In addition, the Company
recognizes the indirect effects of sharebased compensation on R&D tax credits, foreign tax credits and domestic manufacturing
deductionsintheConsolidatedStatementsofOperations.FurtherinformationregardingsharebasedcompensationcanbefoundinNote
9,BenefitPlans.
IncomeTaxes
The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are
recognizedfortheexpectedfuturetaxconsequencesoftemporarydifferencesbetweenthefinancialreportingandtaxbasesofassetsand
liabilitiesandforoperatinglossesandtaxcreditcarryforwards.Deferredtaxassetsandliabilitiesaremeasuredusingthecurrentlyenacted
taxratesthatapplytotaxableincomeineffectfortheyearsinwhichthosetaxassetsandliabilitiesareexpectedtoberealizedorsettled.
The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be
realized.
TheCompanyrecognizesthetaxbenefitfromanuncertaintaxpositiononlyifitismorelikelythannotthetaxpositionwillbesustainedon
examinationbythetaxingauthorities,basedonthetechnicalmeritsoftheposition.Thetaxbenefitsrecognizedinthefinancialstatements
from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon
settlement.SeeNote5,IncomeTaxesforadditionalinformation.
EarningsPerShare
Basicearningspershareiscomputedbydividingincomeavailabletocommonshareholdersbytheweightedaveragenumberofsharesof
common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common
shareholdersbytheweightedaveragenumberofsharesofcommonstockoutstandingduringtheperiodincreasedtoincludethenumber
ofadditionalsharesofcommonstockthatwouldhavebeenoutstandingifthepotentiallydilutivesecuritieshadbeenissued.Potentially
dilutive securities include outstanding stock options, shares to be purchased under the Companys employee stock purchase plan,
unvestedrestrictedstockandunvestedRSUs.Thedilutiveeffectofpotentiallydilutivesecuritiesisreflectedindilutedearningspershare
by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Companys
commonstockcanresultinagreaterdilutiveeffectfrompotentiallydilutivesecurities.
TableofContents
Thefollowingtableshowsthecomputationofbasicanddilutedearningspersharefor2015,2014and2013(netincomeinmillionsand
sharesinthousands):
2015 2014 2013
Numerator:

Netincome
$ 53,394$ 39,510$ 37,037
Denominator:

Weightedaveragesharesoutstanding
5,753,421 6,085,572 6,477,320
Effectofdilutivesecurities
39,648 37,091 44,314
Weightedaveragedilutedshares
5,793,069 6,122,663 6,521,634
Basicearningspershare
$ 9.28$ 6.49$ 5.72
Dilutedearningspershare
$ 9.22$ 6.45$ 5.68
Potentiallydilutivesecuritieswhoseeffectwouldhavebeenantidilutiveareexcludedfromthecomputationofdilutedearningspershare.
FinancialInstruments
CashEquivalentsandMarketableSecurities
All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. The
Companysmarketabledebtandequitysecuritieshavebeenclassifiedandaccountedforasavailableforsale.Managementdetermines
theappropriateclassificationofitsinvestmentsatthetimeofpurchaseandreevaluatestheclassificationsateachbalancesheetdate.The
Company classifies its marketable debt securities as either shortterm or longterm based on each instruments underlying contractual
maturitydate.Marketabledebtsecuritieswithmaturitiesof12monthsorlessareclassifiedasshorttermandmarketabledebtsecurities
withmaturitiesgreaterthan12monthsareclassifiedaslongterm.Marketableequitysecurities,includingmutualfunds,areclassifiedas
either shortterm or longterm based on the nature of each security and its availability for use in current operations. The Companys
marketabledebtandequitysecuritiesarecarriedatfairvalue,withunrealizedgainsandlosses,netoftaxes,reportedasacomponentof
accumulatedothercomprehensiveincome(AOCI)inshareholdersequity,withtheexceptionofunrealizedlossesbelievedtobeother
thantemporarywhicharereportedinearningsinthecurrentperiod.Thecostofsecuritiessoldisbaseduponthespecificidentification
method.
DerivativeFinancialInstruments
TheCompanyaccountsforitsderivativeinstrumentsaseitherassetsorliabilitiesandcarriesthematfairvalue.
Forderivativeinstrumentsthathedgetheexposuretovariabilityinexpectedfuturecashflowsthataredesignatedascashflowhedges,the
effectiveportionofthegainorlossonthederivativeinstrumentisreportedasacomponentofAOCIinshareholdersequityandreclassified
intoearningsinthesameperiodorperiodsduringwhichthehedgedtransactionaffectsearnings.Theineffectiveportionofthegainorloss
on the derivative instrument, if any, is recognized in earnings in the current period. To receive hedge accounting treatment, cash flow
hedgesmustbehighlyeffectiveinoffsettingchangestoexpectedfuturecashflowsonhedgedtransactions.Foroptionsdesignatedas
cashflowhedges,changesinthetimevalueareexcludedfromtheassessmentofhedgeeffectivenessandarerecognizedinearnings.
Forderivativeinstrumentsthathedgetheexposuretochangesinthefairvalueofanassetoraliabilityandthataredesignatedasfair
valuehedges,boththenetgainorlossonthederivativeinstrumentaswellastheoffsettinggainorlossonthehedgeditemarerecognized
inearningsinthecurrentperiod.
For derivative instruments and foreign currency debt that hedge the exposure to changes in foreign currency exchange rates used for
translationofthenetinvestmentinaforeignoperationandthataredesignatedasanetinvestmenthedge,thenetgainorlossonthe
effective portion of the derivative instrument is reported in the same manner as a foreign currency translation adjustment. For forward
exchangecontractsdesignatedasnetinvestmenthedges,theCompanyexcludeschangesinfairvaluerelatingtochangesintheforward
carry component from its definition of effectiveness. Accordingly, any gains or losses related to this forward carry component are
recognizedinearningsinthecurrentperiod.
Derivativesthatdonotqualifyashedgesareadjustedtofairvaluethroughearningsinthecurrentperiod.
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AllowanceforDoubtfulAccounts
TheCompanyrecordsitsallowancefordoubtfulaccountsbaseduponitsassessmentofvariousfactors,includinghistoricalexperience,
ageoftheaccountsreceivablebalances,creditqualityoftheCompanyscustomers,currenteconomicconditionsandotherfactorsthat
mayaffectthecustomersabilitytopay.
Inventories
Inventoriesarestatedatthelowerofcost,computedusingthefirstin,firstoutmethodandnetrealizablevalue.Anyadjustmentstoreduce
the cost of inventories to their net realizable value are recognized in earnings in the current period. As of September 26, 2015 and
September27,2014,theCompanysinventoriesconsistprimarilyoffinishedgoods.
Property,PlantandEquipment
Property,plantandequipmentarestatedatcost.Depreciationiscomputedbyuseofthestraightlinemethodovertheestimateduseful
livesoftheassets,whichforbuildingsisthelesserof30yearsortheremaininglifeoftheunderlyingbuildingbetweenonetofiveyearsfor
machineryandequipment,includingproducttoolingandmanufacturingprocessequipmentandtheshorterofleasetermsortenyearsfor
leaseholdimprovements.TheCompanycapitalizeseligiblecoststoacquireordevelopinternalusesoftwarethatareincurredsubsequent
tothepreliminaryprojectstage.Capitalizedcostsrelatedtointernalusesoftwareareamortizedusingthestraightlinemethodoverthe
estimated useful lives of the assets, which range from three to five years. Depreciation and amortization expense on property and
equipmentwas$9.2billion,$6.9billionand$5.8billionduring2015,2014and2013,respectively.
LongLivedAssetsIncludingGoodwillandOtherAcquiredIntangibleAssets
TheCompanyreviewsproperty,plantandequipment,inventorycomponentprepaymentsandcertainidentifiableintangibles,excluding
goodwill, for impairment. Longlived assets are reviewed for impairment whenever events or changes in circumstances indicate the
carryingamountofanassetmaynotberecoverable.Recoverabilityoftheseassetsismeasuredbycomparisonoftheircarryingamounts
tofutureundiscountedcashflowstheassetsareexpectedtogenerate.Ifproperty,plantandequipment,inventorycomponentprepayments
and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the
carryingvalueoftheassetsexceedsitsfairvalue.
TheCompanydoesnotamortizegoodwillandintangibleassetswithindefiniteusefullives,rathersuchassetsarerequiredtobetestedfor
impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. The
Companyperformsitsgoodwillandintangibleassetimpairmenttestsinthefourthquarterofeachyear.TheCompanydidnotrecognize
anyimpairmentchargesrelatedtogoodwillorindefinitelivedintangibleassetsduring2015,2014and2013.TheCompanyestablished
reportingunitsbasedonitscurrentreportingstructure.Forpurposesoftestinggoodwillforimpairment,goodwillhasbeenallocatedto
thesereportingunitstotheextentitrelatestoeachreportingunit.In2015and2014,theCompanysgoodwillwasprimarilyallocatedtothe
AmericasandEuropereportingunits.
The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for
impairment. The Company typically amortizes its acquired intangible assets with definite useful lives over periods from three to seven
years.
FairValueMeasurements
TheCompanyappliesfairvalueaccountingforallfinancialassetsandliabilitiesandnonfinancialassetsandliabilitiesthatarerecognized
or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be
receivedfromsellinganassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.
Whendeterminingthefairvaluemeasurementsforassetsandliabilities,whicharerequiredtoberecordedatfairvalue,theCompany
considerstheprincipalormostadvantageousmarketinwhichtheCompanywouldtransactandthemarketbasedriskmeasurementsor
assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer
restrictionsandcreditrisk.Fairvalueisestimatedbyapplyingthefollowinghierarchy,whichprioritizestheinputsusedtomeasurefair
valueintothreelevelsandbasesthecategorizationwithinthehierarchyuponthelowestlevelofinputthatisavailableandsignificantto
thefairvaluemeasurement:
Level1Quotedpricesinactivemarketsforidenticalassetsorliabilities.
Level2Observableinputsotherthanquotedpricesinactivemarketsforidenticalassetsandliabilities, quoted prices for identical or

similarassetsorliabilitiesininactivemarkets,orotherinputsthatareobservableorcanbecorroboratedbyobservablemarketdatafor
substantiallythefulltermoftheassetsorliabilities.
Level 3 Inputs that are generally unobservable and typically reflect managements estimate of assumptions that market participants
woulduseinpricingtheassetorliability.
TableofContents
TheCompanysvaluationtechniquesusedtomeasurethefairvalueofmoneymarketfundsandcertainmarketableequitysecuritieswere
derivedfromquotedpricesinactivemarketsforidenticalassetsorliabilities.Thevaluationtechniquesusedtomeasurethefairvalueofthe
Companys debt instruments and all other financial instruments, all of which have counterparties with high credit ratings, were valued
basedonquotedmarketpricesormodeldrivenvaluationsusingsignificantinputsderivedfromorcorroboratedbyobservablemarketdata.
Inaccordancewiththefairvalueaccountingrequirements,companiesmaychoosetomeasureeligiblefinancialinstrumentsandcertain
otheritemsatfairvalue.TheCompanyhasnotelectedthefairvalueoptionforanyeligiblefinancialinstruments.
ForeignCurrencyTranslationandRemeasurement
TheCompanytranslatestheassetsandliabilitiesofitsnonU.S.dollarfunctionalcurrencysubsidiariesintoU.S.dollarsusingexchange
ratesineffectattheendofeachperiod.Revenueandexpensesforthesesubsidiariesaretranslatedusingratesthatapproximatethosein
effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in AOCI in
shareholdersequity.TheCompanyssubsidiariesthatusetheU.S.dollarastheirfunctionalcurrencyremeasuremonetaryassetsand
liabilitiesatexchangeratesineffectattheendofeachperiod,andinventories,propertyandnonmonetaryassetsandliabilitiesathistorical
rates.
Note2FinancialInstruments
Cash,CashEquivalentsandMarketableSecurities
ThefollowingtablesshowtheCompanyscashandavailableforsalesecuritiesadjustedcost,grossunrealizedgains,grossunrealized
lossesandfairvaluebysignificantinvestmentcategoryrecordedascashandcashequivalentsorshortorlongtermmarketablesecurities
asofSeptember26,2015andSeptember27,2014(inmillions):
2015
Cashand ShortTerm LongTerm
Adjusted Unrealized Unrealized Fair Cash Marketable Marketable
Cost Gains Losses Value Equivalents Securities Securities
Cash
$ 11,389 $ 0 $ 0 $ 11,389 $ 11,389 $ 0 $ 0

Level1:

Moneymarketfunds
1,798 0 0 1,798 1,798 0 0
Mutualfunds
1,772 0 (144) 1,628 0 1,628 0
Subtotal
3,570 0 (144) 3,426 1,798 1,628 0

Level2:

U.S.Treasurysecurities
34,902 181 (1) 35,082 0 3,498 31,584
U.S.agencysecurities
5,864 14 0 5,878 841 767 4,270
NonU.S.government
securities
6,356 45 (167) 6,234 43 135 6,056
Certificatesofdepositand
timedeposits
4,347 0 0 4,347 2,065 1,405 877
Commercialpaper
6,016 0 0 6,016 4,981 1,035 0
Corporatesecurities
116,908 242 (985) 116,165 3 11,948 104,214
Municipalsecurities 947 5 0 952 0 48 904
Mortgageandassetbacked
securities
16,121 87 (31) 16,177 0 17 16,160
Subtotal
191,461 574 (1,184) 190,851 7,933 18,853 164,065
Total
$ 206,420 $ 574 $ (1,328) $ 205,666 $ 21,120 $ 20,481 $ 164,065
TableofContents
2014
Cashand ShortTerm LongTerm
Adjusted Unrealized Unrealized Fair Cash Marketable Marketable
Cost Gains Losses Value Equivalents Securities Securities
Cash
$ 10,232 $ 0 $ 0 $ 10,232 $ 10,232 $ 0 $ 0

