APPLE INC, 10-K filed on 11/5/2018
Annual Report
v3.10.0.1
Document and Entity Information - USD ($)
shares in Thousands, $ in Millions
12 Months Ended
Sep. 29, 2018
Oct. 26, 2018
Mar. 30, 2018
Document And Entity Information [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Sep. 29, 2018    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Trading Symbol AAPL    
Entity Registrant Name APPLE INC    
Entity Central Index Key 0000320193    
Current Fiscal Year End Date --09-29    
Entity Well-known Seasoned Issuer Yes    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Shell Company false    
Entity Common Stock, Shares Outstanding   4,745,398  
Entity Public Float     $ 828,880
v3.10.0.1
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Income Statement [Abstract]      
Net sales $ 265,595 $ 229,234 $ 215,639
Cost of sales 163,756 141,048 131,376
Gross margin 101,839 88,186 84,263
Operating expenses:      
Research and development 14,236 11,581 10,045
Selling, general and administrative 16,705 15,261 14,194
Total operating expenses 30,941 26,842 24,239
Operating income 70,898 61,344 60,024
Other income/(expense), net 2,005 2,745 1,348
Income before provision for income taxes 72,903 64,089 61,372
Provision for income taxes 13,372 15,738 15,685
Net income $ 59,531 $ 48,351 $ 45,687
Earnings per share:      
Basic (in dollars per share) $ 12.01 $ 9.27 $ 8.35
Diluted (in dollars per share) $ 11.91 $ 9.21 $ 8.31
Shares used in computing earnings per share:      
Basic (in shares) 4,955,377 5,217,242 5,470,820
Diluted (in shares) 5,000,109 5,251,692 5,500,281
v3.10.0.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Statement of Comprehensive Income [Abstract]      
Net income $ 59,531 $ 48,351 $ 45,687
Other comprehensive income/(loss):      
Change in foreign currency translation, net of tax effects of $(1), $(77) and $8, respectively (525) 224 75
Change in unrealized gains/losses on derivative instruments:      
Change in fair value of derivatives, net of tax benefit/(expense) of $(149), $(478) and $(7), respectively 523 1,315 7
Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $(104), $475 and $131, respectively 382 (1,477) (741)
Total change in unrealized gains/losses on derivative instruments, net of tax 905 (162) (734)
Change in unrealized gains/losses on marketable securities:      
Change in fair value of marketable securities, net of tax benefit/(expense) of $1,156, $425 and $(863), respectively (3,407) (782) 1,582
Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $21, $35 and $(31), respectively 1 (64) 56
Total change in unrealized gains/losses on marketable securities, net of tax (3,406) (846) 1,638
Total other comprehensive income/(loss) (3,026) (784) 979
Total comprehensive income $ 56,505 $ 47,567 $ 46,666
v3.10.0.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Statement of Comprehensive Income [Abstract]      
Change in foreign currency translation, tax effects $ (1) $ (77) $ 8
Change in fair value of derivatives, tax benefit/(expense) (149) (478) (7)
Adjustment for net (gains)/losses realized and included in net income, tax expense/(benefit) (104) 475 131
Change in fair value of marketable securities, tax benefit/(expense) 1,156 425 (863)
Adjustment for net (gains)/losses realized and included in net income, tax expense/(benefit) $ 21 $ 35 $ (31)
v3.10.0.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Sep. 29, 2018
Sep. 30, 2017
Current assets:    
Cash and cash equivalents $ 25,913 $ 20,289
Marketable securities 40,388 53,892
Accounts receivable, net 23,186 17,874
Inventories 3,956 4,855
Vendor non-trade receivables 25,809 17,799
Other current assets 12,087 13,936
Total current assets 131,339 128,645
Non-current assets:    
Marketable securities 170,799 194,714
Property, plant and equipment, net 41,304 33,783
Other non-current assets 22,283 18,177
Total non-current assets 234,386 246,674
Total assets 365,725 375,319
Current liabilities:    
Accounts payable 55,888 44,242
Other current liabilities 32,687 30,551
Deferred revenue 7,543 7,548
Commercial paper 11,964 11,977
Term debt 8,784 6,496
Total current liabilities 116,866 100,814
Non-current liabilities:    
Deferred revenue 2,797 2,836
Term debt 93,735 97,207
Other non-current liabilities 45,180 40,415
Total non-current liabilities 141,712 140,458
Total liabilities 258,578 241,272
Commitments and contingencies
Shareholders’ equity:    
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,754,986 and 5,126,201 shares issued and outstanding, respectively 40,201 35,867
Retained earnings 70,400 98,330
Accumulated other comprehensive income/(loss) (3,454) (150)
Total shareholders’ equity 107,147 134,047
Total liabilities and shareholders’ equity $ 365,725 $ 375,319
v3.10.0.1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Sep. 29, 2018
Sep. 30, 2017
Statement of Financial Position [Abstract]    
Common stock, par value (in dollars per share) $ 0.00001 $ 0.00001
Common stock, shares authorized (in shares) 12,600,000,000 12,600,000,000
Common stock, shares issued (in shares) 4,754,986,000 5,126,201,000
Common stock, shares outstanding (in shares) 4,754,986,000 5,126,201,000
v3.10.0.1
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($)
shares in Thousands, $ in Millions
Total
Common Stock and Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income/(Loss)
Beginning balances (in shares) at Sep. 26, 2015   5,578,753    
Beginning balances at Sep. 26, 2015 $ 119,355 $ 27,416 $ 92,284 $ (345)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net income 45,687 0 45,687 0
Other comprehensive income/(loss) 979 0 0 979
Dividends and dividend equivalents declared (12,188) $ 0 (12,188) 0
Repurchase of common stock (in shares)   (279,609)    
Repurchase of common stock (29,000) $ 0 (29,000) 0
Share-based compensation 4,262 $ 4,262 0 0
Common stock issued, net of shares withheld for employee taxes (in shares)   37,022    
Common stock issued, net of shares withheld for employee taxes (1,225) $ (806) (419) 0
Tax benefit from equity awards, including transfer pricing adjustments 379 $ 379 0 0
Ending balances (in shares) at Sep. 24, 2016   5,336,166    
Ending balances at Sep. 24, 2016 128,249 $ 31,251 96,364 634
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net income 48,351 0 48,351 0
Other comprehensive income/(loss) (784) 0 0 (784)
Dividends and dividend equivalents declared (12,803) $ 0 (12,803) 0
Repurchase of common stock (in shares)   (246,496)    
Repurchase of common stock (33,001) $ 0 (33,001) 0
Share-based compensation 4,909 $ 4,909 0 0
Common stock issued, net of shares withheld for employee taxes (in shares)   36,531    
Common stock issued, net of shares withheld for employee taxes (1,494) $ (913) (581) 0
Tax benefit from equity awards, including transfer pricing adjustments $ 620 $ 620 0 0
Ending balances (in shares) at Sep. 30, 2017 5,126,201 5,126,201    
Ending balances at Sep. 30, 2017 $ 134,047 $ 35,867 98,330 (150)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Cumulative effect of change in accounting principle 0 0 278 (278)
Net income 59,531 0 59,531 0
Other comprehensive income/(loss) (3,026) 0 0 (3,026)
Dividends and dividend equivalents declared $ (13,735) $ 0 (13,735) 0
Repurchase of common stock (in shares) (405,500) (405,549)    
Repurchase of common stock $ (73,056) $ 0 (73,056) 0
Share-based compensation 5,443 $ 5,443 0 0
Common stock issued, net of shares withheld for employee taxes (in shares)   34,334    
Common stock issued, net of shares withheld for employee taxes $ (2,057) $ (1,109) (948) 0
Ending balances (in shares) at Sep. 29, 2018 4,754,986 4,754,986    
Ending balances at Sep. 29, 2018 $ 107,147 $ 40,201 $ 70,400 $ (3,454)
v3.10.0.1
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Statement of Stockholders' Equity [Abstract]      
Dividends and dividend equivalents declared (in dollars per share or RSU) $ 2.72 $ 2.40 $ 2.18
v3.10.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Statement of Cash Flows [Abstract]      
Cash and cash equivalents, beginning of the year $ 20,289 $ 20,484 $ 21,120
Operating activities:      
Net income 59,531 48,351 45,687
Adjustments to reconcile net income to cash generated by operating activities:      
Depreciation and amortization 10,903 10,157 10,505
Share-based compensation expense 5,340 4,840 4,210
Deferred income tax expense/(benefit) (32,590) 5,966 4,938
Other (444) (166) 486
Changes in operating assets and liabilities:      
Accounts receivable, net (5,322) (2,093) 527
Inventories 828 (2,723) 217
Vendor non-trade receivables (8,010) (4,254) (51)
Other current and non-current assets (423) (5,318) 1,055
Accounts payable 9,175 8,966 2,117
Deferred revenue (44) (626) (1,554)
Other current and non-current liabilities 38,490 1,125 (1,906)
Cash generated by operating activities 77,434 64,225 66,231
Investing activities:      
Purchases of marketable securities (71,356) (159,486) (142,428)
Proceeds from maturities of marketable securities 55,881 31,775 21,258
Proceeds from sales of marketable securities 47,838 94,564 90,536
Payments for acquisition of property, plant and equipment (13,313) (12,451) (12,734)
Payments made in connection with business acquisitions, net (721) (329) (297)
Purchases of non-marketable securities (1,871) (521) (1,388)
Proceeds from non-marketable securities 353 126 0
Other (745) (124) (924)
Cash generated by/(used in) investing activities 16,066 (46,446) (45,977)
Financing activities:      
Proceeds from issuance of common stock 669 555 495
Payments for taxes related to net share settlement of equity awards (2,527) (1,874) (1,570)
Payments for dividends and dividend equivalents 13,712 12,769 12,150
Repurchases of common stock (72,738) (32,900) (29,722)
Proceeds from issuance of term debt, net 6,969 28,662 24,954
Repayments of term debt (6,500) (3,500) (2,500)
Change in commercial paper, net (37) 3,852 (397)
Cash used in financing activities (87,876) (17,974) (20,890)
Increase/(Decrease) in cash and cash equivalents 5,624 (195) (636)
Cash and cash equivalents, end of the year 25,913 20,289 20,484
Supplemental cash flow disclosure:      
Cash paid for income taxes, net 10,417 11,591 10,444
Cash paid for interest $ 3,022 $ 2,092 $ 1,316
v3.10.0.1
Summary of Significant Accounting Policies
12 Months Ended
Sep. 29, 2018
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Apple Inc. and its wholly-owned subsidiaries (collectively “Apple” or the “Company”) designs, manufactures and markets mobile communication and media devices and personal computers, and sells a variety of related software, services, accessories and third-party digital content and applications. The Company’s products and services include iPhone, iPad, Mac, Apple Watch, AirPods, Apple TV, HomePod, a portfolio of consumer and professional software applications, iOS, macOS, watchOS and tvOS operating systems, iCloud, Apple Pay and a variety of other accessory, service and support offerings. The Company sells and delivers digital content and applications through the iTunes Store, App Store, Mac App Store, TV App Store, Book Store and Apple Music (collectively “Digital Content and Services”). The Company sells its products worldwide through its retail stores, online stores and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers and resellers. In addition, the Company sells a variety of third-party Apple-compatible products, including application software and various accessories, through its retail and online stores. The Company sells to consumers, small and mid-sized businesses and education, enterprise and government customers.
Basis of Presentation and Preparation
The accompanying consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation.
The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. The Company’s fiscal years 2018 and 2016 spanned 52 weeks each, whereas fiscal year 2017 included 53 weeks. A 14th week was included in the first fiscal quarter of 2017, as is done every five or six years, to realign the Company’s fiscal quarters with calendar quarters. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years.
Revenue Recognition
Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications, accessories, and service and support contracts. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. Product is considered delivered to the customer once it has been shipped and title, risk of loss and rewards of ownership have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit. For payment terms in excess of the Company’s standard payment terms, revenue is recognized as payments become due unless the Company has positive evidence that the sales price is fixed or determinable, such as a successful history of collection, 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 third-party digital content sold on the iTunes Store in accordance with general revenue recognition accounting guidance. The Company recognizes revenue in accordance with industry-specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software products, (ii) sales of software upgrades and (iii) sales of software bundled with hardware not essential to the functionality of the hardware.
For the sale of most third-party products, the Company recognizes revenue based on the gross amount billed to customers because the Company establishes its own pricing for such products, retains related inventory risk for physical products, is the primary obligor to the customer and assumes the credit risk for amounts billed to its customers. For third-party applications sold through the App Store and Mac App Store and certain digital content sold through the iTunes Store, the Company does not determine the selling price of the products and is not the primary obligor to the customer. Therefore, the Company accounts for such sales on a net basis by recognizing in net sales only the commission it retains from each sale. The portion of the gross amount billed to customers that is remitted by the Company to third-party app developers and certain digital content owners is not reflected in the Company’s Consolidated Statements of Operations.
The Company records deferred revenue when it receives payments in advance of the delivery of products or the performance of services. This includes amounts that have been deferred for unspecified and specified software upgrade rights and non-software services that are attached to hardware and software products. The Company sells gift cards redeemable at its retail and online stores, and also sells gift cards redeemable on iTunes Store, App Store, Mac App Store, TV App Store and Book Store for the purchase of digital content and software. The Company records deferred revenue upon the sale of the card, which is relieved upon redemption of the card by the customer. 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, web-based support resources and diagnostic tools offered under the Company’s standard limited warranty.
The Company records reductions to revenue for estimated commitments related to price protection and other customer incentive programs. For transactions involving price protection, the Company recognizes revenue net of the estimated amount to be refunded. For the Company’s other customer incentive programs, the estimated cost of these programs is recognized at the later of the date at which the Company has sold the product or the date at which the program is offered. The Company also records reductions to revenue for expected future product returns based on the Company’s historical experience. Revenue is recorded net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority.
Revenue Recognition for Arrangements with Multiple Deliverables
For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality, undelivered software elements that relate to the hardware product’s essential software, and undelivered non-software services, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of selling price (“ESP”). 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 Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis. For multi-element arrangements accounted for in accordance with industry-specific software accounting guidance, the Company allocates revenue to all deliverables based on the VSOE of each element, and if VSOE does not exist revenue is recognized when elements lacking VSOE are delivered.
For sales of iPhone, iPad, Mac and certain other products, the Company has indicated it may from time to time provide future unspecified software upgrades to the device’s essential software and/or non-software services free of charge. The Company has identified up to three deliverables regularly included in arrangements involving the sale of these devices. The first deliverable, which represents the substantial portion of the allocated sales price, is the hardware and software essential 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 when-and-if-available basis, future unspecified software upgrades relating to the product’s essential software. The third deliverable is the non-software services to be provided to qualifying devices. The Company allocates revenue between these deliverables using the relative selling price method. Because the Company has neither VSOE nor TPE for these deliverables, the allocation of revenue is based on the Company’s ESPs. Revenue allocated to the delivered hardware and the related essential software is recognized at the time of sale, provided the other conditions for revenue recognition have been met. Revenue allocated to the embedded unspecified software upgrade rights and the non-software services is deferred and recognized on a straight-line basis over the estimated period the software upgrades and non-software services are expected to be provided. Cost of sales related to delivered hardware and related essential software, including estimated warranty costs, are recognized at the time of sale. Costs incurred to provide non-software services are recognized as cost of sales as incurred, and engineering and sales and marketing costs are recognized as operating expenses as incurred.
The Company’s process for determining its ESP for deliverables without VSOE or TPE considers multiple factors that may vary depending upon the unique facts and circumstances related to each deliverable including, where applicable, prices charged by the Company and market trends in the pricing for similar offerings, product-specific business objectives, estimated cost to provide the non-software services and the relative ESP of the upgrade rights and non-software services as compared to the total selling price of the product.
Shipping Costs
Amounts billed to customers related to shipping and handling are classified as revenue, and the Company’s shipping and handling costs are classified as cost of sales.
Advertising Costs
Advertising costs are expensed as incurred and included in selling, general and administrative expenses.
Share-Based Compensation
The Company generally measures share-based compensation based on the closing price of the Company’s common stock on the date of grant, and recognizes expense on a straight-line basis for its estimate of equity awards that will ultimately vest. Further information regarding share-based compensation can be found in Note 8, “Benefit Plans.”
During the first quarter of 2018, the Company adopted the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which modified certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification in the statement of cash flows. Historically, excess tax benefits or deficiencies from the Company’s equity awards were recorded as additional paid-in capital in its Consolidated Balance Sheets and were classified as a financing activity in its Consolidated Statements of Cash Flows. Beginning in 2018, the Company records any excess tax benefits or deficiencies from its equity awards as part of the provision for income taxes in its Consolidated Statements of Operations in the reporting periods in which equity vesting occurs. The Company elected to apply the cash flow classification requirements related to excess tax benefits retrospectively to all periods presented, which resulted in an increase to cash generated by operating activities in the Consolidated Statements of Cash Flows of $627 million and $407 million for 2017 and 2016, respectively.
Earnings Per Share
The following table shows the computation of basic and diluted earnings per share for 2018, 2017 and 2016 (net income in millions and shares in thousands):
 
2018
 
2017
 
2016
Numerator:
 
 
 
 
 
Net income
$
59,531

 
$
48,351

 
$
45,687

 
 
 
 
 
 
Denominator:
 
 
 
 
 
Weighted-average basic shares outstanding
4,955,377

 
5,217,242

 
5,470,820

Effect of dilutive securities
44,732

 
34,450

 
29,461

Weighted-average diluted shares
5,000,109

 
5,251,692


5,500,281

 
 
 
 
 
 
Basic earnings per share
$
12.01

 
$
9.27

 
$
8.35

Diluted earnings per share
$
11.91

 
$
9.21

 
$
8.31


Cash Equivalents and Marketable Securities
All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. The Company’s marketable debt and equity securities have been classified and accounted for as available-for-sale. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable equity securities, including mutual funds, are classified as short-term based on the nature of the securities and their availability for use in current operations. The cost of securities sold is determined using the specific identification method.
Inventories
Inventories are computed using the first-in, first-out method.
Property, Plant and Equipment
Depreciation on property, plant and equipment is recognized on a straight-line basis over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building; between one and five years for machinery and equipment, including product tooling and manufacturing process equipment; and the shorter of lease term or useful life for leasehold improvements. Capitalized costs related to internal-use software are amortized on a straight-line basis over the estimated useful lives of the assets, which range from three to five years. Depreciation and amortization expense on property and equipment was $9.3 billion, $8.2 billion and $8.3 billion during 2018, 2017 and 2016, respectively.
During 2018, non-cash investing activities involving property, plant and equipment resulted in a net increase to accounts payable and other current liabilities of $3.4 billion.
Fair Value Measurements
The Company’s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities are derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of the Company’s debt instruments and all other financial instruments, which generally have counterparties with high credit ratings, are based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data.
v3.10.0.1
Financial Instruments
12 Months Ended
Sep. 29, 2018
Investments, All Other Investments [Abstract]  
Financial Instruments
Financial Instruments
Cash, Cash Equivalents and Marketable Securities
The following tables show the Company’s cash and available-for-sale securities by significant investment category as of September 29, 2018 and September 30, 2017 (in millions):
 
2018
 
Adjusted
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
Cash and
Cash
Equivalents
 
Short-Term
Marketable
Securities
 
Long-Term
Marketable
Securities
Cash
$
11,575

 
$

 
$

 
$
11,575

 
$
11,575

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 1 (1):
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
8,083

 

 

 
8,083

 
8,083

 

 

Mutual funds
799

 

 
(116
)
 
683

 

 
683

 

Subtotal
8,882

 

 
(116
)
 
8,766

 
8,083

 
683

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 2 (2):
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
47,296

 

 
(1,202
)
 
46,094

 
1,613

 
7,606

 
36,875

U.S. agency securities
4,127

 

 
(48
)
 
4,079

 
1,732

 
360

 
1,987

Non-U.S. government securities
21,601

 
49

 
(250
)
 
21,400

 

 
3,355

 
18,045

Certificates of deposit and time deposits
3,074

 

 

 
3,074

 
1,247

 
1,330

 
497

Commercial paper
2,573

 

 

 
2,573

 
1,663

 
910

 

Corporate securities
123,001

 
152

 
(2,038
)
 
121,115

 

 
25,162

 
95,953

Municipal securities
946

 

 
(12
)
 
934

 

 
178

 
756

Mortgage- and asset-backed securities
18,105

 
8

 
(623
)
 
17,490

 

 
804

 
16,686

Subtotal
220,723

 
209

 
(4,173
)
 
