APPLE INC, 10-K filed on 11/3/2017
Annual Report
Document and Entity Information (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Oct. 20, 2017
Mar. 31, 2017
Document And Entity Information [Abstract]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Sep. 30, 2017 
 
 
Document Fiscal Year Focus
2017 
 
 
Document Fiscal Period Focus
FY 
 
 
Trading Symbol
AAPL 
 
 
Entity Registrant Name
APPLE INC 
 
 
Entity Central Index Key
0000320193 
 
 
Current Fiscal Year End Date
--09-30 
 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
5,134,312 
 
Entity Public Float
 
 
$ 747,509 
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Income Statement [Abstract]
 
 
 
Net sales
$ 229,234 
$ 215,639 
$ 233,715 
Cost of sales
141,048 
131,376 
140,089 
Gross margin
88,186 
84,263 
93,626 
Operating expenses:
 
 
 
Research and development
11,581 
10,045 
8,067 
Selling, general and administrative
15,261 
14,194 
14,329 
Total operating expenses
26,842 
24,239 
22,396 
Operating income
61,344 
60,024 
71,230 
Other income/(expense), net
2,745 
1,348 
1,285 
Income before provision for income taxes
64,089 
61,372 
72,515 
Provision for income taxes
15,738 
15,685 
19,121 
Net income
$ 48,351 
$ 45,687 
$ 53,394 
Earnings per share:
 
 
 
Basic (in dollars per share)
$ 9.27 
$ 8.35 
$ 9.28 
Diluted (in dollars per share)
$ 9.21 
$ 8.31 
$ 9.22 
Shares used in computing earnings per share:
 
 
 
Basic (in shares)
5,217,242 
5,470,820 
5,753,421 
Diluted (in shares)
5,251,692 
5,500,281 
5,793,069 
Cash dividends declared per share (in dollars per share)
$ 2.4 
$ 2.18 
$ 1.98 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
Net income
$ 48,351 
$ 45,687 
$ 53,394 
Other comprehensive income/(loss):
 
 
 
Change in foreign currency translation, net of tax effects of $(77), $8 and $201, respectively
224 
75 
(411)
Change in unrealized gains/losses on derivative instruments:
 
 
 
Change in fair value of derivatives, net of tax benefit/(expense) of $(478), $(7) and $(441), respectively
1,315 
7 
2,905 
Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $475, $131 and $630, respectively
(1,477)
(741)
(3,497)
Total change in unrealized gains/losses on derivative instruments, net of tax
(162)
(734)
(592)
Change in unrealized gains/losses on marketable securities:
 
 
 
Change in fair value of marketable securities, net of tax benefit/(expense) of $425, $(863) and $264, respectively
(782)
1,582 
(483)
Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $35, $(31) and $(32), respectively
(64)
56 
59 
Total change in unrealized gains/losses on marketable securities, net of tax
(846)
1,638 
(424)
Total other comprehensive income/(loss)
(784)
979 
(1,427)
Total comprehensive income
$ 47,567 
$ 46,666 
$ 51,967 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
Change in foreign currency translation, tax effects
$ (77)
$ 8 
$ 201 
Change in fair value of derivatives, tax benefit/(expense)
(478)
(7)
(441)
Adjustment for net (gains)/losses realized and included in net income, tax expense/(benefit)
475 
131 
630 
Change in fair value of marketable securities, tax benefit/(expense)
425 
(863)
264 
Adjustment for net (gains)/losses realized and included in net income, tax expense/(benefit)
$ 35 
$ (31)
$ (32)
CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Sep. 24, 2016
Current assets:
 
 
Cash and cash equivalents
$ 20,289 
$ 20,484 
Short-term marketable securities
53,892 
46,671 
Accounts receivable, less allowances of $58 and $53, respectively
17,874 
15,754 
Inventories
4,855 
2,132 
Vendor non-trade receivables
17,799 
13,545 
Other current assets
13,936 
8,283 
Total current assets
128,645 
106,869 
Long-term marketable securities
194,714 
170,430 
Property, plant and equipment, net
33,783 
27,010 
Goodwill
5,717 
5,414 
Acquired intangible assets, net
2,298 
3,206 
Other non-current assets
10,162 
8,757 
Total assets
375,319 
321,686 
Current liabilities:
 
 
Accounts payable
49,049 
37,294 
Accrued expenses
25,744 
22,027 
Deferred revenue
7,548 
8,080 
Commercial paper
11,977 
8,105 
Current portion of long-term debt
6,496 
3,500 
Total current liabilities
100,814 
79,006 
Deferred revenue, non-current
2,836 
2,930 
Long-term debt
97,207 
75,427 
Other non-current liabilities
40,415 
36,074 
Total liabilities
241,272 
193,437 
Commitments and contingencies
   
   
Shareholders’ equity:
 
 
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,126,201 and 5,336,166 shares issued and outstanding, respectively
35,867 
31,251 
Retained earnings
98,330 
96,364 
Accumulated other comprehensive income/(loss)
(150)
634 
Total shareholders’ equity
134,047 
128,249 
Total liabilities and shareholders’ equity
$ 375,319 
$ 321,686 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Sep. 30, 2017
Sep. 24, 2016
Statement of Financial Position [Abstract]
 
 
Accounts receivable, allowances
$ 58 
$ 53 
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)
5,126,201,000 
5,336,166,000 
Common stock, shares outstanding (in shares)
5,126,201,000 
5,336,166,000 
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
Total
Common Stock and Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income/(Loss)
Beginning balances at Sep. 27, 2014
$ 111,547 
$ 23,313 
$ 87,152 
$ 1,082 
Beginning balances (in shares) at Sep. 27, 2014
 
5,866,161 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Net income
53,394 
0 
53,394 
0 
Other comprehensive income/(loss)
(1,427)
0 
0 
(1,427)
Dividends and dividend equivalents declared
(11,627)
0 
(11,627)
0 
Repurchase of common stock (in shares)
 
(325,032)
 
 
Repurchase of common stock
(36,026)
0 
(36,026)
0 
Share-based compensation
3,586 
3,586 
0 
0 
Common stock issued, net of shares withheld for employee taxes (in shares)
 
37,624 
 
 
Common stock issued, net of shares withheld for employee taxes
(840)
(231)
(609)
0 
Tax benefit from equity awards, including transfer pricing adjustments
748 
748 
0 
0 
Ending balances at Sep. 26, 2015
119,355 
27,416 
92,284 
(345)
Ending balances (in shares) at Sep. 26, 2015
 
5,578,753 
 
 
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 at Sep. 24, 2016
128,249 
31,251 
96,364 
634 
Ending balances (in shares) at Sep. 24, 2016
5,336,166 
5,336,166 
 
 
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 at Sep. 30, 2017
$ 134,047 
$ 35,867 
$ 98,330 
$ (150)
Ending balances (in shares) at Sep. 30, 2017
5,126,201 
5,126,201 
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Statement of Cash Flows [Abstract]
 
 
 
Cash and cash equivalents, beginning of the year
$ 20,484 
$ 21,120 
$ 13,844 
Operating activities:
 
 
 
Net income
48,351 
45,687 
53,394 
Adjustments to reconcile net income to cash generated by operating activities:
 
 
 
Depreciation and amortization
10,157 
10,505 
11,257 
Share-based compensation expense
4,840 
4,210 
3,586 
Deferred income tax expense
5,966 
4,938 
1,382 
Other
(166)
486 
385 
Changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
(2,093)
527 
417 
Inventories
(2,723)
217 
(238)
Vendor non-trade receivables
(4,254)
(51)
(3,735)
Other current and non-current assets
(5,318)
1,055 
(283)
Accounts payable
9,618 
1,837 
5,001 
Deferred revenue
(626)
(1,554)
1,042 
Other current and non-current liabilities
(154)
(2,033)
9,058 
Cash generated by operating activities
63,598 
65,824 
81,266 
Investing activities:
 
 
 
Purchases of marketable securities
(159,486)
(142,428)
(166,402)
Proceeds from maturities of marketable securities
31,775 
21,258 
14,538 
Proceeds from sales of marketable securities
94,564 
90,536 
107,447 
Payments made in connection with business acquisitions, net
(329)
(297)
(343)
Payments for acquisition of property, plant and equipment
(12,451)
(12,734)
(11,247)
Payments for acquisition of intangible assets
(344)
(814)
(241)
Payments for strategic investments, net
(395)
(1,388)
0 
Other
220 
(110)
(26)
Cash used in investing activities
(46,446)
(45,977)
(56,274)
Financing activities:
 
 
 
Proceeds from issuance of common stock
555 
495 
543 
Excess tax benefits from equity awards
627 
407 
749 
Payments for taxes related to net share settlement of equity awards
(1,874)
(1,570)
(1,499)
Payments for dividends and dividend equivalents
12,769 
12,150 
11,561 
Repurchases of common stock
(32,900)
(29,722)
(35,253)
Proceeds from issuance of term debt, net
28,662 
24,954 
27,114 
Repayments of term debt
(3,500)
(2,500)
0 
Change in commercial paper, net
3,852 
(397)
2,191 
Cash used in financing activities
(17,347)
(20,483)
(17,716)
Increase/(Decrease) in cash and cash equivalents
(195)
(636)
7,276 
Cash and cash equivalents, end of the year
20,289 
20,484 
21,120 
Supplemental cash flow disclosure:
 
 
 
Cash paid for income taxes, net
11,591 
10,444 
13,252 
Cash paid for interest
$ 2,092 
$ 1,316 
$ 514 
Summary of Significant Accounting Policies
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, networking solutions and third-party digital content and applications. The Company’s products and services include iPhone, iPad, Mac, Apple Watch, Apple TV, a portfolio of consumer and professional software applications, iOS, macOS, watchOS and tvOS operating systems, iCloud, Apple Pay and a variety of 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, iBooks 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 value-added 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 in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Certain prior period amounts in the consolidated financial statements 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 year 2017 included 53 weeks and ended on September 30, 2017. 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. The Company’s fiscal years 2016 and 2015 ended on September 24, 2016 and September 26, 2015, respectively, and spanned 52 weeks each. 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 iBooks 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 qualifying versions of iPhone, iPad, iPod touch, Mac, Apple Watch and Apple TV, 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.
Warranty Costs
The Company generally provides for the estimated cost of hardware and software warranties in the period the related revenue is recognized. The Company assesses the adequacy of its accrued warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in future estimates.
Software Development Costs
Research and development (“R&D”) costs are expensed as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established and as a result software development costs were expensed as incurred.
Advertising Costs
Advertising costs are expensed as incurred and included in selling, general and administrative expenses.
Share-based Compensation
The Company recognizes expense related to share-based payment transactions in which it receives employee services in exchange for (a) equity instruments of the Company or (b) liabilities that are based on the fair value of the Company’s equity instruments or that may be settled by the issuance of such equity instruments. Share-based compensation expense for restricted stock units (“RSUs”) and restricted stock is measured based on the closing fair market value of the Company’s common stock on the date of grant. The Company estimates forfeitures expected to occur and recognizes share-based compensation expense for those equity awards expected to vest. The Company recognizes share-based compensation expense over the award’s requisite service period on a straight-line basis for time-based RSUs and on a graded basis for RSUs that are contingent on the achievement of performance conditions. The Company recognizes a benefit from share-based compensation in the Consolidated Statements of Shareholders’ Equity if an excess tax benefit is realized. In addition, the Company recognizes the indirect effects of share-based compensation on R&D tax credits, foreign tax credits and domestic manufacturing deductions in the Consolidated Statements of Operations. Further information regarding share-based compensation can be found in Note 9, “Benefit Plans.”
Income Taxes
The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. See Note 5, “Income Taxes” for additional information.
Earnings Per Share
Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include unvested RSUs, unvested restricted stock, outstanding stock options and shares to be purchased by employees under the Company’s employee stock purchase plan. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities.
The following table shows the computation of basic and diluted earnings per share for 2017, 2016 and 2015 (net income in millions and shares in thousands):
 
2017
 
2016
 
2015
Numerator:
 
 
 
 
 
Net income
$
48,351

 
$
45,687

 
$
53,394

 
 
 
 
 
 
Denominator:
 
 
 
 
 
Weighted-average shares outstanding
5,217,242

 
5,470,820

 
5,753,421

Effect of dilutive securities
34,450

 
29,461

 
39,648

Weighted-average diluted shares
5,251,692

 
5,500,281


5,793,069

 
 
 
 
 
 