Level1:

Moneymarketfunds
1,546 0 0 1,546 1,546 0 0
Mutualfunds
2,531 1 (132) 2,400 0 2,400 0
Subtotal
4,077 1 (132) 3,946 1,546 2,400 0

Level2:

U.S.Treasurysecurities
23,140 15 (9) 23,146 12 607 22,527
U.S.agencysecurities
7,373 3 (11) 7,365 652 157 6,556
NonU.S.government
securities
6,925 69 (69) 6,925 0 204 6,721
Certificatesofdepositand
timedeposits
3,832 0 0 3,832 1,230 1,233 1,369
Commercialpaper
475 0 0 475 166 309 0
Corporatesecurities
85,431 296 (241) 85,486 6 6,298 79,182
Municipalsecurities
940 8 0 948 0 0 948
Mortgageandassetbacked
securities
12,907 26 (49) 12,884 0 25 12,859
Subtotal
141,023 417 (379) 141,061 2,066 8,833 130,162
Total
$ 155,332 $ 418 $ (511) $ 155,239 $ 13,844 $ 11,233 $ 130,162
TheCompanymaysellcertainofitsmarketablesecuritiespriortotheirstatedmaturitiesforstrategicreasonsincluding,butnotlimitedto,
anticipationofcreditdeteriorationanddurationmanagement.ThematuritiesoftheCompanyslongtermmarketablesecuritiesgenerally
rangefromonetofiveyears.
As of September 26, 2015, the Company considers the declines in market value of its marketable securities investment portfolio to be
temporaryinnatureanddoesnotconsideranyofitsinvestmentsotherthantemporarilyimpaired.TheCompanytypicallyinvestsinhighly
ratedsecurities,anditsinvestmentpolicygenerallylimitstheamountofcreditexposuretoanyoneissuer.Thepolicygenerallyrequires
investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were
determinedforeachindividualsecurityintheinvestmentportfolio.Whenevaluatinganinvestmentforotherthantemporaryimpairmentthe
Companyreviewsfactorssuchasthelengthoftimeandextenttowhichfairvaluehasbeenbelowitscostbasis,thefinancialconditionof
theissuerandanychangesthereto,changesinmarketinterestratesandtheCompanysintenttosell,orwhetheritismorelikelythannotit
willberequiredtoselltheinvestmentbeforerecoveryoftheinvestmentscostbasis.
DerivativeFinancialInstruments
TheCompanymayusederivativestopartiallyoffsetitsbusinessexposuretoforeigncurrencyandinterestrateriskonexpectedfuturecash
flows,onnetinvestmentsincertainforeignsubsidiariesandoncertainexistingassetsandliabilities.However,theCompanymaychoose
nottohedgecertainexposuresforavarietyofreasonsincluding,butnotlimitedto,accountingconsiderationsandtheprohibitiveeconomic
costofhedgingparticularexposures.Therecanbenoassurancethehedgeswilloffsetmorethanaportionofthefinancialimpactresulting
frommovementsinforeigncurrencyexchangeorinterestrates.
Tohelpprotectgrossmarginsfromfluctuationsinforeigncurrencyexchangerates,certainoftheCompanyssubsidiarieswhosefunctional
currencyistheU.S.dollarmayhedgeaportionofforecastedforeigncurrencyrevenue,andsubsidiarieswhosefunctionalcurrencyisnot
the U.S. dollar and who sell in local currencies may hedge a portion of forecasted inventory purchases not denominated in the
subsidiariesfunctionalcurrencies.TheCompanymayenterintoforwardcontracts,optioncontractsorotherinstrumentstomanagethis
riskandmaydesignatetheseinstrumentsascashflowhedges.TheCompanytypicallyhedgesportionsofitsforecastedforeigncurrency
exposureassociatedwithrevenueandinventorypurchases,typicallyforupto12months.
Tohelpprotectthenetinvestmentinaforeignoperationfromadversechangesinforeigncurrencyexchangerates,theCompanymay
enter into foreign currency forward and option contracts to offset the changes in the carrying amounts of these investments due to
fluctuationsinforeigncurrencyexchangerates.Inaddition,theCompanymayusenonderivativefinancialinstruments,suchasitsforeign
currencydenominateddebt,aseconomichedgesofitsnetinvestmentsincertainforeignsubsidiaries.Inbothofthesecases,theCompany
designatestheseinstrumentsasnetinvestmenthedges.
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TheCompanymayalsoenterintonondesignatedforeigncurrencycontractstopartiallyoffsettheforeigncurrencyexchangegainsand
lossesgeneratedbytheremeasurementofcertainassetsandliabilitiesdenominatedinnonfunctionalcurrencies.
TheCompanymayenterintointerestrateswaps,options,orotherinstrumentstomanageinterestraterisk.Theseinstrumentsmayoffseta
portionofchangesinincomeorexpense,orchangesinfairvalueoftheCompanystermdebtorinvestments.TheCompanydesignates
theseinstrumentsaseithercashfloworfairvaluehedges.TheCompanyshedgedinterestratetransactionsasofSeptember26,2015are
expectedtoberecognizedwithin10years.
CashFlowHedges
TheeffectiveportionsofcashflowhedgesarerecordedinAOCIuntilthehedgeditemisrecognizedinearnings.Deferredgainsandlosses
associated with cash flow hedges of foreign currency revenue are recognized as a component of net sales in the same period as the
relatedrevenueisrecognized,anddeferredgainsandlossesrelatedtocashflowhedgesofinventorypurchasesarerecognizedasa
componentofcostofsalesinthesameperiodastherelatedcostsarerecognized.Deferredgainsandlossesassociatedwithcashflow
hedgesofinterestincomeorexpensearerecognizedinotherincome/(expense),netinthesameperiodastherelatedincomeorexpense
isrecognized.Theineffectiveportionsandamountsexcludedfromtheeffectivenesstestingofcashflowhedgesarerecognizedinother
income/(expense),net.
Derivative instruments designated as cash flow hedges must be dedesignated as hedges when it is probable the forecasted hedged
transactionwillnotoccurintheinitiallyidentifiedtimeperiodorwithinasubsequenttwomonthtimeperiod.Deferredgainsandlossesin
AOCIassociatedwithsuchderivativeinstrumentsarereclassifiedimmediatelyintootherincome/(expense),net.Anysubsequentchanges
infairvalueofsuchderivativeinstrumentsarereflectedinotherincome/(expense),netunlesstheyareredesignatedashedgesofother
transactions.
NetInvestmentHedges
Theeffectiveportionsofnetinvestmenthedgesarerecordedinothercomprehensiveincome(OCI)asapartofthecumulativetranslation
adjustment.Theineffectiveportionsandamountsexcludedfromtheeffectivenesstestingofnetinvestmenthedgesarerecognizedinother
income/(expense),net.
FairValueHedges
Gainsandlossesrelatedtochangesinfairvaluehedgesarerecognizedinearningsalongwithacorrespondinglossorgainrelatedtothe
changeinvalueoftheunderlyinghedgeditem.
NonDesignatedDerivatives
Derivativesthatarenotdesignatedashedginginstrumentsareadjustedtofairvaluethroughearningsinthefinancialstatementlineitem
towhichthederivativerelates.
TheCompanyrecords all derivatives in the Consolidated Balance Sheets at fair value. The Companys accounting treatment for these
derivativeinstrumentsisbasedonitshedgedesignation.ThefollowingtablesshowtheCompanysderivativeinstrumentsatgrossfair
valueasofSeptember26,2015andSeptember27,2014(inmillions):
2015
FairValueof FairValueof
DerivativesDesignated DerivativesNotDesignated Total
asHedgeInstruments asHedgeInstruments FairValue
Derivativeassets(1):

Foreignexchangecontracts
$1,442 $109 $1,551
Interestratecontracts
$ 394 $ 0 $ 394
Derivativeliabilities(2):

$ 905 $ 94 $ 999
$ 13 $ 0 $ 13
TableofContents
2014
FairValueof FairValueof
DerivativesDesignated DerivativesNotDesignated Total
asHedgeInstruments asHedgeInstruments FairValue
Derivativeassets(1):

$1,332 $222 $1,554
$ 81 $ 0 $ 81
Derivativeliabilities(2):

$ 41 $ 40 $ 81
(1)
ThefairvalueofderivativeassetsismeasuredusingLevel2fairvalueinputsandisrecordedasothercurrentassetsintheConsolidated
BalanceSheets.
(2)
ThefairvalueofderivativeliabilitiesismeasuredusingLevel2fairvalueinputsandisrecordedasaccruedexpensesintheConsolidated
BalanceSheets.
ThefollowingtableshowsthepretaxgainsandlossesoftheCompanysderivativeandnonderivativeinstrumentsdesignatedascash
flow,netinvestmentandfairvaluehedgesonOCIandtheConsolidatedStatementsofOperationsfor2015,2014and2013(inmillions):
2015 2014 2013
Gains/(Losses)recognizedinOCIeffectiveportion:

Cashflowhedges:

$ 3,592$ 1,750$ 891
(111) (15) 12
Total
$ 3,481$ 1,735$ 903
Netinvestmenthedges:

$ 167$ 53$ 143
Foreigncurrencydebt
(71) 0 0
Total
$ 96$ 53$ 143
Gains/(Losses)reclassifiedfromAOCIintonetincomeeffectiveportion:

Cashflowhedges:

$ 4,092$ (154)$ 676
(17) (16) (6)
Total $ 4,075$ (170)$ 670
Gains/(Losses)onderivativeinstruments:

Fairvaluehedges:

$ 337$ 39$ 0
Gains/(Losses)relatedtohedgeditems:

Fairvaluehedges:

$ (337)$ (39)$ 0
ThefollowingtableshowsthenotionalamountsoftheCompanysoutstandingderivativeinstrumentsandcreditriskamountsassociated
withoutstandingorunsettledderivativeinstrumentsasofSeptember26,2015andSeptember27,2014(inmillions):
2015 2014
Notional CreditRisk Notional CreditRisk
Amount Amount Amount Amount
Instrumentsdesignatedasaccountinghedges:

$ 70,054$ 1,385$ 42,945$ 1,333
$ 18,750$ 394$ 12,000$ 89

Instrumentsnotdesignatedasaccountinghedges:

$ 49,190$ 109$ 38,510$ 222
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The notional amounts for outstanding derivative instruments provide one measure of the transaction volume outstanding and do not
represent the amount of the Companys exposure to credit or market loss. The credit risk amounts represent the Companys gross
exposure to potential accounting loss on derivative instruments that are outstanding or unsettled if all counterparties failed to perform
accordingtothetermsofthecontract,basedonthencurrentcurrencyorinterestratesateachrespectivedate.TheCompanysexposureto
creditlossandmarketriskwillvaryovertimeascurrencyandinterestrateschange.Althoughthetableabovereflectsthenotionaland
credit risk amounts of the Companys derivative instruments, it does not reflect the gains or losses associated with the exposures and
transactionsthattheinstrumentsareintendedtohedge.Theamountsultimatelyrealizeduponsettlementofthesefinancialinstruments,
togetherwiththegainsandlossesontheunderlyingexposures,willdependonactualmarketconditionsduringtheremaininglifeofthe
instruments.
TheCompanygenerallyentersintomasternettingarrangements,whicharedesignedtoreducecreditriskbypermittingnetsettlementof
transactionswiththesamecounterparty.Tofurtherlimitcreditrisk,theCompanygenerallyentersintocollateralsecurityarrangementsthat
provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually
establishedthresholds.TheCompanypresentsitsderivativeassetsandderivativeliabilitiesattheirgrossfairvaluesinitsConsolidated
Balance Sheets. The net cash collateral received by the Company related to derivative instruments under its collateral security
arrangementswas$1.0billionasofSeptember26,2015and$2.1billionasofSeptember27,2014.
UndermasternettingarrangementswiththerespectivecounterpartiestotheCompanysderivativecontracts,theCompanyisallowedto
netsettletransactionswithasinglenetamountpayablebyonepartytotheother.AsofSeptember26,2015andSeptember27,2014,the
potentialeffectsoftheserightsofsetoffassociatedwiththeCompanysderivativecontracts,includingtheeffectsofcollateral,wouldbea
reductiontobothderivativeassetsandderivativeliabilitiesof$2.2billionand$1.6billion,respectively,resultinginnetderivativeliabilities
of$78millionand$549million,respectively.
AccountsReceivable
TradeReceivables
TheCompanyhasconsiderabletradereceivablesoutstandingwithitsthirdpartycellularnetworkcarriers,wholesalers,retailers,value
addedresellers,smallandmidsizedbusinessesandeducation,enterpriseandgovernmentcustomers.TheCompanygenerallydoesnot
requirecollateralfromitscustomershowever,theCompanywillrequirecollateralincertaininstancestolimitcreditrisk.Inaddition,when
possible,theCompanyattemptstolimitcreditriskontradereceivableswithcreditinsuranceforcertaincustomersorbyrequiringthird
party financing, loans or leases to support credit exposure. These creditfinancing arrangements are directly between the thirdparty
financingcompanyandtheendcustomer.Assuch,theCompanygenerallydoesnotassumeanyrecourseorcreditrisksharingrelatedto
anyofthesearrangements.
AsofSeptember26,2015,theCompanyhadonecustomerthatrepresented10%ormoreoftotaltradereceivables,whichaccountedfor
12%.AsofSeptember27,2014,theCompanyhadtwocustomersthatrepresented10%ormoreoftotaltradereceivables,oneofwhich
accountedfor16%andtheother13%.TheCompanyscellularnetworkcarriersaccountedfor71%and72%oftradereceivablesasof
September26,2015andSeptember27,2014,respectively.
VendorNonTradeReceivables
TheCompanyhasnontradereceivablesfromcertainofitsmanufacturingvendorsresultingfromthesaleofcomponentstothesevendors
whomanufacturesubassembliesorassemblefinalproductsfortheCompany.TheCompanypurchasesthesecomponentsdirectlyfrom
suppliers.VendornontradereceivablesfromthreeoftheCompanysvendorsaccountedfor38%,18%and14%oftotalvendornontrade
receivablesasofSeptember26,2015andthreeoftheCompanysvendorsaccountedfor51%,16%and14%oftotalvendornontrade
receivablesasofSeptember27,2014.
Note3ConsolidatedFinancialStatementDetails
ThefollowingtablesshowtheCompanysconsolidatedfinancialstatementdetailsasofSeptember26,2015andSeptember27,2014(in
millions):
Property,PlantandEquipment,Net
2015 2014
Landandbuildings
$ 6,956$ 4,863
Machinery,equipmentandinternalusesoftware
37,038 29,639
Leaseholdimprovements
5,263 4,513
49,257 39,015
Grossproperty,plantandequipment
Accumulateddepreciationandamortization
(26,786) (18,391)
Totalproperty,plantandequipment,net
$ 22,471$ 20,624
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OtherNonCurrentLiabilities
2015 2014
Deferredtaxliabilities
$ 24,062$ 20,259
Othernoncurrentliabilities
9,365 4,567
Totalothernoncurrentliabilities
$ 33,427$ 24,826
OtherIncome/(Expense),Net
Thefollowingtableshowsthedetailofotherincome/(expense),netfor2015,2014and2013(inmillions):
2015 2014 2013
Interestanddividendincome
$ 2,921$ 1,795$ 1,616
Interestexpense
(733) (384) (136)
Otherexpense,net
(903) (431) (324)
Totalotherincome/(expense),net
$ 1,285$ 980$ 1,156
Note4GoodwillandOtherIntangibleAssets
OnJuly31,2014,theCompanycompletedtheacquisitionsofBeatsMusic,LLC,whichoffersasubscriptionstreamingmusicservice,and
BeatsElectronics,LLC,whichmakesBeats headphones,speakersandaudiosoftware(collectively,Beats).Thetotalpurchaseprice
considerationfortheseacquisitionswas$2.6billion, which consisted primarily of cash, of which $2.2 billion was allocated to goodwill,
$636milliontoacquiredintangibleassetsand$258milliontonetliabilitiesassumed.Concurrentwiththecloseoftheacquisitions,the
Companyrepaid$295 million of existing Beats outstanding debt to thirdparty creditors. In conjunction with the Beats acquisitions, the
Companyissuedapproximately5.1millionsharesofitscommonstocktocertainformerequityholdersofBeats.Therestrictedstockwas
valuedatapproximately$485millionbasedontheCompanyscommonstockontheacquisitiondate.Themajorityoftheseshares,valued
atapproximately$417million,willvestovertimebasedoncontinuedemploymentwithApple.
TheCompanyalsocompletedvariousotherbusinessacquisitionsduring2014foranaggregatecashconsideration,netofcashacquired,
of$957million,ofwhich$828millionwasallocatedtogoodwill,$257milliontoacquiredintangibleassetsand$128milliontonetliabilities
assumed.
The Companys acquired intangible assets with definite useful lives primarily consist of patents and licenses and are amortized over
periodstypicallyfromthreetosevenyears.Thefollowingtablesummarizesthecomponentsofgrossandnetintangibleassetbalancesas
ofSeptember26,2015andSeptember27,2014(inmillions):
2015 2014
Gross Gross
Carrying Accumulated NetCarrying Carrying Accumulated NetCarrying
Amount Amortization Amount Amount Amortization Amount
Definitelivedandamortizable
acquiredintangibleassets
$ 8,125 $ (4,332) $ 3,793 $ 7,127 $ (3,085) $ 4,042
Indefinitelivedandnon
amortizableacquired
intangibleassets
100 0 100 100 0 100
Totalacquiredintangible
assets
$ 8,225 $ (4,332) $ 3,893 $ 7,227 $ (3,085) $ 4,142
Amortization expense related to acquired intangible assets was $1.3 billion, $1.1 billion and $960 million in 2015, 2014 and 2013,
respectively.AsofSeptember26,2015,theremainingweightedaverageamortizationperiodforacquiredintangibleassetsis3.6years.
TheexpectedannualamortizationexpenserelatedtoacquiredintangibleassetsasofSeptember26,2015,isasfollows(inmillions):
2016
$ 1,288
2017
1,033
2018
786
2019
342
2020
166
Thereafter
178
Total
$ 3,793
TableofContents
Note5IncomeTaxes
Theprovisionforincometaxesfor2015,2014and2013,consistedofthefollowing(inmillions):
2015 2014 2013
Federal:

Current
$11,730$ 8,624$ 9,334
Deferred
3,408 3,183 1,878
15,138 11,807 11,212
State:

Current
1,265 855 1,084
Deferred
(220) (178) (311)
1,045 677 773
Foreign:

Current
4,744 2,147 1,559
Deferred
(1,806) (658) (426)
2,938 1,489 1,133
$ 19,121$13,973$13,118
Theforeignprovisionforincometaxesisbasedonforeignpretaxearningsof$47.6billion,$33.6billionand$30.5billionin2015,2014
and2013,respectively.TheCompanysconsolidatedfinancialstatementsprovideforanyrelatedtaxliabilityonundistributedearningsthat
theCompanydoesnotintendtobeindefinitelyreinvestedoutsidetheU.S.SubstantiallyalloftheCompanysundistributedinternational
earningsintendedtobeindefinitelyreinvestedinoperationsoutsidetheU.S.weregeneratedbysubsidiariesorganizedinIreland,which
hasastatutorytaxrateof12.5%.AsofSeptember26,2015,U.S.incometaxeshavenotbeenprovidedonacumulativetotalof$91.5
billionofsuchearnings.Theamountofunrecognizeddeferredtaxliabilityrelatedtothesetemporarydifferencesisestimatedtobe$30.0
billion.
As of September 26, 2015 and September 27, 2014, $186.9 billion and $137.1 billion, respectively, of the Companys cash, cash
equivalentsandmarketablesecuritieswereheldbyforeignsubsidiariesandaregenerallybasedinU.S.dollardenominated holdings.
AmountsheldbyforeignsubsidiariesaregenerallysubjecttoU.S.incometaxationonrepatriationtotheU.S.
Areconciliationoftheprovisionforincometaxes,withtheamountcomputedbyapplyingthestatutoryfederalincome tax rate (35% in

2015,2014and2013)toincomebeforeprovisionforincometaxesfor2015,2014and2013,isasfollows(dollarsinmillions):
2015 2014 2013
Computedexpectedtax
$25,380$18,719$17,554
Statetaxes,netoffederaleffect
680 469 508
Indefinitelyinvestedearningsofforeignsubsidiaries
(6,470) (4,744) (4,614)
Domesticproductionactivitiesdeduction
(426) (495) (308)
(171) (88) (287)
Researchanddevelopmentcredit,net
Other
128 112 265
$ 19,121$ 13,973$ 13,118
Effectivetaxrate
26.4% 26.1% 26.2%
TheCompanysincometaxespayablehavebeenreducedbythetaxbenefitsfromemployeestockplanawards.Forstockoptions, the
Companyreceivesanincometaxbenefitcalculatedasthetaxeffectofthedifferencebetweenthefairmarketvalueofthestockissuedat
thetimeoftheexerciseandtheexerciseprice.ForRSUs,theCompanyreceivesanincometaxbenefitupontheawardsvestingequalto
thetaxeffectoftheunderlyingstocksfairmarketvalue.TheCompanyhadnetexcesstaxbenefitsfromequityawardsof$748million,$706
millionand$643millionin2015,2014and2013,respectively,whichwerereflectedasincreasestocommonstock.
TableofContents
AsofSeptember26,2015andSeptember27,2014,thesignificantcomponentsoftheCompanysdeferredtaxassetsandliabilitieswere
(inmillions):
2015 2014
Deferredtaxassets:

Accruedliabilitiesandotherreserves
$4,205$3,326
Basisofcapitalassetsandinvestments
2,238 898
Deferredrevenue
1,941 1,787
Deferredcostsharing
667 0
575 454
Unrealizedlosses
564 130
Other
721 227
Totaldeferredtaxassets,netofvaluationallowanceof$0
10,911 6,822
Deferredtaxliabilities:

Unremittedearningsofforeignsubsidiaries
26,868 21,544
Other
303 398
Totaldeferredtaxliabilities
27,171 21,942
Netdeferredtaxliabilities
$ (16,260)$ (15,120)
Deferredtaxassetsandliabilitiesreflecttheeffectsoftaxlosses,creditsandthefutureincometaxeffectsoftemporarydifferencesbetween
theconsolidatedfinancialstatementcarryingamountsofexistingassetsandliabilitiesandtheirrespectivetaxbasesandaremeasured
usingenactedtaxratesthatapplytotaxableincomeintheyearsinwhichthosetemporarydifferencesareexpectedtoberecoveredor
settled.
UncertainTaxPositions
Taxpositionsareevaluatedinatwostepprocess.TheCompanyfirstdetermineswhetheritismorelikelythannotthatataxpositionwillbe
sustaineduponexamination.Ifataxpositionmeetsthemorelikelythannotrecognitionthresholditisthenmeasuredtodeterminethe
amountofbenefittorecognizeinthefinancialstatements.Thetaxpositionismeasuredasthelargestamountofbenefitthatisgreaterthan
50%likelyofbeingrealizeduponultimatesettlement.TheCompanyclassifiesgrossinterestandpenaltiesandunrecognizedtaxbenefits
thatarenotexpectedtoresultinpaymentorreceiptofcashwithinoneyearasnoncurrentliabilitiesintheConsolidatedBalanceSheets.
AsofSeptember26,2015,thetotalamountofgrossunrecognizedtaxbenefitswas$6.9billion,ofwhich$2.5billion,ifrecognized,would
affecttheCompanyseffectivetaxrate.AsofSeptember27,2014,thetotalamountofgrossunrecognizedtaxbenefitswas$4.0billion,of
which$1.4billion,ifrecognized,wouldaffecttheCompanyseffectivetaxrate.
The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2015, 2014 and
2013,isasfollows(inmillions):
2015 2014 2013

BeginningBalance $4,033$2,714$2,062
Increasesrelatedtotaxpositionstakenduringaprioryear
2,056 1,295 745
Decreasesrelatedtotaxpositionstakenduringaprioryear
(345) (280) (118)
Increasesrelatedtotaxpositionstakenduringthecurrentyear
1,278 882 626
Decreasesrelatedtosettlementswithtaxingauthorities
(109) (574) (592)
Decreasesrelatedtoexpirationofstatuteoflimitations
(13) (4) (9)
EndingBalance
$ 6,900$ 4,033$ 2,714
The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. As of
September26,2015andSeptember27,2014,thetotalamountofgrossinterestandpenaltiesaccruedwas$1.3billionand$630million,
respectively,whichisclassifiedasnoncurrentliabilitiesintheConsolidatedBalanceSheets.Inconnectionwithtaxmatters,theCompany
recognizedinterestandpenaltyexpensein2015,2014and2013of$709million,$40millionand$189million,respectively.
TableofContents
TheCompanyissubjecttotaxationandfilesincometaxreturnsintheU.S.federaljurisdictionandinmanystateandforeignjurisdictions.
TheU.S.InternalRevenueService(theIRS)iscurrentlyexaminingtheyears2010through2012,andallyearspriorto2010areclosed.
Inaddition,theCompanyissubjecttoauditsbystate,localandforeigntaxauthorities.Inmajorstatesandmajorforeignjurisdictions,the
yearssubsequentto2003generallyremainopenandcouldbesubjecttoexaminationbythetaxingauthorities.
Managementbelievesthatanadequateprovisionhasbeenmadeforanyadjustmentsthatmayresultfromtaxexaminations.However,the
outcomeoftaxauditscannotbepredictedwithcertainty.IfanyissuesaddressedintheCompanystaxauditsareresolvedinamannernot
consistentwithmanagementsexpectations,theCompanycouldberequiredtoadjustitsprovisionforincometaxesin the period such
resolutionoccurs.Althoughtimingoftheresolutionand/orclosureofauditsisnotcertain,theCompanydoesnotbelieveitisreasonably
possiblethatitsunrecognizedtaxbenefitswouldmateriallychangeinthenext12months.
OnJune11,2014,theEuropeanCommissionissuedanopeningdecisioninitiatingaformalinvestigationagainstIrelandforallegedstate
aidtotheCompany.TheopeningdecisionconcernstheallocationofprofitsfortaxationpurposesoftheIrishbranchesoftwosubsidiaries
oftheCompany.TheCompanybelievestheEuropeanCommissionsassertionsarewithoutmerit.IftheEuropeanCommissionwereto
concludeagainstIreland,theEuropeanCommissioncouldrequireIrelandtorecoverfromtheCompanypasttaxescoveringaperiodofup
to10yearsreflectiveofthedisallowedstateaid.Whilesuchamountcouldbematerial,asofSeptember26,2015theCompanyisunableto
estimatetheimpact.
Note6Debt
CommercialPaper
In2014,theBoardofDirectorsauthorizedtheCompanytoissueunsecuredshorttermpromissorynotes(CommercialPaper)pursuantto
a commercial paper program. The Company intends to use net proceeds from the commercial paper program for general corporate
purposes,includingdividendsandsharerepurchases.AsofSeptember26,2015andSeptember27,2014,theCompanyhad$8.5billion
and$6.3billionofCommercialPaperoutstanding,respectively,withaweightedaverageinterestrateof0.14%and0.12%,respectively,
andmaturitiesgenerallylessthanninemonths.
ThefollowingtableprovidesasummaryofcashflowsassociatedwiththeissuanceandmaturitiesofCommercialPaperfor2015and2014
(inmillions):
2015 2014
Maturitieslessthan90days:

Proceedsfrom(repaymentsof)commercialpaper,net
$5,293$1,865
Maturitiesgreaterthan90days:

Proceedsfromcommercialpaper
3,851 4,771
Repaymentsofcommercialpaper
(6,953) (330)
Maturitiesgreaterthan90days,net
(3,102) 4,441
Totalchangeincommercialpaper,net
$ 2,191$ 6,306
LongTermDebt
AsofSeptember26,2015,theCompanyhadoutstandingfloatingandfixedratenoteswithvaryingmaturitiesforanaggregateprincipal
amountof$55.7billion(collectivelytheNotes).TheNotesareseniorunsecuredobligations,andinterestispayableinarrears,quarterly
for the U.S. dollardenominated and Australian dollardenominated floatingrate notes, semiannually for the U.S. dollardenominated,
Australian dollardenominated, British pounddenominated and Japanese yendenominated fixedrate notes and annually for the euro
denominatedandSwissfrancdenominatedfixedratenotes.
TableofContents
ThefollowingtableprovidesasummaryoftheCompanystermdebtasofSeptember26,2015andSeptember27,2014:
2015 2014
Amount Amount

(inmillions) Effective (inmillions) Effective
Maturities InterestRate InterestRate
2013debtissuanceof$17.0billion:

Floatingratenotes
20162018$ 3,0000.51%1.10%$ 3,0000.51%1.10%
Fixedrate0.45%3.85%notes
20162043 14,0000.51%3.91% 14,0000.51%3.91%
2014debtissuanceof$12.0billion:

Floatingratenotes
20172019 2,0000.37%0.60% 2,0000.31%0.54%
Fixedrate1.05%4.45%notes
20172044 10,0000.37%4.48% 10,0000.30%4.48%
Firstquarter2015eurodenominateddebtissuanceof2.8billion:

Fixedrate1.000%notes
2022 1,558 2.94% 0 0
2026 1,558 3.45% 0 0
Secondquarter2015debtissuanceof$6.5billion:

Floatingratenotes
2020 500 0.56% 0 0
Fixedrate1.55%notes
2020 1,250 0.56% 0 0
Fixedrate2.15%notes
2022 1,250 0.87% 0 0
Fixedrate2.50%notes
2025 1,500 2.60% 0 0
Fixedrate3.45%notes
2045 2,000 3.58% 0 0
Secondquarter2015SwissfrancdenominateddebtissuanceofSFr1.25billion:

2024 895 0.28% 0 0
2030 384 0.74% 0 0
Thirdquarter2015debtissuanceof$8.0billion:

Floatingratenotes
2017 250 0.36% 0 0
Floatingratenotes
2020 500 0.61% 0 0
2017 750 0.35% 0 0
2020 1,250 0.61% 0 0
2022 1,250 0.99% 0 0
2025 2,000 1.22% 0 0
2045 2,000 4.40% 0 0
Thirdquarter2015Japaneseyendenominateddebtissuanceof250.0billion:

Fixedrate0.35%notes
2020 2,081 0.35% 0 0
Fourthquarter2015Britishpounddenominateddebtissuanceof1.25billion:

Fixedrate3.05%notes
2029 1,148 3.79% 0 0
Fixedrate3.60%notes
2042 766 4.51% 0 0
Fourthquarter2015AustraliandollardenominateddebtissuanceofA$2.25
billion:

Floatingratenotes
2019 493 1.87% 0 0
Fixedrate2.85%notes
2019 282 1.89% 0 0
Fixedrate3.70%notes
2022 810 2.79% 0 0
Fourthquarter2015eurodenominateddebtissuanceof2.0billion:

2024 1,113 3.30% 0 0
2027 1,113 3.85% 0 0
Totaltermdebt
55,701 29,000
Unamortizeddiscount
(114) (52)
Hedgeaccountingfairvalueadjustments
376 39
Less:Currentportionoflongtermdebt
(2,500) 0
Totallongtermdebt
$ 53,463 $ 28,987
Tomanageforeigncurrencyriskassociatedwiththeeurodenominatednotesissuedinthefirstquarterof2015andtheBritish pound
denominated,Australiandollardenominatedandeurodenominatednotesissuedinthefourthquarterof2015,theCompanyenteredinto
currencyswapswithanaggregatenotionalamountof$3.5billion,$1.9billion,$1.6billionand$2.2billion,respectively,whicheffectively
convertedthesenotestoU.S.dollardenominatednotes.
TableofContents
TomanageinterestrateriskontheU.S.dollardenominatedfixedratenotesissuedinthesecondquarterof2015andmaturingin2020
and2022,theCompanyenteredintointerestrateswapswithanaggregatenotionalamountof$2.5billion.Tomanageinterestrateriskon
theU.S.dollardenominatedfixedratenotesissuedinthethirdquarterof2015andmaturingin2017,2020,2022and2025,theCompany
enteredintointerestrateswapswithanaggregatenotionalamountof$4.3billion.Theseinterestrateswapseffectivelyconvertedthefixed
interestratesontheU.S.dollardenominatednotestoafloatinginterestrate.
AsofSeptember26,2015,250.0billionoftheJapaneseyendenominatednoteswasdesignatedasahedgeoftheforeign currency
exposureofitsnetinvestmentinaforeignoperation.TheforeigncurrencytransactiongainorlossontheJapaneseyendenominateddebt
designatedasahedgeisrecordedinOCIasapartofthecumulativetranslationadjustment.AsofSeptember26,2015,thecarryingvalue
ofthedebtdesignatedasanetinvestmenthedgewas$2.1billion.
ForfurtherdiscussionregardingtheCompanysuseofderivativeinstrumentsseetheDerivativeFinancialInstrumentssectionofNote2,
FinancialInstruments.
The effective interest rates for the Notes include the interest on the Notes, amortization of the discount and, if applicable, adjustments
relatedtohedging.TheCompanyrecognized$722million,$381millionand$136millionofinterestexpenseonitstermdebtfor2015,
2014and2013,respectively.
ThefutureprincipalpaymentsfortheCompanysNotesasofSeptember26,2015areasfollows(inmillions):
2016
$ 2,500
2017
3,500
2018
6,000
2019
3,775
2020
5,581
Thereafter
34,345
Totaltermdebt
$55,701
AsofSeptember26,2015andSeptember27,2014,thefairvalueoftheCompanysNotes,basedonLevel2inputs,was$54.9billionand
$28.5billion,respectively.
Note7ShareholdersEquity
Dividends
TheCompanydeclaredandpaidcashdividendspershareduringtheperiodspresentedasfollows:
Dividends Amount
PerShare (inmillions)
2015:

Fourthquarter
$ 0.52$ 2,950
Thirdquarter
0.52 2,997
Secondquarter
0.47 2,734
Firstquarter
0.47 2,750
Totalcashdividendsdeclaredandpaid $ 1.98$ 11,431
2014:

Fourthquarter
$ 0.47$ 2,807
Thirdquarter
0.47 2,830
Secondquarter
0.44 2,655
Firstquarter
0.44 2,739
Totalcashdividendsdeclaredandpaid
$ 1.82$ 11,031
FuturedividendsaresubjecttodeclarationbytheBoardofDirectors.
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ShareRepurchaseProgram
In the third quarter of 2015, the Companys Board of Directors increased the share repurchase authorization to $140 billion of the
Companyscommonstock,ofwhich$104billionhadbeenutilizedasofSeptember26,2015.TheCompanyssharerepurchaseprogram
does not obligate it to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated
and/or open market transactions, including under plans complying with Rule 10b51 under the Securities Exchange Act of 1934, as
amended(theExchangeAct).
The Company has entered, and in the future may enter, into accelerated share repurchase arrangements (ASRs) with financial
institutions. In exchange for upfront payments, the financial institutions deliver shares of the Companys common stock during the
purchase periods of each ASR. The total number of shares ultimately delivered, and therefore the average repurchase price paid per
share, is determined at the end of the applicable purchase period of each ASR based on the volume weightedaverage price of the
Companyscommonstockduringthatperiod.Thesharesreceivedareretiredintheperiodstheyaredelivered,andtheupfrontpayments
areaccountedforasareductiontoshareholdersequityintheCompanysConsolidatedBalanceSheetsintheperiodsthepaymentsare
made.TheCompanyreflectstheASRsasarepurchaseofcommonstockintheperioddeliveredforpurposesofcalculatingearningsper
shareandasforwardcontractsindexedtoitsowncommonstock.TheASRsmetalloftheapplicablecriteriaforequityclassification,and
thereforewerenotaccountedforasderivativeinstruments.
The following table shows the Companys ASR activity and related information during the years ended September 26, 2015 and
September27,2014:
Average
Purchase Numberof Repurchase ASR
PeriodEnd Shares PricePer Amount
Date (inthousands) Share (inmillions)
May2015ASR
July2015 48,293(1) $ 124.24 $ 6,000
August2014ASR
February2015 81,525(2) $ 110.40 $ 9,000
January2014ASR
December2014 134,247 $ 89.39 $ 12,000
April2013ASR
March2014 172,548 $ 69.55 $ 12,000
(1)
Includes38.3millionsharesdeliveredandretiredatthebeginningofthepurchaseperiod,whichbeganinthethirdquarterof2015and
10.0millionsharesdeliveredandretiredattheendofthepurchaseperiod,whichconcludedinthefourthquarterof2015.
(2)
Includes59.9millionsharesdeliveredandretiredatthebeginningofthepurchaseperiod,whichbeganinthefourthquarterof2014,
8.3millionnet shares delivered and retired in the first quarter of 2015 and 13.3 million shares delivered and retired at the end of the
purchaseperiod,whichconcludedinthesecondquarterof2015.
Additionally,theCompanyrepurchasedsharesofitscommonstockintheopenmarket,whichwereretireduponrepurchase,duringthe
periodspresentedasfollows:
NumberofShares AverageRepurchase Amount

(inthousands) PricePerShare (inmillions)
2015:
Fourthquarter
121,802$ 115.15$ 14,026
Thirdquarter
31,231$ 128.08 4,000
Secondquarter
56,400$ 124.11 7,000
Firstquarter
45,704$ 109.40 5,000
Totalopenmarketcommonstockrepurchases
255,137 $ 30,026

2014:
Fourthquarter
81,255$ 98.46$ 8,000
Thirdquarter
58,661$ 85.23 5,000
Secondquarter
79,749$ 75.24 6,000
Firstquarter
66,847$ 74.79 5,000
Totalopenmarketcommonstockrepurchases
286,512 $ 24,000
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Note8ComprehensiveIncome
Comprehensiveincomeconsistsoftwocomponents,netincomeandOCI.OCIreferstorevenue,expenses,andgainsandlossesthat
underGAAParerecordedasanelementofshareholdersequitybutareexcludedfromnetincome.TheCompanysOCIconsistsofforeign
currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency, net deferred gains and
losses on certain derivative instruments accounted for as cash flow hedges and unrealized gains and losses on marketable securities
classifiedasavailableforsale.
ThefollowingtableshowsthepretaxamountsreclassifiedfromAOCIintotheConsolidatedStatementsofOperations,andtheassociated
financialstatementlineitem,for2015and2014(inmillions):
ComprehensiveIncomeComponents FinancialStatementLineItem 2015 2014
Unrealized(gains)/lossesonderivativeinstruments:

Foreignexchangecontracts Revenue
$ (2,432) $ 449
Costofsales
(2,168) (295)
Otherincome/(expense),net
456 15
Interestratecontracts Otherincome/(expense),net
17 16
(4,127) 185
Unrealized(gains)/lossesonmarketablesecurities
Otherincome/(expense),net 91 (205)
TotalamountsreclassifiedfromAOCI
$ (4,036) $ (20)
ThefollowingtableshowsthechangesinAOCIbycomponentfor2015(inmillions):
Cumulative Unrealized Unrealized