216,759

 
6,255

 
39,705

 
170,799

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total (3)
$
241,180

 
$
209

 
$
(4,289
)
 
$
237,100

 
$
25,913

 
$
40,388

 
$
170,799

 
2017
 
Adjusted
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
Cash and
Cash
Equivalents
 
Short-Term
Marketable
Securities
 
Long-Term
Marketable
Securities
Cash
$
7,982

 
$

 
$

 
$
7,982

 
$
7,982

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 1 (1):
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
6,534

 

 

 
6,534

 
6,534

 

 

Mutual funds
799

 

 
(88
)
 
711

 

 
711

 

Subtotal
7,333

 

 
(88
)
 
7,245

 
6,534

 
711

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 2 (2):
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
55,254

 
58

 
(230
)
 
55,082

 
865

 
17,228

 
36,989

U.S. agency securities
5,162

 
2

 
(9
)
 
5,155

 
1,439

 
2,057

 
1,659

Non-U.S. government securities
7,827

 
210

 
(37
)
 
8,000

 
9

 
123

 
7,868

Certificates of deposit and time deposits
5,832

 

 

 
5,832

 
1,142

 
3,918

 
772

Commercial paper
3,640

 

 

 
3,640

 
2,146

 
1,494

 

Corporate securities
152,724

 
969

 
(242
)
 
153,451

 
172

 
27,591

 
125,688

Municipal securities
961

 
4

 
(1
)
 
964

 

 
114

 
850

Mortgage- and asset-backed securities
21,684

 
35

 
(175
)
 
21,544

 

 
656

 
20,888

Subtotal
253,084

 
1,278

 
(694
)
 
253,668

 
5,773

 
53,181

 
194,714

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
$
268,399

 
$
1,278

 
$
(782
)
 
$
268,895

 
$
20,289

 
$
53,892

 
$
194,714


(1)
Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities.
(2)
Level 2 fair value estimates are based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
(3)
As of September 29, 2018, total cash, cash equivalents and marketable securities included $20.3 billion that was restricted from general use, related to the State Aid Decision (refer to Note 4, “Income Taxes”) and other agreements.
The Company may sell certain of its marketable securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation. The maturities of the Company’s long-term marketable securities generally range from one to five years.
The following tables show information about the Company’s marketable securities that had been in a continuous unrealized loss position for less than 12 months and for 12 months or greater as of September 29, 2018 and September 30, 2017 (in millions):
 
2018
 
Continuous Unrealized Losses
 
Less than 12 Months
 
12 Months or Greater
 
Total
Fair value of marketable securities
$
126,238

 
$
60,599

 
$
186,837

Unrealized losses
$
(2,400
)
 
$
(1,889
)
 
$
(4,289
)
 
2017
 
Continuous Unrealized Losses
 
Less than 12 Months
 
12 Months or Greater
 
Total
Fair value of marketable securities
$
101,986

 
$
8,290

 
$
110,276

Unrealized losses
$
(596
)
 
$
(186
)
 
$
(782
)

The Company typically invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer. Fair values were determined for each individual security in the investment portfolio. When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and the Company’s intent to sell, or whether it is more likely than not it will be required to sell the investment before recovery of the investment’s cost basis. As of September 29, 2018, the Company does not consider any of its investments to be other-than-temporarily impaired.
Derivative Financial Instruments
The Company may use derivatives to partially offset its business exposure to foreign currency and interest rate risk on expected future cash flows, net investments in certain foreign subsidiaries, and certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates.
To protect gross margins from fluctuations in foreign currency exchange rates, certain of the Company’s subsidiaries whose functional currency is the U.S. dollar may hedge a portion of forecasted foreign currency revenue, and subsidiaries whose functional currency is not the U.S. dollar may hedge a portion of forecasted inventory purchases not denominated in the subsidiaries’ functional currencies. The Company may enter into forward contracts, option contracts or other instruments to manage this risk and may designate these instruments as cash flow hedges. The Company generally hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months.
To protect the net investment in a foreign operation from fluctuations in foreign currency exchange rates, the Company may enter into foreign currency forward and option contracts to offset a portion of the changes in the carrying amounts of these investments due to fluctuations in foreign currency exchange rates. In addition, the Company may use non-derivative financial instruments, such as its foreign currency–denominated debt, as hedges of its net investments in certain foreign subsidiaries. In both of these cases, the Company designates these instruments as net investment hedges.
To protect the Company’s foreign currency–denominated term debt or marketable securities from fluctuations in foreign currency exchange rates, the Company may enter into forward contracts, cross-currency swaps or other instruments. These instruments may offset a portion of the foreign currency remeasurement gains or losses, or changes in fair value. The Company may designate these instruments as either cash flow or fair value hedges. As of September 29, 2018, the Company’s hedged term debt– and marketable securities–related foreign currency transactions are expected to be recognized within 24 years.
The Company may also enter into non-designated foreign currency contracts to offset a portion of the foreign currency exchange gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies.
To protect the Company’s foreign currency–denominated term debt or marketable securities from fluctuations in interest rates, the Company may enter into interest rate swaps, options or other instruments. These instruments may offset a portion of the changes in interest income or expense, or changes in fair value. The Company designates these instruments as either cash flow or fair value hedges. As of September 29, 2018, the Company’s hedged interest rate transactions are expected to be recognized within 9 years.
Cash Flow Hedges
The effective portions of cash flow hedges are recorded in accumulated other comprehensive income/(loss) (“AOCI”) until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of foreign currency revenue are recognized as a component of net sales in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of inventory purchases are recognized as a component of cost of sales in the same period as the related costs are recognized. Deferred gains and losses associated with cash flow hedges of interest income or expense are recognized in other income/(expense), net in the same period as the related income or expense is recognized. For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness. The ineffective portions and amounts excluded from the effectiveness testing of cash flow hedges are recognized in other income/(expense), net.
Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified into other income/(expense), net in the period of de-designation. Any subsequent changes in fair value of such derivative instruments are reflected in other income/(expense), net unless they are re-designated as hedges of other transactions.
Net Investment Hedges
The effective portions of net investment hedges are recorded in other comprehensive income/(loss) (“OCI”) as a part of the cumulative translation adjustment. The ineffective portions and amounts excluded from the effectiveness testing of net investment hedges are recognized in other income/(expense), net. For forward exchange contracts designated as net investment hedges, the Company excludes changes in fair value relating to changes in the forward carry component from its definition of effectiveness. Accordingly, any gains or losses related to this forward carry component are recognized in earnings in the current period.
Fair Value Hedges
Gains and losses related to changes in fair value hedges are recognized in earnings along with a corresponding loss or gain related to the change in value of the underlying hedged item in the same line in the Consolidated Statements of Operations.
Non-Designated Derivatives
Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates. As a result, during 2018, the Company recognized a gain of $20 million in net sales, a gain of $85 million in cost of sales and a loss of $198 million in other income/(expense), net. During 2017, the Company recognized a gain of $20 million in net sales, a loss of $40 million in cost of sales and a gain of $606 million in other income/(expense), net.
The Company records all derivatives in the Consolidated Balance Sheets at fair value. The Company’s accounting treatment for these derivative instruments is based on its hedge designation. The following tables show the Company’s derivative instruments at gross fair value as of September 29, 2018 and September 30, 2017 (in millions):
 
2018
 
Fair Value of
Derivatives Designated
as Hedge Instruments
 
Fair Value of
Derivatives Not Designated
as Hedge Instruments
 
Total
Fair Value
Derivative assets (1):
 
 
 
 
 
Foreign exchange contracts
$
1,015

 
$
259

 
$
1,274

 
 
 
 
 
 
Derivative liabilities (2):
 
 
 
 
 
Foreign exchange contracts
$
543

 
$
137

 
$
680

Interest rate contracts
$
1,456

 
$

 
$
1,456

 
2017
 
Fair Value of
Derivatives Designated
as Hedge Instruments
 
Fair Value of
Derivatives Not Designated
as Hedge Instruments
 
Total
Fair Value
Derivative assets (1):
 
 
 
 
 
Foreign exchange contracts
$
1,049

 
$
363

 
$
1,412

Interest rate contracts
$
218

 
$

 
$
218

 
 
 
 
 
 
Derivative liabilities (2):
 
 
 
 
 
Foreign exchange contracts
$
759

 
$
501

 
$
1,260

Interest rate contracts
$
303

 
$

 
$
303

 
(1)
The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets and other non-current assets in the Consolidated Balance Sheets.
(2)
The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as other current liabilities and other non-current liabilities in the Consolidated Balance Sheets.
The Company classifies cash flows related to derivative financial instruments as operating activities in its Consolidated Statements of Cash Flows.
The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow, net investment and fair value hedges in OCI and the Consolidated Statements of Operations for 2018, 2017 and 2016 (in millions):
 
2018
 
2017
 
2016
Gains/(Losses) recognized in OCI – effective portion:
 
 
 
 
 
Cash flow hedges:
 
 
 
 
 
Foreign exchange contracts
$
682

 
$
1,797

 
$
109

Interest rate contracts
1

 
7

 
(57
)
Total
$
683


$
1,804


$
52

 
 
 
 
 
 
Net investment hedges:
 
 
 
 
 
Foreign currency debt
$
4

 
$
67

 
$
(258
)
 
 
 
 
 
 
Gains/(Losses) reclassified from AOCI into net income – effective portion:
 
 
 
 
 
Cash flow hedges:
 
 
 
 
 
Foreign exchange contracts
$
(482
)
 
$
1,958

 
$
885

Interest rate contracts
1

 
(2
)
 
(11
)
Total
$
(481
)

$
1,956


$
874

 
 
 
 
 
 
Gains/(Losses) on derivative instruments:
 
 
 
 
 
Fair value hedges:
 
 
 
 
 
Foreign exchange contracts
$
(168
)
 
$

 
$

Interest rate contracts
(1,363
)
 
(810
)
 
341

Total
$
(1,531
)
 
$
(810
)
 
$
341

 
 
 
 
 
 
Gains/(Losses) related to hedged items:
 
 
 
 
 
Fair value hedges:
 
 
 
 
 
Marketable securities
$
167

 
$

 
$

Fixed-rate debt
1,363

 
810

 
(341
)
Total
$
1,530

 
$
810

 
$
(341
)

The following table shows the notional amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of September 29, 2018 and September 30, 2017 (in millions):
 
2018
 
2017
 
Notional
Amount
 
Credit Risk
Amount
 
Notional
Amount
 
Credit Risk
Amount
Instruments designated as accounting hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
$
65,368

 
$
1,015

 
$
56,156

 
$
1,049

Interest rate contracts
$
33,250

 
$

 
$
33,000

 
$
218

 
 
 
 
 
 
 
 
Instruments not designated as accounting hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
$
63,062

 
$
259

 
$
69,774

 
$
363


The notional amounts for outstanding derivative instruments provide one measure of the transaction volume outstanding and do not represent the amount of the Company’s exposure to credit or market loss. The credit risk amounts represent the Company’s gross exposure to potential accounting loss on derivative instruments that are outstanding or unsettled if all counterparties failed to perform according to the terms of the contract, based on then-current currency or interest rates at each respective date. The Company’s exposure to credit loss and market risk will vary over time as currency and interest rates change. Although the table above reflects the notional and credit risk amounts of the Company’s derivative instruments, it does not reflect the gains or losses associated with the exposures and transactions that the instruments are intended to hedge. The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments.
The Company generally enters into master netting arrangements, which are designed to reduce credit risk by permitting net settlement of transactions with the same counterparty. To further limit credit risk, the Company generally enters into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds. The Company presents its derivative assets and derivative liabilities at their gross fair values in its Consolidated Balance Sheets. As of September 29, 2018, the net cash collateral posted by the Company related to derivative instruments under its collateral security arrangements was $1.0 billion, which was recorded as other current assets in the Condensed Consolidated Balance Sheet. As of September 30, 2017, the net cash collateral received by the Company related to derivative instruments under its collateral security arrangements was $35 million, which was recorded as other current liabilities in the Consolidated Balance Sheet.
Under master netting arrangements with the respective counterparties to the Company’s derivative contracts, the Company is allowed to net settle transactions with a single net amount payable by one party to the other. As of September 29, 2018 and September 30, 2017, the potential effects of these rights of set-off associated with the Company’s derivative contracts, including the effects of collateral, would be a reduction to both derivative assets and derivative liabilities of $2.1 billion and $1.4 billion, respectively, resulting in net derivative assets of $138 million and $32 million, respectively.
Accounts Receivable
Trade Receivables
The Company has considerable trade receivables outstanding with its third-party cellular network carriers, wholesalers, retailers, resellers, small and mid-sized businesses and education, enterprise and government customers. The Company generally does not require collateral from its customers; however, the Company will require collateral or third-party credit support in certain instances to limit credit risk. In addition, when possible, the Company attempts to limit credit risk on trade receivables with credit insurance for certain customers or by requiring third-party financing, loans or leases to support credit exposure. These credit-financing arrangements are directly between the third-party financing company and the end customer. As such, the Company generally does not assume any recourse or credit risk sharing related to any of these arrangements.
As of September 29, 2018, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 10%. As of September 30, 2017, the Company had two customers that individually represented 10% or more of total trade receivables, each of which accounted for 10%. The Company’s cellular network carriers accounted for 59% of total trade receivables as of both September 29, 2018 and September 30, 2017.
Vendor Non-Trade Receivables
The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these vendors who manufacture sub-assemblies or assemble final products for the Company. The Company purchases these components directly from suppliers. As of September 29, 2018, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 62% and 12%. As of September 30, 2017, the Company had three vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 42%, 19% and 10%.
v3.10.0.1
Consolidated Financial Statement Details
12 Months Ended
Sep. 29, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Consolidated Financial Statement Details
Consolidated Financial Statement Details
The following tables show the Company’s consolidated financial statement details as of September 29, 2018 and September 30, 2017 (in millions):
Property, Plant and Equipment, Net
 
2018
 
2017
Land and buildings
$
16,216

 
$
13,587

Machinery, equipment and internal-use software
65,982

 
54,210

Leasehold improvements
8,205

 
7,279

Gross property, plant and equipment
90,403

 
75,076

Accumulated depreciation and amortization
(49,099
)
 
(41,293
)
Total property, plant and equipment, net
$
41,304

 
$
33,783


Other Non-Current Liabilities
 
2018
 
2017
Long-term taxes payable
$
33,589

 
$
257

Deferred tax liabilities
426

 
31,504

Other non-current liabilities
11,165

 
8,654

Total other non-current liabilities
$
45,180

 
$
40,415


Other Income/(Expense), Net
The following table shows the detail of other income/(expense), net for 2018, 2017 and 2016 (in millions):
 
2018
 
2017
 
2016
Interest and dividend income
$
5,686

 
$
5,201

 
$
3,999

Interest expense
(3,240
)
 
(2,323
)
 
(1,456
)
Other expense, net
(441
)
 
(133
)
 
(1,195
)
Total other income/(expense), net
$
2,005

 
$
2,745

 
$
1,348

v3.10.0.1
Income Taxes
12 Months Ended
Sep. 29, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
U.S. Tax Cuts and Jobs Act
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which significantly changed U.S. tax law. The Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on previously deferred foreign income. The Act also created a new minimum tax on certain future foreign earnings. The impact of the Act increased the Company’s provision for income taxes by $1.5 billion during 2018. This increase was composed of $2.0 billion related to the remeasurement of net deferred tax assets and liabilities and $1.2 billion associated with the deemed repatriation tax, partially offset by a $1.7 billion impact the deemed repatriation tax had on the Company’s unrecognized tax benefits.
Deferred Tax Balances
As a result of the Act, the Company remeasured certain deferred tax assets and liabilities based on the revised rates at which they are expected to reverse, including items for which the related income tax effects were originally recognized in OCI. In addition, the Company elected to record certain deferred tax assets and liabilities related to the new minimum tax on certain future foreign earnings. Of the $2.0 billion recognized related to the remeasurement of net deferred tax assets and liabilities, $1.2 billion is a provisional estimate that incorporates assumptions based upon the most recent interpretations of the Act and may change as the Company continues to analyze the impact of additional implementation guidance. The Company’s provisional estimates are in accordance with the U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 118.
Deemed Repatriation Tax
As of September 30, 2017, the Company had a U.S. deferred tax liability of $36.4 billion for deferred foreign income. During 2018, the Company replaced $36.1 billion of its U.S. deferred tax liability with a deemed repatriation tax payable of $37.3 billion, which was based on the Company’s cumulative post-1986 deferred foreign income. The deemed repatriation tax payable is a provisional estimate that may change as the Company continues to analyze the impact of additional implementation guidance. The Company plans to pay the tax in installments in accordance with the Act.
Adoption of ASU No. 2018-02
During the second quarter of 2018, the FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). ASU 2018-02 allows an entity to elect to reclassify the income tax effects of the Act on items within AOCI to retained earnings. The Company elected to apply the provision of ASU 2018-02 in 2018 with a reclassification of net tax benefits related to cumulative foreign currency translation and unrealized gains/losses on derivative instruments and marketable securities, resulting in a $278 million decrease in AOCI and a corresponding increase in retained earnings in the Consolidated Balance Sheet and Consolidated Statement of Shareholders’ Equity.
Provision for Income Taxes and Effective Tax Rate
The provision for income taxes for 2018, 2017 and 2016, consisted of the following (in millions):
 
2018
 
2017
 
2016
Federal:
 
 
 
 
 
Current
$
41,425

 
$
7,842

 
$
7,652

Deferred
(33,819
)
 
5,980

 
5,043

Total
7,606


13,822


12,695

State:
 
 
 
 
 
Current
551

 
259

 
990

Deferred
48

 
2

 
(138
)
Total
599


261


852

Foreign:
 
 
 
 
 
Current
3,986

 
1,671

 
2,105

Deferred
1,181

 
(16
)
 
33

Total
5,167


1,655


2,138

Provision for income taxes
$
13,372


$
15,738


$
15,685


The foreign provision for income taxes is based on foreign pre-tax earnings of $48.0 billion, $44.7 billion and $41.1 billion in 2018, 2017 and 2016, respectively.
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate (24.5% in 2018; 35% in 2017 and 2016) to income before provision for income taxes for 2018, 2017 and 2016, is as follows (dollars in millions):
 
2018
 
2017
 
2016
Computed expected tax
$
17,890

 
$
22,431

 
$
21,480

State taxes, net of federal effect
271

 
185

 
553

Impacts of the Act
1,515

 

 

Earnings of foreign subsidiaries
(5,606
)
 
(6,135
)
 
(5,582
)
Domestic production activities deduction
(195
)
 
(209
)
 
(382
)
Research and development credit, net
(560
)
 
(678
)
 
(371
)
Other
57

 
144

 
(13
)
Provision for income taxes
$
13,372


$
15,738


$
15,685

Effective tax rate
18.3
%
 
24.6
%
 
25.6
%

The Company’s income taxes payable have been reduced by the tax benefits from employee stock plan awards. For restricted stock units (“RSUs”), the Company receives an income tax benefit upon the award’s vesting equal to the tax effect of the underlying stock’s fair market value. Prior to adopting ASU 2016-09 in the first quarter of 2018, the Company reflected net excess tax benefits from equity awards as increases to additional paid-in capital, which amounted to $620 million and $379 million in 2017 and 2016, respectively. Refer to Note 1, “Summary of Significant Accounting Policies” for more information.
Deferred Tax Assets and Liabilities
As of September 29, 2018 and September 30, 2017, the significant components of the Company’s deferred tax assets and liabilities were (in millions):
 
2018
 
2017
Deferred tax assets:
 
 
 
Accrued liabilities and other reserves
$
3,151

 
$
4,019

Basis of capital assets
137

 
1,230

Deferred revenue
1,141

 
1,521

Deferred cost sharing

 
667

Share-based compensation
513

 
703

Unrealized losses
871

 

Other
797

 
834

Total deferred tax assets
6,610

 
8,974

Deferred tax liabilities:
 
 
 
Earnings of foreign subsidiaries
275

 
36,355

Other
501

 
207

Total deferred tax liabilities
776

 
36,562

Net deferred tax assets/(liabilities)
$
5,834


$
(27,588
)

Deferred tax assets and liabilities reflect the effects of tax losses, credits and the future income tax effects of temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Uncertain Tax Positions
As of September 29, 2018, the total amount of gross unrecognized tax benefits was $9.7 billion, of which $7.4 billion, if recognized, would impact the Company’s effective tax rate. As of September 30, 2017, the total amount of gross unrecognized tax benefits was $8.4 billion, of which $2.5 billion, if recognized, would have impacted the Company’s effective tax rate.
The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2018, 2017 and 2016, is as follows (in millions):
 