Basic earnings per share
$
9.27

 
$
8.35

 
$
9.28

Diluted earnings per share
$
9.21

 
$
8.31

 
$
9.22


Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per share.
Financial Instruments
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. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the classifications at each balance sheet date. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable debt securities with maturities of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term. Marketable equity securities, including mutual funds, are classified as either short-term or long-term based on the nature of each security and its availability for use in current operations. The Company’s marketable debt and equity securities are carried at fair value, with unrealized gains and losses, net of taxes, reported as a component of accumulated other comprehensive income/(loss) (“AOCI”) in shareholders’ equity, with the exception of unrealized losses believed to be other-than-temporary which are reported in earnings in the current period. The cost of securities sold is based upon the specific identification method.
Derivative Financial Instruments
The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value.
For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI in shareholders’ equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in earnings in the current period. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings.
For derivative instruments that hedge the exposure to changes in the fair value of an asset or a liability and that are designated as fair value hedges, both the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item are recognized in earnings in the current period.
For derivative instruments and foreign currency debt that hedge the exposure to changes in foreign currency exchange rates used for translation of the net investment in a foreign operation and that are designated as a net investment hedge, the net gain or loss on the effective portion of the derivative instrument is reported in the same manner as a foreign currency translation adjustment. 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.
Derivatives that do not qualify as hedges are adjusted to fair value through earnings in the current period.
Allowance for Doubtful Accounts
The Company records its allowance for doubtful accounts based upon its assessment of various factors, including historical experience, age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect the customers’ abilities to pay.
Inventories
Inventories are stated at the lower of cost, computed using the first-in, first-out method, and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computed by use of the straight-line method 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. The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage. Capitalized costs related to internal-use software are amortized using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Depreciation and amortization expense on property and equipment was $8.2 billion, $8.3 billion and $9.2 billion during 2017, 2016 and 2015, respectively.
Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets
The Company reviews property, plant and equipment, inventory component prepayments and identifiable intangibles, excluding goodwill and intangible assets with indefinite useful lives, for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If property, plant and equipment, inventory component prepayments and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair value.
The Company does not amortize goodwill and intangible assets with indefinite useful lives; rather, such assets are required to be tested for impairment at least annually or sooner if events or changes in circumstances indicate that the assets may be impaired. The Company performs its goodwill and intangible asset impairment tests in the fourth quarter of each year. The Company did not recognize any impairment charges related to goodwill or indefinite lived intangible assets during 2017, 2016 and 2015. For purposes of testing goodwill for impairment, the Company established reporting units based on its current reporting structure. Goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. In 2017 and 2016, the Company’s goodwill was primarily allocated to the Americas and Europe reporting units.
The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. The Company typically amortizes its acquired intangible assets with definite useful lives over periods from three to seven years.
Fair Value Measurements
The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use to price the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – 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 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
The Company’s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were 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, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data.
In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments.
Foreign Currency Translation and Remeasurement
The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in AOCI in shareholders’ equity. The Company’s subsidiaries that use the U.S. dollar as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end of each period, and inventories, property and nonmonetary assets and liabilities at historical rates.
Financial Instruments
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 30, 2017 and September 24, 2016 (in millions):
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
2016
 
Adjusted
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
Cash and
Cash
Equivalents
 
Short-Term
Marketable
Securities
 
Long-Term
Marketable
Securities
Cash
$
8,601

 
$
—

 
$
—

 
$
8,601

 
$
8,601

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
3,666

 
—

 
—

 
3,666

 
3,666

 
—

 
—

Mutual funds
1,407

 
—

 
(146
)
 
1,261

 
—

 
1,261

 
—

Subtotal
5,073

 
—

 
(146
)
 
4,927

 
3,666

 
1,261

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 2:
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
41,697

 
319

 
(4
)
 
42,012

 
1,527

 
13,492

 
26,993

U.S. agency securities
7,543

 
16

 
—

 
7,559

 
2,762

 
2,441

 
2,356

Non-U.S. government securities
7,609

 
259

 
(27
)
 
7,841

 
110

 
818

 
6,913

Certificates of deposit and time deposits
6,598

 
—

 
—

 
6,598

 
1,108

 
3,897

 
1,593

Commercial paper
7,433

 
—

 
—

 
7,433

 
2,468

 
4,965

 
—

Corporate securities
131,166

 
1,409

 
(206
)
 
132,369

 
242

 
19,599

 
112,528

Municipal securities
956

 
5

 
—

 
961

 
—

 
167

 
794

Mortgage- and asset-backed securities
19,134

 
178

 
(28
)
 
19,284

 
—

 
31

 
19,253

Subtotal
222,136

 
2,186

 
(265
)
 
224,057

 
8,217

 
45,410

 
170,430

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
$
235,810

 
$
2,186

 
$
(411
)
 
$
237,585

 
$
20,484

 
$
46,671

 
$
170,430


The Company may sell certain of its marketable securities prior to their stated maturities for strategic reasons including, but not limited to, anticipation of credit deterioration and duration management. The maturities of the Company’s long-term marketable securities generally range from one to five years.
The Company considers the declines in market value of its marketable securities investment portfolio to be temporary in nature. The Company typically invests in highly-rated securities, and its investment policy generally limits the amount of credit exposure to any one issuer. The policy generally requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss. 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 30, 2017, 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, on net investments in certain foreign subsidiaries and on 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 and 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 help 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 and who sell in local currencies 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 typically hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months.
To help protect the net investment in a foreign operation from adverse changes in foreign currency exchange rates, the Company may enter into foreign currency forward and option contracts to offset 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 economic hedges of its net investments in certain foreign subsidiaries. In both of these cases, the Company designates these instruments as net investment hedges.
The Company may also enter into non-designated foreign currency contracts to partially offset the foreign currency exchange gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies.
The Company may enter into interest rate swaps, options, or other instruments to manage interest rate risk. These instruments may offset a portion of changes in income or expense, or changes in fair value of the Company’s term debt or investments. The Company designates these instruments as either cash flow or fair value hedges. The Company’s hedged interest rate transactions as of September 30, 2017 are expected to be recognized within 10 years.
The Company may enter into foreign currency swaps to manage currency risk on its foreign currency-denominated term debt. These instruments may offset a portion of the foreign currency remeasurement gains or losses on the Company’s term debt and related interest payments. The Company designates these instruments as cash flow hedges. The Company’s hedged term debt-related foreign currency transactions as of September 30, 2017 are expected to be recognized within 25 years.
Cash Flow Hedges
The effective portions of cash flow hedges are recorded in 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. 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.
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.
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, 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 for 2017.
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 30, 2017 and September 24, 2016 (in millions):
 
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

 
2016
 
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
$
518

 
$
153

 
$
671

Interest rate contracts
$
728

 
$
—

 
$
728

 
 
 
 
 
 
Derivative liabilities (2):
 
 
 
 
 
Foreign exchange contracts
$
935

 
$
134

 
$
1,069

Interest rate contracts
$
7

 
$
—

 
$
7

 
(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 accrued expenses and other non-current liabilities in the Consolidated Balance Sheets.
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 2017, 2016 and 2015 (in millions):
 
2017
 
2016
 
2015
Gains/(Losses) recognized in OCI – effective portion:
 
 
 
 
 
Cash flow hedges:
 
 
 
 
 
Foreign exchange contracts
$
1,797

 
$
109

 
$
3,592

Interest rate contracts
7

 
(57
)
 
(111
)
Total
$
1,804


$
52


$
3,481

 
 
 
 
 
 
Net investment hedges:
 
 
 
 
 
Foreign exchange contracts
$
—

 
$
—

 
$
167

Foreign currency debt
67

 
(258
)
 
(71
)
Total
$
67


$
(258
)

$
96

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

 
$
885

 
$
4,092

Interest rate contracts
(2
)
 
(11
)
 
(17
)
Total
$
1,956


$
874


$
4,075

 
 
 
 
 
 
Gains/(Losses) on derivative instruments:
 
 
 
 
 
Fair value hedges:
 
 
 
 
 
Interest rate contracts
$
(810
)
 
$
341

 
$
337

 
 
 
 
 
 
Gains/(Losses) related to hedged items:
 
 
 
 
 
Fair value hedges:
 
 
 
 
 
Fixed-rate debt
$
810

 
$
(341
)
 
$
(337
)

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 30, 2017 and September 24, 2016 (in millions):
 
2017
 
2016
 
Notional
Amount
 
Credit Risk
Amount
 
Notional
Amount
 
Credit Risk
Amount
Instruments designated as accounting hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
$
56,156

 
$
1,049

 
$
44,678

 
$
518

Interest rate contracts
$
33,000

 
$
218

 
$
24,500

 
$
728

 
 
 
 
 
 
 
 
Instruments not designated as accounting hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
$
69,774

 
$
363

 
$
54,305

 
$
153


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. The net cash collateral received by the Company related to derivative instruments under its collateral security arrangements was $35 million and $163 million as of September 30, 2017 and September 24, 2016, respectively, which were recorded as accrued expenses in the Consolidated Balance Sheets.
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 30, 2017 and September 24, 2016, 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 $1.4 billion and $1.5 billion, respectively, resulting in net derivative assets of $32 million and $160 million, respectively.
Accounts Receivable
Trade Receivables
The Company has considerable trade receivables outstanding with its third-party cellular network carriers, wholesalers, retailers, value-added 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 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 30, 2017, the Company had two customers that individually represented 10% or more of total trade receivables, each of which accounted for 10%. As of September 24, 2016, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 10%. The Company’s cellular network carriers accounted for 59% and 63% of trade receivables as of September 30, 2017 and September 24, 2016, respectively.
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 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%. As of September 24, 2016, the Company had two vendors that individually represented 10% or more of total vendor non-trade receivables, which accounted for 47% and 21%.
Consolidated Financial Statement Details
Consolidated Financial Statement Details
Consolidated Financial Statement Details
The following tables show the Company’s consolidated financial statement details as of September 30, 2017 and September 24, 2016 (in millions):
Property, Plant and Equipment, Net
 
2017
 
2016
Land and buildings
$
13,587

 
$
10,185

Machinery, equipment and internal-use software
54,210

 
44,543

Leasehold improvements
7,279

 
6,517

Gross property, plant and equipment
75,076

 
61,245

Accumulated depreciation and amortization
(41,293
)
 
(34,235
)
Total property, plant and equipment, net
$
33,783

 
$
27,010


Other Non-Current Liabilities
 
2017
 
2016
Deferred tax liabilities
$
31,504

 
$
26,019

Other non-current liabilities
8,911

 
10,055

Total other non-current liabilities
$
40,415

 
$
36,074


Other Income/(Expense), Net
The following table shows the detail of other income/(expense), net for 2017, 2016 and 2015 (in millions):
 
2017
 
2016
 
2015
Interest and dividend income
$
5,201

 
$
3,999

 
$
2,921

Interest expense
(2,323
)
 
(1,456
)
 
(733
)
Other expense, net
(133
)
 
(1,195
)
 
(903
)
Total other income/(expense), net
$
2,745

 
$
1,348

 
$
1,285

Acquired Intangible Assets
Acquired Intangible Assets
Acquired Intangible Assets
The Company’s acquired intangible assets with definite useful lives primarily consist of patents and licenses. The following table summarizes the components of acquired intangible asset balances as of September 30, 2017 and September 24, 2016 (in millions):
 
2017
 
2016
 
Gross
Carrying Amount
 
Accumulated
Amortization
 
Net
Carrying Amount
 
Gross
Carrying Amount
 
Accumulated
Amortization
 
Net
Carrying Amount
Definite-lived and amortizable acquired intangible assets
$
7,507

 
$
(5,309
)
 
$
2,198

 
$
8,912

 
$
(5,806
)
 
$
3,106

Indefinite-lived and non-amortizable acquired intangible assets
100

 
—

 
100

 
100

 
—

 
100

Total acquired intangible assets
$
7,607


$
(5,309
)

$
2,298


$
9,012


$
(5,806
)

$
3,206

Amortization expense related to acquired intangible assets was $1.2 billion, $1.5 billion and $1.3 billion in 2017, 2016 and 2015, respectively. As of September 30, 2017, the remaining weighted-average amortization period for acquired intangible assets is 3.4 years. The expected annual amortization expense related to acquired intangible assets as of September 30, 2017, is as follows (in millions):
2018
$
948

2019
505

2020
323

2021
222

2022
131

Thereafter
69

Total
$
2,198

Income Taxes
Income Taxes
Income Taxes
The provision for income taxes for 2017, 2016 and 2015, consisted of the following (in millions):
 
2017
 
2016
 
2015
Federal:
 
 
 
 
 
Current
$
7,842

 
$
7,652

 
$
11,730

Deferred
5,980

 
5,043

 
3,408

Total (1)
13,822


12,695


15,138

State:
 
 
 
 
 
Current
259

 
990

 
1,265

Deferred
2

 
(138
)
 
(220
)
Total
261


852


1,045

Foreign:
 
 
 
 
 
Current
1,671

 
2,105

 
4,744

Deferred
(16
)
 
33

 
(1,806
)
Total
1,655


2,138


2,938

Provision for income taxes
$
15,738


$
15,685


$
19,121


(1)
Includes taxes of $7.9 billion, $6.7 billion and $7.3 billion provided on foreign pre-tax earnings in 2017, 2016 and 2015, respectively.
The foreign provision for income taxes is based on foreign pre-tax earnings of $44.7 billion, $41.1 billion and $47.6 billion in 2017, 2016 and 2015, respectively. The Company’s consolidated financial statements provide for any related tax liability on undistributed earnings that the Company does not intend to be indefinitely reinvested outside the U.S. Substantially all of the Company’s undistributed international earnings intended to be indefinitely reinvested in operations outside the U.S. were generated by subsidiaries organized in Ireland, which has a statutory tax rate of 12.5%. As of September 30, 2017, U.S. income taxes have not been provided on a cumulative total of $128.7 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be $42.2 billion.
As of September 30, 2017 and September 24, 2016, $252.3 billion and $216.0 billion, respectively, of the Company’s cash, cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings. Amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S.
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate (35% in 2017, 2016 and 2015) to income before provision for income taxes for 2017, 2016 and 2015, is as follows (dollars in millions):
 
2017
 
2016
 
2015
Computed expected tax
$
22,431

 
$
21,480

 
$
25,380

State taxes, net of federal effect
185

 
553

 
680

Indefinitely invested earnings of foreign subsidiaries
(6,135
)
 
(5,582
)
 
(6,470
)
Domestic production activities deduction
(209
)
 
(382
)
 
(426
)
Research and development credit, net
(678
)
 
(371
)
 
(171
)
Other
144

 
(13
)
 