Foreign Gains/Losses Gains/Losses
Currency onDerivative onMarketable
Translation Instruments Securities Total
BalanceatSeptember28,2013
$ (105) $ (175) $ (191) $ (471)
Othercomprehensiveincome/(loss)beforereclassifications
(187) 1,687 438 1,938
AmountsreclassifiedfromAOCI
0 185 (205) (20)
Taxeffect
50 (333) (82) (365)
(137) 1,539 151 1,553
(242) 1,364 (40) 1,082
Othercomprehensiveincome/(loss)beforereclassifications
(612) 3,346 (747) 1,987
AmountsreclassifiedfromAOCI
0 (4,127) 91 (4,036)
Taxeffect
201 189 232 622
(411) (592) (424) (1,427)
$ (653) $ 772 $ (464) $ (345)
TableofContents
Note9BenefitPlans
2014EmployeeStockPlan
Inthesecondquarterof2014,shareholdersapprovedthe2014EmployeeStockPlan(the2014Plan)andterminatedtheCompanys
authoritytograntnewawardsunderthe2003EmployeeStockPlan(the2003Plan).The2014Planprovidesforbroadbasedequity
grants to employees, including executive officers, and permits the granting of RSUs, stock grants, performancebased awards, stock
optionsandstockappreciationrights,aswellascashbonusawards.RSUsgrantedunderthe2014Plangenerallyvestoverfouryears,
basedoncontinuedemployment,andaresettleduponvestinginsharesoftheCompanyscommonstockonaoneforonebasis.Each
shareissuedwithrespecttoRSUsgrantedunderthe2014Planreducesthenumberofsharesavailableforgrantundertheplanbytwo
shares.RSUscancelledandshareswithheldtosatisfytaxwithholdingobligationsincreasethenumberofsharesavailableforgrantunder
the2014PlanutilizingafactoroftwotimesthenumberofRSUscancelledorshareswithheld.Currently,allRSUsgrantedunderthe2014
Planhavedividendequivalentrights(DERs),whichentitleholdersofRSUstothesamedividendvaluepershareasholdersofcommon
stock.DERsaresubjecttothesamevestingandothertermsandconditionsasthecorrespondingunvestedRSUs.DERsareaccumulated
andpaidwhentheunderlyingsharesvest.Uponapprovalofthe2014Plan,theCompanyreserved385millionsharesplusthenumberof
sharesremainingthatwerereservedbutnotissuedunderthe2003Plan.Sharessubjecttooutstandingawardsunderthe2003Planthat
expire, are cancelled or otherwise terminate, or are withheld to satisfy tax withholding obligations with respect to RSUs, will also be
availableforawardsunderthe2014Plan.AsofSeptember26,2015,approximately442.9millionshareswerereservedforfutureissuance
underthe2014Plan.
2003EmployeeStockPlan
The2003Planisashareholderapprovedplanthatprovidedforbroadbasedequitygrantstoemployees,includingexecutiveofficers.The
2003Planpermittedthegrantingofincentivestockoptions,nonstatutorystockoptions,RSUs,stockappreciationrights,stockpurchase
rightsandperformancebasedawards.Optionsgrantedunderthe2003Plangenerallyexpireseventotenyearsafterthegrantdateand
generallybecomeexercisableoveraperiodoffouryears,basedoncontinuedemployment,witheitherannual,semiannualorquarterly
vesting.RSUsgrantedunderthe2003Plangenerallyvestovertwotofouryears,basedoncontinuedemploymentandaresettledupon
vestinginsharesoftheCompanyscommonstockonaoneforonebasis.AllRSUs,otherthanRSUsheldbytheChiefExecutiveOfficer,
grantedunderthe2003PlanhaveDERs.DERsaresubjecttothesamevestingandothertermsandconditionsasthecorresponding
unvested RSUs. DERs are accumulated and paid when the underlying shares vest. In the second quarter of 2014, the Company
terminatedtheauthoritytograntnewawardsunderthe2003Plan.
1997DirectorStockPlan
The1997DirectorStockPlan(theDirectorPlan)isashareholderapprovedplanthat(i)permitstheCompanytograntawardsofRSUsor
stockoptionstotheCompanysnonemployeedirectors,(ii)providesforautomaticinitialgrantsofRSUsuponanonemployeedirector
joiningtheBoardofDirectorsandautomaticannualgrantsofRSUsateachannualmeetingofshareholders,and(iii)permitstheBoardof
Directors to prospectively change the relative mixture of stock options and RSUs for the initial and annual award grants and the
methodologyfordeterminingthenumberofsharesoftheCompanyscommonstocksubjecttothesegrantswithoutshareholderapproval.
EachshareissuedwithrespecttoRSUsgrantedundertheDirectorPlanreducesthenumberofsharesavailableforgrantundertheplan
bytwoshares.TheDirectorPlanexpiresNovember9,2019.AllRSUsgrantedundertheDirectorPlanareentitledtoDERs.DERsare
subjecttothesamevestingandothertermsandconditionsasthecorrespondingunvestedRSUs.DERsareaccumulatedandpaidwhen
the underlying shares vest. As of September 26, 2015, approximately 1.2 million shares were reserved for future issuance under the
DirectorPlan.
Rule10b51TradingPlans
Duringthefourthquarterof2015,Section16officersTimothyD.Cook,AngelaAhrendts,LucaMaestri,DanielRiccio,PhilipSchillerand
JeffreyWilliamshadequitytradingplansinplaceinaccordancewithRule10b51(c)(1)undertheExchangeAct.Anequitytradingplanisa
writtendocumentthatpreestablishestheamounts,pricesanddates(orformulafordeterminingtheamounts,pricesanddates)offuture
purchasesorsalesoftheCompanysstock,includingsharesacquiredpursuanttotheCompanysemployeeanddirectorequityplans.
EmployeeStockPurchasePlan
TheEmployeeStockPurchasePlan(thePurchasePlan)isashareholderapprovedplanunderwhichsubstantiallyallemployeesmay
purchasetheCompanyscommonstockthroughpayrolldeductionsatapriceequalto85%ofthelowerofthefairmarketvaluesofthe
stockasofthebeginningortheendofsixmonthofferingperiods.AnemployeespayrolldeductionsunderthePurchasePlanarelimitedto
10% of the employees compensation and employees may not purchase more than $25,000 of stock during any calendar year. As of
September26,2015,approximately53.0millionshareswerereservedforfutureissuanceunderthePurchasePlan.
TableofContents
401(k)Plan
TheCompanys401(k)PlanisadeferredsalaryarrangementunderSection401(k)oftheInternalRevenueCode.Underthe401(k)Plan,
participatingU.S.employeesmaydeferaportionoftheirpretaxearnings,uptotheIRSannualcontributionlimit($18,000forcalendar
year2015).TheCompanymatches50%to100%ofeachemployeescontributions,dependingonlengthofservice,uptoamaximum6%
oftheemployeeseligibleearnings.TheCompanysmatchingcontributionstothe401(k)Planwere$200million,$163millionand$135
millionin2015,2014and2013,respectively.
RestrictedStockUnits
AsummaryoftheCompanysRSUactivityandrelatedinformationfor2015,2014and2013,isasfollows:
Numberof WeightedAverage Aggregate

RSUs GrantDateFair IntrinsicValue
(inthousands) ValuePerShare (inmillions)
105,037$ 49.27
RSUsgranted
39,415$ 78.23
RSUsvested
(42,291)$ 45.96
RSUscancelled
(8,877)$ 57.31
93,284$ 62.24
RSUsgranted
59,269$ 74.54
RSUsvested
(43,111)$ 57.29
RSUscancelled
(5,620)$ 68.47
103,822$ 70.98
RSUsgranted
45,587$ 105.51
RSUsvested
(41,684)$ 71.32
RSUscancelled
(6,258)$ 80.34
101,467$ 85.77$ 11,639
The fair value as of the respective vesting dates of RSUs was $4.8 billion, $3.4 billion and $3.1 billion for 2015, 2014 and 2013,
respectively.ThemajorityofRSUsthatvestedin2015,2014and2013werenetsharesettledsuchthattheCompanywithheldshareswith
valueequivalenttotheemployeesminimumstatutoryobligationfortheapplicableincomeandotheremploymenttaxes,andremittedthe
cashtotheappropriatetaxingauthorities.Thetotalshareswithheldwereapproximately14.1million,15.6millionand15.5millionfor2015,
2014and2013,respectively,andwerebasedonthevalueoftheRSUsontheirrespectivevestingdatesasdeterminedbytheCompanys
closingstockprice.Totalpaymentsfortheemployeestaxobligationstotaxingauthoritieswere$1.6billion,$1.2billionand$1.1billionin
2015,2014and2013,respectively,andarereflectedasafinancingactivitywithintheConsolidatedStatementsofCashFlows.Thesenet
sharesettlementshadtheeffectofsharerepurchasesbytheCompanyastheyreducedthenumberofsharesthatwouldhaveotherwise
beenissuedasaresultofthevestinganddidnotrepresentanexpensetotheCompany.
StockOptions
TheCompanyhad1.2millionstockoptionsoutstandingasofSeptember26,2015,withaweightedaverageexercisepricepershareof
$15.08andweightedaverageremainingcontractualtermof4.1years,substantiallyallofwhichareexercisable.Theaggregateintrinsic
valueofthestockoptionsoutstandingasofSeptember26,2015was$120million,whichrepresentsthevalueoftheCompanysclosing
stock price on the last trading day of the period in excess of the weightedaverage exercise price multiplied by the number of options
outstanding.Totalintrinsicvalueofoptionsattimeofexercisewas$479million,$1.5billionand$1.0billionfor2015,2014and2013,
respectively.
TableofContents
SharebasedCompensation
ThefollowingtableshowsasummaryofthesharebasedcompensationexpenseincludedintheConsolidatedStatementsofOperations
for2015,2014and2013(inmillions):
2015 2014 2013
Costofsales
$ 575$ 450$ 350
1,536 1,216 917
1,475 1,197 986
Totalsharebasedcompensationexpense
$3,586$2,863$2,253
Theincometaxbenefitrelatedtosharebasedcompensationexpensewas$1.2billion,$1.0billionand$816millionfor2015,2014and
2013,respectively.AsofSeptember26,2015,thetotalunrecognizedcompensationcostrelatedtooutstandingstockoptions,RSUsand
restrictedstockwas$6.8billion,whichtheCompanyexpectstorecognizeoveraweightedaverageperiodof2.7years.
Note10CommitmentsandContingencies
AccruedWarrantyandIndemnification
ThefollowingtableshowschangesintheCompanysaccruedwarrantiesandrelatedcostsfor2015,2014and2013(inmillions):
2015 2014 2013
Beginningaccruedwarrantyandrelatedcosts
$ 4,159$ 2,967$ 1,638
Costofwarrantyclaims
(4,401) (3,760) (3,703)
Accrualsforproductwarranty
5,022 4,952 5,032
Endingaccruedwarrantyandrelatedcosts
$4,780$4,159$2,967
The Company generally does not indemnify endusers of its operating system and application software against legal claims that the
software infringes thirdparty intellectual property rights. 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 thirdparty. In the opinion of management, there was not at least a reasonable possibility the
Companymayhaveincurredamateriallosswithrespecttoindemnificationofendusersofitsoperatingsystemorapplicationsoftwarefor
infringement of thirdparty intellectual property rights. The Company did not record a liability for infringement costs related to
indemnificationasofSeptember26,2015orSeptember27,2014.
InSeptember2015,theCompanyintroducedtheiPhoneUpgradeProgram,whichisavailabletocustomerswhopurchaseaniPhone6s
and6sPlusinoneofitsU.S.physicalretailstoresandactivatethepurchasediPhonewithoneofthefournationalcarriers.TheiPhone
UpgradeProgramprovidescustomerstherighttotradeinthatiPhoneforanewiPhone,providedcertainconditionsaremet.Oneofthe
conditionsofthisprogramrequiresthecustomertofinancetheinitialpurchasepriceoftheiPhonewithathirdpartylender.Uponexercise
ofthetradeinrightandpurchaseofanewiPhone,theCompanysatisfiesthecustomersoutstandingbalanceduetothethirdpartylender
ontheoriginaldevice.TheCompanyaccountsforthetradeinrightasaguaranteeliabilityandrecognizesarrangementrevenuenetofthe
fairvalueofsuchrightwithsubsequentchangestotheguaranteeliabilityrecognizedwithinrevenue.
The Company has entered into indemnification agreements with its directors and executive officers. 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
statusasdirectorsorofficersandtoadvanceexpensesincurredbysuchindividualsinconnectionwithrelatedlegalproceedings.Itisnot
possibletodeterminethemaximumpotentialamountofpaymentstheCompanycouldberequiredtomakeundertheseagreementsdueto
thelimitedhistoryofpriorindemnificationclaimsandtheuniquefactsandcircumstancesinvolvedineachclaim.However,theCompany
maintainsdirectorsandofficersliabilityinsurancecoveragetoreduceitsexposuretosuchobligations.
ConcentrationsintheAvailableSourcesofSupplyofMaterialsandProduct
AlthoughmostcomponentsessentialtotheCompanysbusinessaregenerallyavailablefrommultiplesources,anumberofcomponents
arecurrentlyobtainedfromsingleorlimitedsources.Inaddition,theCompanycompetesforvariouscomponentswithotherparticipantsin
themarketsformobilecommunicationandmediadevicesandpersonalcomputers.Therefore,manycomponentsusedbytheCompany,
includingthosethatareavailablefrommultiplesources,areattimessubjecttoindustrywideshortageandsignificantpricingfluctuations
thatcouldmateriallyadverselyaffecttheCompanysfinancialconditionandoperatingresults.
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The Company uses some custom components that are not commonly used by its competitors, and new products introduced by the
Companyoftenutilizecustomcomponentsavailablefromonlyonesource.Whenacomponentorproductusesnewtechnologies,initial
capacityconstraintsmayexistuntilthesuppliersyieldshavematuredormanufacturingcapacityhasincreased.IftheCompanyssupplyof
components for a new or existing product were delayed or constrained, or if an outsourcing partner delayed shipments of completed
productstotheCompany,theCompanysfinancialconditionandoperatingresultscouldbemateriallyadverselyaffected.TheCompanys
business and financial performance could also be materially adversely affected depending on the time required to obtain sufficient
quantitiesfromtheoriginalsource,ortoidentifyandobtainsufficientquantitiesfromanalternativesource.Continuedavailabilityofthese
components at acceptable prices, or at all, may be affected if those suppliers concentrated on the production of common components
insteadofcomponentscustomizedtomeettheCompanysrequirements.
TheCompanyhasenteredintoagreementsforthesupplyofmanycomponentshowever,therecanbenoguaranteethattheCompanywill
beabletoextendorrenewtheseagreementsonsimilarterms,oratall.Therefore,theCompanyremainssubjecttosignificantrisksof
supplyshortagesandpriceincreasesthatcouldmateriallyadverselyaffectitsfinancialconditionandoperatingresults.
Substantially all of the Companys hardware products are manufactured by outsourcing partners that are located primarily in Asia. A
significantconcentrationofthismanufacturingiscurrentlyperformedbyasmallnumberofoutsourcingpartners,ofteninsinglelocations.
Certain of these outsourcing partners are the solesourced suppliers of components and manufacturers for many of the Companys
products.AlthoughtheCompanyworkscloselywithitsoutsourcingpartnersonmanufacturingschedules,theCompanysoperatingresults
could be adversely affected if its outsourcing partners were unable to meet their production commitments. The Companys purchase
commitmentstypicallycoveritsrequirementsforperiodsupto150days.
OtherOffBalanceSheetCommitments
OperatingLeases
TheCompanyleasesvariousequipmentandfacilities,includingretailspace,undernoncancelableoperatingleasearrangements.The
Companydoesnotcurrentlyutilizeanyotheroffbalancesheetfinancingarrangements.Themajorfacilityleasesaretypicallyfortermsnot
exceeding10yearsandgenerallycontainmultiyearrenewaloptions.AsofSeptember26,2015,theCompanyhadatotalof463retail
stores.Leasesforretailspacearefortermsrangingfromfiveto20years,themajorityofwhicharefor10years,andoftencontainmulti
yearrenewaloptions.AsofSeptember26,2015,theCompanystotalfutureminimumlease payments under noncancelable operating
leaseswere$6.3billion,ofwhich$3.6billionrelatedtoleasesforretailspace.
Rentexpenseunderalloperatingleases,includingbothcancelableandnoncancelableleases,was$794million,$717millionand$645
millionin2015,2014and2013,respectively.Futureminimumleasepaymentsundernoncancelableoperatingleaseshavingremaining
termsinexcessofoneyearasofSeptember26,2015,areasfollows(inmillions):
2016
$ 772
2017
774
2018
744
2019
715
2020
674
Thereafter
2,592
Total
$6,271
OtherCommitments
The Company utilizes several outsourcing partners to manufacture subassemblies for the Companys products and to perform final
assembly and testing of finished products. These outsourcing partners acquire components and build product based on demand
informationsuppliedbytheCompany,whichtypicallycoversperiodsupto150days.TheCompanyalsoobtainsindividualcomponentsfor
itsproductsfromawidevarietyofindividualsuppliers.Consistentwithindustrypractice,theCompanyacquirescomponentsthrougha
combination of purchase orders, supplier contracts and open orders based on projected demand information. Where
appropriate, the purchases are applied to inventory component prepayments that are outstanding with the respective supplier. As of
September26,2015,theCompanyhadoutstandingoffbalancesheetthirdpartymanufacturingcommitmentsandcomponentpurchase
commitmentsof$29.5billion.
TableofContents
Inadditiontothecommitmentsmentionedabove,theCompanyhadotheroffbalancesheetobligationsof$7.3billionasofSeptember26,
2015 that consisted of commitments to acquire capital assets, including product tooling and manufacturing process equipment, and
commitmentsrelatedtoinventoryprepayments,advertising,licensing,R&D,internetandtelecommunicationsservices,energyandother
obligations.
Contingencies
TheCompanyissubjecttovariouslegalproceedingsandclaimsthathavearisenintheordinarycourseofbusinessandthathavenot
beenfullyadjudicated,certainofwhicharediscussedinPartI,Item1AofthisForm10KundertheheadingRiskFactorsandinPartI,
Item 3 of this Form 10K under the heading Legal Proceedings. 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 for asserted legal and other claims. However, the outcome of litigation is inherently uncertain. Therefore, although
managementconsidersthelikelihoodofsuchanoutcometoberemote,ifoneormoreoftheselegalmatterswereresolvedagainstthe
Companyinareportingperiodforamountsinexcessofmanagementsexpectations,theCompanysconsolidatedfinancialstatementsfor
thatreportingperiodcouldbemateriallyadverselyaffected.
AppleInc.v.SamsungElectronicsCo.,Ltd,etal.
OnAugust24,2012,ajuryreturnedaverdictawardingtheCompany$1.05billioninitslawsuitagainstSamsungElectronicsCo.,Ltdand
affiliatedpartiesintheUnitedStatesDistrictCourt,NorthernDistrictofCalifornia,SanJoseDivision.OnMarch6,2014,theDistrictCourt
enteredfinaljudgmentinfavoroftheCompanyintheamountofapproximately$930million.OnMay18,2015,theU.S.CourtofAppeals
fortheFederalCircuitaffirmedinpart,andreversedinpart,thedecisionoftheDistrictCourt.Asaresult,theCourtofAppealsorderedentry
offinaljudgmentondamagesintheamountofapproximately$548million,withtheDistrictCourttodeterminesupplementaldamagesand
interest,aswellasdamagesowedforproductssubjecttothereversalinpart.Becausetherulingremainssubjecttofurtherproceedings,
theCompanyhasnotrecognizedtheawardinitsresultsofoperations.
Note11SegmentInformationandGeographicData
TheCompanyreportssegmentinformationbasedonthemanagementapproach.Themanagementapproachdesignatestheinternal
reportingusedbymanagementformakingdecisionsandassessingperformanceasthesourceoftheCompanysreportableoperating
segments.
The Company manages its business primarily on a geographic basis. The Companys reportable operating segments consist of the
Americas,Europe,GreaterChina,JapanandRestofAsiaPacific.TheAmericassegmentincludesbothNorthandSouthAmerica. The
EuropesegmentincludesEuropeancountries,aswellasIndia,theMiddleEastandAfrica.TheGreaterChinasegmentincludesChina,
HongKongandTaiwan.TheRestofAsiaPacificsegmentincludesAustraliaandthoseAsiancountriesnotincludedintheCompanys
otherreportableoperatingsegments.Althougheachreportableoperatingsegmentprovidessimilarhardwareandsoftwareproductsand
similarservices,theyaremanagedseparatelytobetteralignwiththelocationoftheCompanyscustomersanddistributionpartnersand
theuniquemarketdynamicsofeachgeographicregion.Theaccountingpoliciesofthevarioussegmentsarethesameasthosedescribed
inNote1,SummaryofSignificantAccountingPolicies.
TheCompanyevaluatestheperformanceofitsreportableoperatingsegmentsbasedonnetsalesandoperatingincome.Netsalesfor
geographicsegmentsaregenerallybasedonthelocationofcustomersandsalesthroughtheCompanysretailstoreslocatedinthose
geographiclocations.Operatingincomeforeachsegmentincludesnetsalestothirdparties,relatedcostofsalesandoperatingexpenses
directlyattributabletothesegment.Advertisingexpensesaregenerallyincludedinthegeographicsegmentinwhichtheexpendituresare
incurred.Operatingincomeforeachsegmentexcludesotherincomeandexpenseandcertainexpensesmanagedoutsidethereportable
operating segments. Costs excluded from segment operating income include various corporate expenses such as R&D, corporate
marketing expenses, certain sharebased compensation expenses, income taxes, various nonrecurring charges and other separately
managedgeneralandadministrativecosts.TheCompanydoesnotincludeintercompanytransfersbetweensegmentsformanagement
reportingpurposes.
TableofContents
Thefollowingtableshowsinformationbyreportableoperatingsegmentfor2015,2014and2013(inmillions):
2015 2014 2013
Americas:

Netsales
$93,864$80,095$77,093
Operatingincome
$ 31,186$ 26,158$ 24,829

Europe:

Netsales
$ 50,337$ 44,285$ 40,980
Operatingincome
$ 16,527$ 14,434$ 12,767
GreaterChina:

Netsales
$ 58,715$ 31,853$ 27,016
Operatingincome
$ 23,002$ 11,039$ 8,499

Japan:

Netsales
$ 15,706$ 15,314$ 13,782
Operatingincome
$ 7,617$ 6,904$ 6,668
RestofAsiaPacific:

Netsales
$ 15,093$ 11,248$ 12,039
Operatingincome
$ 5,518$ 3,674$ 3,762
AreconciliationoftheCompanyssegmentoperatingincometotheConsolidatedStatementsofOperationsfor2015,2014and2013isas
follows(inmillions):
2015 2014 2013
Segmentoperatingincome
$83,850$62,209$56,525
Researchanddevelopmentexpense
(8,067) (6,041) (4,475)
Othercorporateexpenses,net
(4,553) (3,665) (3,051)
Totaloperatingincome
$ 71,230$ 52,503$ 48,999
TheU.S.andChinaweretheonlycountriesthataccountedformorethan10%oftheCompanysnetsalesin2015,2014and2013.There
wasnosinglecustomerthataccountedformorethan10%ofnetsalesin2015,2014or2013.Netsalesfor2015,2014and2013andlong
livedassetsasofSeptember26,2015andSeptember27,2014areasfollows(inmillions):
2015 2014 2013
Netsales:

U.S.
$ 81,732$ 68,909$ 66,197
China(1)
56,547 30,638 25,946
Othercountries
95,436 83,248 78,767
Totalnetsales
$233,715$182,795$170,910

2015 2014
Longlivedassets:

U.S.
$ 12,022$ 9,108
China(1)
8,722 9,477
Othercountries
3,040 2,917
Totallonglivedassets
$ 23,784$ 21,502
(1)
ChinaincludesHongKong.LonglivedassetslocatedinChinaconsistprimarilyofproducttoolingandmanufacturingprocessequipment
andassetsrelatedtoretailstoresandrelatedinfrastructure.
TableofContents
Netsalesbyproductfor2015,2014and2013areasfollows(inmillions):
2015 2014 2013
NetSalesbyProduct:

iPhone(1)
$ 155,041$ 101,991$ 91,279
iPad(1)
23,227 30,283 31,980
Mac(1)
25,471 24,079 21,483
Services(2)
19,909 18,063 16,051
OtherProducts(1)(3)
10,067 8,379 10,117
Totalnetsales
$233,715$182,795$170,910
(1)
Includesdeferralsandamortizationofrelatedsoftwareupgraderightsandnonsoftwareservices.
(2)
Includes revenue from the iTunes Store, App Store, Mac App Store, iBooks Store, Apple Music, AppleCare, Apple Pay, licensing and
otherservices.
(3)
IncludessalesofAppleTV,AppleWatch,Beatsproducts,iPodandApplebrandedandthirdpartyaccessories.
Note12SelectedQuarterlyFinancialInformation(Unaudited)
ThefollowingtablesshowasummaryoftheCompanysquarterlyfinancialinformationforeachofthefourquartersof2015and2014(in
millions,exceptpershareamounts):
2015:

Netsales
$ 51,501$ 49,605$ 58,010$ 74,599
Grossmargin
$ 20,548$ 19,681$ 23,656$ 29,741
Netincome
$ 11,124$ 10,677$ 13,569$ 18,024
Earningspershare(1):

Basic
$ 1.97$ 1.86$ 2.34$ 3.08
Diluted
$ 1.96$ 1.85$ 2.33$ 3.06
2014:

$ 42,123$ 37,432$ 45,646$ 57,594
Netsales
Grossmargin
$ 16,009$ 14,735$ 17,947$ 21,846
Netincome
$ 8,467$ 7,748$ 10,223$ 13,072
Earningspershare(1):