2018
 
2017
 
2016
Beginning balances
$
8,407

 
$
7,724

 
$
6,900

Increases related to tax positions taken during a prior year
2,431

 
333

 
1,121

Decreases related to tax positions taken during a prior year
(2,212
)
 
(952
)
 
(257
)
Increases related to tax positions taken during the current year
1,824

 
1,880

 
1,578

Decreases related to settlements with taxing authorities
(756
)
 
(539
)
 
(1,618
)
Decreases related to expiration of statute of limitations

 
(39
)
 

Ending balances
$
9,694

 
$
8,407

 
$
7,724


The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. As of September 29, 2018 and September 30, 2017, the total amount of gross interest and penalties accrued was $1.4 billion and $1.2 billion, respectively. Both the unrecognized tax benefits and the associated interest and penalties that are not expected to result in payment or receipt of cash within one year are classified as other non-current liabilities in the Consolidated Balance Sheets. In connection with tax matters, the Company recognized interest and penalty expense in 2018, 2017 and 2016 of $236 million, $165 million and $295 million, respectively.
The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. The U.S. Internal Revenue Service (the “IRS”) concluded its review of the years 2013 through 2015 in 2018, and all years prior to 2016 are closed. Tax years subsequent to 2006 in certain major U.S. states and subsequent to 2007 in certain major foreign jurisdictions remain open, and could be subject to examination by the taxing authorities. The Company believes that an adequate provision has 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 Company’s tax audits are resolved in a manner inconsistent with its expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Although timing of resolution and/or closure of audits is not certain, the Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease (either by payment, release or a combination of both) in the next 12 months by as much as $800 million.
European Commission State Aid Decision
On August 30, 2016, the European Commission announced its decision that Ireland granted state aid to the Company by providing tax opinions in 1991 and 2007 concerning the tax allocation of profits of the Irish branches of two subsidiaries of the Company (the “State Aid Decision”). The State Aid Decision ordered Ireland to calculate and recover additional taxes from the Company for the period June 2003 through December 2014. The recovery amount was calculated to be €13.1 billion, plus interest of €1.2 billion. Irish legislative changes, effective as of January 2015, eliminated the application of the tax opinions from that date forward. The Company believes the State Aid Decision to be without merit and appealed to the General Court of the Court of Justice of the European Union. Ireland has also appealed the State Aid Decision. The Company believes that any incremental Irish corporate income taxes potentially due related to the State Aid Decision would be creditable against U.S. taxes, subject to any foreign tax credit limitations in the Act. As of September 29, 2018, the entire recovery amount plus interest was funded into escrow, where it will remain restricted from general use pending conclusion of all appeals. Refer to Note 2, “Financial Instruments” for more information.
v3.10.0.1
Debt
12 Months Ended
Sep. 29, 2018
Debt Disclosure [Abstract]  
Debt
Debt
Commercial Paper
The Company issues unsecured short-term promissory notes (“Commercial Paper”) pursuant to a commercial paper program. The Company uses net proceeds from the commercial paper program for general corporate purposes, including dividends and share repurchases. As of both September 29, 2018 and September 30, 2017, the Company had $12.0 billion of Commercial Paper outstanding with maturities generally less than nine months. The weighted-average interest rate of the Company’s Commercial Paper was 2.18% as of September 29, 2018 and 1.20% as of September 30, 2017. The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for 2018, 2017 and 2016 (in millions):
 
2018
 
2017
 
2016
Maturities 90 days or less:
 
 
 
 
 
Proceeds from/(Repayments of) commercial paper, net
$
1,044

 
$
(1,782
)
 
$
(869
)
 
 
 
 
 
 
Maturities greater than 90 days:
 
 
 
 
 
Proceeds from commercial paper
14,555

 
17,932

 
3,632

Repayments of commercial paper
(15,636
)
 
(12,298
)
 
(3,160
)
Proceeds from/(Repayments of) commercial paper, net
(1,081
)

5,634

 
472

 
 
 
 
 
 
Total change in commercial paper, net
$
(37
)

$
3,852

 
$
(397
)

Term Debt
As of September 29, 2018, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $104.2 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, quarterly for the U.S. dollar–denominated and Australian dollar–denominated floating-rate notes, semi-annually for the U.S. dollar–denominated, Australian dollar–denominated, British pound–denominated, Japanese yen–denominated and Canadian dollar–denominated fixed-rate notes and annually for the euro-denominated and Swiss franc–denominated fixed-rate notes. The following table provides a summary of the Company’s term debt as of September 29, 2018 and September 30, 2017:
 
Maturities
(calendar year)
 
2018
 
2017
 
Amount
(in millions)
 
Effective
Interest Rate
 
Amount
(in millions)
 
Effective
Interest Rate
2013 debt issuance of $17.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
 
 
 
$

 
 
 
 
%
 
$
2,000

 
 
 
 
1.10
%
Fixed-rate 2.400% – 3.850% notes
2023
2043
 
8,500

 
 
2.44%
3.91
%
 
12,500

 
 
1.08%
3.91
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014 debt issuance of $12.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
 
 
2019
 
1,000

 
 
 
 
2.64
%
 
1,000

 
 
 
 
1.61
%
Fixed-rate 2.100% – 4.450% notes
2019
2044
 
8,500

 
 
2.64%
4.48
%
 
8,500

 
 
1.61%
4.48
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 debt issuances of $27.3 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
2019
2020
 
1,507

 
 
1.87%
2.64
%
 
1,549

 
 
1.56%
1.87
%
Fixed-rate 0.350% – 4.375% notes
2019
2045
 
24,410

 
 
0.28%
4.51
%
 
24,522

 
 
0.28%
4.51
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016 debt issuances of $24.9 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
2019
2021
 
1,350

 
 
2.48%
3.44
%
 
1,350

 
 
1.45%
2.44
%
Fixed-rate 1.100% – 4.650% notes
2019
2046
 
23,059

 
 
1.13%
4.78
%
 
23,645

 
 
1.13%
4.78
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017 debt issuances of $28.7 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
2019
2022
 
3,250

 
 
2.41%
2.84
%
 
3,250

 
 
1.38%
1.81
%
Fixed-rate 0.875% – 4.300% notes
2019
2047
 
25,617

 
 
1.54%
4.30
%
 
25,705

 
 
1.51%
4.30
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First quarter 2018 debt issuance of $7.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate 1.800% notes
 
 
2019
 
1,000

 
 
 
 
1.83
%
 

 
 
 
 
%
Fixed-rate 2.000% notes
 
 
2020
 
1,000

 
 
 
 
2.03
%
 

 
 
 
 
%
Fixed-rate 2.400% notes
 
 
2023
 
750

 
 
 
 
2.66
%
 

 
 
 
 
%
Fixed-rate 2.750% notes
 
 
2025
 
1,500

 
 
 
 
2.77
%
 

 
 
 
 
%
Fixed-rate 3.000% notes
 
 
2027
 
1,500

 
 
 
 
3.05
%
 

 
 
 
 
%
Fixed-rate 3.750% notes
 
 
2047
 
1,250

 
 
 
 
3.80
%
 

 
 
 
 
%
Total term debt
 
 
 
 
104,193

 
 
 
 
 
 
104,021

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized premium/(discount) and issuance costs, net
 
 
 
 
(218
)
 
 
 
 
 
 
(225
)
 
 
 
 
 
Hedge accounting fair value adjustments
 
 
 
 
(1,456
)
 
 
 
 
 
 
(93
)
 
 
 
 
 
Less: Current portion of term debt
 
 
 
 
(8,784
)
 
 
 
 
 
 
(6,496
)
 
 
 
 
 
Total non-current portion of term debt
 
 
 
 
$
93,735

 
 
 
 
 
 
$
97,207

 
 
 
 
 

To manage interest rate risk on certain of its U.S. dollar–denominated fixed- or floating-rate notes, the Company has entered into interest rate swaps to effectively convert the fixed interest rates to floating interest rates or the floating interest rates to fixed interest rates on a portion of these notes. Additionally, to manage foreign currency risk on certain of its foreign currency–denominated notes, the Company has entered into foreign currency swaps to effectively convert these notes to U.S. dollar–denominated notes.
A portion of the Company’s Japanese yen–denominated notes is designated as a hedge of the foreign currency exposure of the Company’s net investment in a foreign operation. As of September 29, 2018 and September 30, 2017, the carrying value of the debt designated as a net investment hedge was $811 million and $1.6 billion, respectively. For further discussion regarding the Company’s use of derivative instruments, refer to the Derivative Financial Instruments section of Note 2, “Financial Instruments.”
The effective interest rates for the Notes include the interest on the Notes, amortization of the discount or premium and, if applicable, adjustments related to hedging. The Company recognized $3.0 billion, $2.2 billion and $1.4 billion of interest expense on its term debt for 2018, 2017 and 2016, respectively.
The future principal payments for the Company’s Notes as of September 29, 2018 are as follows (in millions):
2019
$
8,797

2020
10,183

2021
8,750

2022
8,583

2023
9,395

Thereafter
58,485

Total term debt
$
104,193


As of September 29, 2018 and September 30, 2017, the fair value of the Company’s Notes, based on Level 2 inputs, was $103.2 billion and $106.1 billion, respectively.
v3.10.0.1
Shareholders' Equity
12 Months Ended
Sep. 29, 2018
Equity [Abstract]  
Shareholders' Equity
Shareholders’ Equity
Share Repurchase Program
During 2018, the Company repurchased 405.5 million shares of its common stock for $73.1 billion in connection with two separate share repurchase programs. Of the $73.1 billion, $44.0 billion was repurchased under the Company’s previous share repurchase program of up to $210 billion, thereby completing that program. On May 1, 2018, the Company announced the Board of Directors had authorized a new program to repurchase up to $100 billion of the Company’s common stock. The remaining $29.0 billion repurchased during 2018 was in connection with the new share repurchase program. The Company’s new share repurchase program does not obligate it to acquire any specific number of shares. Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
v3.10.0.1
Comprehensive Income
12 Months Ended
Sep. 29, 2018
Equity [Abstract]  
Comprehensive Income
Comprehensive Income
The Company’s OCI consists of foreign 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 classified as available-for-sale.
The following table shows the pre-tax amounts reclassified from AOCI into the Consolidated Statements of Operations, and the associated financial statement line item, for 2018 and 2017 (in millions):
Comprehensive Income Components
 
Financial Statement Line Item
 
2018
 
2017
Unrealized (gains)/losses on derivative instruments:
 
 
 
 
 
 
Foreign exchange contracts
 
Net sales
 
$
214

 
$
(662
)
 
 
Cost of sales
 
(70
)
 
(654
)
 
 
Other income/(expense), net
 
344

 
(638
)
Interest rate contracts
 
Other income/(expense), net
 
(2
)
 
2

 
 
 
 
486

 
(1,952
)
Unrealized (gains)/losses on marketable securities
 
Other income/(expense), net
 
(20
)
 
(99
)
Total amounts reclassified from AOCI
 
 
 
$
466

 
$
(2,051
)

The following table shows the changes in AOCI by component for 2018 and 2017 (in millions):
 
Cumulative Foreign
Currency Translation
 
Unrealized Gains/Losses
on Derivative Instruments
 
Unrealized Gains/Losses
on Marketable Securities
 
Total
Balances as of September 24, 2016
$
(578
)
 
$
38

 
$
1,174

 
$
634

Other comprehensive income/(loss) before reclassifications
301

 
1,793

 
(1,207
)
 
887

Amounts reclassified from AOCI

 
(1,952
)
 
(99
)
 
(2,051
)
Tax effect
(77
)
 
(3
)
 
460

 
380

Other comprehensive income/(loss)
224


(162
)

(846
)

(784
)
Balances as of September 30, 2017
(354
)
 
(124
)
 
328

 
(150
)
Other comprehensive income/(loss) before reclassifications
(524
)
 
672

 
(4,563
)
 
(4,415
)
Amounts reclassified from AOCI

 
486

 
(20
)
 
466

Tax effect
(1
)
 
(253
)
 
1,177

 
923

Other comprehensive income/(loss)
(525
)

905


(3,406
)

(3,026
)
Cumulative effect of change in accounting principle (1)
(176
)
 
29

 
(131
)
 
(278
)
Balances as of September 29, 2018
$
(1,055
)

$
810


$
(3,209
)

$
(3,454
)

(1)
Refer to Note 4, “Income Taxes” for more information on the Company’s adoption of ASU 2018-02 in 2018.
v3.10.0.1
Benefit Plans
12 Months Ended
Sep. 29, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Benefit Plans
Benefit Plans
2014 Employee Stock Plan
In the second quarter of 2014, shareholders approved the 2014 Employee Stock Plan (the “2014 Plan”) and terminated the Company’s authority to grant new awards under the 2003 Employee Stock Plan (the “2003 Plan”). The 2014 Plan provides for broad-based equity grants to employees, including executive officers, and permits the granting of RSUs, stock grants, performance-based awards, stock options and stock appreciation rights, as well as cash bonus awards. RSUs granted under the 2014 Plan generally vest over four years, based on continued employment, and are settled upon vesting in shares of the Company’s common stock on a one-for-one basis. Each share issued with respect to RSUs granted under the 2014 Plan reduces the number of shares available for grant under the plan by two shares. RSUs canceled and shares withheld to satisfy tax withholding obligations increase the number of shares available for grant under the 2014 Plan utilizing a factor of two times the number of RSUs canceled or shares withheld. Currently, all RSUs granted under the 2014 Plan have dividend equivalent rights (“DERs”), which entitle holders of RSUs to the same dividend value per share as holders of common stock. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are accumulated and paid when the underlying shares vest. Upon approval of the 2014 Plan, the Company reserved 385 million shares plus the number of shares remaining that were reserved but not issued under the 2003 Plan. Shares subject to outstanding awards under the 2003 Plan that expire, are canceled or otherwise terminate, or are withheld to satisfy tax withholding obligations with respect to RSUs, will also be available for awards under the 2014 Plan. As of September 29, 2018, approximately 280.2 million shares were reserved for future issuance under the 2014 Plan.
Apple Inc. Non-Employee Director Stock Plan
The Apple Inc. Non-Employee Director Stock Plan (the “Director Plan”) is a shareholder-approved plan that (i) permits the Company to grant awards of RSUs or stock options to the Company’s non-employee directors, (ii) provides for automatic initial grants of RSUs upon a non-employee director joining the Board of Directors and automatic annual grants of RSUs at each annual meeting of shareholders, and (iii) permits the Board of Directors to prospectively change the value and relative mixture of stock options and RSUs for the initial and annual award grants and the methodology for determining the number of shares of the Company’s common stock subject to these grants, in each case within the limits set forth in the Director Plan and without further shareholder approval. Each share issued with respect to RSUs granted under the Director Plan reduces the number of shares available for grant under the plan by two shares. The Director Plan expires November 12, 2027. All RSUs granted under the Director Plan are entitled to DERs. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs. DERs are accumulated and paid when the underlying shares vest. As of September 29, 2018, approximately 1.1 million shares were reserved for future issuance under the Director Plan.
Rule 10b5-1 Trading Plans
During the three months ended September 29, 2018, Section 16 officers Angela Ahrendts, Timothy D. Cook, Chris Kondo, Luca Maestri, Daniel Riccio, Philip Schiller and Jeffrey Williams had equity trading plans in place in accordance with Rule 10b5-1(c)(1) under the Exchange Act. An equity trading plan is a written document that pre-establishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including shares acquired pursuant to the Company’s employee and director equity plans.
Employee Stock Purchase Plan
The Employee Stock Purchase Plan (the “Purchase Plan”) is a shareholder-approved plan under which substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of six-month offering periods. An employee’s payroll deductions under the Purchase Plan are limited to 10% of the employee’s compensation and employees may not purchase more than $25,000 of stock during any calendar year. As of September 29, 2018, approximately 36.5 million shares were reserved for future issuance under the Purchase Plan.
401(k) Plan
The Company’s 401(k) Plan is a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating U.S. employees may defer a portion of their pre-tax earnings, up to the IRS annual contribution limit ($18,500 for calendar year 2018). The Company matches 50% to 100% of each employee’s contributions, depending on length of service, up to a maximum 6% of the employee’s eligible earnings.
Restricted Stock Units
A summary of the Company’s RSU activity and related information for 2018, 2017 and 2016, is as follows:
 
Number of
RSUs
(in thousands)
 
Weighted-Average
Grant Date Fair
Value Per RSU
 
Aggregate Fair Value
(in millions)
Balance as of September 26, 2015
101,467

 
$
85.77

 
 
RSUs granted
49,468

 
$
109.28

 
 
RSUs vested
(46,313
)
 
$
84.44

 
 
RSUs canceled
(5,533
)
 
$
96.48

 
 
Balance as of September 24, 2016
99,089

 
$
97.54

 
 
RSUs granted
50,112

 
$
121.65

 
 
RSUs vested
(45,735
)
 
$
95.48

 
 
RSUs canceled
(5,895
)
 
$
106.87

 
 
Balance as of September 30, 2017
97,571

 
$
110.33

 
 
RSUs granted
45,351

 
$
162.86

 
 
RSUs vested
(44,718
)
 
$
111.24

 
 
RSUs canceled
(6,049
)
 
$
127.82

 
 
Balance as of September 29, 2018
92,155

 
$
134.60

 
$
20,803


The fair value as of the respective vesting dates of RSUs was $7.6 billion, $6.1 billion and $5.1 billion for 2018, 2017 and 2016, respectively. The majority of RSUs that vested in 2018, 2017 and 2016 were net share settled such that the Company withheld shares with value equivalent to the employees’ obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were approximately 16.0 million, 15.4 million and 15.9 million for 2018, 2017 and 2016, respectively, and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to taxing authorities were $2.7 billion, $2.0 billion and $1.7 billion in 2018, 2017 and 2016, respectively, and are reflected as a financing activity within the Consolidated Statements of Cash Flows. These net share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company.
Share-Based Compensation
The following table shows a summary of the share-based compensation expense included in the Consolidated Statements of Operations for 2018, 2017 and 2016 (in millions):
 
2018
 
2017
 
2016
Cost of sales
$
1,010

 
$
877

 
$
769

Research and development
2,668

 
2,299

 
1,889

Selling, general and administrative
1,662

 
1,664

 
1,552

Total share-based compensation expense
$
5,340


$
4,840


$
4,210


The income tax benefit related to share-based compensation expense was $1.9 billion, $1.6 billion and $1.4 billion for 2018, 2017 and 2016, respectively. As of September 29, 2018, the total unrecognized compensation cost related to outstanding RSUs and stock options was $9.4 billion, which the Company expects to recognize over a weighted-average period of 2.5 years.
v3.10.0.1
Commitments and Contingencies
12 Months Ended
Sep. 29, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
Accrued Warranty and Indemnification
The following table shows changes in the Company’s accrued warranties and related costs for 2018, 2017 and 2016 (in millions):
 
2018
 
2017
 
2016
Beginning accrued warranty and related costs
$
3,834

 
$
3,702

 
$
4,780

Cost of warranty claims
(4,115
)
 
(4,322
)
 