128

Provision for income taxes
$
15,738


$
15,685


$
19,121

Effective tax rate
24.6
%
 
25.6
%
 
26.4
%

The Company’s income taxes payable have been reduced by the tax benefits from employee stock plan awards. For 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. The Company had net excess tax benefits from equity awards of $620 million, $379 million and $748 million in 2017, 2016 and 2015, respectively, which were reflected as increases to common stock.
As of September 30, 2017 and September 24, 2016, the significant components of the Company’s deferred tax assets and liabilities were (in millions):
 
2017
 
2016
Deferred tax assets:
 
 
 
Accrued liabilities and other reserves
$
4,019

 
$
4,135

Basis of capital assets
1,230

 
2,107

Deferred revenue
1,521

 
1,717

Deferred cost sharing
667

 
667

Share-based compensation
703

 
601

Other
834

 
788

Total deferred tax assets, net of valuation allowance of $0
8,974

 
10,015

Deferred tax liabilities:
 
 
 
Unremitted earnings of foreign subsidiaries
36,355

 
31,436

Other
207

 
485

Total deferred tax liabilities
36,562

 
31,921

Net deferred tax liabilities
$
(27,588
)

$
(21,906
)

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
Tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as non-current liabilities in the Consolidated Balance Sheets.
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 affect the Company’s effective tax rate. As of September 24, 2016, the total amount of gross unrecognized tax benefits was $7.7 billion, of which $2.8 billion, if recognized, would have affected the Company’s effective tax rate.
The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2017, 2016 and 2015, is as follows (in millions):
 
2017
 
2016
 
2015
Beginning balances
$
7,724

 
$
6,900

 
$
4,033

Increases related to tax positions taken during a prior year
333

 
1,121

 
2,056

Decreases related to tax positions taken during a prior year
(952
)
 
(257
)
 
(345
)
Increases related to tax positions taken during the current year
1,880

 
1,578

 
1,278

Decreases related to settlements with taxing authorities
(539
)
 
(1,618
)
 
(109
)
Decreases related to expiration of statute of limitations
(39
)
 
—

 
(13
)
Ending balances
$
8,407

 
$
7,724

 
$
6,900


The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. As of September 30, 2017 and September 24, 2016, the total amount of gross interest and penalties accrued was $1.2 billion and $1.0 billion, respectively, which is classified as non-current liabilities in the Consolidated Balance Sheets. In connection with tax matters, the Company recognized interest and penalty expense in 2017, 2016 and 2015 of $165 million, $295 million and $709 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 2010 through 2012 during the third quarter of 2017. All years prior to 2013 are closed, and the IRS is currently examining the years 2013 through 2015. The Company is also subject to audits by state, local and foreign tax authorities. In major states and major foreign jurisdictions, the years subsequent to 2003 generally remain open and could be subject to examination by the taxing authorities.
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 not consistent with its expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Although timing of the resolution and/or closure of audits is not certain, the Company does not believe it is reasonably possible that its gross unrecognized tax benefits would materially change in the next 12 months.
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 orders Ireland to calculate and recover additional taxes from the Company for the period June 2003 through December 2014. 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. Although Ireland is still computing the recovery amount, the Company expects the amount to be in line with the European Commission’s announced recovery amount of €13 billion, plus interest of €1 billion. Once the recovery amount is finalized by Ireland, the Company anticipates funding it, including interest, out of foreign cash. These amounts are expected to be placed into escrow in 2018, where they will remain pending conclusion of all appeals. 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.
Debt
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 September 30, 2017 and September 24, 2016, the Company had $12.0 billion and $8.1 billion of Commercial Paper outstanding, respectively, with maturities generally less than nine months. The weighted-average interest rate of the Company’s Commercial Paper was 1.20% as of September 30, 2017 and 0.45% as of September 24, 2016.
The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for 2017 and 2016 (in millions):
 
2017
 
2016
Maturities less than 90 days:
 
 
 
Proceeds from/(Repayments of) commercial paper, net
$
(1,782
)
 
$
(869
)
 
 
 
 
Maturities greater than 90 days:
 
 
 
Proceeds from commercial paper
17,932

 
3,632

Repayments of commercial paper
(12,298
)
 
(3,160
)
Proceeds from/(Repayments of) commercial paper, net
5,634


472

 
 
 
 
Total change in commercial paper, net
$
3,852


$
(397
)

Term Debt
As of September 30, 2017, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $104.0 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 30, 2017 and September 24, 2016:
 
Maturities
 
2017
 
2016
 
Amount
(in millions)
 
Effective
Interest Rate
 
Amount
(in millions)
 
Effective
Interest Rate
2013 debt issuance of $17.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
2018
 
2018
 
$
2,000

 
 
1.10%
 
1.10
%
 
$
2,000

 
 
1.10%
 
1.10
%
Fixed-rate 1.000% – 3.850% notes
2018
–
2043
 
12,500

 
 
1.08%
–
3.91
%
 
12,500

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

 
 
1.61%
 
1.61
%
 
2,000

 
 
0.86%
–
1.09
%
Fixed-rate 2.100% – 4.450% notes
2019
–
2044
 
8,500

 
 
1.61%
–
4.48
%
 
10,000

 
 
0.85%
–
4.48
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 debt issuances of $27.3 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
2019
–
2020
 
1,549

 
 
1.56%
–
1.87
%
 
1,781

 
 
0.87%
–
1.87
%
Fixed-rate 0.350% – 4.375% notes
2019
–
2045
 
24,522

 
 
0.28%
–
4.51
%
 
25,144

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

 
 
1.45%
–
2.44
%
 
1,350

 
 
0.91%
–
1.95
%
Fixed-rate 1.100% – 4.650% notes
2018
–
2046
 
23,645

 
 
1.13%
–
4.78
%
 
23,609

 
 
1.13%
–
4.58
%
 
Maturities
 
2017
 
2016
(Continued)
Amount
(in millions)
 
Effective
Interest Rate
 
Amount
(in millions)
 
Effective
Interest Rate
Second quarter 2017 debt issuance of $10.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
 
 
2019
 
500

 
 
 
 
1.39
%
 
—

 
 
 
 
—
%
Floating-rate notes
 
 
2020
 
500

 
 
 
 
1.51
%
 
—

 
 
 
 
—
%
Floating-rate notes
 
 
2022
 
1,000

 
 
 
 
1.81
%
 
—

 
 
 
 
—
%
Fixed-rate 1.550% notes
 
 
2019
 
500

 
 
 
 
1.59
%
 
—

 
 
 
 
—
%
Fixed-rate 1.900% notes
 
 
2020
 
1,000

 
 
 
 
1.51
%
 
—

 
 
 
 
—
%
Fixed-rate 2.500% notes
 
 
2022
 
1,500

 
 
 
 
1.80
%
 
—

 
 
 
 
—
%
Fixed-rate 3.000% notes
 
 
2024
 
1,750

 
 
 
 
2.11
%
 
—

 
 
 
 
—
%
Fixed-rate 3.350% notes
 
 
2027
 
2,250

 
 
 
 
2.25
%
 
—

 
 
 
 
—
%
Fixed-rate 4.250% notes
 
 
2047
 
1,000

 
 
 
 
4.26
%
 
—

 
 
 
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Second quarter 2017 debt issuance of $1.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate 4.300% notes
 
 
2047
 
1,000

 
 
 
 
4.30
%
 
—

 
 
 
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third quarter 2017 debt issuance of $7.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
 
 
2020
 
500

 
 
 
 
1.38
%
 
—

 
 
 
 
—
%
Floating-rate notes
 
 
2022
 
750

 
 
 
 
1.66
%
 
—

 
 
 
 
—
%
Fixed-rate 1.800% notes
 
 
2020
 
1,000

 
 
 
 
1.84
%
 
—

 
 
 
 
—
%
Fixed-rate 2.300% notes
 
 
2022
 
1,000

 
 
 
 
2.34
%
 
—

 
 
 
 
—
%
Fixed-rate 2.850% notes
 
 
2024
 
1,750

 
 
 
 
2.25
%
 
—

 
 
 
 
—
%
Fixed-rate 3.200% notes
 
 
2027
 
2,000

 
 
 
 
2.43
%
 
—

 
 
 
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third quarter 2017 euro-denominated debt issuance of €2.5 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate 0.875% notes
 
 
2025
 
1,469

 
 
 
 
3.03
%
 
—

 
 
 
 
—
%
Fixed-rate 1.375% notes
 
 
2029
 
1,469

 
 
 
 
3.37
%
 
—

 
 
 
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third quarter 2017 debt issuance of $1.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate 3.000% notes
 
 
2027
 
1,000

 
 
 
 
3.03
%
 
—

 
 
 
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth quarter 2017 Canadian dollar-denominated debt issuance of C$2.5 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate 2.513% notes
 
 
2024
 
2,017

 
 
 
 
2.66
%
 
—

 
 
 
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth quarter 2017 debt issuance of $5.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate 1.500% notes
 
 
2019
 
1,000

 
 
 
 
1.54
%
 
—

 
 
 
 
—
%
Fixed-rate 2.100% notes
 
 
2022
 
1,000

 
 
 
 
1.92
%
 
—

 
 
 
 
—
%
Fixed-rate 2.900% notes
 
 
2027
 
2,000

 
 
 
 
2.55
%
 
—

 
 
 
 
—
%
Fixed-rate 3.750% notes
 
 
2047
 
1,000

 
 
 
 
3.78
%
 
—

 
 
 
 
—
%
Total term debt
 
 
 
 
104,021

 
 
 
 
 
 
78,384

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized premium/(discount) and issuance costs, net
 
 
 
 
(225
)
 
 
 
 
 
 
(174
)
 
 
 
 
 
Hedge accounting fair value adjustments
 
 
 
 
(93
)
 
 
 
 
 
 
717

 
 
 
 
 
Less: Current portion of long-term debt
 
 
 
 
(6,496
)
 
 
 
 
 
 
(3,500
)
 
 
 
 
 
Total long-term debt
 
 
 
 
$
97,207

 
 
 
 
 
 
$
75,427

 
 
 
 
 

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 30, 2017 and September 24, 2016, the carrying value of the debt designated as a net investment hedge was $1.6 billion and $1.9 billion, respectively.
For further discussion regarding the Company’s use of derivative instruments see 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 $2.2 billion, $1.4 billion and $722 million of interest expense on its term debt for 2017, 2016 and 2015, respectively.
The future principal payments for the Company’s Notes as of September 30, 2017 are as follows (in millions):
2018
$
6,500

2019
8,863

2020
9,220

2021
7,750

2022
10,297

Thereafter
61,391

Total term debt
$
104,021


As of September 30, 2017 and September 24, 2016, the fair value of the Company’s Notes, based on Level 2 inputs, was $106.1 billion and $81.7 billion, respectively.
Shareholders' Equity
Shareholders' Equity
Shareholders’ Equity
Dividends
The Company declared and paid cash dividends per share during the periods presented as follows:
 
Dividends
Per Share
 
Amount
(in millions)
2017:
 
 
 
Fourth quarter
$
0.63

 
$
3,252

Third quarter
0.63

 
3,281

Second quarter
0.57

 
2,988

First quarter
0.57

 
3,042

Total cash dividends declared and paid
$
2.40

 
$
12,563

2016:
 
 
 
Fourth quarter
$
0.57

 
$
3,071

Third quarter
0.57

 
3,117

Second quarter
0.52

 
2,879

First quarter
0.52

 
2,898

Total cash dividends declared and paid
$
2.18

 
$
11,965


Future dividends are subject to declaration by the Board of Directors.
Share Repurchase Program
In May 2017, the Company’s Board of Directors increased the share repurchase authorization from $175 billion to $210 billion of the Company’s common stock, of which $166 billion had been utilized as of September 30, 2017. The Company’s share repurchase program does not obligate it to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The Company has entered, and in the future may enter, into accelerated share repurchase arrangements (“ASRs”) with financial institutions. In exchange for up-front payments, the financial institutions deliver shares of the Company’s common stock during the purchase periods of each ASR. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, is determined at the end of the applicable purchase period of each ASR based on the volume-weighted average price of the Company’s common stock during that period. The shares received are retired in the periods they are delivered, and the up-front payments are accounted for as a reduction to shareholders’ equity in the Company’s Consolidated Balance Sheets in the periods the payments are made. The Company reflects the ASRs as a repurchase of common stock in the period delivered for purposes of calculating earnings per share and as forward contracts indexed to its own common stock. The ASRs met all of the applicable criteria for equity classification, and therefore were not accounted for as derivative instruments.
The following table shows the Company’s ASR activity and related information during the years ended September 30, 2017 and September 24, 2016:
 
Purchase Period
End Date
 
Number of
Shares
(in thousands)
 
Average
Repurchase
Price Per Share
 
ASR
Amount
(in millions)
August 2017 ASR
November 2017
 
15,069

(1) 
(1) 

 
$
3,000

May 2017 ASR
August 2017
 
20,108

(2) 
$
149.20

 
$
3,000

February 2017 ASR
May 2017
 
20,949

 
$
143.20

 
$
3,000

November 2016 ASR
February 2017
 
51,157

 
$
117.29

 
$
6,000

August 2016 ASR
November 2016
 
26,850

 
$
111.73

 
$
3,000

May 2016 ASR
August 2016
 
60,452

 
$
99.25

 
$
6,000

November 2015 ASR
April 2016
 
29,122

 
$
103.02

 
$
3,000

 
(1)
“Number of Shares” represents those shares delivered at the beginning of the purchase period and does not represent the final number of shares to be delivered under the ASR. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, will be determined at the end of the purchase period based on the volume-weighted average price of the Company’s common stock during that period. The August 2017 ASR purchase period will end in November 2017.
(2)
Includes 15.6 million shares delivered and retired at the beginning of the purchase period, which began in the third quarter of 2017, and 4.5 million shares delivered and retired at the end of the purchase period, which concluded in the fourth quarter of 2017.
Additionally, the Company repurchased shares of its common stock in the open market, which were retired upon repurchase, during the periods presented as follows:
 