Basic
$ 1.43$ 1.29$ 1.67$ 2.08
Diluted
$ 1.42$ 1.28$ 1.66$ 2.07
(1)
Basicanddilutedearningspersharearecomputedindependentlyforeachofthequarterspresented.Therefore,thesumofquarterly
basicanddilutedpershareinformationmaynotequalannualbasicanddilutedearningspershare.
TableofContents
ReportofErnst&YoungLLP,IndependentRegisteredPublicAccountingFirm
TheBoardofDirectorsandShareholdersofAppleInc.
WehaveauditedtheaccompanyingconsolidatedbalancesheetsofAppleInc.asofSeptember26,2015andSeptember27,2014,and
therelatedconsolidatedstatementsofoperations,comprehensiveincome,shareholdersequityandcashflowsforeachofthethreeyears
in the period ended September 26, 2015. These financial statements are the responsibility of the Companys management. Our
responsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.
Weconductedourauditsinaccordancewith the standards of the Public Company Accounting Oversight Board (United States). Those
standardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeof
materialmisstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellas
evaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditsprovideareasonablebasisforouropinion.
Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,theconsolidatedfinancialpositionofApple
Inc.atSeptember26,2015andSeptember27,2014,andtheconsolidatedresultsofitsoperationsanditscashflowsforeachofthethree
yearsintheperiodendedSeptember26,2015,inconformitywithU.S.generallyacceptedaccountingprinciples.
Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),AppleInc.s
internalcontroloverfinancialreportingasofSeptember26,2015,basedoncriteriaestablishedinInternalControlIntegratedFramework
issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(2013framework)andourreportdatedOctober28,
2015expressedanunqualifiedopinionthereon.
/s/Ernst&YoungLLP
SanJose,California
October28,2015
TableofContents
ReportofErnst&YoungLLP,IndependentRegisteredPublicAccountingFirm
TheBoardofDirectorsandShareholdersofAppleInc.
WehaveauditedAppleInc.sinternalcontroloverfinancialreportingasofSeptember26,2015,basedoncriteriaestablishedinInternal
ControlIntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(2013framework)
(theCOSOcriteria).AppleInc.smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreporting,andforits
assessmentoftheeffectivenessofinternalcontroloverfinancialreportingincludedintheaccompanyingManagementsAnnualReporton
Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Companys internal control over financial
reportingbasedonouraudit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancial
reportingwasmaintainedinallmaterialrespects.Ourauditincludedobtaininganunderstandingofinternalcontroloverfinancialreporting,
assessingtheriskthatamaterialweaknessexists,testingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolbased
ontheassessedrisk,andperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatouraudit
providesareasonablebasisforouropinion.
Acompanysinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityof
financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles.Acompanysinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1)pertaintothemaintenance
ofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany(2)provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial
statements.
Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofany
evaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,
orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.
Inouropinion,AppleInc.maintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofSeptember26,2015,
basedontheCOSOcriteria.
Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),the2015
consolidatedfinancialstatementsofAppleInc.andourreportdatedOctober28,2015expressedanunqualifiedopinionthereon.
/s/Ernst&YoungLLP
SanJose,California
October28,2015
TableofContents
Item9. ChangesinandDisagreementswithAccountantsonAccountingandFinancialDisclosure
None.
Item9A. ControlsandProcedures
EvaluationofDisclosureControlsandProcedures
Based on an evaluation under the supervision and with the participation of the Companys management, the Companys principal
executiveofficerandprincipalfinancialofficerhaveconcludedthattheCompanysdisclosurecontrolsandproceduresasdefinedinRules
13a15(e)and15d15(e)undertheSecuritiesExchangeActof1934,asamended(theExchangeAct)wereeffectiveasofSeptember26,
2015toprovidereasonableassurancethatinformationrequiredtobedisclosedbytheCompanyinreportsthatitfilesorsubmitsunderthe
Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange
Commission rules and forms and (ii) accumulated and communicated to the Companys management, including its principal executive
officerandprincipalfinancialofficer,asappropriatetoallowtimelydecisionsregardingrequireddisclosure.
InherentLimitationsOverInternalControls
TheCompanysinternalcontroloverfinancialreportingisdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancial
reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting
principles(GAAP).TheCompanysinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat:
(i)
pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsof
theCompanysassets
(ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with GAAP, and that the Companys receipts and expenditures are being made only in accordance with
authorizationsoftheCompanysmanagementanddirectorsand
(iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
Companysassetsthatcouldhaveamaterialeffectonthefinancialstatements.
Management,includingtheCompanysChiefExecutiveOfficerandChiefFinancialOfficer,doesnotexpectthattheCompanysinternal
controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only
reasonable,notabsolute,assurancethattheobjectivesofthecontrolsystemaremet.Further,thedesignofacontrolsystemmustreflect
thefactthatthereareresourceconstraints,andthebenefitsofcontrolsmustbeconsideredrelativetotheircosts.Becauseoftheinherent
limitationsinallcontrolsystems,noevaluationofinternalcontrolscanprovideabsoluteassurancethatallcontrolissuesandinstancesof
fraud,ifany,havebeendetected.Also,anyevaluationoftheeffectivenessofcontrolsinfutureperiodsaresubjecttotheriskthatthose
internalcontrolsmaybecomeinadequatebecauseofchangesinbusinessconditions,orthatthedegreeofcompliancewiththepoliciesor
proceduresmaydeteriorate.
ManagementsAnnualReportonInternalControlOverFinancialReporting
TheCompanysmanagementisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting(asdefined
inRule13a15(f)undertheExchangeAct).ManagementconductedanassessmentoftheeffectivenessoftheCompanysinternalcontrol
overfinancialreportingbasedonthecriteriasetforthinInternalControlIntegratedFrameworkissuedbytheCommitteeofSponsoring
OrganizationsoftheTreadwayCommission(2013framework).BasedontheCompanysassessment,managementhasconcludedthatits
internalcontroloverfinancialreportingwaseffectiveasofSeptember26,2015toprovidereasonableassuranceregardingthereliabilityof
financialreportingandthepreparationoffinancialstatementsinaccordancewithGAAP.TheCompanysindependentregisteredpublic
accountingfirm,Ernst&YoungLLP,hasissuedanauditreportontheCompanysinternalcontroloverfinancialreporting,whichappears
inPartII,Item8ofthisForm10K.
ChangesinInternalControlOverFinancialReporting
TherewerenochangesintheCompanysinternalcontroloverfinancialreportingduringthefourthquarterof2015,whichwereidentifiedin
connection with managements evaluation required by paragraph (d) of rules 13a15 and 15d15 under the Exchange Act, that have
materiallyaffected,orarereasonablylikelytomateriallyaffect,theCompanysinternalcontroloverfinancialreporting.
Item9B. OtherInformation
Notapplicable.
TableofContents
PARTIII
Item10. Directors,ExecutiveOfficersandCorporateGovernance
The information required by this Item is set forth under the headings Directors, Corporate Governance and Executive Officers in the
Companys 2016 Proxy Statement to be filed with the U.S. Securities and Exchange Commission (the SEC) within 120 days after
September 26, 2015 in connection with the solicitation of proxies for the Companys 2016 annual meeting of shareholders and is
incorporatedhereinbyreference.
TheCompanyhasacodeofethics,BusinessConduct:Thewaywedobusinessworldwide,thatappliestoallemployees,includingthe
Companysprincipalexecutiveofficer,principalfinancialofficer,andprincipalaccountingofficer,aswellastothemembersoftheBoardof
DirectorsoftheCompany.Thecodeisavailableatinvestor.apple.com/corporategovernance.cfm.TheCompanyintendstodiscloseany
changesin,orwaiversfrom,thiscodebypostingsuchinformationonthesamewebsiteorbyfilingaForm8K,ineachcasetotheextent
suchdisclosureisrequiredbyrulesoftheSECortheNASDAQStockMarketLLC.
Item11. ExecutiveCompensation
The information required by this Item is set forth under the heading Executive Compensation and under the subheadings Board
OversightofRiskManagement,CompensationCommitteeInterlocksandInsiderParticipation,CompensationofDirectorsandDirector
Compensation2015 under the heading Directors, Corporate Governance and Executive Officers in the Companys 2016 Proxy
StatementtobefiledwiththeSECwithin120daysafterSeptember26,2015andisincorporatedhereinbyreference.
Item12. SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters
TheinformationrequiredbythisItemissetforthundertheheadingsSecurityOwnershipofCertainBeneficialOwnersandManagement
and Equity Compensation Plan Information in the Companys 2016 Proxy Statement to be filed with the SEC within 120 days after
September26,2015andisincorporatedhereinbyreference.
Item13. CertainRelationshipsandRelatedTransactions,andDirectorIndependence
The information required by this Item is set forth under the subheadings Board Committees, Review, Approval or Ratification of
TransactionswithRelatedPersonsandTransactionswithRelatedPersonsundertheheadingDirectors,CorporateGovernanceand
Executive Officers in the Companys 2016 Proxy Statement to be filed with the SEC within 120 days after September 26, 2015 and is
incorporatedhereinbyreference.
Item14. PrincipalAccountingFeesandServices
The information required by this Item is set forth under the subheadings Fees Paid to Auditors and Policy on Audit Committee Pre
Approval of Audit and NonAudit Services Performed by the Independent Registered Public Accounting Firm under the proposal
RatificationofAppointmentofIndependentRegisteredPublicAccountingFirmintheCompanys2016ProxyStatementtobefiledwith
theSECwithin120daysafterSeptember26,2015andisincorporatedhereinbyreference.
TableofContents
PARTIV
Item15. Exhibits,FinancialStatementSchedules
(a)
Documentsfiledaspartofthisreport
(1)
Allfinancialstatements
IndextoConsolidatedFinancialStatements Page
ConsolidatedStatementsofOperationsfortheyearsendedSeptember26,2015,September27,2014andSeptember28,
2013
39
ConsolidatedStatementsofComprehensiveIncomefortheyearsendedSeptember26,2015,September27,2014and
September28,2013
40
ConsolidatedBalanceSheetsasofSeptember26,2015andSeptember27,2014
41
ConsolidatedStatementsofShareholdersEquityfortheyearsendedSeptember26,2015,September27,2014and
September28,2013
42
ConsolidatedStatementsofCashFlowsfortheyearsendedSeptember26,2015,September27,2014andSeptember28,
2013
43
44
SelectedQuarterlyFinancialInformation(Unaudited)
68
ReportsofErnst&YoungLLP,IndependentRegisteredPublicAccountingFirm
69
(2)
FinancialStatementSchedules
Allfinancialstatementscheduleshavebeenomitted,sincetherequiredinformationisnotapplicableorisnotpresentinamountssufficient
torequiresubmissionoftheschedule,orbecausetheinformationrequiredisincludedintheconsolidatedfinancialstatementsandnotes
theretoincludedinthisForm10K.
(3)
ExhibitsrequiredbyItem601ofRegulationSK
TheinformationrequiredbythisSection(a)(3)ofItem15issetforthontheexhibitindexthatfollowstheSignaturespageofthisForm10K.
TableofContents
SIGNATURES
PursuanttotherequirementsofSection13or15(d)oftheSecuritiesExchangeActof1934,theRegistranthasdulycausedthisreporttobe
signedonitsbehalfbytheundersigned,thereuntodulyauthorized.
Date:October28,2015
AppleInc.
By: /s/LucaMaestri
LucaMaestri
SeniorVicePresident,
ChiefFinancialOfficer
PowerofAttorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Timothy D.
CookandLucaMaestri,jointlyandseverally,hisorherattorneysinfact,eachwiththepowerofsubstitution,forhimorherinanyandall
capacities,tosignanyamendmentstothisAnnualReportonForm10K,andtofilethesame,withexhibitstheretoandotherdocumentsin
connectiontherewith,withtheSecuritiesandExchangeCommission,herebyratifyingandconfirmingallthateachofsaidattorneysinfact,
orhissubstituteorsubstitutes,maydoorcausetobedonebyvirtuehereof.
PursuanttotherequirementsoftheSecuritiesExchangeActof1934,thisreporthasbeensignedbelowbythefollowingpersonsonbehalf
oftheRegistrantandinthecapacitiesandonthedatesindicated:
Name Title Date

/s/TimothyD.Cook ChiefExecutiveOfficerandDirector October28,2015

TIMOTHYD.COOK (PrincipalExecutiveOfficer)
/s/LucaMaestri SeniorVicePresident,ChiefFinancialOfficer October28,2015

LUCAMAESTRI (PrincipalFinancialOfficer)
/s/ChrisKondo SeniorDirectorofCorporateAccounting October28,2015

CHRISKONDO (PrincipalAccountingOfficer)
/s/AlGore Director October28,2015

ALGORE
/s/RobertA.Iger Director October28,2015

ROBERTA.IGER
/s/AndreaJung Director October28,2015

ANDREAJUNG
/s/ArthurD.Levinson Director October28,2015

ARTHURD.LEVINSON
/s/RonaldD.Sugar Director October28,2015

RONALDD.SUGAR
/s/SusanL.Wagner Director October28,2015

SUSANL.WAGNER
TableofContents
EXHIBITINDEX(1)
Incorporatedby
Reference
FilingDate/
Period
Exhibit End
Number ExhibitDescription Form Exhibit Date
3.1 RestatedArticlesofIncorporationoftheRegistranteffectiveasof 8K 3.1 6/6/14

June6,2014.
3.2 AmendedandRestatedBylawsoftheRegistranteffectiveasof 8K 3.2 3/5/14
February28,2014.
4.1 FormofCommonStockCertificateoftheRegistrant. 10Q 4.1 12/30/06
4.2 Indenture,datedasofApril29,2013,betweentheRegistrantandTheBankofNewYorkMellon S3 4.1 4/29/13
TrustCompany,N.A.,asTrustee.
4.3 OfficersCertificateoftheRegistrant,datedasofMay3,2013,includingformsofglobalnotes 8K 4.1 5/3/13
representingtheFloatingRateNotesdue2016,FloatingRateNotesdue2018,0.45%Notes
due2016,1.00%Notesdue2018,2.40%Notesdue2023and3.85%Notesdue2043.
due2017,2.10%Notesdue2019,2.85%Notesdue2021,3.45%Notesdue2024and4.45%
Notesdue2044.
4.5 OfficersCertificateoftheRegistrant,datedasofNovember10,2014,includingformsofglobal 8K 4.1 11/10/14
notesrepresentingthe1.000%Notesdue2022and1.625%Notesdue2026.
4.6 OfficersCertificateoftheRegistrant,datedasofFebruary9,2015,includingformsofglobal 8K 4.1 2/9/15
notesrepresentingtheFloatingRateNotesdue2020,1.55%Notesdue2020,2.15%Notesdue
2022,2.50%Notesdue2025and3.45%Notesdue2045.
due2017,2.000%Notesdue2020,2.700%Notesdue2022,3.200%Notesdue2025,and
4.375%Notesdue2045.
4.8 OfficersCertificateoftheRegistrant,datedasofJune10,2015,includingformsofglobalnotes 8K 4.1 6/10/15
representingthe0.35%Notesdue2020.
4.9 OfficersCertificateoftheRegistrant,datedasofJuly31,2015,includingformsofglobalnotes 8K 4.1 7/31/15
representingthe3.05%Notesdue2029and3.60%Notesdue2042.
4.10 OfficersCertificateoftheRegistrant,datedasofSeptember17,2015,includingformsofglobal 8K 4.1 9/17/15
notesrepresentingthe1.375%Notesdue2024and2.000%Notesdue2027.
10.1* EmployeeStockPurchasePlan,asamendedandrestatedasofMarch10,2015. 8K 10.1 3/13/15
10.2* FormofIndemnificationAgreementbetweentheRegistrantandeachdirectorandexecutive 10Q 10.2 6/27/09
officeroftheRegistrant.
10.3* 1997DirectorStockPlan,asamendedthroughAugust23,2012. 10Q 10.3 12/28/13
10.4* 2003EmployeeStockPlan,asamendedthroughFebruary25,2010. 8K 10.1 3/1/10
10.5* FormofRestrictedStockUnitAwardAgreementunder2003EmployeeStockPlaneffectiveasof 10Q 10.10 12/25/10
November16,2010.
10.6* FormofRestrictedStockUnitAwardAgreementunder2003EmployeeStockPlaneffectiveasof 10Q 10.8 3/31/12
April6,2012.
TableofContents
Incorporatedby
Reference
FilingDate/
Period
Exhibit End
Number ExhibitDescription Form Exhibit Date
10.7* SummaryDescriptionofAmendment,effectiveasofMay24,2012,tocertainRestrictedStock 10Q 10.8 6/30/12