(4,663
)
Accruals for product warranty
3,973

 
4,454

 
3,585

Ending accrued warranty and related costs
$
3,692


$
3,834


$
3,702


Agreements entered into by the Company may include indemnification provisions which may subject the Company to costs and damages in the event of a claim against an indemnified third party. Except as disclosed under the heading “Contingencies” below, 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 indemnification of third parties.
The Company offers an iPhone Upgrade Program, which is available to customers who purchase a qualifying iPhone in the U.S., the U.K. and mainland China. The iPhone Upgrade Program provides customers the right to trade in that iPhone for a specified amount when purchasing a new iPhone, provided certain conditions are met. The Company accounts for the trade-in right as a guarantee liability and recognizes arrangement revenue net of the fair value of such right, with subsequent changes to the guarantee liability recognized within revenue.
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 status as directors or officers of the Company, and to advance expenses incurred by such individuals in connection with related legal proceedings. It is not possible to determine the maximum potential amount of payments the Company could be required to make under these agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each claim. While the Company maintains directors and officers liability insurance coverage, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise.
Concentrations in the Available Sources of Supply of Materials and Product
Although most components essential to the Company’s business are generally available from multiple sources, certain components are currently obtained from single or limited sources. In addition, the Company competes for various components with other participants in the markets for mobile communication and media devices and personal computers. Therefore, many components used by the Company, including those that are available from multiple sources, are at times subject to industry-wide shortage and significant commodity pricing fluctuations that could materially adversely affect the Company’s financial condition and operating results.
The Company uses some custom components that are not commonly used by its competitors, and new products introduced by the Company often utilize custom components available from only one source. When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or manufacturing capacity has increased. If the Company’s supply of components for a new or existing product were delayed or constrained, or if an outsourcing partner delayed shipments of completed products to the Company, the Company’s financial condition and operating results could be materially adversely affected. The Company’s business and financial performance could also be materially adversely affected depending on the time required to obtain sufficient quantities from the original source, or to identify and obtain sufficient quantities from an alternative source. Continued availability of these components at acceptable prices, or at all, may be affected if suppliers decide to concentrate on the production of common components instead of components customized to meet the Company’s requirements.
The Company has entered into agreements for the supply of many components; however, there can be no guarantee that the Company will be able to extend or renew these agreements on similar terms, or at all. Therefore, the Company remains subject to significant risks of supply shortages and price increases that could materially adversely affect its financial condition and operating results.
Substantially all of the Company’s hardware products are manufactured by outsourcing partners that are located primarily in Asia, with some Mac computers manufactured in the U.S. and Ireland. A significant concentration of this manufacturing is currently performed by a small number of outsourcing partners, often in single locations. Certain of these outsourcing partners are single-sourced suppliers of components and manufacturers for many of the Company’s products. Although the Company works closely with its outsourcing partners on manufacturing schedules, the Company’s financial condition and operating results could be materially adversely affected if its outsourcing partners were unable to meet their production commitments. The Company’s manufacturing purchase obligations typically cover its requirements for periods up to 150 days.
Other Off–Balance Sheet Commitments
Operating Leases
The Company leases various equipment and facilities, including retail space, under noncancelable operating lease arrangements. The Company does not currently utilize any other off–balance sheet financing arrangements. As of September 29, 2018, the Company’s total future minimum lease payments under noncancelable operating leases were $9.6 billion. The Company’s retail store and other facility leases typically have original terms not exceeding 10 years and generally contain multi-year renewal options.
Rent expense under all operating leases, including both cancelable and noncancelable leases, was $1.2 billion, $1.1 billion and $939 million in 2018, 2017 and 2016, respectively. Future minimum lease payments under noncancelable operating leases having initial or remaining terms in excess of one year as of September 29, 2018, are as follows (in millions):
2019
$
1,298

2020
1,289

2021
1,218

2022
1,038

2023
800

Thereafter
3,984

Total
$
9,627


Unconditional Purchase Obligations
The Company has entered into certain off–balance sheet arrangements which require the future purchase of goods or services (“unconditional purchase obligations”). The Company’s unconditional purchase obligations primarily consist of payments for supplier arrangements, internet and telecommunication services and intellectual property licenses. Future payments under noncancelable unconditional purchase obligations having a remaining term in excess of one year as of September 29, 2018, are as follows (in millions):
2019
$
2,447

2020
3,202

2021
1,749

2022
1,596

2023
268

Thereafter
66

Total
$
9,328


Contingencies
The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully adjudicated, as further discussed in Part I, Item 1A of this Form 10-K under the heading “Risk Factors” and in Part I, Item 3 of this Form 10-K under the heading “Legal Proceedings.” The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected. 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, except for the following matters:
VirnetX
VirnetX, Inc. filed two lawsuits in the U.S. District Court for the Eastern District of Texas (the “Eastern Texas District Court”) against the Company alleging that certain Company products infringe four patents (the “VirnetX Patents”) relating to network communications technology (“VirnetX I” and “VirnetX II”). On September 30, 2016, a jury returned a verdict in VirnetX I against the Company and awarded damages of $302 million, which later increased to $440 million in post-trial proceedings. VirnetX I is currently on appeal at the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”). On April 11, 2018, a jury returned a verdict in VirnetX II against the Company and awarded damages of $503 million. VirnetX II is currently on appeal. The Company has challenged the validity of the VirnetX Patents at the U.S. Patent and Trademark Office (the “PTO”). In response, the PTO has declared the VirnetX Patents invalid. VirnetX has appealed, and those appeals are currently pending at the Federal Circuit. The Federal Circuit has consolidated the Company’s appeal of the Eastern Texas District Court VirnetX I verdict and VirnetX’s appeals from the PTO invalidity proceedings. The Company believes it will prevail on the merits.
Qualcomm
On January 20, 2017, the Company filed a lawsuit against Qualcomm Incorporated and affiliated parties (“Qualcomm”) in the U.S. District Court for the Southern District of California seeking, among other things, to enjoin Qualcomm from requiring the Company to pay royalties at the rate demanded by Qualcomm. As the Company does not believe the demanded royalty it has historically paid contract manufacturers for each applicable device is fair, reasonable and non-discriminatory, and believes it to be invalid and/or overstated in other respects as well, no Qualcomm-related royalty payments have been remitted by the Company to its contract manufacturers since the beginning of the second quarter of 2017. The Company believes it will prevail on the merits of the case and has accrued its best estimate for the ultimate resolution of this matter.
v3.10.0.1
Segment Information and Geographic Data
12 Months Ended
Sep. 29, 2018
Segment Reporting [Abstract]  
Segment Information and Geographic Data
Segment Information and Geographic Data
The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.
The Company manages its business primarily on a geographic basis. The Company’s reportable segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. Americas includes both North and South America. Europe includes European countries, as well as India, the Middle East and Africa. Greater China includes China, Hong Kong and Taiwan. Rest of Asia Pacific includes Australia and those Asian countries not included in the Company’s other reportable segments. Although the reportable segments provide similar hardware and software products and similar services, each one is managed separately to better align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic region. The accounting policies of the various segments are the same as those described in Note 1, “Summary of Significant Accounting Policies.”
The Company evaluates the performance of its reportable segments based on net sales and operating income. Net sales for geographic segments are generally based on the location of customers and sales through the Company’s retail stores located in those geographic locations. Operating income for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. Advertising expenses are generally included in the geographic segment in which the expenditures are incurred. Operating income for each segment excludes other income and expense and certain expenses managed outside the reportable segments. Costs excluded from segment operating income include various corporate expenses such as research and development, corporate marketing expenses, certain share-based compensation expenses, income taxes, various nonrecurring charges and other separately managed general and administrative costs. The Company does not include intercompany transfers between segments for management reporting purposes.
The following table shows information by reportable segment for 2018, 2017 and 2016 (in millions):
 
2018
 
2017
 
2016
Americas:
 
 
 
 
 
Net sales
$
112,093

 
$
96,600

 
$
86,613

Operating income
$
34,864

 
$
30,684

 
$
28,172

 
 
 
 
 
 
Europe:
 
 
 
 
 
Net sales
$
62,420

 
$
54,938

 
$
49,952

Operating income
$
19,955

 
$
16,514

 
$
15,348

 
 
 
 
 
 
Greater China:
 
 
 
 
 
Net sales
$
51,942

 
$
44,764

 
$
48,492

Operating income
$
19,742

 
$
17,032

 
$
18,835

 
 
 
 
 
 
Japan:
 
 
 
 
 
Net sales
$
21,733

 
$
17,733

 
$
16,928

Operating income
$
9,500

 
$
8,097

 
$
7,165

 
 
 
 
 
 
Rest of Asia Pacific:
 
 
 
 
 
Net sales
$
17,407

 
$
15,199

 
$
13,654

Operating income
$
6,181

 
$
5,304

 
$
4,781


A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2018, 2017 and 2016 is as follows (in millions):
 
2018
 
2017
 
2016
Segment operating income
$
90,242

 
$
77,631

 
$
74,301

Research and development expense
(14,236
)
 
(11,581
)
 
(10,045
)
Other corporate expenses, net
(5,108
)
 
(4,706
)
 
(4,232
)
Total operating income
$
70,898

 
$
61,344

 
$
60,024


The U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2018, 2017 and 2016. There was no single customer that accounted for more than 10% of net sales in 2018, 2017 and 2016. Net sales for 2018, 2017 and 2016 and long-lived assets as of September 29, 2018 and September 30, 2017 were as follows (in millions):
 
2018
 
2017
 
2016
Net sales:
 
 
 
 
 
U.S.
$
98,061

 
$
84,339

 
$
75,667

China (1)
51,942

 
44,764

 
48,492

Other countries
115,592

 
100,131

 
91,480

Total net sales
$
265,595


$
229,234


$
215,639


 
2018
 
2017
Long-lived assets:
 
 
 
U.S.
$
23,963

 
$
20,637

China (1)
13,268

 
10,211

Other countries
4,073

 
2,935

Total long-lived assets
$
41,304

 
$
33,783

(1)
China includes Hong Kong and Taiwan. Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure.
Net sales by product for 2018, 2017 and 2016 were as follows (in millions):
 
2018
 
2017
 
2016
iPhone (1)
$
166,699

 
$
141,319

 
$
136,700

iPad (1)
18,805

 
19,222

 
20,628

Mac (1)
25,484

 
25,850

 
22,831

Services (2)
37,190

 
29,980

 
24,348

Other Products (1)(3)
17,417

 
12,863

 
11,132

Total net sales
$
265,595


$
229,234


$
215,639

 
(1)
Includes deferrals and amortization of related software upgrade rights and non-software services.
(2)
Includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services. Services net sales in 2018 included a favorable one-time item of $236 million in connection with the final resolution of various lawsuits. Services net sales in 2017 included a favorable one-time adjustment of $640 million due to a change in estimate based on the availability of additional supporting information.
(3)
Includes sales of AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and other Apple-branded and third-party accessories.
v3.10.0.1
Selected Quarterly Financial Information (Unaudited)
12 Months Ended
Sep. 29, 2018
Quarterly Financial Information Disclosure [Abstract]  
Selected Quarterly Financial Information (Unaudited)
Selected Quarterly Financial Information (Unaudited)
The following tables show a summary of the Company’s quarterly financial information for each of the four quarters of 2018 and 2017 (in millions, except per share amounts):
 
Fourth Quarter
 
Third Quarter
 
Second Quarter
 
First Quarter
2018:
 
 
 
 
 
 
 
Net sales
$
62,900

 
$
53,265

 
$
61,137

 
$
88,293

Gross margin
$
24,084

 
$
20,421

 
$
23,422

 
$
33,912

Net income
$
14,125

 
$
11,519

 
$
13,822

 
$
20,065

 
 
 
 
 
 
 
 
Earnings per share (1):
 
 
 
 
 
 
 
Basic
$
2.94

 
$
2.36

 
$
2.75

 
$
3.92

Diluted
$
2.91

 
$
2.34

 
$
2.73

 
$
3.89

 
Fourth Quarter
 
Third Quarter
 
Second Quarter
 
First Quarter
2017:
 
 
 
 
 
 
 
Net sales
$
52,579

 
$
45,408

 
$
52,896

 
$
78,351

Gross margin
$
19,931

 
$
17,488

 
$
20,591

 
$
30,176

Net income
$
10,714

 
$
8,717

 
$
11,029

 
$
17,891

 
 
 
 
 
 
 
 
Earnings per share (1):
 
 
 
 
 
 
 
Basic
$
2.08

 
$
1.68

 
$
2.11

 
$
3.38

Diluted
$
2.07

 
$
1.67

 
$
2.10

 
$
3.36

 
(1)
Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings per share.
v3.10.0.1
Summary of Significant Accounting Policies (Policies)
12 Months Ended
Sep. 29, 2018
Accounting Policies [Abstract]  
Basis of Presentation and Preparation
Basis of Presentation and Preparation
The accompanying consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation.
Fiscal Period
The Company’s fiscal year is the 52- or 53-week period that ends on the last Saturday of September. The Company’s fiscal years 2018 and 2016 spanned 52 weeks each, whereas fiscal year 2017 included 53 weeks. A 14th week was included in the first fiscal quarter of 2017, as is done every five or six years, to realign the Company’s fiscal quarters with calendar quarters. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years.
Revenue Recognition
Revenue Recognition
Net sales consist primarily of revenue from the sale of hardware, software, digital content and applications, accessories, and service and support contracts. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. Product is considered delivered to the customer once it has been shipped and title, risk of loss and rewards of ownership have been transferred. For most of the Company’s product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit. For payment terms in excess of the Company’s standard payment terms, revenue is recognized as payments become due unless the Company has positive evidence that the sales price is fixed or determinable, such as a successful history of collection, 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 third-party digital content sold on the iTunes Store in accordance with general revenue recognition accounting guidance. The Company recognizes revenue in accordance with industry-specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software products, (ii) sales of software upgrades and (iii) sales of software bundled with hardware not essential to the functionality of the hardware.
For the sale of most third-party products, the Company recognizes revenue based on the gross amount billed to customers because the Company establishes its own pricing for such products, retains related inventory risk for physical products, is the primary obligor to the customer and assumes the credit risk for amounts billed to its customers. For third-party applications sold through the App Store and Mac App Store and certain digital content sold through the iTunes Store, the Company does not determine the selling price of the products and is not the primary obligor to the customer. Therefore, the Company accounts for such sales on a net basis by recognizing in net sales only the commission it retains from each sale. The portion of the gross amount billed to customers that is remitted by the Company to third-party app developers and certain digital content owners is not reflected in the Company’s Consolidated Statements of Operations.
The Company records deferred revenue when it receives payments in advance of the delivery of products or the performance of services. This includes amounts that have been deferred for unspecified and specified software upgrade rights and non-software services that are attached to hardware and software products. The Company sells gift cards redeemable at its retail and online stores, and also sells gift cards redeemable on iTunes Store, App Store, Mac App Store, TV App Store and Book Store for the purchase of digital content and software. The Company records deferred revenue upon the sale of the card, which is relieved upon redemption of the card by the customer. 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, web-based support resources and diagnostic tools offered under the Company’s standard limited warranty.
The Company records reductions to revenue for estimated commitments related to price protection and other customer incentive programs. For transactions involving price protection, the Company recognizes revenue net of the estimated amount to be refunded. For the Company’s other customer incentive programs, the estimated cost of these programs is recognized at the later of the date at which the Company has sold the product or the date at which the program is offered. The Company also records reductions to revenue for expected future product returns based on the Company’s historical experience. Revenue is recorded net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority.
Revenue Recognition for Arrangements with Multiple Deliverables
For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality, undelivered software elements that relate to the hardware product’s essential software, and undelivered non-software services, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the Company uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of selling price (“ESP”). 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 Company’s best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis. For multi-element arrangements accounted for in accordance with industry-specific software accounting guidance, the Company allocates revenue to all deliverables based on the VSOE of each element, and if VSOE does not exist revenue is recognized when elements lacking VSOE are delivered.
For sales of iPhone, iPad, Mac and certain other products, the Company has indicated it may from time to time provide future unspecified software upgrades to the device’s essential software and/or non-software services free of charge. The Company has identified up to three deliverables regularly included in arrangements involving the sale of these devices. The first deliverable, which represents the substantial portion of the allocated sales price, is the hardware and software essential 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 when-and-if-available basis, future unspecified software upgrades relating to the product’s essential software. The third deliverable is the non-software services to be provided to qualifying devices. The Company allocates revenue between these deliverables using the relative selling price method. Because the Company has neither VSOE nor TPE for these deliverables, the allocation of revenue is based on the Company’s ESPs. Revenue allocated to the delivered hardware and the related essential software is recognized at the time of sale, provided the other conditions for revenue recognition have been met. Revenue allocated to the embedded unspecified software upgrade rights and the non-software services is deferred and recognized on a straight-line basis over the estimated period the software upgrades and non-software services are expected to be provided. Cost of sales related to delivered hardware and related essential software, including estimated warranty costs, are recognized at the time of sale. Costs incurred to provide non-software services are recognized as cost of sales as incurred, and engineering and sales and marketing costs are recognized as operating expenses as incurred.
The Company’s process for determining its ESP for deliverables without VSOE or TPE considers multiple factors that may vary depending upon the unique facts and circumstances related to each deliverable including, where applicable, prices charged by the Company and market trends in the pricing for similar offerings, product-specific business objectives, estimated cost to provide the non-software services and the relative ESP of the upgrade rights and non-software services as compared to the total selling price of the product.
Shipping Costs
Shipping Costs
Amounts billed to customers related to shipping and handling are classified as revenue, and the Company’s shipping and handling costs are classified as cost of sales.
Advertising Costs
Advertising Costs
Advertising costs are expensed as incurred and included in selling, general and administrative expenses.
Share-Based Compensation
Share-Based Compensation
The Company generally measures share-based compensation based on the closing price of the Company’s common stock on the date of grant, and recognizes expense on a straight-line basis for its estimate of equity awards that will ultimately vest. Further information regarding share-based compensation can be found in Note 8, “Benefit Plans.”
New Accounting Pronouncements
During the first quarter of 2018, the Company adopted the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which modified certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification in the statement of cash flows. Historically, excess tax benefits or deficiencies from the Company’s equity awards were recorded as additional paid-in capital in its Consolidated Balance Sheets and were classified as a financing activity in its Consolidated Statements of Cash Flows. Beginning in 2018, the Company records any excess tax benefits or deficiencies from its equity awards as part of the provision for income taxes in its Consolidated Statements of Operations in the reporting periods in which equity vesting occurs. The Company elected to apply the cash flow classification requirements related to excess tax benefits retrospectively to all periods presented, which resulted in an increase to cash generated by operating activities in the Consolidated Statements of Cash Flows of $627 million and $407 million for 2017 and 2016, respectively.
During the second quarter of 2018, the FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). ASU 2018-02 allows an entity to elect to reclassify the income tax effects of the Act on items within AOCI to retained earnings. The Company elected to apply the provision of ASU 2018-02 in 2018 with a reclassification of net tax benefits related to cumulative foreign currency translation and unrealized gains/losses on derivative instruments and marketable securities, resulting in a $278 million decrease in AOCI and a corresponding increase in retained earnings in the Consolidated Balance Sheet and Consolidated Statement of Shareholders’ Equity.
Cash Equivalents and Marketable Securities
Cash Equivalents and Marketable Securities
All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. The Company’s marketable debt and equity securities have been classified and accounted for as available-for-sale. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable equity securities, including mutual funds, are classified as short-term based on the nature of the securities and their availability for use in current operations. The cost of securities sold is determined using the specific identification method.
Inventories
Inventories
Inventories are computed using the first-in, first-out method.
Property, Plant and Equipment
Property, Plant and Equipment
Depreciation on property, plant and equipment is recognized on a straight-line basis over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building; between one and five years for machinery and equipment, including product tooling and manufacturing process equipment; and the shorter of lease term or useful life for leasehold improvements. Capitalized costs related to internal-use software are amortized on a straight-line basis over the estimated useful lives of the assets, which range from three to five years.
Fair Value Measurements
Fair Value Measurements
The Company’s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities are derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of the Company’s debt instruments and all other financial instruments, which generally have counterparties with high credit ratings, are based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data.
Level 2 fair value estimates are based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities.
Derivative Financial Instruments
Derivative Financial Instruments
The Company may use derivatives to partially offset its business exposure to foreign currency and interest rate risk on expected future cash flows, net investments in certain foreign subsidiaries, and certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates.
To protect gross margins from fluctuations in foreign currency exchange rates, certain of the Company’s subsidiaries whose functional currency is the U.S. dollar may hedge a portion of forecasted foreign currency revenue, and subsidiaries whose functional currency is not the U.S. dollar may hedge a portion of forecasted inventory purchases not denominated in the subsidiaries’ functional currencies. The Company may enter into forward contracts, option contracts or other instruments to manage this risk and may designate these instruments as cash flow hedges. The Company generally hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months.
To protect the net investment in a foreign operation from fluctuations in foreign currency exchange rates, the Company may enter into foreign currency forward and option contracts to offset a portion of the changes in the carrying amounts of these investments due to fluctuations in foreign currency exchange rates. In addition, the Company may use non-derivative financial instruments, such as its foreign currency–denominated debt, as hedges of its net investments in certain foreign subsidiaries. In both of these cases, the Company designates these instruments as net investment hedges.
To protect the Company’s foreign currency–denominated term debt or marketable securities from fluctuations in foreign currency exchange rates, the Company may enter into forward contracts, cross-currency swaps or other instruments. These instruments may offset a portion of the foreign currency remeasurement gains or losses, or changes in fair value. The Company may designate these instruments as either cash flow or fair value hedges. As of September 29, 2018, the Company’s hedged term debt– and marketable securities–related foreign currency transactions are expected to be recognized within 24 years.
The Company may also enter into non-designated foreign currency contracts to offset a portion of the foreign currency exchange gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies.
To protect the Company’s foreign currency–denominated term debt or marketable securities from fluctuations in interest rates, the Company may enter into interest rate swaps, options or other instruments. These instruments may offset a portion of the changes in interest income or expense, or changes in fair value. The Company designates these instruments as either cash flow or fair value hedges. As of September 29, 2018, the Company’s hedged interest rate transactions are expected to be recognized within 9 years.
Cash Flow Hedges
The effective portions of cash flow hedges are recorded in accumulated other comprehensive income/(loss) (“AOCI”) until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of foreign currency revenue are recognized as a component of net sales in the same period as the related revenue is recognized, and deferred gains and losses related to cash flow hedges of inventory purchases are recognized as a component of cost of sales in the same period as the related costs are recognized. Deferred gains and losses associated with cash flow hedges of interest income or expense are recognized in other income/(expense), net in the same period as the related income or expense is recognized. For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness. The ineffective portions and amounts excluded from the effectiveness testing of cash flow hedges are recognized in other income/(expense), net.
Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified into other income/(expense), net in the period of de-designation. Any subsequent changes in fair value of such derivative instruments are reflected in other income/(expense), net unless they are re-designated as hedges of other transactions.
Net Investment Hedges
The effective portions of net investment hedges are recorded in other comprehensive income/(loss) (“OCI”) as a part of the cumulative translation adjustment. The ineffective portions and amounts excluded from the effectiveness testing of net investment hedges are recognized in other income/(expense), net. For forward exchange contracts designated as net investment hedges, the Company excludes changes in fair value relating to changes in the forward carry component from its definition of effectiveness. Accordingly, any gains or losses related to this forward carry component are recognized in earnings in the current period.
Fair Value Hedges
Gains and losses related to changes in fair value hedges are recognized in earnings along with a corresponding loss or gain related to the change in value of the underlying hedged item in the same line in the Consolidated Statements of Operations.
Non-Designated Derivatives
Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates.
The Company records all derivatives in the Consolidated Balance Sheets at fair value. The Company’s accounting treatment for these derivative instruments is based on its hedge designation.
Segment Reporting
Segment Information and Geographic Data
The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.
The Company manages its business primarily on a geographic basis. The Company’s reportable segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. Americas includes both North and South America. Europe includes European countries, as well as India, the Middle East and Africa. Greater China includes China, Hong Kong and Taiwan. Rest of Asia Pacific includes Australia and those Asian countries not included in the Company’s other reportable segments. Although the reportable segments provide similar hardware and software products and similar services, each one is managed separately to better align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic region. The accounting policies of the various segments are the same as those described in Note 1, “Summary of Significant Accounting Policies.”
The Company evaluates the performance of its reportable segments based on net sales and operating income. Net sales for geographic segments are generally based on the location of customers and sales through the Company’s retail stores located in those geographic locations. Operating income for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. Advertising expenses are generally included in the geographic segment in which the expenditures are incurred. Operating income for each segment excludes other income and expense and certain expenses managed outside the reportable segments. Costs excluded from segment operating income include various corporate expenses such as research and development, corporate marketing expenses, certain share-based compensation expenses, income taxes, various nonrecurring charges and other separately managed general and administrative costs. The Company does not include intercompany transfers between segments for management reporting purposes.
v3.10.0.1
Summary of Significant Accounting Policies (Tables)
12 Months Ended
Sep. 29, 2018
Accounting Policies [Abstract]  
Computation of Basic and Diluted Earnings Per Share
The following table shows the computation of basic and diluted earnings per share for 2018, 2017 and 2016 (net income in millions and shares in thousands):
 