Number of
Shares
(in thousands)
 
Average
Repurchase
Price Per Share
 
Amount
(in millions)
2017:
 
 
 
 
 
Fourth quarter
29,073

 
$
154.78

 
$
4,500

Third quarter
30,356

 
$
148.24

 
4,500

Second quarter
31,070

 
$
128.74

 
4,001

First quarter
44,333

 
$
112.78

 
5,000

Total open market common stock repurchases
134,832

 
 
 
$
18,001

2016:
 
 
 
 
 
Fourth quarter
28,579

 
$
104.97

 
$
3,000

Third quarter
41,238

 
$
97.00

 
4,000

Second quarter
71,766

 
$
97.54

 
7,000

First quarter
25,984

 
$
115.45

 
3,000

Total open market common stock repurchases
167,567

 
 
 
$
17,000

Comprehensive Income
Comprehensive Income
Comprehensive Income
Comprehensive income consists of two components, net income and OCI. OCI refers to revenue, expenses, and gains and losses that under GAAP are recorded as an element of shareholders’ equity but are excluded from net 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 2017 and 2016 (in millions):
Comprehensive Income Components
 
Financial Statement Line Item
 
2017
 
2016
Unrealized (gains)/losses on derivative instruments:
 
 
 
 
 
 
Foreign exchange contracts
 
Revenue
 
$
(662
)
 
$
(865
)
 
 
Cost of sales
 
(654
)
 
(130
)
 
 
Other income/(expense), net
 
(638
)
 
111

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

 
12

 
 
 
 
(1,952
)
 
(872
)
Unrealized (gains)/losses on marketable securities
 
Other income/(expense), net
 
(99
)
 
87

Total amounts reclassified from AOCI
 
 
 
$
(2,051
)
 
$
(785
)

The following table shows the changes in AOCI by component for 2017 and 2016 (in millions):
 
Cumulative Foreign
Currency Translation
 
Unrealized Gains/Losses
on Derivative Instruments
 
Unrealized Gains/Losses
on Marketable Securities
 
Total
Balances as of September 26, 2015
$
(653
)
 
$
772

 
$
(464
)
 
$
(345
)
Other comprehensive income/(loss) before reclassifications
67

 
14

 
2,445

 
2,526

Amounts reclassified from AOCI
—

 
(872
)
 
87

 
(785
)
Tax effect
8

 
124

 
(894
)
 
(762
)
Other comprehensive income/(loss)
75


(734
)

1,638


979

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
)
Benefit Plans
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 30, 2017, approximately 327.9 million shares were reserved for future issuance under the 2014 Plan.
2003 Employee Stock Plan
The 2003 Plan is a shareholder approved plan that provided for broad-based equity grants to employees, including executive officers. The 2003 Plan permitted the granting of incentive stock options, nonstatutory stock options, RSUs, stock appreciation rights, stock purchase rights and performance-based awards. Options granted under the 2003 Plan generally expire seven to ten years after the grant date and generally become exercisable over a period of four years, based on continued employment, with either annual, semi-annual or quarterly vesting. RSUs granted under the 2003 Plan generally vest over two to 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. All RSUs, other than RSUs held by the Chief Executive Officer, granted under the 2003 Plan have 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. In the second quarter of 2014, the Company terminated the authority to grant new awards under the 2003 Plan.
1997 Director Stock Plan
The 1997 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 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 without 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 9, 2019. 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 30, 2017, 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 30, 2017, Section 16 officers Angela Ahrendts, Timothy D. Cook, Luca Maestri, Daniel Riccio and Philip Schiller 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 30, 2017, approximately 41.5 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 ($18,000 for calendar year 2017). 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 2017, 2016 and 2015, is as follows:
 
Number of
RSUs
(in thousands)
 
Weighted-Average
Grant Date Fair
Value Per Share
 
Aggregate Fair Value
(in millions)
Balance as of September 27, 2014
103,822

 
$
70.98

 
 
RSUs granted
45,587

 
$
105.51

 
 
RSUs vested
(41,684
)
 
$
71.32

 
 
RSUs canceled
(6,258
)
 
$
80.34

 
 
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

 
$
15,038


The fair value as of the respective vesting dates of RSUs was $6.1 billion, $5.1 billion and $4.8 billion for 2017, 2016 and 2015, respectively. The majority of RSUs that vested in 2017, 2016 and 2015 were net share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were approximately 15.4 million, 15.9 million and 14.1 million for 2017, 2016 and 2015, 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 $2.0 billion, $1.7 billion and $1.6 billion in 2017, 2016 and 2015, 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 2017, 2016 and 2015 (in millions):
 
2017
 
2016
 
2015
Cost of sales
$
877

 
$
769

 
$
575

Research and development
2,299

 
1,889

 
1,536

Selling, general and administrative
1,664

 
1,552

 
1,475

Total share-based compensation expense
$
4,840


$
4,210


$
3,586


The income tax benefit related to share-based compensation expense was $1.6 billion, $1.4 billion and $1.2 billion for 2017, 2016 and 2015, respectively. As of September 30, 2017, the total unrecognized compensation cost related to outstanding RSUs, restricted stock and stock options was $8.1 billion, which the Company expects to recognize over a weighted-average period of 2.5 years.
Commitments and Contingencies
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 2017, 2016 and 2015 (in millions):
 
2017
 
2016
 
2015
Beginning accrued warranty and related costs
$
3,702

 
$
4,780

 
$
4,159

Cost of warranty claims
(4,322
)
 
(4,663
)
 
(4,401
)
Accruals for product warranty
4,454

 
3,585

 
5,022

Ending accrued warranty and related costs
$
3,834


$
3,702


$
4,780


Agreements entered into by the Company sometimes include indemnification provisions which may subject the Company to costs and damages in the event of a claim against an indemnified third party. 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, a few 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 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 those 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 the sole-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 operating results could be 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 30, 2017, the Company’s total future minimum lease payments under noncancelable operating leases were $9.5 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 $1.1 billion, $939 million and $794 million in 2017, 2016 and 2015, respectively. Future minimum lease payments under noncancelable operating leases having initial or remaining terms in excess of one year as of September 30, 2017, are as follows (in millions):
2018
$
1,223

2019
1,187

2020
1,108

2021
1,033

2022
871

Thereafter
4,123

Total
$
9,545


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 30, 2017, are as follows (in millions):
2018
$
1,798

2019
2,675

2020
1,626

2021
1,296

2022
1,268

Thereafter
14

Total
$
8,677


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.” In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims. However, the outcome of litigation is inherently uncertain. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected.
Apple Inc. v. Samsung Electronics Co., Ltd., et al.
On August 24, 2012, a jury returned a verdict awarding the Company $1.05 billion in its lawsuit against Samsung Electronics Co., Ltd. and affiliated parties in the United States District Court, Northern District of California, San Jose Division. On March 6, 2014, the District Court entered final judgment in favor of the Company in the amount of approximately $930 million. On May 18, 2015, the U.S. Court of Appeals for the Federal Circuit affirmed in part, and reversed in part, the decision of the District Court. As a result, the Court of Appeals ordered entry of final judgment on damages in the amount of approximately $548 million, with the District Court to determine supplemental damages and interest, as well as damages owed for products subject to the reversal in part. Samsung paid $548 million to the Company in December 2015, which was included in net sales in the Consolidated Statement of Operations. On December 6, 2016, the U.S. Supreme Court remanded the case to the U.S. Court of Appeals for the Federal Circuit for further proceedings related to the $548 million in damages. On February 7, 2017, the U.S. Court of Appeals for the Federal Circuit remanded the case to the District Court to determine what additional proceedings, if any, are needed. On October 22, 2017, on remand from the U.S. Supreme Court, the District Court ordered a new trial on damages.
Segment Information and Geographic Data
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 R&D, 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 2017, 2016 and 2015 (in millions):
 
2017
 
2016
 
2015
Americas:
 
 
 
 
 
Net sales
$
96,600

 
$
86,613

 
$
93,864

Operating income
$
30,684

 
$
28,172

 
$
31,186

 
 
 
 
 
 
Europe:
 
 
 
 
 
Net sales
$
54,938

 
$
49,952

 
$
50,337

Operating income
$
16,514

 
$
15,348

 
$
16,527

 
 
 
 
 
 
Greater China:
 
 
 
 
 
Net sales
$
44,764

 
$
48,492

 
$
58,715

Operating income
$
17,032

 
$
18,835

 
$
23,002

 
 
 
 
 
 
Japan:
 
 
 
 
 
Net sales
$
17,733

 
$
16,928

 
$
15,706

Operating income
$
8,097

 
$
7,165

 
$
7,617

 
 
 
 
 
 
Rest of Asia Pacific:
 
 
 
 
 
Net sales
$
15,199

 
$
13,654

 
$
15,093

Operating income
$
5,304

 
$
4,781

 
$
5,518


A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2017, 2016 and 2015 is as follows (in millions):
 
2017
 
2016
 
2015
Segment operating income
$
77,631

 
$
74,301

 
$
83,850

Research and development expense
(11,581
)
 
(10,045
)
 
(8,067
)
Other corporate expenses, net
(4,706
)
 
(4,232
)
 
(4,553
)
Total operating income
$
61,344

 
$
60,024

 
$
71,230


The U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2017, 2016 and 2015. There was no single customer that accounted for more than 10% of net sales in 2017, 2016 and 2015. Net sales for 2017, 2016 and 2015 and long-lived assets as of September 30, 2017 and September 24, 2016 were as follows (in millions):
 
2017
 
2016
 
2015
Net sales:
 
 
 
 
 
U.S.
$
84,339

 
$
75,667

 
$
81,732

China (1)
44,764

 
48,492

 
58,715

Other countries
100,131

 
91,480

 
93,268

Total net sales
$
229,234


$
215,639


$
233,715


 
2017
 
2016
Long-lived assets:
 
 
 
U.S.
$
20,637

 
$
16,364

China (1)
10,211

 
7,875

Other countries
2,935

 
2,771

Total long-lived assets
$
33,783

 
$
27,010

(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 2017, 2016 and 2015 were as follows (in millions):
 
2017
 
2016
 
2015
iPhone (1)
$
141,319

 
$
136,700

 
$
155,041

iPad (1)
19,222

 
20,628

 
23,227

Mac (1)
25,850

 
22,831

 
25,471

Services (2)
29,980

 
24,348

 
19,909

Other Products (1)(3)
12,863

 
11,132

 
10,067

Total net sales
$
229,234


$
215,639


$
233,715

 
(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 the fourth quarter of 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 Apple TV, Apple Watch, Beats products, iPod touch and Apple-branded and third-party accessories.
Selected Quarterly Financial Information (Unaudited)
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 2017 and 2016 (in millions, except per share amounts):
 
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

 
Fourth Quarter
 
Third Quarter
 
Second Quarter
 
First Quarter
2016:
 
 
 
 
 
 
 
Net sales
$
46,852

 
$
42,358

 
$
50,557

 
$
75,872

Gross margin
$
17,813

 
$
16,106

 
$
19,921

 
$
30,423

Net income
$
9,014

 
$
7,796

 
$
10,516

 
$
18,361

 
 
 
 
 
 
 
 
Earnings per share (1):
 
 
 
 
 
 
 