UnitAwardAgreementsoutstandingasofApril5,2012.
10.8* 2014EmployeeStockPlan. 8K 10.1 3/5/14
10.9* FormofRestrictedStockUnitAwardAgreementunder2014EmployeeStockPlanasof 8K 10.2 3/5/14
February28,2014.
10.10* FormofPerformanceAwardAgreementunder2014EmployeeStockPlaneffectiveasof 8K 10.3 3/5/14
February28,2014.
10.11* FormofRestrictedStockUnitAwardAgreementunder2014EmployeeStockPlaneffectiveas 10K 10.11 9/27/14
ofAugust26,2014.
10.12* FormofPerformanceAwardAgreementunder2014EmployeeStockPlaneffectiveasof 10K 10.12 9/27/14
August26,2014.
10.13* FormofAmendment,effectiveasofAugust26,2014,toRestrictedStockUnitAward 10K 10.13 9/27/14
AgreementsandPerformanceAwardAgreementsoutstandingasofAugust26,2014.
10.14* OfferLetter,datedAugust1,2013,fromtheRegistranttoAngelaAhrendts. 10Q 10.14 12/27/14
12.1** ComputationofRatioofEarningstoFixedCharges.
21.1** SubsidiariesoftheRegistrant.
23.1** ConsentofErnst&YoungLLP,IndependentRegisteredPublic
AccountingFirm.
24.1** PowerofAttorney(includedontheSignaturespageofthis
AnnualReportonForm10K).
31.1** Rule13a14(a)/15d14(a)CertificationofChiefExecutiveOfficer.
31.2** Rule13a14(a)/15d14(a)CertificationofChiefFinancialOfficer.
32.1*** Section1350CertificationsofChiefExecutiveOfficerandChiefFinancialOfficer.
101.INS** XBRLInstanceDocument.
101.SCH** XBRLTaxonomyExtensionSchemaDocument.
101.CAL** XBRLTaxonomyExtensionCalculationLinkbaseDocument.
101.DEF** XBRLTaxonomyExtensionDefinitionLinkbaseDocument.
101.LAB** XBRLTaxonomyExtensionLabelLinkbaseDocument.
101.PRE** XBRLTaxonomyExtensionPresentationLinkbaseDocument.
*
Indicatesmanagementcontractorcompensatoryplanorarrangement.
**
Filedherewith.
***
Furnishedherewith.
(1)
CertaininstrumentsdefiningtherightsofholdersoflongtermdebtsecuritiesoftheRegistrantareomittedpursuanttoItem601(b)(4)(iii)
ofRegulationSK.TheRegistrantherebyundertakestofurnishtotheSEC,uponrequest,copiesofanysuchinstruments.
Exhibit12.1
AppleInc.
ComputationofRatioofEarningstoFixedCharges
(Inmillions,exceptratios)
Yearsended
September26, September27, September28, September29, September24,
2015 2014 2013 2012 2011
Earnings:

Earningsbeforeprovisionforincometaxes
$ 72,515$ 53,483$ 50,155$ 55,763$ 34,205
Add:FixedCharges
892 527 265 98 68
TotalEarnings
$ 73,407$ 54,010$ 50,420$ 55,861$ 34,273
FixedCharges(1):

InterestExpense
$ 733$ 384$ 136$ 0$ 0
Interestcomponentofrentalexpense
159 143 129 98 68
TotalFixedCharges
$ 892$ 527$ 265$ 98$ 68
RatioofEarningstoFixedCharges(2)
82 102 190 570 504
(1)
Fixedchargesincludetheportionofrentalexpensethatmanagementbelievesisrepresentativeoftheinterestcomponent.
(2)
TheratioofearningstofixedchargesiscomputedbydividingTotalEarningsbyTotalFixedCharges.
Exhibit21.1
Subsidiariesof
AppleInc.*
Jurisdiction
ofIncorporation
AppleSalesInternational
Ireland
AppleOperationsInternational
Ireland
AppleOperationsEurope
Ireland
BraeburnCapital,Inc.
Nevada,U.S.
*
PursuanttoItem601(b)(21)(ii)ofRegulationSK,thenamesofothersubsidiariesofAppleInc.areomittedbecause,consideredinthe
aggregate,theywouldnotconstituteasignificantsubsidiaryasoftheendoftheyearcoveredbythisreport.
Exhibit23.1
ConsentofErnst&YoungLLP,IndependentRegisteredPublicAccountingFirm
WeconsenttotheincorporationbyreferenceinthefollowingRegistrationStatements:
(1)
RegistrationStatement(FormS8No.333203698)pertainingtoAppleInc.EmployeeStockPurchasePlan,
(2)
RegistrationStatement(FormS8No.333195509)pertainingtoAppleInc.2014EmployeeStockPlan,
(3)
RegistrationStatement(FormS8No.333193709)pertainingtoTopsyLabs,Inc.2007StockPlan,
(4)
RegistrationStatement(FormS3ASRNo.333188191)ofAppleInc.,
(5)
RegistrationStatement(FormS8No.333184706)pertainingtoAuthenTec,Inc.2007StockIncentivePlanandAuthenTec,Inc.2010
IncentivePlan,asamended,
(6)
RegistrationStatement(FormS8No.333180981)pertainingtoChompInc.2009EquityIncentivePlan,
(7)
RegistrationStatement(FormS8No.333179189)pertainingtoAnobitTechnologiesLtd.GlobalShareIncentivePlan(2006),
(8)
RegistrationStatement(FormS8No.333168279)pertainingtoSiri,Inc.2008StockOption/StockIssuancePlan,
(9)
RegistrationStatement(FormS8No.333165214)pertainingtoAppleInc.2003EmployeeStockPlan,lalamedia,inc.2005Stock
PlanandQuattroWireless,Inc.2006StockOptionandGrantPlan,
(10)
Registration Statement (Form S8 No. 333146026) pertaining to Apple Inc. 2003 Employee Stock Plan and Apple Inc. Amended
EmployeeStockPurchasePlan,
(11)
RegistrationStatement(FormS8No.333125148)pertainingtoEmployeeStockPurchasePlanand2003EmployeeStockPlan,and
(12)
RegistrationStatement(FormS8No.33360455)pertainingto1997DirectorStockOptionPlan
ofourreportsdatedOctober28,2015withrespecttotheconsolidatedfinancialstatementsofAppleInc.,andtheeffectivenessofinternal
controloverfinancialreportingofAppleInc.,includedinthisAnnualReportonForm10KfortheyearendedSeptember26,2015.
/s/Ernst&YoungLLP
SanJose,California
October28,2015
Exhibit31.1
CERTIFICATION
I,TimothyD.Cook,certifythat:
1.
IhavereviewedthisannualreportonForm10KofAppleInc.
2.
Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessaryto
makethestatementsmade,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttothe
periodcoveredbythisreport
3.
Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterial
respectsthefinancial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this
report
4.
TheRegistrantsothercertifyingofficer(s)andIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures
(asdefinedinExchangeActRules13a15(e)and15d15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeAct
Rules13a15(f)and15d15(f))fortheRegistrantandhave:
(a)
Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderour
supervision,toensurethatmaterialinformationrelatingtotheRegistrant,includingitsconsolidatedsubsidiaries,ismadeknown
tousbyotherswithinthoseentities,particularlyduringtheperiodinwhichthisreportisbeingprepared
(b)
Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesigned
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples
(c)
EvaluatedtheeffectivenessoftheRegistrantsdisclosurecontrolsandproceduresandpresentedinthisreportourconclusions
abouttheeffectivenessofthedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedon
suchevaluationand
(d)
Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the
Registrantsmostrecentfiscalquarter(theRegistrantsfourthfiscalquarterinthecaseofanannualreport)thathasmaterially
affected,orisreasonablylikelytomateriallyaffect,theRegistrantsinternalcontroloverfinancialreportingand
5.
TheRegistrantsothercertifyingofficer(s)andIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancial
reporting, to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the
equivalentfunctions):
(a)
Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhich
arereasonablylikelytoadverselyaffecttheRegistrantsabilitytorecord,process,summarize,andreportfinancialinformation
and
(b)
Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheRegistrants
internalcontroloverfinancialreporting.
Date:October28,2015
By: /s/TimothyD.Cook
TimothyD.Cook
ChiefExecutiveOfficer
Exhibit31.2
CERTIFICATION
I,LucaMaestri,certifythat:
1.
IhavereviewedthisannualreportonForm10KofAppleInc.
2.
Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessaryto
makethestatementsmade,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttothe
periodcoveredbythisreport
3.
Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterial
respectsthefinancial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this
report
4.
TheRegistrantsothercertifyingofficer(s)andIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures
(asdefinedinExchangeActRules13a15(e)and15d15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeAct
Rules13a15(f)and15d15(f))fortheRegistrantandhave:
(a)
Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderour
supervision,toensurethatmaterialinformationrelatingtotheRegistrant,includingitsconsolidatedsubsidiaries,ismadeknown
tousbyotherswithinthoseentities,particularlyduringtheperiodinwhichthisreportisbeingprepared
(b)
Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesigned
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples
(c)
EvaluatedtheeffectivenessoftheRegistrantsdisclosurecontrolsandproceduresandpresentedinthisreportourconclusions
abouttheeffectivenessofthedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedon
suchevaluationand
(d)
Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the
Registrantsmostrecentfiscalquarter(theRegistrantsfourthfiscalquarterinthecaseofanannualreport)thathasmaterially
affected,orisreasonablylikelytomateriallyaffect,theRegistrantsinternalcontroloverfinancialreportingand
5.
TheRegistrantsothercertifyingofficer(s)andIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancial
reporting, to the Registrants auditors and the audit committee of the Registrants board of directors (or persons performing the
equivalentfunctions):
(a)
Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhich
arereasonablylikelytoadverselyaffecttheRegistrantsabilitytorecord,process,summarize,andreportfinancialinformation
and
(b)
Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheRegistrants
internalcontroloverfinancialreporting.
Date:October28,2015
By: /s/LucaMaestri
LucaMaestri
Exhibit32.1
CERTIFICATIONSOFCHIEFEXECUTIVEOFFICERANDCHIEFFINANCIALOFFICER
PURSUANTTO
18U.S.C.SECTION1350,
ASADOPTEDPURSUANTTO
SECTION906OFTHESARBANESOXLEYACTOF2002
I,TimothyD.Cook,certify,asofthedatehereof,pursuantto18U.S.C.Section1350,asadoptedpursuanttoSection906oftheSarbanes
OxleyActof2002,thattheAnnualReportofAppleInc.onForm10KforthefiscalyearendedSeptember26,2015fullycomplieswiththe
requirementsofSection13(a)or15(d)oftheSecuritiesExchangeAct of 1934 and that information contained in such Form 10K fairly
presentsinallmaterialrespectsthefinancialconditionandresultsofoperationsofAppleInc.atthedatesandfortheperiodsindicated.
Date:October28,2015
By: /s/TimothyD.Cook
TimothyD.Cook
ChiefExecutiveOfficer
I,LucaMaestri,certify,asofthedatehereof,pursuantto18U.S.C.Section1350,asadoptedpursuanttoSection906oftheSarbanes
OxleyActof2002,thattheAnnualReportofAppleInc.onForm10KforthefiscalyearendedSeptember26,2015fullycomplieswiththe
requirementsofSection13(a)or15(d)oftheSecuritiesExchangeAct of 1934 and that information contained in such Form 10K fairly
presentsinallmaterialrespectsthefinancialconditionandresultsofoperationsofAppleInc.atthedatesandfortheperiodsindicated.
Date:October28,2015
By: /s/LucaMaestri
LucaMaestri
AsignedoriginalofthiswrittenstatementrequiredbySection906hasbeenprovidedtoAppleInc.andwillberetainedbyAppleInc.and
furnishedtotheSecuritiesandExchangeCommissionoritsstaffuponrequest.

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TableofContents

FourthQuarter ThirdQuarter SecondQuarter FirstQuarter

September September September September September September

2015 2014 2013 2012 2011

2015 Change 2014 Change 2013

2015 Change 2014 Change 2013

2015 Change 2014 Change 2013

2015 Change 2014 Change 2013

2015 Change 2014 Change 2013

2015 Change 2014 Change 2013

2015 Change 2014 Change 2013

2015 Change 2014 Change 2013

2015 Change 2014 Change 2013

2015 Change 2014 Change 2013

TheyearoveryearincreaseinRestofAsiaPacificnetsalesduring2015primarilyreflectsstronggrowthinnetsalesand unit sales of

2015 2014 2013

2015 Change 2014 Change 2013

2015 Change 2014 Change 2013

2015 2014 2013

2015 2014 2013

TheCompanybelievesitsexistingbalancesofcash,cashequivalentsandmarketablesecuritieswillbesufficienttosatisfy its working

Dividendsand OpenMarket TaxesRelated

PaymentsDuein PaymentsDuein PaymentsDuein PaymentsDuein

2015 2014 2013

Level2Observableinputsotherthanquotedpricesinactivemarketsforidenticalassetsandliabilities, quoted prices for identical or

2015 2014 2013

2015 2014 2013

2015 2014 2013

Areconciliationoftheprovisionforincometaxes,withtheamountcomputedbyapplyingthestatutoryfederalincome tax rate (35% in

2015 2014 2013

2015 2014 2013

NumberofShares AverageRepurchase Amount

ComprehensiveIncomeComponents FinancialStatementLineItem 2015 2014

Cumulative Unrealized Unrealized

Numberof WeightedAverage Aggregate

2015 2014 2013

2015 2014 2013

2015 2014 2013

2015 2014 2013

2015 2014 2013

2015 2014 2013

FourthQuarter ThirdQuarter SecondQuarter FirstQuarter

FourthQuarter ThirdQuarter SecondQuarter FirstQuarter

Name Title Date

/s/TimothyD.Cook ChiefExecutiveOfficerandDirector October28,2015

/s/LucaMaestri SeniorVicePresident,ChiefFinancialOfficer October28,2015

/s/ChrisKondo SeniorDirectorofCorporateAccounting October28,2015

/s/AlGore Director October28,2015

/s/RobertA.Iger Director October28,2015

/s/AndreaJung Director October28,2015

/s/ArthurD.Levinson Director October28,2015

/s/RonaldD.Sugar Director October28,2015

/s/SusanL.Wagner Director October28,2015

3.1 RestatedArticlesofIncorporationoftheRegistranteffectiveasof 8K 3.1 6/6/14

10.7* SummaryDescriptionofAmendment,effectiveasofMay24,2012,tocertainRestrictedStock 10Q 10.8 6/30/12

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