2018
 
2017
 
2016
Numerator:
 
 
 
 
 
Net income
$
59,531

 
$
48,351

 
$
45,687

 
 
 
 
 
 
Denominator:
 
 
 
 
 
Weighted-average basic shares outstanding
4,955,377

 
5,217,242

 
5,470,820

Effect of dilutive securities
44,732

 
34,450

 
29,461

Weighted-average diluted shares
5,000,109

 
5,251,692


5,500,281

 
 
 
 
 
 
Basic earnings per share
$
12.01

 
$
9.27

 
$
8.35

Diluted earnings per share
$
11.91

 
$
9.21

 
$
8.31

v3.10.0.1
Financial Instruments (Tables)
12 Months Ended
Sep. 29, 2018
Investments, All Other Investments [Abstract]  
Cash and Available-for-Sale Securities by Significant Investment Category
The following tables show the Company’s cash and available-for-sale securities by significant investment category as of September 29, 2018 and September 30, 2017 (in millions):
 
2018
 
Adjusted
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
Cash and
Cash
Equivalents
 
Short-Term
Marketable
Securities
 
Long-Term
Marketable
Securities
Cash
$
11,575

 
$

 
$

 
$
11,575

 
$
11,575

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 1 (1):
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
8,083

 

 

 
8,083

 
8,083

 

 

Mutual funds
799

 

 
(116
)
 
683

 

 
683

 

Subtotal
8,882

 

 
(116
)
 
8,766

 
8,083

 
683

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 2 (2):
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
47,296

 

 
(1,202
)
 
46,094

 
1,613

 
7,606

 
36,875

U.S. agency securities
4,127

 

 
(48
)
 
4,079

 
1,732

 
360

 
1,987

Non-U.S. government securities
21,601

 
49

 
(250
)
 
21,400

 

 
3,355

 
18,045

Certificates of deposit and time deposits
3,074

 

 

 
3,074

 
1,247

 
1,330

 
497

Commercial paper
2,573

 

 

 
2,573

 
1,663

 
910

 

Corporate securities
123,001

 
152

 
(2,038
)
 
121,115

 

 
25,162

 
95,953

Municipal securities
946

 

 
(12
)
 
934

 

 
178

 
756

Mortgage- and asset-backed securities
18,105

 
8

 
(623
)
 
17,490

 

 
804

 
16,686

Subtotal
220,723

 
209

 
(4,173
)
 
216,759

 
6,255

 
39,705

 
170,799

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total (3)
$
241,180

 
$
209

 
$
(4,289
)
 
$
237,100

 
$
25,913

 
$
40,388

 
$
170,799

 
2017
 
Adjusted
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
Cash and
Cash
Equivalents
 
Short-Term
Marketable
Securities
 
Long-Term
Marketable
Securities
Cash
$
7,982

 
$

 
$

 
$
7,982

 
$
7,982

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 1 (1):
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
6,534

 

 

 
6,534

 
6,534

 

 

Mutual funds
799

 

 
(88
)
 
711

 

 
711

 

Subtotal
7,333

 

 
(88
)
 
7,245

 
6,534

 
711

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 2 (2):
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
55,254

 
58

 
(230
)
 
55,082

 
865

 
17,228

 
36,989

U.S. agency securities
5,162

 
2

 
(9
)
 
5,155

 
1,439

 
2,057

 
1,659

Non-U.S. government securities
7,827

 
210

 
(37
)
 
8,000

 
9

 
123

 
7,868

Certificates of deposit and time deposits
5,832

 

 

 
5,832

 
1,142

 
3,918

 
772

Commercial paper
3,640

 

 

 
3,640

 
2,146

 
1,494

 

Corporate securities
152,724

 
969

 
(242
)
 
153,451

 
172

 
27,591

 
125,688

Municipal securities
961

 
4

 
(1
)
 
964

 

 
114

 
850

Mortgage- and asset-backed securities
21,684

 
35

 
(175
)
 
21,544

 

 
656

 
20,888

Subtotal
253,084

 
1,278

 
(694
)
 
253,668

 
5,773

 
53,181

 
194,714

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
$
268,399

 
$
1,278

 
$
(782
)
 
$
268,895

 
$
20,289

 
$
53,892

 
$
194,714


(1)
Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities.
(2)
Level 2 fair value estimates are based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
(3)
As of September 29, 2018, total cash, cash equivalents and marketable securities included $20.3 billion that was restricted from general use, related to the State Aid Decision (refer to Note 4, “Income Taxes”) and other agreements.
Marketable Securities in a Continuous Unrealized Loss Position
The following tables show information about the Company’s marketable securities that had been in a continuous unrealized loss position for less than 12 months and for 12 months or greater as of September 29, 2018 and September 30, 2017 (in millions):
 
2018
 
Continuous Unrealized Losses
 
Less than 12 Months
 
12 Months or Greater
 
Total
Fair value of marketable securities
$
126,238

 
$
60,599

 
$
186,837

Unrealized losses
$
(2,400
)
 
$
(1,889
)
 
$
(4,289
)
 
2017
 
Continuous Unrealized Losses
 
Less than 12 Months
 
12 Months or Greater
 
Total
Fair value of marketable securities
$
101,986

 
$
8,290

 
$
110,276

Unrealized losses
$
(596
)
 
$
(186
)
 
$
(782
)
Derivative Instruments at Gross Fair Value
The following tables show the Company’s derivative instruments at gross fair value as of September 29, 2018 and September 30, 2017 (in millions):
 
2018
 
Fair Value of
Derivatives Designated
as Hedge Instruments
 
Fair Value of
Derivatives Not Designated
as Hedge Instruments
 
Total
Fair Value
Derivative assets (1):
 
 
 
 
 
Foreign exchange contracts
$
1,015

 
$
259

 
$
1,274

 
 
 
 
 
 
Derivative liabilities (2):
 
 
 
 
 
Foreign exchange contracts
$
543

 
$
137

 
$
680

Interest rate contracts
$
1,456

 
$

 
$
1,456

 
2017
 
Fair Value of
Derivatives Designated
as Hedge Instruments
 
Fair Value of
Derivatives Not Designated
as Hedge Instruments
 
Total
Fair Value
Derivative assets (1):
 
 
 
 
 
Foreign exchange contracts
$
1,049

 
$
363

 
$
1,412

Interest rate contracts
$
218

 
$

 
$
218

 
 
 
 
 
 
Derivative liabilities (2):
 
 
 
 
 
Foreign exchange contracts
$
759

 
$
501

 
$
1,260

Interest rate contracts
$
303

 
$

 
$
303

 
(1)
The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets and other non-current assets in the Consolidated Balance Sheets.
(2)
The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as other current liabilities and other non-current liabilities in the Consolidated Balance Sheets.
Pre-Tax Gains and Losses of Derivative and Non-Derivative Instruments Designated as Cash Flow, Net Investment and Fair Value Hedges
The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow, net investment and fair value hedges in OCI and the Consolidated Statements of Operations for 2018, 2017 and 2016 (in millions):
 
2018
 
2017
 
2016
Gains/(Losses) recognized in OCI – effective portion:
 
 
 
 
 
Cash flow hedges:
 
 
 
 
 
Foreign exchange contracts
$
682

 
$
1,797

 
$
109

Interest rate contracts
1

 
7

 
(57
)
Total
$
683


$
1,804


$
52

 
 
 
 
 
 
Net investment hedges:
 
 
 
 
 
Foreign currency debt
$
4

 
$
67

 
$
(258
)
 
 
 
 
 
 
Gains/(Losses) reclassified from AOCI into net income – effective portion:
 
 
 
 
 
Cash flow hedges:
 
 
 
 
 
Foreign exchange contracts
$
(482
)
 
$
1,958

 
$
885

Interest rate contracts
1

 
(2
)
 
(11
)
Total
$
(481
)

$
1,956


$
874

 
 
 
 
 
 
Gains/(Losses) on derivative instruments:
 
 
 
 
 
Fair value hedges:
 
 
 
 
 
Foreign exchange contracts
$
(168
)
 
$

 
$

Interest rate contracts
(1,363
)
 
(810
)
 
341

Total
$
(1,531
)
 
$
(810
)
 
$
341

 
 
 
 
 
 
Gains/(Losses) related to hedged items:
 
 
 
 
 
Fair value hedges:
 
 
 
 
 
Marketable securities
$
167

 
$

 
$

Fixed-rate debt
1,363

 
810

 
(341
)
Total
$
1,530

 
$
810

 
$
(341
)
Notional Amounts of Outstanding Derivative Instruments and Credit Risk Amounts Associated with Outstanding or Unsettled Derivative Instruments
The following table shows the notional amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of September 29, 2018 and September 30, 2017 (in millions):
 
2018
 
2017
 
Notional
Amount
 
Credit Risk
Amount
 
Notional
Amount
 
Credit Risk
Amount
Instruments designated as accounting hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
$
65,368

 
$
1,015

 
$
56,156

 
$
1,049

Interest rate contracts
$
33,250

 
$

 
$
33,000

 
$
218

 
 
 
 
 
 
 
 
Instruments not designated as accounting hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
$
63,062

 
$
259

 
$
69,774

 
$
363

v3.10.0.1
Consolidated Financial Statement Details (Tables)
12 Months Ended
Sep. 29, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Property, Plant and Equipment, Net
Property, Plant and Equipment, Net
 
2018
 
2017
Land and buildings
$
16,216

 
$
13,587

Machinery, equipment and internal-use software
65,982

 
54,210

Leasehold improvements
8,205

 
7,279

Gross property, plant and equipment
90,403

 
75,076

Accumulated depreciation and amortization
(49,099
)
 
(41,293
)
Total property, plant and equipment, net
$
41,304

 
$
33,783

Other Non-Current Liabilities
Other Non-Current Liabilities
 
2018
 
2017
Long-term taxes payable
$
33,589

 
$
257

Deferred tax liabilities
426

 
31,504

Other non-current liabilities
11,165

 
8,654

Total other non-current liabilities
$
45,180

 
$
40,415

Other Income/(Expense), Net
Other Income/(Expense), Net
The following table shows the detail of other income/(expense), net for 2018, 2017 and 2016 (in millions):
 
2018
 
2017
 
2016
Interest and dividend income
$
5,686

 
$
5,201

 
$
3,999

Interest expense
(3,240
)
 
(2,323
)
 
(1,456
)
Other expense, net
(441
)
 
(133
)
 
(1,195
)
Total other income/(expense), net
$
2,005

 
$
2,745

 
$
1,348

v3.10.0.1
Income Taxes (Tables)
12 Months Ended
Sep. 29, 2018
Income Tax Disclosure [Abstract]  
Provision for Income Taxes
The provision for income taxes for 2018, 2017 and 2016, consisted of the following (in millions):
 
2018
 
2017
 
2016
Federal:
 
 
 
 
 
Current
$
41,425

 
$
7,842

 
$
7,652

Deferred
(33,819
)
 
5,980

 
5,043

Total
7,606


13,822


12,695

State:
 
 
 
 
 
Current
551

 
259

 
990

Deferred
48

 
2

 
(138
)
Total
599


261


852

Foreign:
 
 
 
 
 
Current
3,986

 
1,671

 
2,105

Deferred
1,181

 
(16
)
 
33

Total
5,167


1,655


2,138

Provision for income taxes
$
13,372


$
15,738


$
15,685


Reconciliation of Provision for Income Taxes
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate (24.5% in 2018; 35% in 2017 and 2016) to income before provision for income taxes for 2018, 2017 and 2016, is as follows (dollars in millions):
 
2018
 
2017
 
2016
Computed expected tax
$
17,890

 
$
22,431

 
$
21,480

State taxes, net of federal effect
271

 
185

 
553

Impacts of the Act
1,515

 

 

Earnings of foreign subsidiaries
(5,606
)
 
(6,135
)
 
(5,582
)
Domestic production activities deduction
(195
)
 
(209
)
 
(382
)
Research and development credit, net
(560
)
 
(678
)
 
(371
)
Other
57

 
144

 
(13
)
Provision for income taxes
$
13,372


$
15,738


$
15,685

Effective tax rate
18.3
%
 
24.6
%
 
25.6
%
Significant Components of Deferred Tax Assets and Liabilities
As of September 29, 2018 and September 30, 2017, the significant components of the Company’s deferred tax assets and liabilities were (in millions):
 
2018
 
2017
Deferred tax assets:
 
 
 
Accrued liabilities and other reserves
$
3,151

 
$
4,019

Basis of capital assets
137

 
1,230

Deferred revenue
1,141

 
1,521

Deferred cost sharing

 
667

Share-based compensation
513

 
703

Unrealized losses
871

 

Other
797

 
834

Total deferred tax assets
6,610

 
8,974

Deferred tax liabilities:
 
 
 
Earnings of foreign subsidiaries
275

 
36,355

Other
501

 
207

Total deferred tax liabilities
776

 
36,562

Net deferred tax assets/(liabilities)
$
5,834


$
(27,588
)
Aggregate Changes in Gross Unrecognized Tax Benefits, Excluding Interest and Penalties
The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2018, 2017 and 2016, is as follows (in millions):
 
2018
 
2017
 
2016
Beginning balances
$
8,407

 
$
7,724

 
$
6,900

Increases related to tax positions taken during a prior year
2,431

 
333

 
1,121

Decreases related to tax positions taken during a prior year
(2,212
)
 
(952
)
 
(257
)
Increases related to tax positions taken during the current year
1,824

 
1,880

 
1,578

Decreases related to settlements with taxing authorities
(756
)
 
(539
)
 
(1,618
)
Decreases related to expiration of statute of limitations

 
(39
)
 

Ending balances
$
9,694

 
$
8,407

 
$
7,724

v3.10.0.1
Debt (Tables)
12 Months Ended
Sep. 29, 2018
Debt Disclosure [Abstract]  
Summary of Cash Flows Associated with Issuance and Maturities of Commercial Paper
The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for 2018, 2017 and 2016 (in millions):
 
2018
 
2017
 
2016
Maturities 90 days or less:
 
 
 
 
 
Proceeds from/(Repayments of) commercial paper, net
$
1,044

 
$
(1,782
)
 
$
(869
)
 
 
 
 
 
 
Maturities greater than 90 days:
 
 
 
 
 
Proceeds from commercial paper
14,555

 
17,932

 
3,632

Repayments of commercial paper
(15,636
)
 
(12,298
)
 
(3,160
)
Proceeds from/(Repayments of) commercial paper, net
(1,081
)

5,634

 
472

 
 
 
 
 
 
Total change in commercial paper, net
$
(37
)

$
3,852

 
$
(397
)
Summary of Term Debt
The following table provides a summary of the Company’s term debt as of September 29, 2018 and September 30, 2017:
 
Maturities
(calendar year)
 
2018
 
2017
 
Amount
(in millions)
 
Effective
Interest Rate
 
Amount
(in millions)
 
Effective
Interest Rate
2013 debt issuance of $17.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
 
 
 
$

 
 
 
 
%
 
$
2,000

 
 
 
 
1.10
%
Fixed-rate 2.400% – 3.850% notes
2023
2043
 
8,500

 
 
2.44%
3.91
%
 
12,500

 
 
1.08%
3.91
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014 debt issuance of $12.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
 
 
2019
 
1,000

 
 
 
 
2.64
%
 
1,000

 
 
 
 
1.61
%
Fixed-rate 2.100% – 4.450% notes
2019
2044
 
8,500

 
 
2.64%
4.48
%
 
8,500

 
 
1.61%
4.48
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 debt issuances of $27.3 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
2019
2020
 
1,507

 
 
1.87%
2.64
%
 
1,549

 
 
1.56%
1.87
%
Fixed-rate 0.350% – 4.375% notes
2019
2045
 
24,410

 
 
0.28%
4.51
%
 
24,522

 
 
0.28%
4.51
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016 debt issuances of $24.9 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
2019
2021
 
1,350

 
 
2.48%
3.44
%
 
1,350

 
 
1.45%
2.44
%
Fixed-rate 1.100% – 4.650% notes
2019
2046
 
23,059

 
 
1.13%
4.78
%
 
23,645

 
 
1.13%
4.78
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2017 debt issuances of $28.7 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
2019
2022
 
3,250

 
 
2.41%
2.84
%
 
3,250

 
 
1.38%
1.81
%
Fixed-rate 0.875% – 4.300% notes
2019
2047
 
25,617

 
 
1.54%
4.30
%
 
25,705

 
 
1.51%
4.30
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
First quarter 2018 debt issuance of $7.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate 1.800% notes
 
 
2019
 
1,000

 
 
 
 
1.83
%
 

 
 
 
 
%
Fixed-rate 2.000% notes
 
 
2020
 
1,000

 
 
 
 
2.03
%
 

 
 
 
 
%
Fixed-rate 2.400% notes
 
 
2023
 
750

 
 
 
 
2.66
%
 

 
 
 
 
%
Fixed-rate 2.750% notes
 
 
2025
 
1,500

 
 
 
 
2.77
%
 

 
 
 
 
%
Fixed-rate 3.000% notes
 
 
2027
 
1,500

 
 
 
 
3.05
%
 

 
 
 
 