Basic
$
1.68

 
$
1.43

 
$
1.91

 
$
3.30

Diluted
$
1.67

 
$
1.42

 
$
1.90

 
$
3.28

 
(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.
Summary of Significant Accounting Policies (Policies)
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 in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Certain prior period amounts in the consolidated financial statements 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 year 2017 included 53 weeks and ended on September 30, 2017. 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. The Company’s fiscal years 2016 and 2015 ended on September 24, 2016 and September 26, 2015, respectively, and spanned 52 weeks each. 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 iBooks 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 qualifying versions of iPhone, iPad, iPod touch, Mac, Apple Watch and Apple TV, 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.
Warranty Costs 
Warranty Costs
The Company generally provides for the estimated cost of hardware and software warranties in the period the related revenue is recognized. The Company assesses the adequacy of its accrued warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in future estimates.
Software Development Costs 
Software Development Costs
Research and development (“R&D”) costs are expensed as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company’s products are released soon after technological feasibility has been established and as a result software development costs were expensed as incurred.
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 recognizes expense related to share-based payment transactions in which it receives employee services in exchange for (a) equity instruments of the Company or (b) liabilities that are based on the fair value of the Company’s equity instruments or that may be settled by the issuance of such equity instruments. Share-based compensation expense for restricted stock units (“RSUs”) and restricted stock is measured based on the closing fair market value of the Company’s common stock on the date of grant. The Company estimates forfeitures expected to occur and recognizes share-based compensation expense for those equity awards expected to vest. The Company recognizes share-based compensation expense over the award’s requisite service period on a straight-line basis for time-based RSUs and on a graded basis for RSUs that are contingent on the achievement of performance conditions. The Company recognizes a benefit from share-based compensation in the Consolidated Statements of Shareholders’ Equity if an excess tax benefit is realized. In addition, the Company recognizes the indirect effects of share-based compensation on R&D tax credits, foreign tax credits and domestic manufacturing deductions in the Consolidated Statements of Operations. Further information regarding share-based compensation can be found in Note 9, “Benefit Plans.”
Income Taxes 
Income Taxes
The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. See Note 5, “Income Taxes” for additional information.
Earnings Per Share 
Potentially dilutive securities whose effect would have been antidilutive are excluded from the computation of diluted earnings per share.
Earnings Per Share
Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include unvested RSUs, unvested restricted stock, outstanding stock options and shares to be purchased by employees under the Company’s employee stock purchase plan. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities.
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. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the classifications at each balance sheet date. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable debt securities with maturities of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term. Marketable equity securities, including mutual funds, are classified as either short-term or long-term based on the nature of each security and its availability for use in current operations. The Company’s marketable debt and equity securities are carried at fair value, with unrealized gains and losses, net of taxes, reported as a component of accumulated other comprehensive income/(loss) (“AOCI”) in shareholders’ equity, with the exception of unrealized losses believed to be other-than-temporary which are reported in earnings in the current period. The cost of securities sold is based upon the specific identification method.
Derivative Financial Instruments 
Derivative Financial Instruments
The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value.
For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of AOCI in shareholders’ equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in earnings in the current period. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. For options designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings.
For derivative instruments that hedge the exposure to changes in the fair value of an asset or a liability and that are designated as fair value hedges, both the net gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedged item are recognized in earnings in the current period.
For derivative instruments and foreign currency debt that hedge the exposure to changes in foreign currency exchange rates used for translation of the net investment in a foreign operation and that are designated as a net investment hedge, the net gain or loss on the effective portion of the derivative instrument is reported in the same manner as a foreign currency translation adjustment. 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.
Derivatives that do not qualify as hedges are adjusted to fair value through earnings in the current period.
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.
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, on net investments in certain foreign subsidiaries and on 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 and 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 help 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 and who sell in local currencies 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 typically hedges portions of its forecasted foreign currency exposure associated with revenue and inventory purchases, typically for up to 12 months.
To help protect the net investment in a foreign operation from adverse changes in foreign currency exchange rates, the Company may enter into foreign currency forward and option contracts to offset 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 economic hedges of its net investments in certain foreign subsidiaries. In both of these cases, the Company designates these instruments as net investment hedges.
The Company may also enter into non-designated foreign currency contracts to partially offset the foreign currency exchange gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies.
The Company may enter into interest rate swaps, options, or other instruments to manage interest rate risk. These instruments may offset a portion of changes in income or expense, or changes in fair value of the Company’s term debt or investments. The Company designates these instruments as either cash flow or fair value hedges. The Company’s hedged interest rate transactions as of September 30, 2017 are expected to be recognized within 10 years.
The Company may enter into foreign currency swaps to manage currency risk on its foreign currency-denominated term debt. These instruments may offset a portion of the foreign currency remeasurement gains or losses on the Company’s term debt and related interest payments. The Company designates these instruments as cash flow hedges. The Company’s hedged term debt-related foreign currency transactions as of September 30, 2017 are expected to be recognized within 25 years.
Cash Flow Hedges
The effective portions of cash flow hedges are recorded in 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. 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.
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.
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.
Allowance for Doubtful Accounts 
Allowance for Doubtful Accounts
The Company records its allowance for doubtful accounts based upon its assessment of various factors, including historical experience, age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect the customers’ abilities to pay.
Inventories 
Inventories
Inventories are stated at the lower of cost, computed using the first-in, first-out method, and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period.
Property, Plant and Equipment 
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computed by use of the straight-line method 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. The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage. Capitalized costs related to internal-use software are amortized using the straight-line method over the estimated useful lives of the assets, which range from three to five years.
Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets 
Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets
The Company reviews property, plant and equipment, inventory component prepayments and identifiable intangibles, excluding goodwill and intangible assets with indefinite useful lives, for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If property, plant and equipment, inventory component prepayments and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair value.
The Company does not amortize goodwill and intangible assets with indefinite useful lives; rather, such assets are required to be tested for impairment at least annually or sooner if events or changes in circumstances indicate that the assets may be impaired. The Company performs its goodwill and intangible asset impairment tests in the fourth quarter of each year. The Company did not recognize any impairment charges related to goodwill or indefinite lived intangible assets during 2017, 2016 and 2015. For purposes of testing goodwill for impairment, the Company established reporting units based on its current reporting structure. Goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. In 2017 and 2016, the Company’s goodwill was primarily allocated to the Americas and Europe reporting units.
The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. The Company typically amortizes its acquired intangible assets with definite useful lives over periods from three to seven years.
Fair Value Measurements 
Fair Value Measurements
The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use to price the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – 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 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
The Company’s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were 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, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data.
In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments.
Foreign Currency Translation and Remeasurement 
Foreign Currency Translation and Remeasurement
The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period. Gains and losses from these translations are recognized in foreign currency translation included in AOCI in shareholders’ equity. The Company’s subsidiaries that use the U.S. dollar as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end of each period, and inventories, property and nonmonetary assets and liabilities at historical rates.
Segment Reporting 
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 R&D, 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.
Summary of Significant Accounting Policies (Tables)
Computation of Basic and Diluted Earnings Per Share
The following table shows the computation of basic and diluted earnings per share for 2017, 2016 and 2015 (net income in millions and shares in thousands):
 
2017
 
2016
 
2015
Numerator:
 
 
 
 
 
Net income
$
48,351

 
$
45,687

 
$
53,394

 
 
 
 
 
 
Denominator:
 
 
 
 
 
Weighted-average shares outstanding
5,217,242

 
5,470,820

 
5,753,421

Effect of dilutive securities
34,450

 
29,461

 
39,648

Weighted-average diluted shares
5,251,692

 
5,500,281


5,793,069

 
 
 
 
 
 
Basic earnings per share
$
9.27

 
$
8.35

 
$
9.28

Diluted earnings per share
$
9.21

 
$
8.31

 
$
9.22

Financial Instruments (Tables)
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 30, 2017 and September 24, 2016 (in millions):
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
2016
 
Adjusted
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
Cash and
Cash
Equivalents
 
Short-Term
Marketable
Securities
 
Long-Term
Marketable
Securities
Cash
$
8,601

 
$
—

 
$
—

 
$
8,601

 
$
8,601

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
3,666

 
—

 
—

 
3,666

 
3,666

 
—

 
—

Mutual funds
1,407

 
—

 
(146
)
 
1,261

 
—

 
1,261

 
—

Subtotal
5,073

 
—

 
(146
)
 
4,927

 
3,666

 
1,261

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 2:
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
41,697

 
319

 
(4
)
 
42,012

 
1,527

 
13,492

 
26,993

U.S. agency securities
7,543

 
16

 
—

 
7,559

 
2,762

 
2,441

 
2,356

Non-U.S. government securities
7,609

 
259

 
(27
)
 
7,841

 
110

 
818

 
6,913

Certificates of deposit and time deposits
6,598

 
—

 
—

 
6,598

 
1,108

 
3,897

 
1,593

Commercial paper
7,433

 
—

 
—

 
7,433

 
2,468

 
4,965

 
—

Corporate securities
131,166

 
1,409

 
(206
)
 
132,369

 
242

 
19,599

 
112,528

Municipal securities
956

 
5

 
—

 
961

 
—

 
167

 
794

Mortgage- and asset-backed securities
19,134

 
178

 
(28
)
 
19,284

 
—

 
31

 
19,253

Subtotal
222,136

 
2,186

 
(265
)
 
224,057

 
8,217

 
45,410

 
170,430

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
$
235,810

 
$
2,186

 
$
(411
)
 
$
237,585

 
$
20,484

 
$
46,671

 
$
170,430

Derivative Instruments at Gross Fair Value 
The following tables show the Company’s derivative instruments at gross fair value as of September 30, 2017 and September 24, 2016 (in millions):
 
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

 
2016
 
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
$
518

 
$
153

 
$
671

Interest rate contracts
$
728

 
$
—

 
$
728

 
 
 
 
 
 
Derivative liabilities (2):
 
 
 
 
 
Foreign exchange contracts
$
935

 
$
134

 
$
1,069

Interest rate contracts
$
7

 
$
—

 
$
7

 
(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 accrued expenses 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 2017, 2016 and 2015 (in millions):
 
2017
 
2016
 
2015
Gains/(Losses) recognized in OCI – effective portion:
 
 
 
 
 
Cash flow hedges:
 
 
 
 
 
Foreign exchange contracts
$
1,797

 
$
109

 
$
3,592

Interest rate contracts
7

 
(57
)
 
(111
)
Total
$
1,804


$
52


$
3,481

 
 
 
 
 
 
Net investment hedges:
 
 
 
 
 
Foreign exchange contracts
$
—

 
$
—

 
$
167

Foreign currency debt
67

 
(258
)
 
(71
)
Total
$
67


$
(258
)

$
96

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

 
$
885

 
$
4,092

Interest rate contracts
(2
)
 
(11
)
 
(17
)
Total
$
1,956


$
874


$
4,075

 
 
 
 
 
 
Gains/(Losses) on derivative instruments:
 
 
 
 
 
Fair value hedges:
 
 
 
 
 
Interest rate contracts
$
(810
)
 
$
341

 
$
337

 
 
 
 
 
 
Gains/(Losses) related to hedged items:
 
 
 
 
 
Fair value hedges:
 
 
 
 
 
Fixed-rate debt
$
810

 
$
(341
)
 
$
(337
)
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 30, 2017 and September 24, 2016 (in millions):
 
2017
 
2016
 
Notional
Amount
 
Credit Risk
Amount
 
Notional
Amount
 
Credit Risk
Amount
Instruments designated as accounting hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
$
56,156

 
$
1,049

 
$
44,678

 
$
518

Interest rate contracts
$
33,000

 
$
218

 
$
24,500

 
$
728

 
 
 
 
 
 
 
 
Instruments not designated as accounting hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
$
69,774

 
$
363

 
$
54,305

 
$
153

Consolidated Financial Statement Details (Tables)
Property, Plant and Equipment, Net 
Property, Plant and Equipment, Net
 
2017
 
2016
Land and buildings
$
13,587

 
$
10,185

Machinery, equipment and internal-use software
54,210

 
44,543

Leasehold improvements
7,279

 
6,517

Gross property, plant and equipment
75,076

 
61,245

Accumulated depreciation and amortization
(41,293
)
 
(34,235
)
Total property, plant and equipment, net
$
33,783

 
$
27,010

Other Non-Current Liabilities 
Other Non-Current Liabilities
 
2017
 
2016
Deferred tax liabilities
$
31,504

 
$
26,019

Other non-current liabilities
8,911

 
10,055

Total other non-current liabilities
$
40,415

 
$
36,074

Other Income/(Expense), Net 
Other Income/(Expense), Net
The following table shows the detail of other income/(expense), net for 2017, 2016 and 2015 (in millions):
 
2017
 
2016
 
2015
Interest and dividend income
$
5,201

 
$
3,999

 
$
2,921

Interest expense
(2,323
)
 
(1,456
)
 
(733
)
Other expense, net
(133
)
 
(1,195
)
 
(903
)
Total other income/(expense), net
$
2,745

 
$
1,348

 
$
1,285

Acquired Intangible Assets (Tables)
Components of Acquired Intangible Asset Balances 
The following table summarizes the components of acquired intangible asset balances as of September 30, 2017 and September 24, 2016 (in millions):
 
2017
 
2016
 
Gross
Carrying Amount
 
Accumulated
Amortization
 
Net
Carrying Amount
 
Gross
Carrying Amount
 
Accumulated
Amortization
 
Net
Carrying Amount
Definite-lived and amortizable acquired intangible assets
$
7,507

 
$
(5,309
)
 
$
2,198

 
$
8,912

 
$
(5,806
)
 
$
3,106

Indefinite-lived and non-amortizable acquired intangible assets
100

 
—

 
100

 
100

 
—

 
100

Total acquired intangible assets
$
7,607


$
(5,309
)

$
2,298


$
9,012


$
(5,806
)

$
3,206

Expected Annual Amortization Expense Related to Acquired Intangible Assets 
The expected annual amortization expense related to acquired intangible assets as of September 30, 2017, is as follows (in millions):
2018
$
948

2019
505

2020
323

2021
222

2022
131

Thereafter
69

Total
$
2,198

Income Taxes (Tables)
Provision for Income Taxes 
The provision for income taxes for 2017, 2016 and 2015, consisted of the following (in millions):
 
2017
 
2016
 
2015
Federal:
 
 
 
 
 
Current
$
7,842

 
$
7,652

 
$
11,730

Deferred
5,980

 
5,043

 
3,408

Total (1)
13,822


12,695


15,138

State:
 
 
 
 
 
Current
259

 
990

 
1,265

Deferred
2

 
(138
)
 
(220
)
Total
261


852


1,045

Foreign:
 
 
 
 
 
Current
1,671

 
2,105

 
4,744

Deferred
(16
)
 
33

 
(1,806
)
Total
1,655


2,138


2,938

Provision for income taxes
$
15,738


$
15,685


$
19,121


(1)
Includes taxes of $7.9 billion, $6.7 billion and $7.3 billion provided on foreign pre-tax earnings in 2017, 2016 and 2015, respectively.
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 (35% in 2017, 2016 and 2015) to income before provision for income taxes for 2017, 2016 and 2015, is as follows (dollars in millions):
 
2017
 
2016
 
2015
Computed expected tax
$
22,431

 
$
21,480

 
$
25,380

State taxes, net of federal effect
185

 
553

 
680

Indefinitely invested earnings of foreign subsidiaries
(6,135
)
 
(5,582
)
 
(6,470
)
Domestic production activities deduction
(209
)
 
(382
)
 
(426
)
Research and development credit, net
(678
)
 
(371
)
 
(171
)
Other
144

 
(13
)
 
128

Provision for income taxes
$
15,738


$
15,685


$
19,121

Effective tax rate
24.6
%
 
25.6
%
 
26.4
%
Significant Components of Deferred Tax Assets and Liabilities 
As of September 30, 2017 and September 24, 2016, the significant components of the Company’s deferred tax assets and liabilities were (in millions):
 