%
Fixed-rate 3.750% notes
 
 
2047
 
1,250

 
 
 
 
3.80
%
 

 
 
 
 
%
Total term debt
 
 
 
 
104,193

 
 
 
 
 
 
104,021

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized premium/(discount) and issuance costs, net
 
 
 
 
(218
)
 
 
 
 
 
 
(225
)
 
 
 
 
 
Hedge accounting fair value adjustments
 
 
 
 
(1,456
)
 
 
 
 
 
 
(93
)
 
 
 
 
 
Less: Current portion of term debt
 
 
 
 
(8,784
)
 
 
 
 
 
 
(6,496
)
 
 
 
 
 
Total non-current portion of term debt
 
 
 
 
$
93,735

 
 
 
 
 
 
$
97,207

 
 
 
 
 
Future Principal Payments for Notes
The future principal payments for the Company’s Notes as of September 29, 2018 are as follows (in millions):
2019
$
8,797

2020
10,183

2021
8,750

2022
8,583

2023
9,395

Thereafter
58,485

Total term debt
$
104,193

v3.10.0.1
Comprehensive Income (Tables)
12 Months Ended
Sep. 29, 2018
Equity [Abstract]  
Pre-tax Amounts Reclassified from AOCI into the Consolidated Statements of Operations
The following table shows the pre-tax amounts reclassified from AOCI into the Consolidated Statements of Operations, and the associated financial statement line item, for 2018 and 2017 (in millions):
Comprehensive Income Components
 
Financial Statement Line Item
 
2018
 
2017
Unrealized (gains)/losses on derivative instruments:
 
 
 
 
 
 
Foreign exchange contracts
 
Net sales
 
$
214

 
$
(662
)
 
 
Cost of sales
 
(70
)
 
(654
)
 
 
Other income/(expense), net
 
344

 
(638
)
Interest rate contracts
 
Other income/(expense), net
 
(2
)
 
2

 
 
 
 
486

 
(1,952
)
Unrealized (gains)/losses on marketable securities
 
Other income/(expense), net
 
(20
)
 
(99
)
Total amounts reclassified from AOCI
 
 
 
$
466

 
$
(2,051
)
Changes in AOCI by Component
The following table shows the changes in AOCI by component for 2018 and 2017 (in millions):
 
Cumulative Foreign
Currency Translation
 
Unrealized Gains/Losses
on Derivative Instruments
 
Unrealized Gains/Losses
on Marketable Securities
 
Total
Balances as of September 24, 2016
$
(578
)
 
$
38

 
$
1,174

 
$
634

Other comprehensive income/(loss) before reclassifications
301

 
1,793

 
(1,207
)
 
887

Amounts reclassified from AOCI

 
(1,952
)
 
(99
)
 
(2,051
)
Tax effect
(77
)
 
(3
)
 
460

 
380

Other comprehensive income/(loss)
224


(162
)

(846
)

(784
)
Balances as of September 30, 2017
(354
)
 
(124
)
 
328

 
(150
)
Other comprehensive income/(loss) before reclassifications
(524
)
 
672

 
(4,563
)
 
(4,415
)
Amounts reclassified from AOCI

 
486

 
(20
)
 
466

Tax effect
(1
)
 
(253
)
 
1,177

 
923

Other comprehensive income/(loss)
(525
)

905


(3,406
)

(3,026
)
Cumulative effect of change in accounting principle (1)
(176
)
 
29

 
(131
)
 
(278
)
Balances as of September 29, 2018
$
(1,055
)

$
810


$
(3,209
)

$
(3,454
)

(1)
Refer to Note 4, “Income Taxes” for more information on the Company’s adoption of ASU 2018-02 in 2018.
v3.10.0.1
Benefit Plans (Tables)
12 Months Ended
Sep. 29, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Restricted Stock Unit Activity
A summary of the Company’s RSU activity and related information for 2018, 2017 and 2016, is as follows:
 
Number of
RSUs
(in thousands)
 
Weighted-Average
Grant Date Fair
Value Per RSU
 
Aggregate Fair Value
(in millions)
Balance as of September 26, 2015
101,467

 
$
85.77

 
 
RSUs granted
49,468

 
$
109.28

 
 
RSUs vested
(46,313
)
 
$
84.44

 
 
RSUs canceled
(5,533
)
 
$
96.48

 
 
Balance as of September 24, 2016
99,089

 
$
97.54

 
 
RSUs granted
50,112

 
$
121.65

 
 
RSUs vested
(45,735
)
 
$
95.48

 
 
RSUs canceled
(5,895
)
 
$
106.87

 
 
Balance as of September 30, 2017
97,571

 
$
110.33

 
 
RSUs granted
45,351

 
$
162.86

 
 
RSUs vested
(44,718
)
 
$
111.24

 
 
RSUs canceled
(6,049
)
 
$
127.82

 
 
Balance as of September 29, 2018
92,155

 
$
134.60

 
$
20,803

Summary of Share-Based Compensation Expense
The following table shows a summary of the share-based compensation expense included in the Consolidated Statements of Operations for 2018, 2017 and 2016 (in millions):
 
2018
 
2017
 
2016
Cost of sales
$
1,010

 
$
877

 
$
769

Research and development
2,668

 
2,299

 
1,889

Selling, general and administrative
1,662

 
1,664

 
1,552

Total share-based compensation expense
$
5,340


$
4,840


$
4,210

v3.10.0.1
Commitments and Contingencies (Tables)
12 Months Ended
Sep. 29, 2018
Commitments and Contingencies Disclosure [Abstract]  
Changes in Accrued Warranties and Related Costs
The following table shows changes in the Company’s accrued warranties and related costs for 2018, 2017 and 2016 (in millions):
 
2018
 
2017
 
2016
Beginning accrued warranty and related costs
$
3,834

 
$
3,702

 
$
4,780

Cost of warranty claims
(4,115
)
 
(4,322
)
 
(4,663
)
Accruals for product warranty
3,973

 
4,454

 
3,585

Ending accrued warranty and related costs
$
3,692


$
3,834


$
3,702

Future Minimum Lease Payments Under Noncancelable Operating Leases
Future minimum lease payments under noncancelable operating leases having initial or remaining terms in excess of one year as of September 29, 2018, are as follows (in millions):
2019
$
1,298

2020
1,289

2021
1,218

2022
1,038

2023
800

Thereafter
3,984

Total
$
9,627

Future Payments Under Unconditional Purchase Obligations
Future payments under noncancelable unconditional purchase obligations having a remaining term in excess of one year as of September 29, 2018, are as follows (in millions):
2019
$
2,447

2020
3,202

2021
1,749

2022
1,596

2023
268

Thereafter
66

Total
$
9,328

v3.10.0.1
Segment Information and Geographic Data (Tables)
12 Months Ended
Sep. 29, 2018
Segment Reporting [Abstract]  
Summary Information by Reportable Segment
The following table shows information by reportable segment for 2018, 2017 and 2016 (in millions):
 
2018
 
2017
 
2016
Americas:
 
 
 
 
 
Net sales
$
112,093

 
$
96,600

 
$
86,613

Operating income
$
34,864

 
$
30,684

 
$
28,172

 
 
 
 
 
 
Europe:
 
 
 
 
 
Net sales
$
62,420

 
$
54,938

 
$
49,952

Operating income
$
19,955

 
$
16,514

 
$
15,348

 
 
 
 
 
 
Greater China:
 
 
 
 
 
Net sales
$
51,942

 
$
44,764

 
$
48,492

Operating income
$
19,742

 
$
17,032

 
$
18,835

 
 
 
 
 
 
Japan:
 
 
 
 
 
Net sales
$
21,733

 
$
17,733

 
$
16,928

Operating income
$
9,500

 
$
8,097

 
$
7,165

 
 
 
 
 
 
Rest of Asia Pacific:
 
 
 
 
 
Net sales
$
17,407

 
$
15,199

 
$
13,654

Operating income
$
6,181

 
$
5,304

 
$
4,781

Reconciliation of Segment Operating Income to the Consolidated Statements of Operations
A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2018, 2017 and 2016 is as follows (in millions):
 
2018
 
2017
 
2016
Segment operating income
$
90,242

 
$
77,631

 
$
74,301

Research and development expense
(14,236
)
 
(11,581
)
 
(10,045
)
Other corporate expenses, net
(5,108
)
 
(4,706
)
 
(4,232
)
Total operating income
$
70,898

 
$
61,344

 
$
60,024

Net Sales and Long-lived Assets
Net sales for 2018, 2017 and 2016 and long-lived assets as of September 29, 2018 and September 30, 2017 were as follows (in millions):
 
2018
 
2017
 
2016
Net sales:
 
 
 
 
 
U.S.
$
98,061

 
$
84,339

 
$
75,667

China (1)
51,942

 
44,764

 
48,492

Other countries
115,592

 
100,131

 
91,480

Total net sales
$
265,595


$
229,234


$
215,639


 
2018
 
2017
Long-lived assets:
 
 
 
U.S.
$
23,963

 
$
20,637

China (1)
13,268

 
10,211

Other countries
4,073

 
2,935

Total long-lived assets
$
41,304

 
$
33,783

(1)
China includes Hong Kong and Taiwan. Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure.
Net Sales by Product
Net sales by product for 2018, 2017 and 2016 were as follows (in millions):
 
2018
 
2017
 
2016
iPhone (1)
$
166,699

 
$
141,319

 
$
136,700

iPad (1)
18,805

 
19,222

 
20,628

Mac (1)
25,484

 
25,850

 
22,831

Services (2)
37,190

 
29,980

 
24,348

Other Products (1)(3)
17,417

 
12,863

 
11,132

Total net sales
$
265,595


$
229,234


$
215,639

 
(1)
Includes deferrals and amortization of related software upgrade rights and non-software services.
(2)
Includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services. Services net sales in 2018 included a favorable one-time item of $236 million in connection with the final resolution of various lawsuits. Services net sales in 2017 included a favorable one-time adjustment of $640 million due to a change in estimate based on the availability of additional supporting information.
(3)
Includes sales of AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and other Apple-branded and third-party accessories.
v3.10.0.1
Selected Quarterly Financial Information (Unaudited) (Tables)
12 Months Ended
Sep. 29, 2018
Quarterly Financial Information Disclosure [Abstract]  
Summary of Quarterly Financial Information
The following tables show a summary of the Company’s quarterly financial information for each of the four quarters of 2018 and 2017 (in millions, except per share amounts):
 
Fourth Quarter
 
Third Quarter
 
Second Quarter
 
First Quarter
2018:
 
 
 
 
 
 
 
Net sales
$
62,900

 
$
53,265

 
$
61,137

 
$
88,293

Gross margin
$
24,084

 
$
20,421

 
$
23,422

 
$
33,912

Net income
$
14,125

 
$
11,519

 
$
13,822

 
$
20,065

 
 
 
 
 
 
 
 
Earnings per share (1):
 
 
 
 
 
 
 
Basic
$
2.94

 
$
2.36

 
$
2.75

 
$
3.92

Diluted
$
2.91

 
$
2.34

 
$
2.73

 
$
3.89

 
Fourth Quarter
 
Third Quarter
 
Second Quarter
 
First Quarter
2017:
 
 
 
 
 
 
 
Net sales
$
52,579

 
$
45,408

 
$
52,896

 
$
78,351

Gross margin
$
19,931

 
$
17,488

 
$
20,591

 
$
30,176

Net income
$
10,714

 
$
8,717

 
$
11,029

 
$
17,891

 
 
 
 
 
 
 
 
Earnings per share (1):
 
 
 
 
 
 
 
Basic
$
2.08

 
$
1.68

 
$
2.11

 
$
3.38

Diluted
$
2.07

 
$
1.67

 
$
2.10

 
$
3.36

 
(1)
Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings per share.
v3.10.0.1
Summary of Significant Accounting Policies - Additional Information (Details)
$ in Millions
12 Months Ended
Sep. 29, 2018
USD ($)
Item
Sep. 30, 2017
USD ($)
Sep. 24, 2016
USD ($)
Significant Accounting Policies [Line Items]      
Deliverables in arrangements (up to) | Item 3    
Depreciation and amortization expense $ 9,300 $ 8,200 $ 8,300
Non-cash investing activities involving property, plant and equipment, net increase to accounts payable and other current liabilities $ 3,400    
Accounting Standards Update 2016-09      
Significant Accounting Policies [Line Items]      
Increase to cash provided by operating activities   $ 627 $ 407
Building | Maximum      
Significant Accounting Policies [Line Items]      
Property, plant and equipment, estimated useful life 30 years    
Machinery and Equipment | Minimum      
Significant Accounting Policies [Line Items]      
Property, plant and equipment, estimated useful life 1 year    
Machinery and Equipment | Maximum      
Significant Accounting Policies [Line Items]      
Property, plant and equipment, estimated useful life 5 years    
Internal-Use Software | Minimum      
Significant Accounting Policies [Line Items]      
Property, plant and equipment, estimated useful life 3 years    
Internal-Use Software | Maximum      
Significant Accounting Policies [Line Items]      
Property, plant and equipment, estimated useful life 5 years    
v3.10.0.1
Summary of Significant Accounting Policies - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
3 Months Ended 12 Months Ended
Sep. 29, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 30, 2017
Sep. 30, 2017
Jul. 01, 2017
Apr. 01, 2017
Dec. 31, 2016
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Numerator:                      
Net income $ 14,125 $ 11,519 $ 13,822 $ 20,065 $ 10,714 $ 8,717 $ 11,029 $ 17,891 $ 59,531 $ 48,351 $ 45,687
Denominator:                      
Weighted-average basic shares outstanding (in shares)                 4,955,377 5,217,242 5,470,820
Effect of dilutive securities (in shares)                 44,732 34,450 29,461
Weighted-average diluted shares (in shares)                 5,000,109 5,251,692 5,500,281
Basic earnings per share (in dollars per share) $ 2.94 $ 2.36 $ 2.75 $ 3.92 $ 2.08 $ 1.68 $ 2.11 $ 3.38 $ 12.01 $ 9.27 $ 8.35
Diluted earnings per share (in dollars per share) $ 2.91 $ 2.34 $ 2.73 $ 3.89 $ 2.07 $ 1.67 $ 2.10 $ 3.36 $ 11.91 $ 9.21 $ 8.31
v3.10.0.1
Financial Instruments - Cash, Cash Equivalents and Marketable Securities (Details) - USD ($)
$ in Millions
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost $ 241,180 $ 268,399    
Unrealized Gains 209 1,278    
Unrealized Losses (4,289) (782)    
Fair Value 237,100 268,895    
Cash and Cash Equivalents 25,913 20,289 $ 20,484 $ 21,120
Short-Term Marketable Securities 40,388 53,892    
Long-Term Marketable Securities 170,799 194,714    
Total cash, cash equivalents and marketable securities that were restricted from general use 20,300      
Cash        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 11,575 7,982    
Unrealized Gains 0 0    
Unrealized Losses 0 0    
Fair Value 11,575 7,982    
Cash and Cash Equivalents 11,575 7,982    
Short-Term Marketable Securities 0 0    
Long-Term Marketable Securities 0 0    
Level 1        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 8,882 7,333    
Unrealized Gains 0 0    
Unrealized Losses (116) (88)    
Fair Value 8,766 7,245    
Cash and Cash Equivalents 8,083 6,534    
Short-Term Marketable Securities 683 711    
Long-Term Marketable Securities 0 0    
Level 1 | Money market funds        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 8,083 6,534    
Unrealized Gains 0 0    
Unrealized Losses 0 0    
Fair Value 8,083 6,534    
Cash and Cash Equivalents 8,083 6,534    
Short-Term Marketable Securities 0 0    
Long-Term Marketable Securities 0 0    
Level 1 | Mutual funds        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 799 799    
Unrealized Gains 0 0    
Unrealized Losses (116) (88)    
Fair Value 683 711    
Cash and Cash Equivalents 0 0    
Short-Term Marketable Securities 683 711    
Long-Term Marketable Securities 0 0    
Level 2        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 220,723 253,084    
Unrealized Gains 209 1,278    
Unrealized Losses (4,173) (694)    
Fair Value 216,759 253,668    
Cash and Cash Equivalents 6,255 5,773    
Short-Term Marketable Securities 39,705 53,181    
Long-Term Marketable Securities 170,799 194,714    
Level 2 | U.S. Treasury securities        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 47,296 55,254    
Unrealized Gains 0 58    
Unrealized Losses (1,202) (230)    
Fair Value 46,094 55,082    
Cash and Cash Equivalents 1,613 865    
Short-Term Marketable Securities 7,606 17,228    
Long-Term Marketable Securities 36,875 36,989    
Level 2 | U.S. agency securities        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 4,127 5,162    
Unrealized Gains 0 2    
Unrealized Losses (48) (9)    
Fair Value 4,079 5,155    
Cash and Cash Equivalents 1,732 1,439    
Short-Term Marketable Securities 360 2,057    
Long-Term Marketable Securities 1,987 1,659    
Level 2 | Non-U.S. government securities        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 21,601 7,827    
Unrealized Gains 49 210    
Unrealized Losses (250) (37)    
Fair Value 21,400 8,000    
Cash and Cash Equivalents 0 9    
Short-Term Marketable Securities 3,355 123    
Long-Term Marketable Securities 18,045 7,868    
Level 2 | Certificates of deposit and time deposits        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 3,074 5,832    
Unrealized Gains 0 0    
Unrealized Losses 0 0    
Fair Value 3,074 5,832    
Cash and Cash Equivalents 1,247 1,142    
Short-Term Marketable Securities 1,330 3,918    
Long-Term Marketable Securities 497 772    
Level 2 | Commercial paper        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 2,573 3,640    
Unrealized Gains 0 0    
Unrealized Losses 0 0    
Fair Value 2,573 3,640    
Cash and Cash Equivalents 1,663 2,146    
Short-Term Marketable Securities 910 1,494    
Long-Term Marketable Securities 0 0    
Level 2 | Corporate securities        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 123,001 152,724    
Unrealized Gains 152 969    
Unrealized Losses (2,038) (242)    
Fair Value 121,115 153,451    
Cash and Cash Equivalents 0 172    
Short-Term Marketable Securities 25,162 27,591    
Long-Term Marketable Securities 95,953 125,688    
Level 2 | Municipal securities        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 946 961    
Unrealized Gains 0 4    
Unrealized Losses (12) (1)    
Fair Value 934 964    
Cash and Cash Equivalents 0 0    
Short-Term Marketable Securities 178 114    
Long-Term Marketable Securities 756 850    
Level 2 | Mortgage- and asset-backed securities        
Debt Securities, Available-for-sale [Line Items]        
Adjusted Cost 18,105 21,684    
Unrealized Gains 8 35    
Unrealized Losses (623) (175)    
Fair Value 17,490 21,544    
Cash and Cash Equivalents 0 0    
Short-Term Marketable Securities 804 656    
Long-Term Marketable Securities $ 16,686 $ 20,888    
v3.10.0.1
Financial Instruments - Additional Information (Details)
$ in Millions
12 Months Ended
Sep. 29, 2018
USD ($)
Customer
Vendor
Sep. 30, 2017
USD ($)
Customer
Vendor
Financial Instruments [Line Items]    
Hedged interest rate transactions, expected recognition period 9 years  
Potential reduction to derivative assets resulting from rights of set-off under master netting arrangements $ 2,100 $ 1,400
Potential reduction to derivative liabilities resulting from rights of set-off under master netting arrangements 2,100 1,400
Net derivative assets/(liabilities) after potential reductions under master netting arrangements $ 138 $ 32
Trade receivables | Credit concentration risk    
Financial Instruments [Line Items]    
Number of customers that individually represented 10% or more of total trade receivables | Customer 1 2
Trade receivables | Credit concentration risk | Customer one    
Financial Instruments [Line Items]    
Concentration risk, percentage 10.00% 10.00%
Trade receivables | Credit concentration risk | Customer two    
Financial Instruments [Line Items]    
Concentration risk, percentage   10.00%
Trade receivables | Credit concentration risk | Cellular network carriers    
Financial Instruments [Line Items]    
Concentration risk, percentage 59.00% 59.00%
Non-trade receivables | Credit concentration risk    
Financial Instruments [Line Items]    
Number of vendors that individually represented 10% or more of total vendor non-trade receivables | Vendor 2 3
Non-trade receivables | Credit concentration risk | Vendor one    
Financial Instruments [Line Items]    
Concentration risk, percentage 62.00% 42.00%
Non-trade receivables | Credit concentration risk | Vendor two    
Financial Instruments [Line Items]    
Concentration risk, percentage 12.00% 19.00%
Non-trade receivables | Credit concentration risk | Vendor three    
Financial Instruments [Line Items]    
Concentration risk, percentage   10.00%
Other current assets    
Financial Instruments [Line Items]    
Net cash collateral posted, derivative instruments $ 1,000  
Other current liabilities    
Financial Instruments [Line Items]    
Net cash collateral received, derivative instruments   $ 35
Derivatives not designated as accounting hedges | Net sales    
Financial Instruments [Line Items]    
Non-designated derivatives, fair value adjustment gains/(losses) 20 20
Derivatives not designated as accounting hedges | Cost of sales    
Financial Instruments [Line Items]    
Non-designated derivatives, fair value adjustment gains/(losses) 85 (40)
Derivatives not designated as accounting hedges | Other income/(expense), net    
Financial Instruments [Line Items]    
Non-designated derivatives, fair value adjustment gains/(losses) $ (198) $ 606
Hedges of foreign currency exposure associated with revenue and inventory purchases    
Financial Instruments [Line Items]    
Hedged foreign currency transactions, expected recognition period 12 months  
Hedges of foreign currency exposure associated with term debt    
Financial Instruments [Line Items]    
Hedged foreign currency transactions, expected recognition period 24 years  
Minimum    
Financial Instruments [Line Items]    
General maturities of long-term marketable securities 1 year  
Maximum    
Financial Instruments [Line Items]    
General maturities of long-term marketable securities 5 years  
v3.10.0.1
Financial Instruments - Marketable Securities in a Continuous Unrealized Loss Position (Details) - USD ($)
$ in Millions
Sep. 29, 2018
Sep. 30, 2017
Fair Value of Marketable Securities    
Continuous Unrealized Losses, Less than 12 Months $ 126,238 $ 101,986
Continuous Unrealized Losses, 12 Months or Greater 60,599 8,290
Continuous Unrealized Losses, Total 186,837 110,276
Unrealized Losses    
Continuous Unrealized Losses, Less than 12 Months (2,400) (596)
Continuous Unrealized Losses, 12 Months or Greater (1,889) (186)
Continuous Unrealized Losses, Total $ (4,289) $ (782)
v3.10.0.1
Financial Instruments - Derivative Instruments at Gross Fair Value (Details) - Level 2 - USD ($)
$ in Millions
Sep. 29, 2018
Sep. 30, 2017
Other current assets and other non-current assets | Foreign exchange contracts    
Derivative assets:    
Fair value of derivative assets $ 1,274 $ 1,412
Other current assets and other non-current assets | Interest rate contracts    
Derivative assets:    
Fair value of derivative assets   218
Other current assets and other non-current assets | Derivatives designated as accounting hedges | Foreign exchange contracts    
Derivative assets:    
Fair value of derivative assets 1,015 1,049
Other current assets and other non-current assets | Derivatives designated as accounting hedges | Interest rate contracts    
Derivative assets:    
Fair value of derivative assets   218
Other current assets and other non-current assets | Derivatives not designated as accounting hedges | Foreign exchange contracts    
Derivative assets:    
Fair value of derivative assets 259 363
Other current assets and other non-current assets | Derivatives not designated as accounting hedges | Interest rate contracts    
Derivative assets:    
Fair value of derivative assets   0
Other current liabilities and other non-current liabilities | Foreign exchange contracts    
Derivative liabilities:    
Fair value of derivative liabilities 680 1,260
Other current liabilities and other non-current liabilities | Interest rate contracts    
Derivative liabilities:    
Fair value of derivative liabilities 1,456 303
Other current liabilities and other non-current liabilities | Derivatives designated as accounting hedges | Foreign exchange contracts    
Derivative liabilities:    
Fair value of derivative liabilities 543 759
Other current liabilities and other non-current liabilities | Derivatives designated as accounting hedges | Interest rate contracts    
Derivative liabilities:    
Fair value of derivative liabilities 1,456 303
Other current liabilities and other non-current liabilities | Derivatives not designated as accounting hedges | Foreign exchange contracts    
Derivative liabilities:    
Fair value of derivative liabilities 137 501
Other current liabilities and other non-current liabilities | Derivatives not designated as accounting hedges | Interest rate contracts    
Derivative liabilities:    
Fair value of derivative liabilities $ 0 $ 0
v3.10.0.1
Financial Instruments - Pre-Tax Gains and Losses of Derivative and Non-Derivative Instruments Designated as Hedges (Details) - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Cash flow hedges      
Derivative Instruments, Gain (Loss) [Line Items]      
Gains/(Losses) recognized in OCI - effective portion $ 683 $ 1,804 $ 52
Gains/(Losses) reclassified from AOCI into net income - effective portion (481) 1,956 874
Cash flow hedges | Foreign exchange contracts      
Derivative Instruments, Gain (Loss) [Line Items]      
Gains/(Losses) recognized in OCI - effective portion 682 1,797 109
Gains/(Losses) reclassified from AOCI into net income - effective portion (482) 1,958 885
Cash flow hedges | Interest rate contracts      
Derivative Instruments, Gain (Loss) [Line Items]      
Gains/(Losses) recognized in OCI - effective portion 1 7 (57)
Gains/(Losses) reclassified from AOCI into net income - effective portion 1 (2) (11)
Net investment hedges | Foreign currency debt      
Derivative Instruments, Gain (Loss) [Line Items]      
Gains/(Losses) recognized in OCI - effective portion 4 67 (258)
Fair value hedges      
Derivative Instruments, Gain (Loss) [Line Items]      
Gains/(Losses) on derivative instruments (1,531) (810) 341
Gains/(Losses) related to hedged items 1,530 810 (341)
Fair value hedges | Foreign exchange contracts      
Derivative Instruments, Gain (Loss) [Line Items]      
Gains/(Losses) on derivative instruments (168) 0 0
Gains/(Losses) related to hedged items 167 0 0
Fair value hedges | Interest rate contracts      
Derivative Instruments, Gain (Loss) [Line Items]      
Gains/(Losses) on derivative instruments (1,363) (810) 341
Gains/(Losses) related to hedged items $ 1,363 $ 810 $ (341)
v3.10.0.1
Financial Instruments - Notional Amounts and Credit Risk Amounts Associated with Derivative Instruments (Details) - USD ($)
$ in Millions
Sep. 29, 2018
Sep. 30, 2017
Derivatives designated as accounting hedges | Foreign exchange contracts    
Derivative [Line Items]    
Derivative, notional amount $ 65,368 $ 56,156
Derivative, credit risk amount 1,015 1,049
Derivatives designated as accounting hedges | Interest rate contracts    
Derivative [Line Items]    
Derivative, notional amount 33,250 33,000
Derivative, credit risk amount 0 218
Derivatives not designated as accounting hedges | Foreign exchange contracts    
Derivative [Line Items]    
Derivative, notional amount 63,062 69,774
Derivative, credit risk amount $ 259 $ 363
v3.10.0.1
Consolidated Financial Statement Details - Property, Plant and Equipment, Net (Details) - USD ($)
$ in Millions
Sep. 29, 2018
Sep. 30, 2017
Property, Plant and Equipment [Line Items]    
Gross property, plant and equipment $ 90,403 $ 75,076
Accumulated depreciation and amortization (49,099) (41,293)
Total property, plant and equipment, net 41,304 33,783
Land and buildings    
Property, Plant and Equipment [Line Items]    
Gross property, plant and equipment 16,216 13,587
Machinery, equipment and internal-use software    
Property, Plant and Equipment [Line Items]    
Gross property, plant and equipment 65,982 54,210
Leasehold improvements    
Property, Plant and Equipment [Line Items]    
Gross property, plant and equipment $ 8,205 $ 7,279
v3.10.0.1
Consolidated Financial Statement Details - Other Non-Current Liabilities (Details) - USD ($)
$ in Millions
Sep. 29, 2018
Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Long-term taxes payable $ 33,589 $ 257
Deferred tax liabilities 426 31,504
Other non-current liabilities 11,165 8,654
Total other non-current liabilities $ 45,180 $ 40,415
v3.10.0.1
Consolidated Financial Statement Details - Other Income/(Expense), Net (Details) - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]      
Interest and dividend income $ 5,686 $ 5,201 $ 3,999
Interest expense (3,240) (2,323) (1,456)
Other expense, net (441) (133) (1,195)
Total other income/(expense), net $ 2,005 $ 2,745 $ 1,348
v3.10.0.1
Income Taxes - Provision for Income Taxes (Details) - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Federal:      
Current $ 41,425 $ 7,842 $ 7,652
Deferred (33,819) 5,980 5,043
Federal income tax expense/(benefit) 7,606 13,822 12,695
State:      
Current 551 259 990
Deferred 48 2 (138)
State income tax expense/(benefit) 599 261 852
Foreign:      
Current 3,986 1,671 2,105
Deferred 1,181 (16) 33
Foreign income tax expense/(benefit) 5,167 1,655 2,138
Provision for income taxes $ 13,372 $ 15,738 $ 15,685
v3.10.0.1
Income Taxes - Additional Information (Details)
$ in Millions, € in Billions
12 Months Ended
Jan. 01, 2018
Dec. 31, 2017
Aug. 30, 2016
EUR (€)
Subsidiary
Sep. 29, 2018
USD ($)
Sep. 30, 2017
USD ($)
Sep. 24, 2016
USD ($)
Sep. 26, 2015
USD ($)
Income Tax Contingency [Line Items]              
U.S. statutory federal income tax rate 21.00% 35.00%   24.50% 35.00% 35.00%  
Provision for income taxes related to the Act       $ 1,500      
Provision for income taxes related to remeasurement of deferred tax balances       2,000      
Provision for income taxes related to deemed repatriation tax, provisional amount       1,200      
Increase/(Reduction) to unrecognized tax benefits related to deemed repatriation tax       (1,700)      
Provision for income taxes related to remeasurement of deferred tax balances, provisional amount       1,200      
Deferred tax liability for unremitted foreign earnings       275 $ 36,355    
Deferred tax liability reversal       32,590 (5,966) $ (4,938)  
Deemed repatriation tax payable, provisional amount       37,300      
Reclassification from AOCI to retained earnings, tax effects of the Act       0      
Foreign pre-tax earnings       48,000 44,700 41,100  
Net excess tax benefits from equity awards         620 379  
Gross unrecognized tax benefits       9,694 8,407 7,724 $ 6,900
Gross unrecognized tax benefits that would impact effective tax rate, if recognized       7,400 2,500    
Unrecognized tax benefits, gross interest and penalties accrued       1,400 1,200    
Tax matters, recognized interest and penalty expense       236 165 295  
Reasonably possible decrease in gross unrecognized tax benefits over next 12 months       800      
Unfavorable investigation outcome, EU State Aid rules              
Income Tax Contingency [Line Items]              
Number of subsidiaries impacted by the European Commission tax ruling | Subsidiary     2        
Maximum potential loss related to European Commission tax ruling | €     € 13.1        
Unfavorable investigation outcome, EU State Aid rules - interest component              
Income Tax Contingency [Line Items]              
Maximum potential loss related to European Commission tax ruling | €     € 1.2        
Tax Cuts and Jobs Act, deemed repatriation tax, related amount              
Income Tax Contingency [Line Items]              
Deferred tax liability reversal       (36,100)      
Accumulated Other Comprehensive Income/(Loss)              
Income Tax Contingency [Line Items]              
Reclassification from AOCI to retained earnings, tax effects of the Act       (278)      
Net excess tax benefits from equity awards         0 0  
Retained Earnings              
Income Tax Contingency [Line Items]              
Reclassification from AOCI to retained earnings, tax effects of the Act       278      
Net excess tax benefits from equity awards         $ 0 $ 0  
Accounting Standards Update 2018-02 | Accumulated Other Comprehensive Income/(Loss)              
Income Tax Contingency [Line Items]              
Reclassification from AOCI to retained earnings, tax effects of the Act       (278)      
Accounting Standards Update 2018-02 | Retained Earnings              
Income Tax Contingency [Line Items]              
Reclassification from AOCI to retained earnings, tax effects of the Act       $ 278      
v3.10.0.1
Income Taxes - Reconciliation of the Provision for Income Taxes (Details) - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Income Tax Disclosure [Abstract]      
Computed expected tax $ 17,890 $ 22,431 $ 21,480
State taxes, net of federal effect 271 185 553
Impacts of the Act 1,515 0 0
Earnings of foreign subsidiaries (5,606) (6,135) (5,582)
Domestic production activities deduction (195) (209) (382)
Research and development credit, net (560) (678) (371)
Other 57 144 (13)
Provision for income taxes $ 13,372 $ 15,738 $ 15,685
Effective tax rate 18.30% 24.60% 25.60%
v3.10.0.1
Income Taxes - Significant Components of Deferred Tax Assets and Liabilities (Details) - USD ($)
$ in Millions
Sep. 29, 2018
Sep. 30, 2017
Deferred tax assets:    
Accrued liabilities and other reserves $ 3,151 $ 4,019
Basis of capital assets 137 1,230
Deferred revenue 1,141 1,521
Deferred cost sharing 0 667
Share-based compensation 513 703
Unrealized losses 871 0
Other 797 834
Total deferred tax assets 6,610 8,974
Deferred tax liabilities:    
Earnings of foreign subsidiaries 275 36,355
Other 501 207
Total deferred tax liabilities 776 36,562
Net deferred tax assets $ 5,834  
Net deferred tax liabilities   $ (27,588)
v3.10.0.1
Income Taxes - Aggregate Changes in Gross Unrecognized Tax Benefits, Excluding Interest and Penalties (Details) - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]      
Beginning balances $ 8,407 $ 7,724 $ 6,900
Increases related to tax positions taken during a prior year 2,431 333 1,121
Decreases related to tax positions taken during a prior year (2,212) (952) (257)
Increases related to tax positions taken during the current year 1,824 1,880 1,578
Decreases related to settlements with taxing authorities (756) (539) (1,618)
Decreases related to expiration of statute of limitations 0 (39) 0
Ending balances $ 9,694 $ 8,407 $ 7,724
v3.10.0.1
Debt - Additional Information (Details) - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Debt Instrument [Line Items]      
Commercial paper $ 11,964 $ 11,977  
Commercial paper, general maturity period (less than) 9 months    
Commercial paper, weighted-average interest rate 2.18% 1.20%  
Floating- and fixed-rate notes, aggregate principal amount $ 104,193 $ 104,021  
Interest expense on term debt 3,000 2,200 $ 1,400
Level 2      
Debt Instrument [Line Items]      
Floating- and fixed-rate notes, aggregate fair value 103,200 106,100  
Net investment hedges      
Debt Instrument [Line Items]      
Carrying value of debt designated as a net investment hedge $ 811 $ 1,600  
v3.10.0.1
Debt - Summary of Cash Flows Associated with Commercial Paper (Details) - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Maturities 90 days or less:      
Proceeds from/(Repayments of) commercial paper, net $ 1,044 $ (1,782) $ (869)
Maturities greater than 90 days:      
Proceeds from commercial paper 14,555 17,932 3,632
Repayments of commercial paper (15,636) (12,298) (3,160)
Proceeds from/(Repayments of) commercial paper, net (1,081) 5,634 472
Total change in commercial paper, net $ (37) $ 3,852 $ (397)
v3.10.0.1
Debt - Summary of Term Debt (Details) - USD ($)
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Debt Instrument [Line Items]    
Total term debt $ 104,193,000,000 $ 104,021,000,000
Unamortized premium/(discount) and issuance costs, net (218,000,000) (225,000,000)
Hedge accounting fair value adjustments (1,456,000,000) (93,000,000)
Less: Current portion of term debt (8,784,000,000) (6,496,000,000)
Total non-current portion of term debt 93,735,000,000 97,207,000,000
2013 debt issuance of $17.0 billion    
Debt Instrument [Line Items]    
Debt instrument, face amount 17,000,000,000  
2013 debt issuance of $17.0 billion | Floating-rate notes    
Debt Instrument [Line Items]    
Total term debt $ 0 $ 2,000,000,000
Debt instrument, effective interest rate 0.00% 1.10%
2013 debt issuance of $17.0 billion | Fixed-rate 2.400% – 3.850% notes    
Debt Instrument [Line Items]    
Total term debt $ 8,500,000,000 $ 12,500,000,000
Debt instrument maturity year, start 2023  
Debt instrument maturity year, end 2043  