2017
 
2016
Deferred tax assets:
 
 
 
Accrued liabilities and other reserves
$
4,019

 
$
4,135

Basis of capital assets
1,230

 
2,107

Deferred revenue
1,521

 
1,717

Deferred cost sharing
667

 
667

Share-based compensation
703

 
601

Other
834

 
788

Total deferred tax assets, net of valuation allowance of $0
8,974

 
10,015

Deferred tax liabilities:
 
 
 
Unremitted earnings of foreign subsidiaries
36,355

 
31,436

Other
207

 
485

Total deferred tax liabilities
36,562

 
31,921

Net deferred tax liabilities
$
(27,588
)

$
(21,906
)
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 2017, 2016 and 2015, is as follows (in millions):
 
2017
 
2016
 
2015
Beginning balances
$
7,724

 
$
6,900

 
$
4,033

Increases related to tax positions taken during a prior year
333

 
1,121

 
2,056

Decreases related to tax positions taken during a prior year
(952
)
 
(257
)
 
(345
)
Increases related to tax positions taken during the current year
1,880

 
1,578

 
1,278

Decreases related to settlements with taxing authorities
(539
)
 
(1,618
)
 
(109
)
Decreases related to expiration of statute of limitations
(39
)
 
—

 
(13
)
Ending balances
$
8,407

 
$
7,724

 
$
6,900

Debt (Tables)
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 2017 and 2016 (in millions):
 
2017
 
2016
Maturities less than 90 days:
 
 
 
Proceeds from/(Repayments of) commercial paper, net
$
(1,782
)
 
$
(869
)
 
 
 
 
Maturities greater than 90 days:
 
 
 
Proceeds from commercial paper
17,932

 
3,632

Repayments of commercial paper
(12,298
)
 
(3,160
)
Proceeds from/(Repayments of) commercial paper, net
5,634


472

 
 
 
 
Total change in commercial paper, net
$
3,852


$
(397
)
Summary of Term Debt 
The following table provides a summary of the Company’s term debt as of September 30, 2017 and September 24, 2016:
 
Maturities
 
2017
 
2016
 
Amount
(in millions)
 
Effective
Interest Rate
 
Amount
(in millions)
 
Effective
Interest Rate
2013 debt issuance of $17.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
2018
 
2018
 
$
2,000

 
 
1.10%
 
1.10
%
 
$
2,000

 
 
1.10%
 
1.10
%
Fixed-rate 1.000% – 3.850% notes
2018
–
2043
 
12,500

 
 
1.08%
–
3.91
%
 
12,500

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

 
 
1.61%
 
1.61
%
 
2,000

 
 
0.86%
–
1.09
%
Fixed-rate 2.100% – 4.450% notes
2019
–
2044
 
8,500

 
 
1.61%
–
4.48
%
 
10,000

 
 
0.85%
–
4.48
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 debt issuances of $27.3 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
2019
–
2020
 
1,549

 
 
1.56%
–
1.87
%
 
1,781

 
 
0.87%
–
1.87
%
Fixed-rate 0.350% – 4.375% notes
2019
–
2045
 
24,522

 
 
0.28%
–
4.51
%
 
25,144

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

 
 
1.45%
–
2.44
%
 
1,350

 
 
0.91%
–
1.95
%
Fixed-rate 1.100% – 4.650% notes
2018
–
2046
 
23,645

 
 
1.13%
–
4.78
%
 
23,609

 
 
1.13%
–
4.58
%
 
Maturities
 
2017
 
2016
(Continued)
Amount
(in millions)
 
Effective
Interest Rate
 
Amount
(in millions)
 
Effective
Interest Rate
Second quarter 2017 debt issuance of $10.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
 
 
2019
 
500

 
 
 
 
1.39
%
 
—

 
 
 
 
—
%
Floating-rate notes
 
 
2020
 
500

 
 
 
 
1.51
%
 
—

 
 
 
 
—
%
Floating-rate notes
 
 
2022
 
1,000

 
 
 
 
1.81
%
 
—

 
 
 
 
—
%
Fixed-rate 1.550% notes
 
 
2019
 
500

 
 
 
 
1.59
%
 
—

 
 
 
 
—
%
Fixed-rate 1.900% notes
 
 
2020
 
1,000

 
 
 
 
1.51
%
 
—

 
 
 
 
—
%
Fixed-rate 2.500% notes
 
 
2022
 
1,500

 
 
 
 
1.80
%
 
—

 
 
 
 
—
%
Fixed-rate 3.000% notes
 
 
2024
 
1,750

 
 
 
 
2.11
%
 
—

 
 
 
 
—
%
Fixed-rate 3.350% notes
 
 
2027
 
2,250

 
 
 
 
2.25
%
 
—

 
 
 
 
—
%
Fixed-rate 4.250% notes
 
 
2047
 
1,000

 
 
 
 
4.26
%
 
—

 
 
 
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Second quarter 2017 debt issuance of $1.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate 4.300% notes
 
 
2047
 
1,000

 
 
 
 
4.30
%
 
—

 
 
 
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third quarter 2017 debt issuance of $7.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Floating-rate notes
 
 
2020
 
500

 
 
 
 
1.38
%
 
—

 
 
 
 
—
%
Floating-rate notes
 
 
2022
 
750

 
 
 
 
1.66
%
 
—

 
 
 
 
—
%
Fixed-rate 1.800% notes
 
 
2020
 
1,000

 
 
 
 
1.84
%
 
—

 
 
 
 
—
%
Fixed-rate 2.300% notes
 
 
2022
 
1,000

 
 
 
 
2.34
%
 
—

 
 
 
 
—
%
Fixed-rate 2.850% notes
 
 
2024
 
1,750

 
 
 
 
2.25
%
 
—

 
 
 
 
—
%
Fixed-rate 3.200% notes
 
 
2027
 
2,000

 
 
 
 
2.43
%
 
—

 
 
 
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third quarter 2017 euro-denominated debt issuance of €2.5 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate 0.875% notes
 
 
2025
 
1,469

 
 
 
 
3.03
%
 
—

 
 
 
 
—
%
Fixed-rate 1.375% notes
 
 
2029
 
1,469

 
 
 
 
3.37
%
 
—

 
 
 
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third quarter 2017 debt issuance of $1.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate 3.000% notes
 
 
2027
 
1,000

 
 
 
 
3.03
%
 
—

 
 
 
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth quarter 2017 Canadian dollar-denominated debt issuance of C$2.5 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate 2.513% notes
 
 
2024
 
2,017

 
 
 
 
2.66
%
 
—

 
 
 
 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth quarter 2017 debt issuance of $5.0 billion:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate 1.500% notes
 
 
2019
 
1,000

 
 
 
 
1.54
%
 
—

 
 
 
 
—
%
Fixed-rate 2.100% notes
 
 
2022
 
1,000

 
 
 
 
1.92
%
 
—

 
 
 
 
—
%
Fixed-rate 2.900% notes
 
 
2027
 
2,000

 
 
 
 
2.55
%
 
—

 
 
 
 
—
%
Fixed-rate 3.750% notes
 
 
2047
 
1,000

 
 
 
 
3.78
%
 
—

 
 
 
 
—
%
Total term debt
 
 
 
 
104,021

 
 
 
 
 
 
78,384

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unamortized premium/(discount) and issuance costs, net
 
 
 
 
(225
)
 
 
 
 
 
 
(174
)
 
 
 
 
 
Hedge accounting fair value adjustments
 
 
 
 
(93
)
 
 
 
 
 
 
717

 
 
 
 
 
Less: Current portion of long-term debt
 
 
 
 
(6,496
)
 
 
 
 
 
 
(3,500
)
 
 
 
 
 
Total long-term debt
 
 
 
 
$
97,207

 
 
 
 
 
 
$
75,427

 
 
 
 
 
Future Principal Payments for Notes 
The future principal payments for the Company’s Notes as of September 30, 2017 are as follows (in millions):
2018
$
6,500

2019
8,863

2020
9,220

2021
7,750

2022
10,297

Thereafter
61,391

Total term debt
$
104,021

Shareholders' Equity (Tables)
Cash Dividends Declared and Paid Per Share 
The Company declared and paid cash dividends per share during the periods presented as follows:
 
Dividends
Per Share
 
Amount
(in millions)
2017:
 
 
 
Fourth quarter
$
0.63

 
$
3,252

Third quarter
0.63

 
3,281

Second quarter
0.57

 
2,988

First quarter
0.57

 
3,042

Total cash dividends declared and paid
$
2.40

 
$
12,563

2016:
 
 
 
Fourth quarter
$
0.57

 
$
3,071

Third quarter
0.57

 
3,117

Second quarter
0.52

 
2,879

First quarter
0.52

 
2,898

Total cash dividends declared and paid
$
2.18

 
$
11,965

Accelerated Share Repurchase Activity and Related Information 
The following table shows the Company’s ASR activity and related information during the years ended September 30, 2017 and September 24, 2016:
 
Purchase Period
End Date
 
Number of
Shares
(in thousands)
 
Average
Repurchase
Price Per Share
 
ASR
Amount
(in millions)
August 2017 ASR
November 2017
 
15,069

(1) 
(1) 

 
$
3,000

May 2017 ASR
August 2017
 
20,108

(2) 
$
149.20

 
$
3,000

February 2017 ASR
May 2017
 
20,949

 
$
143.20

 
$
3,000

November 2016 ASR
February 2017
 
51,157

 
$
117.29

 
$
6,000

August 2016 ASR
November 2016
 
26,850

 
$
111.73

 
$
3,000

May 2016 ASR
August 2016
 
60,452

 
$
99.25

 
$
6,000

November 2015 ASR
April 2016
 
29,122

 
$
103.02

 
$
3,000

 
(1)
“Number of Shares” represents those shares delivered at the beginning of the purchase period and does not represent the final number of shares to be delivered under the ASR. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, will be determined at the end of the purchase period based on the volume-weighted average price of the Company’s common stock during that period. The August 2017 ASR purchase period will end in November 2017.
(2)
Includes 15.6 million shares delivered and retired at the beginning of the purchase period, which began in the third quarter of 2017, and 4.5 million shares delivered and retired at the end of the purchase period, which concluded in the fourth quarter of 2017.
Repurchases of Common Shares in Open Market 
Additionally, the Company repurchased shares of its common stock in the open market, which were retired upon repurchase, during the periods presented as follows:
 
Number of
Shares
(in thousands)
 
Average
Repurchase
Price Per Share
 
Amount
(in millions)
2017:
 
 
 
 
 
Fourth quarter
29,073

 
$
154.78

 
$
4,500

Third quarter
30,356

 
$
148.24

 
4,500

Second quarter
31,070

 
$
128.74

 
4,001

First quarter
44,333

 
$
112.78

 
5,000

Total open market common stock repurchases
134,832

 
 
 
$
18,001

2016:
 
 
 
 
 
Fourth quarter
28,579

 
$
104.97

 
$
3,000

Third quarter
41,238

 
$
97.00

 
4,000

Second quarter
71,766

 
$
97.54

 
7,000

First quarter
25,984

 
$
115.45

 
3,000

Total open market common stock repurchases
167,567

 
 
 
$
17,000

Comprehensive Income (Tables)
Pre-tax Amounts Reclassified from AOCI into 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 2017 and 2016 (in millions):
Comprehensive Income Components
 
Financial Statement Line Item
 
2017
 
2016
Unrealized (gains)/losses on derivative instruments:
 
 
 
 
 
 
Foreign exchange contracts
 
Revenue
 
$
(662
)
 
$
(865
)
 
 
Cost of sales
 
(654
)
 
(130
)
 
 
Other income/(expense), net
 
(638
)
 
111

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

 
12

 
 
 
 
(1,952
)
 
(872
)
Unrealized (gains)/losses on marketable securities
 
Other income/(expense), net
 
(99
)
 
87

Total amounts reclassified from AOCI
 
 
 
$
(2,051
)
 
$
(785
)
Changes in AOCI by Component 
The following table shows the changes in AOCI by component for 2017 and 2016 (in millions):
 
Cumulative Foreign
Currency Translation
 
Unrealized Gains/Losses
on Derivative Instruments
 
Unrealized Gains/Losses
on Marketable Securities
 
Total
Balances as of September 26, 2015
$
(653
)
 
$
772

 
$
(464
)
 
$
(345
)
Other comprehensive income/(loss) before reclassifications
67

 
14

 
2,445

 
2,526

Amounts reclassified from AOCI
—

 
(872
)
 
87

 
(785
)
Tax effect
8

 
124

 
(894
)
 
(762
)
Other comprehensive income/(loss)
75


(734
)

1,638


979

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
)
Benefit Plans (Tables)
Restricted Stock Unit Activity 
A summary of the Company’s RSU activity and related information for 2017, 2016 and 2015, is as follows:
 
Number of
RSUs
(in thousands)
 
Weighted-Average
Grant Date Fair
Value Per Share
 
Aggregate Fair Value
(in millions)
Balance as of September 27, 2014
103,822

 
$
70.98

 
 
RSUs granted
45,587

 
$
105.51

 
 
RSUs vested
(41,684
)
 
$
71.32

 
 
RSUs canceled
(6,258
)
 
$
80.34

 
 
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

 
$
15,038

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 2017, 2016 and 2015 (in millions):
 
2017
 
2016
 
2015
Cost of sales
$
877

 
$
769

 
$
575

Research and development
2,299

 
1,889

 
1,536

Selling, general and administrative
1,664

 
1,552

 
1,475

Total share-based compensation expense
$
4,840


$
4,210


$
3,586

Commitments and Contingencies (Tables)
Changes in Accrued Warranties and Related Costs 
The following table shows changes in the Company’s accrued warranties and related costs for 2017, 2016 and 2015 (in millions):
 