2013 debt issuance of $17.0 billion | Fixed-rate 2.400% – 3.850% notes | Minimum    
Debt Instrument [Line Items]    
Debt instrument, stated interest rate 2.40%  
Debt instrument, effective interest rate 2.44% 1.08%
2013 debt issuance of $17.0 billion | Fixed-rate 2.400% – 3.850% notes | Maximum    
Debt Instrument [Line Items]    
Debt instrument, stated interest rate 3.85%  
Debt instrument, effective interest rate 3.91% 3.91%
2014 debt issuance of $12.0 billion    
Debt Instrument [Line Items]    
Debt instrument, face amount $ 12,000,000,000  
2014 debt issuance of $12.0 billion | Floating-rate notes    
Debt Instrument [Line Items]    
Total term debt $ 1,000,000,000 $ 1,000,000,000
Debt instrument, maturity year 2019  
Debt instrument, effective interest rate 2.64% 1.61%
2014 debt issuance of $12.0 billion | Fixed-rate 2.100% – 4.450% notes    
Debt Instrument [Line Items]    
Total term debt $ 8,500,000,000 $ 8,500,000,000
Debt instrument maturity year, start 2019  
Debt instrument maturity year, end 2044  
2014 debt issuance of $12.0 billion | Fixed-rate 2.100% – 4.450% notes | Minimum    
Debt Instrument [Line Items]    
Debt instrument, stated interest rate 2.10%  
Debt instrument, effective interest rate 2.64% 1.61%
2014 debt issuance of $12.0 billion | Fixed-rate 2.100% – 4.450% notes | Maximum    
Debt Instrument [Line Items]    
Debt instrument, stated interest rate 4.45%  
Debt instrument, effective interest rate 4.48% 4.48%
2015 debt issuances of $27.3 billion    
Debt Instrument [Line Items]    
Debt instrument, face amount $ 27,300,000,000  
2015 debt issuances of $27.3 billion | Floating-rate notes    
Debt Instrument [Line Items]    
Total term debt $ 1,507,000,000 $ 1,549,000,000
Debt instrument maturity year, start 2019  
Debt instrument maturity year, end 2020  
2015 debt issuances of $27.3 billion | Floating-rate notes | Minimum    
Debt Instrument [Line Items]    
Debt instrument, effective interest rate 1.87% 1.56%
2015 debt issuances of $27.3 billion | Floating-rate notes | Maximum    
Debt Instrument [Line Items]    
Debt instrument, effective interest rate 2.64% 1.87%
2015 debt issuances of $27.3 billion | Fixed-rate 0.350% – 4.375% notes    
Debt Instrument [Line Items]    
Total term debt $ 24,410,000,000 $ 24,522,000,000
Debt instrument maturity year, start 2019  
Debt instrument maturity year, end 2045  
2015 debt issuances of $27.3 billion | Fixed-rate 0.350% – 4.375% notes | Minimum    
Debt Instrument [Line Items]    
Debt instrument, stated interest rate 0.35%  
Debt instrument, effective interest rate 0.28% 0.28%
2015 debt issuances of $27.3 billion | Fixed-rate 0.350% – 4.375% notes | Maximum    
Debt Instrument [Line Items]    
Debt instrument, stated interest rate 4.375%  
Debt instrument, effective interest rate 4.51% 4.51%
2016 debt issuances of $24.9 billion    
Debt Instrument [Line Items]    
Debt instrument, face amount $ 24,900,000,000  
2016 debt issuances of $24.9 billion | Floating-rate notes    
Debt Instrument [Line Items]    
Total term debt $ 1,350,000,000 $ 1,350,000,000
Debt instrument maturity year, start 2019  
Debt instrument maturity year, end 2021  
2016 debt issuances of $24.9 billion | Floating-rate notes | Minimum    
Debt Instrument [Line Items]    
Debt instrument, effective interest rate 2.48% 1.45%
2016 debt issuances of $24.9 billion | Floating-rate notes | Maximum    
Debt Instrument [Line Items]    
Debt instrument, effective interest rate 3.44% 2.44%
2016 debt issuances of $24.9 billion | Fixed-rate 1.100% – 4.650% notes    
Debt Instrument [Line Items]    
Total term debt $ 23,059,000,000 $ 23,645,000,000
Debt instrument maturity year, start 2019  
Debt instrument maturity year, end 2046  
2016 debt issuances of $24.9 billion | Fixed-rate 1.100% – 4.650% notes | Minimum    
Debt Instrument [Line Items]    
Debt instrument, stated interest rate 1.10%  
Debt instrument, effective interest rate 1.13% 1.13%
2016 debt issuances of $24.9 billion | Fixed-rate 1.100% – 4.650% notes | Maximum    
Debt Instrument [Line Items]    
Debt instrument, stated interest rate 4.65%  
Debt instrument, effective interest rate 4.78% 4.78%
2017 debt Issuances of $28.7 billion    
Debt Instrument [Line Items]    
Debt instrument, face amount $ 28,700,000,000  
2017 debt Issuances of $28.7 billion | Floating-rate notes    
Debt Instrument [Line Items]    
Total term debt $ 3,250,000,000 $ 3,250,000,000
Debt instrument maturity year, start 2019  
Debt instrument maturity year, end 2022  
2017 debt Issuances of $28.7 billion | Floating-rate notes | Minimum    
Debt Instrument [Line Items]    
Debt instrument, effective interest rate 2.41% 1.38%
2017 debt Issuances of $28.7 billion | Floating-rate notes | Maximum    
Debt Instrument [Line Items]    
Debt instrument, effective interest rate 2.84% 1.81%
2017 debt Issuances of $28.7 billion | Fixed-rate 0.875% – 4.300% notes    
Debt Instrument [Line Items]    
Total term debt $ 25,617,000,000 $ 25,705,000,000
Debt instrument maturity year, start 2019  
Debt instrument maturity year, end 2047  
2017 debt Issuances of $28.7 billion | Fixed-rate 0.875% – 4.300% notes | Minimum    
Debt Instrument [Line Items]    
Debt instrument, stated interest rate 0.875%  
Debt instrument, effective interest rate 1.54% 1.51%
2017 debt Issuances of $28.7 billion | Fixed-rate 0.875% – 4.300% notes | Maximum    
Debt Instrument [Line Items]    
Debt instrument, stated interest rate 4.30%  
Debt instrument, effective interest rate 4.30% 4.30%
First quarter 2018 debt issuance of $7.0 billion    
Debt Instrument [Line Items]    
Debt instrument, face amount $ 7,000,000,000  
First quarter 2018 debt issuance of $7.0 billion | Fixed-rate 1.800% notes    
Debt Instrument [Line Items]    
Total term debt $ 1,000,000,000 $ 0
Debt instrument, maturity year 2019  
Debt instrument, stated interest rate 1.80%  
Debt instrument, effective interest rate 1.83% 0.00%
First quarter 2018 debt issuance of $7.0 billion | Fixed-rate 2.000% notes    
Debt Instrument [Line Items]    
Total term debt $ 1,000,000,000 $ 0
Debt instrument, maturity year 2020  
Debt instrument, stated interest rate 2.00%  
Debt instrument, effective interest rate 2.03% 0.00%
First quarter 2018 debt issuance of $7.0 billion | Fixed-rate 2.400% notes    
Debt Instrument [Line Items]    
Total term debt $ 750,000,000 $ 0
Debt instrument, maturity year 2023  
Debt instrument, stated interest rate 2.40%  
Debt instrument, effective interest rate 2.66% 0.00%
First quarter 2018 debt issuance of $7.0 billion | Fixed-rate 2.750% notes    
Debt Instrument [Line Items]    
Total term debt $ 1,500,000,000 $ 0
Debt instrument, maturity year 2025  
Debt instrument, stated interest rate 2.75%  
Debt instrument, effective interest rate 2.77% 0.00%
First quarter 2018 debt issuance of $7.0 billion | Fixed-rate 3.000% notes    
Debt Instrument [Line Items]    
Total term debt $ 1,500,000,000 $ 0
Debt instrument, maturity year 2027  
Debt instrument, stated interest rate 3.00%  
Debt instrument, effective interest rate 3.05% 0.00%
First quarter 2018 debt issuance of $7.0 billion | Fixed-rate 3.750% notes    
Debt Instrument [Line Items]    
Total term debt $ 1,250,000,000 $ 0
Debt instrument, maturity year 2047  
Debt instrument, stated interest rate 3.75%  
Debt instrument, effective interest rate 3.80% 0.00%
v3.10.0.1
Debt - Future Principal Payments for Term Debt (Details) - USD ($)
$ in Millions
Sep. 29, 2018
Sep. 30, 2017
Debt Disclosure [Abstract]    
2019 $ 8,797  
2020 10,183  
2021 8,750  
2022 8,583  
2023 9,395  
Thereafter 58,485  
Total term debt $ 104,193 $ 104,021
v3.10.0.1
Shareholders' Equity - Additional Information (Details) - USD ($)
shares in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
May 01, 2018
Apr. 30, 2018
Share Repurchase Program [Line Items]          
Number of shares repurchased (in shares) 405.5        
Amount of share repurchases $ 73,056,000,000 $ 33,001,000,000 $ 29,000,000,000    
$100 billion share repurchase program announced on May 1, 2018          
Share Repurchase Program [Line Items]          
Maximum amount authorized for repurchase of common stock       $ 100,000,000,000  
Amount of share repurchases 29,000,000,000        
$210 billion previous share repurchase program          
Share Repurchase Program [Line Items]          
Maximum amount authorized for repurchase of common stock         $ 210,000,000,000
Amount of share repurchases $ 44,000,000,000        
v3.10.0.1
Comprehensive Income - Pre-tax Amounts Reclassified from AOCI into Consolidated Statements of Operations (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Sep. 29, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 30, 2017
Sep. 30, 2017
Jul. 01, 2017
Apr. 01, 2017
Dec. 31, 2016
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]                      
Net sales $ (62,900) $ (53,265) $ (61,137) $ (88,293) $ (52,579) $ (45,408) $ (52,896) $ (78,351) $ (265,595) $ (229,234) $ (215,639)
Cost of sales                 163,756 141,048 131,376
Other income/(expense), net                 (2,005) (2,745) (1,348)
Total amounts reclassified from AOCI                 (72,903) (64,089) $ (61,372)
Reclassifications out of AOCI                      
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]                      
Total amounts reclassified from AOCI                 466 (2,051)  
Reclassifications out of AOCI | Unrealized (gains)/losses on derivative instruments                      
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]                      
Total amounts reclassified from AOCI                 486 (1,952)  
Reclassifications out of AOCI | Unrealized (gains)/losses on derivative instruments | Foreign exchange contracts                      
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]                      
Net sales                 214 (662)  
Cost of sales                 (70) (654)  
Other income/(expense), net                 344 (638)  
Reclassifications out of AOCI | Unrealized (gains)/losses on derivative instruments | Interest rate contracts                      
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]                      
Other income/(expense), net                 (2) 2  
Reclassifications out of AOCI | Unrealized (gains)/losses on marketable securities                      
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]                      
Other income/(expense), net                 $ (20) $ (99)  
v3.10.0.1
Comprehensive Income - Change in AOCI by Component (Details) - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
AOCI Attributable to Parent, Net of Tax [Roll Forward]      
Beginning balances $ 134,047 $ 128,249 $ 119,355
Total other comprehensive income/(loss) (3,026) (784) 979
Cumulative effect of change in accounting principle 0    
Ending balances 107,147 134,047 128,249
Cumulative Foreign Currency Translation      
AOCI Attributable to Parent, Net of Tax [Roll Forward]      
Beginning balances (354) (578)  
Other comprehensive income/(loss) before reclassifications (524) 301  
Amounts reclassified from AOCI 0 0  
Tax effect (1) (77)  
Total other comprehensive income/(loss) (525) 224  
Cumulative effect of change in accounting principle (176)    
Ending balances (1,055) (354) (578)
Unrealized Gains/Losses on Derivative Instruments      
AOCI Attributable to Parent, Net of Tax [Roll Forward]      
Beginning balances (124) 38  
Other comprehensive income/(loss) before reclassifications 672 1,793  
Amounts reclassified from AOCI 486 (1,952)  
Tax effect (253) (3)  
Total other comprehensive income/(loss) 905 (162)  
Cumulative effect of change in accounting principle 29    
Ending balances 810 (124) 38
Unrealized Gains/Losses on Marketable Securities      
AOCI Attributable to Parent, Net of Tax [Roll Forward]      
Beginning balances 328 1,174  
Other comprehensive income/(loss) before reclassifications (4,563) (1,207)  
Amounts reclassified from AOCI (20) (99)  
Tax effect 1,177 460  
Total other comprehensive income/(loss) (3,406) (846)  
Cumulative effect of change in accounting principle (131)    
Ending balances (3,209) 328 1,174
Total AOCI      
AOCI Attributable to Parent, Net of Tax [Roll Forward]      
Beginning balances (150) 634 (345)
Other comprehensive income/(loss) before reclassifications (4,415) 887  
Amounts reclassified from AOCI 466 (2,051)  
Tax effect 923 380  
Total other comprehensive income/(loss) (3,026) (784) 979
Cumulative effect of change in accounting principle (278)    
Ending balances $ (3,454) $ (150) $ 634
v3.10.0.1
Benefit Plans - Additional Information (Details)
12 Months Ended
Sep. 29, 2018
USD ($)
shares
Sep. 30, 2017
USD ($)
shares
Sep. 24, 2016
USD ($)
shares
Mar. 29, 2014
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Maximum portion of pre-tax earnings under 401(k) Plan that can be deferred by participating U.S. employees $ 18,500      
The total shares withheld upon vesting of RSUs (in shares) | shares 16,000,000 15,400,000 15,900,000  
Taxes paid related to net share settlement of equity awards $ 2,700,000,000 $ 2,000,000,000 $ 1,700,000,000  
Income tax benefit related to share-based compensation expense 1,900,000,000 1,600,000,000 1,400,000,000  
Total unrecognized compensation cost related to RSUs and stock options $ 9,400,000,000      
Total unrecognized compensation cost related to RSUs and stock options, weighted-average recognition period 2 years 6 months      
Minimum        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Employer matching contribution to 401(k) Plan as a percentage of employee's contribution 50.00%      
Maximum        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Employer matching contribution to 401(k) Plan as a percentage of employee's contribution 100.00%      
Employer matching contribution to 401(k) Plan as a percentage of employee's eligible earnings 6.00%      
Restricted stock units        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Fair value of vested RSUs as of vesting date $ 7,600,000,000 $ 6,100,000,000 $ 5,100,000,000  
Employee Stock Purchase Plan        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Shares reserved for future issuance under stock plans (in shares) | shares 36,500,000      
Employee common stock purchases through payroll deductions, price as a percentage of fair market value 85.00%      
Employee Stock Purchase Plan offering period 6 months      
Payroll deductions as a percentage of employee compensation, maximum 10.00%      
Employee Stock Purchase Plan, maximum annual purchase amount per employee $ 25,000      
2014 Employee Stock Plan        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Shares authorized for future issuance under stock plans (in shares) | shares       385,000,000
Shares reserved for future issuance under stock plans (in shares) | shares 280,200,000      
2014 Employee Stock Plan | Restricted stock units        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Share-based award, vesting period 4 years      
Number of shares of common stock issued per RSU upon vesting 1      
Factor by which each RSU granted reduces or each RSU canceled or share withheld for taxes increases the number of shares available for grant 2      
Non-Employee Director Stock Plan        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Shares reserved for future issuance under stock plans (in shares) | shares 1,100,000      
Non-Employee Director Stock Plan | Restricted stock units        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Factor by which each RSU granted reduces or each RSU canceled or share withheld for taxes increases the number of shares available for grant 2      
v3.10.0.1
Benefit Plans - Restricted Stock Units Activity and Related Information (Details) - Restricted stock units - USD ($)
$ / shares in Units, shares in Thousands, $ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Number of Restricted Stock Units      
Beginning balance (in shares) 97,571 99,089 101,467
RSUs granted (in shares) 45,351 50,112 49,468
RSUs vested (in shares) (44,718) (45,735) (46,313)
RSUs canceled (in shares) (6,049) (5,895) (5,533)
Ending balance (in shares) 92,155 97,571 99,089
Weighted-Average Grant Date Fair Value Per RSU      
Beginning balance (in dollars per share) $ 110.33 $ 97.54 $ 85.77
RSUs granted (in dollars per share) 162.86 121.65 109.28
RSUs vested (in dollars per share) 111.24 95.48 84.44
RSUs canceled (in dollars per share) 127.82 106.87 96.48
Ending balance (in dollars per share) $ 134.60 $ 110.33 $ 97.54
Aggregate Fair Value      
Aggregate fair value of restricted stock units $ 20,803    
v3.10.0.1
Benefit Plans - Summary of Share-Based Compensation Expense (Details) - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]      
Share-based compensation expense $ 5,340 $ 4,840 $ 4,210
Cost of sales      
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]      
Share-based compensation expense 1,010 877 769
Research and development      
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]      
Share-based compensation expense 2,668 2,299 1,889
Selling, general and administrative      
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]      
Share-based compensation expense $ 1,662 $ 1,664 $ 1,552
v3.10.0.1
Commitments and Contingencies - Changes in Accrued Warranties and Related Costs (Details) - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Changes in Accrued Warranties and Related Costs [Roll Forward]      
Beginning accrued warranty and related costs $ 3,834 $ 3,702 $ 4,780
Cost of warranty claims (4,115) (4,322) (4,663)
Accruals for product warranty 3,973 4,454 3,585
Ending accrued warranty and related costs $ 3,692 $ 3,834 $ 3,702
v3.10.0.1
Commitments and Contingencies - Additional Information (Details) - USD ($)
$ in Millions
12 Months Ended
Apr. 11, 2018
Sep. 30, 2016
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Commitments and Contingencies Disclosure [Line Items]          
Purchase commitments, period (up to)     150 days    
Total future minimum lease payments under noncancelable operating leases     $ 9,627    
Typical term of leases (not exceeding)     10 years    
Rent expense under cancelable and noncancelable operating leases     $ 1,200 $ 1,100 $ 939
VirnetX I | Pending Litigation          
Commitments and Contingencies Disclosure [Line Items]          
Award from legal proceedings, due to other party   $ 302      
Award from legal proceeding, due to other party, revised amount, determined in subsequent proceedings   $ 440      
VirnetX II | Pending Litigation          
Commitments and Contingencies Disclosure [Line Items]          
Award from legal proceedings, due to other party $ 503        
v3.10.0.1
Commitments and Contingencies - Future Minimum Lease Payments Under Noncancelable Operating Leases (Details)
$ in Millions
Sep. 29, 2018
USD ($)
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]  
2019 $ 1,298
2020 1,289
2021 1,218
2022 1,038
2023 800
Thereafter 3,984
Total $ 9,627
v3.10.0.1
Commitments and Contingencies - Future Payments Under Unconditional Purchase Obligations (Details)
$ in Millions
Sep. 29, 2018
USD ($)
Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract]  
2019 $ 2,447
2020 3,202
2021 1,749
2022 1,596
2023 268
Thereafter 66
Total $ 9,328
v3.10.0.1
Segment Information and Geographic Data - Summary Information by Reportable Segment (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Sep. 29, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 30, 2017
Sep. 30, 2017
Jul. 01, 2017
Apr. 01, 2017
Dec. 31, 2016
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Segment Reporting Information [Line Items]                      
Net sales $ 62,900 $ 53,265 $ 61,137 $ 88,293 $ 52,579 $ 45,408 $ 52,896 $ 78,351 $ 265,595 $ 229,234 $ 215,639
Operating income                 70,898 61,344 60,024
Americas                      
Segment Reporting Information [Line Items]                      
Net sales                 112,093 96,600 86,613
Operating income                 34,864 30,684 28,172
Europe                      
Segment Reporting Information [Line Items]                      
Net sales                 62,420 54,938 49,952
Operating income                 19,955 16,514 15,348
Greater China                      
Segment Reporting Information [Line Items]                      
Net sales                 51,942 44,764 48,492
Operating income                 19,742 17,032 18,835
Japan                      
Segment Reporting Information [Line Items]                      
Net sales                 21,733 17,733 16,928
Operating income                 9,500 8,097 7,165
Rest of Asia Pacific                      
Segment Reporting Information [Line Items]                      
Net sales                 17,407 15,199 13,654
Operating income                 $ 6,181 $ 5,304 $ 4,781
v3.10.0.1
Segment Information and Geographic Data - Reconciliation of Segment Operating Income to Consolidated Statements of Operations (Details) - USD ($)
$ in Millions
12 Months Ended
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]      
Operating income $ 70,898 $ 61,344 $ 60,024
Research and development expense (14,236) (11,581) (10,045)
Operating segments      
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]      
Operating income 90,242 77,631 74,301
Segment reconciling items      
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]      
Research and development expense (14,236) (11,581) (10,045)
Corporate non-segment      
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]      
Other corporate expenses, net $ (5,108) $ (4,706) $ (4,232)
v3.10.0.1
Segment Information and Geographic Data - Net Sales (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Sep. 29, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 30, 2017
Sep. 30, 2017
Jul. 01, 2017
Apr. 01, 2017
Dec. 31, 2016
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]                      
Net sales $ 62,900 $ 53,265 $ 61,137 $ 88,293 $ 52,579 $ 45,408 $ 52,896 $ 78,351 $ 265,595 $ 229,234 $ 215,639
U.S.                      
Revenues from External Customers and Long-Lived Assets [Line Items]                      
Net sales                 98,061 84,339 75,667
China                      
Revenues from External Customers and Long-Lived Assets [Line Items]                      
Net sales                 51,942 44,764 48,492
Other countries                      
Revenues from External Customers and Long-Lived Assets [Line Items]                      
Net sales                 $ 115,592 $ 100,131 $ 91,480
v3.10.0.1
Segment Information and Geographic Data - Long-Lived Assets (Details) - USD ($)
$ in Millions
Sep. 29, 2018
Sep. 30, 2017
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-lived assets $ 41,304 $ 33,783
U.S.    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-lived assets 23,963 20,637
China    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-lived assets 13,268 10,211
Other countries    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Long-lived assets $ 4,073 $ 2,935
v3.10.0.1
Segment Information and Geographic Data - Net Sales by Product (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Sep. 29, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 30, 2017
Sep. 30, 2017
Jul. 01, 2017
Apr. 01, 2017
Dec. 31, 2016
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Segment Reporting Information [Line Items]                      
Net sales $ 62,900 $ 53,265 $ 61,137 $ 88,293 $ 52,579 $ 45,408 $ 52,896 $ 78,351 $ 265,595 $ 229,234 $ 215,639
iPhone                      
Segment Reporting Information [Line Items]                      
Net sales                 166,699 141,319 136,700
iPad                      
Segment Reporting Information [Line Items]                      
Net sales                 18,805 19,222 20,628
Mac                      
Segment Reporting Information [Line Items]                      
Net sales                 25,484 25,850 22,831
Services                      
Segment Reporting Information [Line Items]                      
Net sales                 37,190 29,980 24,348
Services | Favorable final resolution of various lawsuits                      
Segment Reporting Information [Line Items]                      
Net sales                 236    
Services | Change in estimate based on the availability of additional supporting information                      
Segment Reporting Information [Line Items]                      
Net sales                   640  
Other Products                      
Segment Reporting Information [Line Items]                      
Net sales                 $ 17,417 $ 12,863 $ 11,132
v3.10.0.1
Selected Quarterly Financial Information (Unaudited) - Summary of Quarterly Financial Information (Details) - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended 12 Months Ended
Sep. 29, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 30, 2017
Sep. 30, 2017
Jul. 01, 2017
Apr. 01, 2017
Dec. 31, 2016
Sep. 29, 2018
Sep. 30, 2017
Sep. 24, 2016
Selected Quarterly Financial Information [Abstract]                      
Net sales $ 62,900 $ 53,265 $ 61,137 $ 88,293 $ 52,579 $ 45,408 $ 52,896 $ 78,351 $ 265,595 $ 229,234 $ 215,639
Gross margin 24,084 20,421 23,422 33,912 19,931 17,488 20,591 30,176 101,839 88,186 84,263
Net income $ 14,125 $ 11,519 $ 13,822 $ 20,065 $ 10,714 $ 8,717 $ 11,029 $ 17,891 $ 59,531 $ 48,351 $ 45,687
Earnings per share:                      
Basic (in dollars per share) $ 2.94 $ 2.36 $ 2.75 $ 3.92 $ 2.08 $ 1.68 $ 2.11 $ 3.38 $ 12.01 $ 9.27 $ 8.35
Diluted (in dollars per share) $ 2.91 $ 2.34 $ 2.73 $ 3.89 $ 2.07 $ 1.67 $ 2.10 $ 3.36 $ 11.91 $ 9.21 $ 8.31