2017
 
2016
 
2015
Beginning accrued warranty and related costs
$
3,702

 
$
4,780

 
$
4,159

Cost of warranty claims
(4,322
)
 
(4,663
)
 
(4,401
)
Accruals for product warranty
4,454

 
3,585

 
5,022

Ending accrued warranty and related costs
$
3,834


$
3,702


$
4,780

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 30, 2017, are as follows (in millions):
2018
$
1,223

2019
1,187

2020
1,108

2021
1,033

2022
871

Thereafter
4,123

Total
$
9,545

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 30, 2017, are as follows (in millions):
2018
$
1,798

2019
2,675

2020
1,626

2021
1,296

2022
1,268

Thereafter
14

Total
$
8,677

Segment Information and Geographic Data (Tables)
Summary Information by Reportable Segment 
The following table shows information by reportable segment for 2017, 2016 and 2015 (in millions):
 
2017
 
2016
 
2015
Americas:
 
 
 
 
 
Net sales
$
96,600

 
$
86,613

 
$
93,864

Operating income
$
30,684

 
$
28,172

 
$
31,186

 
 
 
 
 
 
Europe:
 
 
 
 
 
Net sales
$
54,938

 
$
49,952

 
$
50,337

Operating income
$
16,514

 
$
15,348

 
$
16,527

 
 
 
 
 
 
Greater China:
 
 
 
 
 
Net sales
$
44,764

 
$
48,492

 
$
58,715

Operating income
$
17,032

 
$
18,835

 
$
23,002

 
 
 
 
 
 
Japan:
 
 
 
 
 
Net sales
$
17,733

 
$
16,928

 
$
15,706

Operating income
$
8,097

 
$
7,165

 
$
7,617

 
 
 
 
 
 
Rest of Asia Pacific:
 
 
 
 
 
Net sales
$
15,199

 
$
13,654

 
$
15,093

Operating income
$
5,304

 
$
4,781

 
$
5,518

Reconciliation of Segment Operating Income to Consolidated Statements of Operations 
A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2017, 2016 and 2015 is as follows (in millions):
 
2017
 
2016
 
2015
Segment operating income
$
77,631

 
$
74,301

 
$
83,850

Research and development expense
(11,581
)
 
(10,045
)
 
(8,067
)
Other corporate expenses, net
(4,706
)
 
(4,232
)
 
(4,553
)
Total operating income
$
61,344

 
$
60,024

 
$
71,230

Net Sales and Long-lived Assets 
Net sales for 2017, 2016 and 2015 and long-lived assets as of September 30, 2017 and September 24, 2016 were as follows (in millions):
 
2017
 
2016
 
2015
Net sales:
 
 
 
 
 
U.S.
$
84,339

 
$
75,667

 
$
81,732

China (1)
44,764

 
48,492

 
58,715

Other countries
100,131

 
91,480

 
93,268

Total net sales
$
229,234


$
215,639


$
233,715


 
2017
 
2016
Long-lived assets:
 
 
 
U.S.
$
20,637

 
$
16,364

China (1)
10,211

 
7,875

Other countries
2,935

 
2,771

Total long-lived assets
$
33,783

 
$
27,010

(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 2017, 2016 and 2015 were as follows (in millions):
 
2017
 
2016
 
2015
iPhone (1)
$
141,319

 
$
136,700

 
$
155,041

iPad (1)
19,222

 
20,628

 
23,227

Mac (1)
25,850

 
22,831

 
25,471

Services (2)
29,980

 
24,348

 
19,909

Other Products (1)(3)
12,863

 
11,132

 
10,067

Total net sales
$
229,234


$
215,639


$
233,715

 
(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 the fourth quarter of 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 Apple TV, Apple Watch, Beats products, iPod touch and Apple-branded and third-party accessories.
Selected Quarterly Financial Information (Unaudited) (Tables)
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 2017 and 2016 (in millions, except per share amounts):
 
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

 
Fourth Quarter
 
Third Quarter
 
Second Quarter
 
First Quarter
2016:
 
 
 
 
 
 
 
Net sales
$
46,852

 
$
42,358

 
$
50,557

 
$
75,872

Gross margin
$
17,813

 
$
16,106

 
$
19,921

 
$
30,423

Net income
$
9,014

 
$
7,796

 
$
10,516

 
$
18,361

 
 
 
 
 
 
 
 
Earnings per share (1):
 
 
 
 
 
 
 
Basic
$
1.68

 
$
1.43

 
$
1.91

 
$
3.30

Diluted
$
1.67

 
$
1.42

 
$
1.90

 
$
3.28

 
(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.
Summary of Significant Accounting Policies - Additional Information (Details) (USD $)
12 Months Ended
Sep. 30, 2017
Item
Sep. 24, 2016
Sep. 26, 2015
Significant Accounting Policies [Line Items]
 
 
 
Deliverables in arrangements (up to)
3 
 
 
Measurement of tax position, minimum likelihood of tax benefits being realized upon ultimate settlement, percentage
50.00% 
 
 
Depreciation and amortization expense
$ 8,200,000,000 
$ 8,300,000,000 
$ 9,200,000,000 
Goodwill impairment charges
0 
0 
0 
Indefinite lived intangible asset impairment charges
$ 0 
$ 0 
$ 0 
Minimum
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
Acquired intangible assets with definite lives, useful life
3 years 
 
 
Maximum
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
Acquired intangible assets with definite lives, useful life
7 years 
 
 
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 
 
 
Summary of Significant Accounting Policies - Computation of Basic and Diluted Earnings Per Share (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Sep. 30, 2017
Jul. 1, 2017
Apr. 1, 2017
Dec. 31, 2016
Sep. 24, 2016
Jun. 25, 2016
Mar. 26, 2016
Dec. 26, 2015
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Numerator:
 
 
 
 
 
 
 
 
 
 
 
Net income
$ 10,714 
$ 8,717 
$ 11,029 
$ 17,891 
$ 9,014 
$ 7,796 
$ 10,516 
$ 18,361 
$ 48,351 
$ 45,687 
$ 53,394 
Denominator:
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding (in shares)
 
 
 
 
 
 
 
 
5,217,242 
5,470,820 
5,753,421 
Effect of dilutive securities (in shares)
 
 
 
 
 
 
 
 
34,450 
29,461 
39,648 
Weighted-average diluted shares (in shares)
 
 
 
 
 
 
 
 
5,251,692 
5,500,281 
5,793,069 
Basic earnings per share (in dollars per share)
$ 2.08 
$ 1.68 
$ 2.11 
$ 3.38 
$ 1.68 
$ 1.43 
$ 1.91 
$ 3.30 
$ 9.27 
$ 8.35 
$ 9.28 
Diluted earnings per share (in dollars per share)
$ 2.07 
$ 1.67 
$ 2.10 
$ 3.36 
$ 1.67 
$ 1.42 
$ 1.90 
$ 3.28 
$ 9.21 
$ 8.31 
$ 9.22 
Financial Instruments - Cash, Cash Equivalents and Marketable Securities (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Sep. 27, 2014
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
$ 268,399 
$ 235,810 
 
 
Unrealized Gains
1,278 
2,186 
 
 
Unrealized Losses
(782)
(411)
 
 
Fair Value
268,895 
237,585 
 
 
Cash and Cash Equivalents
20,289 
20,484 
21,120 
13,844 
Short-Term Marketable Securities
53,892 
46,671 
 
 
Long-Term Marketable Securities
194,714 
170,430 
 
 
Cash
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
7,982 
8,601 
 
 
Unrealized Gains
0 
0 
 
 
Unrealized Losses
0 
0 
 
 
Fair Value
7,982 
8,601 
 
 
Cash and Cash Equivalents
7,982 
8,601 
 
 
Short-Term Marketable Securities
0 
0 
 
 
Long-Term Marketable Securities
0 
0 
 
 
Level 1
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
7,333 
5,073 
 
 
Unrealized Gains
0 
0 
 
 
Unrealized Losses
(88)
(146)
 
 
Fair Value
7,245 
4,927 
 
 
Cash and Cash Equivalents
6,534 
3,666 
 
 
Short-Term Marketable Securities
711 
1,261 
 
 
Long-Term Marketable Securities
0 
0 
 
 
Level 1 |
Money market funds
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
6,534 
3,666 
 
 
Unrealized Gains
0 
0 
 
 
Unrealized Losses
0 
0 
 
 
Fair Value
6,534 
3,666 
 
 
Cash and Cash Equivalents
6,534 
3,666 
 
 
Short-Term Marketable Securities
0 
0 
 
 
Long-Term Marketable Securities
0 
0 
 
 
Level 1 |
Mutual funds
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
799 
1,407 
 
 
Unrealized Gains
0 
0 
 
 
Unrealized Losses
(88)
(146)
 
 
Fair Value
711 
1,261 
 
 
Cash and Cash Equivalents
0 
0 
 
 
Short-Term Marketable Securities
711 
1,261 
 
 
Long-Term Marketable Securities
0 
0 
 
 
Level 2
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
253,084 
222,136 
 
 
Unrealized Gains
1,278 
2,186 
 
 
Unrealized Losses
(694)
(265)
 
 
Fair Value
253,668 
224,057 
 
 
Cash and Cash Equivalents
5,773 
8,217 
 
 
Short-Term Marketable Securities
53,181 
45,410 
 
 
Long-Term Marketable Securities
194,714 
170,430 
 
 
Level 2 |
U.S. Treasury securities
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
55,254 
41,697 
 
 
Unrealized Gains
58 
319 
 
 
Unrealized Losses
(230)
(4)
 
 
Fair Value
55,082 
42,012 
 
 
Cash and Cash Equivalents
865 
1,527 
 
 
Short-Term Marketable Securities
17,228 
13,492 
 
 
Long-Term Marketable Securities
36,989 
26,993 
 
 
Level 2 |
U.S. agency securities
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
5,162 
7,543 
 
 
Unrealized Gains
2 
16 
 
 
Unrealized Losses
(9)
0 
 
 
Fair Value
5,155 
7,559 
 
 
Cash and Cash Equivalents
1,439 
2,762 
 
 
Short-Term Marketable Securities
2,057 
2,441 
 
 
Long-Term Marketable Securities
1,659 
2,356 
 
 
Level 2 |
Non-U.S. government securities
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
7,827 
7,609 
 
 
Unrealized Gains
210 
259 
 
 
Unrealized Losses
(37)
(27)
 
 
Fair Value
8,000 
7,841 
 
 
Cash and Cash Equivalents
9 
110 
 
 
Short-Term Marketable Securities
123 
818 
 
 
Long-Term Marketable Securities
7,868 
6,913 
 
 
Level 2 |
Certificates of deposit and time deposits
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
5,832 
6,598 
 
 
Unrealized Gains
0 
0 
 
 
Unrealized Losses
0 
0 
 
 
Fair Value
5,832 
6,598 
 
 
Cash and Cash Equivalents
1,142 
1,108 
 
 
Short-Term Marketable Securities
3,918 
3,897 
 
 
Long-Term Marketable Securities
772 
1,593 
 
 
Level 2 |
Commercial paper
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
3,640 
7,433 
 
 
Unrealized Gains
0 
0 
 
 
Unrealized Losses
0 
0 
 
 
Fair Value
3,640 
7,433 
 
 
Cash and Cash Equivalents
2,146 
2,468 
 
 
Short-Term Marketable Securities
1,494 
4,965 
 
 
Long-Term Marketable Securities
0 
0 
 
 
Level 2 |
Corporate securities
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
152,724 
131,166 
 
 
Unrealized Gains
969 
1,409 
 
 
Unrealized Losses
(242)
(206)
 
 
Fair Value
153,451 
132,369 
 
 
Cash and Cash Equivalents
172 
242 
 
 
Short-Term Marketable Securities
27,591 
19,599 
 
 
Long-Term Marketable Securities
125,688 
112,528 
 
 
Level 2 |
Municipal securities
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
961 
956 
 
 
Unrealized Gains
4 
5 
 
 
Unrealized Losses
(1)
0 
 
 
Fair Value
964 
961 
 
 
Cash and Cash Equivalents
0 
0 
 
 
Short-Term Marketable Securities
114 
167 
 
 
Long-Term Marketable Securities
850 
794 
 
 
Level 2 |
Mortgage- and asset-backed securities
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
Adjusted Cost
21,684 
19,134 
 
 
Unrealized Gains
35 
178 
 
 
Unrealized Losses
(175)
(28)
 
 
Fair Value
21,544 
19,284 
 
 
Cash and Cash Equivalents
0 
0 
 
 
Short-Term Marketable Securities
656 
31 
 
 
Long-Term Marketable Securities
$ 20,888 
$ 19,253 
 
 
Financial Instruments - Additional Information (Details) (USD $)
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Financial Instruments [Line Items]
 
 
Maturities of long-term marketable securities, minimum
1 year 
 
Maturities of long-term marketable securities, maximum
5 years 
 
Hedged interest rate transactions, expected recognition period
10 years 
 
Potential reduction to derivative assets resulting from rights of set-off under master netting arrangements
$ 1,400,000,000 
$ 1,500,000,000 
Potential reduction to derivative liabilities resulting from rights of set-off under master netting arrangements
1,400,000,000 
1,500,000,000 
Net derivative assets/(liabilities) after potential reductions under master netting arrangements
32,000,000 
160,000,000 
Trade receivables |
Credit concentration risk
 
 
Financial Instruments [Line Items]
 
 
Number of customers that individually represented 10% or more of total trade receivables
2 
1 
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% 
63.00% 
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
3 
2 
Non-trade receivables |
Credit concentration risk |
Vendor one
 
 
Financial Instruments [Line Items]
 
 
Concentration risk, percentage
42.00% 
47.00% 
Non-trade receivables |
Credit concentration risk |
Vendor two
 
 
Financial Instruments [Line Items]
 
 
Concentration risk, percentage
19.00% 
21.00% 
Non-trade receivables |
Credit concentration risk |
Vendor three
 
 
Financial Instruments [Line Items]
 
 
Concentration risk, percentage
10.00% 
 
Accrued expenses
 
 
Financial Instruments [Line Items]
 
 
Net cash collateral received, derivative instruments
35,000,000 
163,000,000 
Derivatives not designated as accounting hedges |
Net sales
 
 
Financial Instruments [Line Items]
 
 
Non-designated derivatives, fair value adjustment gains/(losses)
20,000,000 
 
Derivatives not designated as accounting hedges |
Cost of sales
 
 
Financial Instruments [Line Items]
 
 
Non-designated derivatives, fair value adjustment gains/(losses)
(40,000,000)
 
Derivatives not designated as accounting hedges |
Other income/(expense), net
 
 
Financial Instruments [Line Items]
 
 
Non-designated derivatives, fair value adjustment gains/(losses)
$ 606,000,000 
 
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
25 years 
 
Financial Instruments - Derivative Instruments at Gross Fair Value (Details) (Level 2, USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Sep. 24, 2016
Other current assets and other non-current assets |
Foreign exchange contracts
 
 
Derivative assets:
 
 
Fair value of derivative assets
$ 1,412 
$ 671 
Other current assets and other non-current assets |
Interest rate contracts
 
 
Derivative assets:
 
 
Fair value of derivative assets
218 
728 
Other current assets and other non-current assets |
Derivatives designated as accounting hedges |
Foreign exchange contracts
 
 
Derivative assets:
 
 
Fair value of derivative assets
1,049 
518 
Other current assets and other non-current assets |
Derivatives designated as accounting hedges |
Interest rate contracts
 
 
Derivative assets:
 
 
Fair value of derivative assets
218 
728 
Other current assets and other non-current assets |
Derivatives not designated as accounting hedges |
Foreign exchange contracts
 
 
Derivative assets:
 
 
Fair value of derivative assets
363 
153 
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 
0 
Accrued expenses and other non-current liabilities |
Foreign exchange contracts
 
 
Derivative liabilities:
 
 
Fair value of derivative liabilities
1,260 
1,069 
Accrued expenses and other non-current liabilities |
Interest rate contracts
 
 
Derivative liabilities:
 
 
Fair value of derivative liabilities
303 
7 
Accrued expenses and other non-current liabilities |
Derivatives designated as accounting hedges |
Foreign exchange contracts
 
 
Derivative liabilities:
 
 
Fair value of derivative liabilities
759 
935 
Accrued expenses and other non-current liabilities |
Derivatives designated as accounting hedges |
Interest rate contracts
 
 
Derivative liabilities:
 
 
Fair value of derivative liabilities
303 
7 
Accrued expenses and other non-current liabilities |
Derivatives not designated as accounting hedges |
Foreign exchange contracts
 
 
Derivative liabilities:
 
 
Fair value of derivative liabilities
501 
134 
Accrued expenses and other non-current liabilities |
Derivatives not designated as accounting hedges |
Interest rate contracts
 
 
Derivative liabilities:
 
 
Fair value of derivative liabilities
$ 0 
$ 0 
Financial Instruments - Pre-Tax Gains and Losses of Derivative and Non-Derivative Instruments Designated as Hedges (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Cash flow hedges
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Gains/(Losses) recognized in OCI - effective portion
$ 1,804 
$ 52 
$ 3,481 
Gains/(Losses) reclassified from AOCI into net income - effective portion
1,956 
874 
4,075 
Cash flow hedges |
Foreign exchange contracts
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Gains/(Losses) recognized in OCI - effective portion
1,797 
109 
3,592 
Gains/(Losses) reclassified from AOCI into net income - effective portion
1,958 
885 
4,092 
Cash flow hedges |
Interest rate contracts
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Gains/(Losses) recognized in OCI - effective portion
7 
(57)
(111)
Gains/(Losses) reclassified from AOCI into net income - effective portion
(2)
(11)
(17)
Net investment hedges
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Gains/(Losses) recognized in OCI - effective portion
67 
(258)
96 
Net investment hedges |
Foreign exchange contracts
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Gains/(Losses) recognized in OCI - effective portion
0 
0 
167 
Net investment hedges |
Foreign currency debt
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Gains/(Losses) recognized in OCI - effective portion
67 
(258)
(71)
Fair value hedges |
Interest rate contracts
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
Gains/(Losses) on derivative instruments
(810)
341 
337 
Gains/(Losses) related to hedged fixed-rate debt
$ 810 
$ (341)
$ (337)
Financial Instruments - Notional Amounts and Credit Risk Amounts Associated with Derivative Instruments (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Sep. 24, 2016
Derivatives designated as accounting hedges |
Foreign exchange contracts
 
 
Derivative [Line Items]
 
 
Derivative, notional amount
$ 56,156 
$ 44,678 
Derivative, credit risk amount
1,049 
518 
Derivatives designated as accounting hedges |
Interest rate contracts
 
 
Derivative [Line Items]
 
 
Derivative, notional amount
33,000 
24,500 
Derivative, credit risk amount
218 
728 
Derivatives not designated as accounting hedges |
Foreign exchange contracts
 
 
Derivative [Line Items]
 
 
Derivative, notional amount
69,774 
54,305 
Derivative, credit risk amount
$ 363 
$ 153 
Consolidated Financial Statement Details - Property, Plant and Equipment, Net (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Sep. 24, 2016
Property, Plant and Equipment [Line Items]
 
 
Gross property, plant and equipment
$ 75,076 
$ 61,245 
Accumulated depreciation and amortization
(41,293)
(34,235)
Total property, plant and equipment, net
33,783 
27,010 
Land and buildings
 
 
Property, Plant and Equipment [Line Items]
 
 
Gross property, plant and equipment
13,587 
10,185 
Machinery, equipment and internal-use software
 
 
Property, Plant and Equipment [Line Items]
 
 
Gross property, plant and equipment
54,210 
44,543 
Leasehold improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Gross property, plant and equipment
$ 7,279 
$ 6,517 
Consolidated Financial Statement Details - Other Non-Current Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Sep. 24, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
Deferred tax liabilities
$ 31,504 
$ 26,019 
Other non-current liabilities
8,911 
10,055 
Total other non-current liabilities
$ 40,415 
$ 36,074 
Consolidated Financial Statement Details - Other Income/(Expense), Net (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
 
Interest and dividend income
$ 5,201 
$ 3,999 
$ 2,921 
Interest expense
(2,323)
(1,456)
(733)
Other expense, net
(133)
(1,195)
(903)
Total other income/(expense), net
$ 2,745 
$ 1,348 
$ 1,285 
Acquired Intangible Assets - Components of Gross and Net Intangible Asset Balances (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Sep. 24, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
Total acquired intangible assets, gross carrying amount
$ 7,607 
$ 9,012 
Definite-lived and amortizable acquired intangible assets, gross carrying amount
7,507 
8,912 
Definite-lived and amortizable acquired intangible assets, accumulated amortization
(5,309)
(5,806)
Definite-lived and amortizable acquired intangible assets, net carrying amount
2,198 
3,106 
Indefinite-lived and non-amortizable acquired intangible assets
100 
100 
Total acquired intangible assets, net carrying amount
$ 2,298 
$ 3,206 
Acquired Intangible Assets - Additional Information (Details) (USD $)
In Billions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
Amortization expense related to acquired intangible assets
$ 1.2 
$ 1.5 
$ 1.3 
Weighted-average amortization period for acquired intangible assets
3 years 5 months 
 
 
Acquired Intangible Assets - Expected Annual Amortization Expense Related to Acquired Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Sep. 24, 2016
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
 
 
2018
$ 948 
 
2019
505 
 
2020
323 
 
2021
222 
 
2022
131 
 
Thereafter
69 
 
Definite-lived and amortizable acquired intangible assets, net carrying amount
$ 2,198 
$ 3,106 
Income Taxes - Provision for Income Taxes (Details) (USD $)
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Federal:
 
 
 
Current
$ 7,842,000,000 
$ 7,652,000,000 
$ 11,730,000,000 
Deferred
5,980,000,000 
5,043,000,000 
3,408,000,000 
Federal income tax expense (benefit)
13,822,000,000 
12,695,000,000 
15,138,000,000 
State:
 
 
 
Current
259,000,000 
990,000,000 
1,265,000,000 
Deferred
2,000,000 
(138,000,000)
(220,000,000)
State income tax expense (benefits)
261,000,000 
852,000,000 
1,045,000,000 
Foreign:
 
 
 
Current
1,671,000,000 
2,105,000,000 
4,744,000,000 
Deferred
(16,000,000)
33,000,000 
(1,806,000,000)
Foreign income tax expense (benefit)
1,655,000,000 
2,138,000,000 
2,938,000,000 
Provision for income taxes
15,738,000,000 
15,685,000,000 
19,121,000,000 
Federal income taxes provided on foreign pre-tax earnings
$ 7,900,000,000 
$ 6,700,000,000 
$ 7,300,000,000 
Income Taxes - Additional Information (Details)
12 Months Ended 0 Months Ended
Sep. 30, 2017
USD ($)
Sep. 24, 2016
USD ($)
Sep. 26, 2015
USD ($)
Sep. 27, 2014
USD ($)
Aug. 30, 2016
Unfavorable investigation outcome, EU State Aid rules
Subsidiary
Aug. 30, 2016
Unfavorable investigation outcome, EU State Aid rules
EUR (€)
Aug. 30, 2016
Unfavorable investigation outcome, EU State Aid rules - interest component
EUR (€)
Income Tax Disclosure [Abstract]
 
 
 
 
 
 
 
Foreign pre-tax earnings
$ 44,700,000,000 
$ 41,100,000,000 
$ 47,600,000,000 
 
 
 
 
Statutory tax rate in foreign operations
12.50% 
 
 
 
 
 
 
Undistributed earnings of foreign subsidiaries
128,700,000,000 
 
 
 
 
 
 
Deferred tax liability related to foreign earnings that may be repatriated
42,200,000,000 
 
 
 
 
 
 
Cash, cash equivalents and marketable securities held by foreign subsidiaries
252,300,000,000 
216,000,000,000 
 
 
 
 
 
Reconciliation of provision for income taxes, statutory federal income tax rate
35.00% 
35.00% 
35.00% 
 
 
 
 
Net excess tax benefits from equity awards
620,000,000 
379,000,000 
748,000,000 
 
 
 
 
Measurement of tax position, minimum likelihood of tax benefits being realized upon ultimate settlement, percentage
50.00% 
 
 
 
 
 
 
Gross unrecognized tax benefits
8,407,000,000 
7,724,000,000 
6,900,000,000 
4,033,000,000 
 
 
 
Gross unrecognized tax benefits that would affect effective tax rate, if recognized
2,500,000,000 
2,800,000,000 
 
 
 
 
 
Unrecognized tax benefits, gross interest and penalties accrued
1,200,000,000 
1,000,000,000 
 
 
 
 
 
Tax matters, recognized interest and penalty expense
165,000,000 
295,000,000 
709,000,000 
 
 
 
 
Loss Contingencies [Line Items]
 
 
 
 
 
 
 
Number of subsidiaries impacted by the European Commission tax ruling
 
 
 
 
2 
 
 
Maximum potential loss related to European Commission tax ruling
 
 
 
 
 
€ 13,000,000,000 
€ 1,000,000,000 
Income Taxes - Reconciliation of the Provision for Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Income Tax Disclosure [Abstract]
 
 
 
Computed expected tax
$ 22,431 
$ 21,480 
$ 25,380 
State taxes, net of federal effect
185 
553 
680 
Indefinitely invested earnings of foreign subsidiaries
(6,135)
(5,582)
(6,470)
Domestic production activities deduction
(209)
(382)
(426)
Research and development credit, net
(678)
(371)
(171)
Other
144 
(13)
128 
Provision for income taxes
$ 15,738 
$ 15,685 
$ 19,121 
Effective tax rate
24.60% 
25.60% 
26.40% 
Income Taxes - Significant Components of Deferred Tax Assets and Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Sep. 24, 2016
Deferred tax assets:
 
 
Accrued liabilities and other reserves
$ 4,019 
$ 4,135 
Basis of capital assets
1,230 
2,107 
Deferred revenue
1,521 
1,717 
Deferred cost sharing
667 
667 
Share-based compensation
703 
601 
Other
834 
788 
Total deferred tax assets, net of valuation allowance of $0
8,974 
10,015 
Deferred tax liabilities:
 
 
Unremitted earnings of foreign subsidiaries
36,355 
31,436 
Other
207 
485 
Total deferred tax liabilities
36,562 
31,921 
Net deferred tax liabilities
(27,588)
(21,906)
Deferred tax assets, valuation allowance
$ 0 
$ 0 
Income Taxes - Aggregate Changes in Gross Unrecognized Tax Benefits, Excluding Interest and Penalties (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
 
Beginning balances
$ 7,724 
$ 6,900 
$ 4,033 
Increases related to tax positions taken during a prior year
333 
1,121 
2,056 
Decreases related to tax positions taken during a prior year
(952)
(257)
(345)
Increases related to tax positions taken during the current year
1,880 
1,578 
1,278 
Decreases related to settlements with taxing authorities
(539)
(1,618)
(109)
Decreases related to expiration of statute of limitations
(39)
0 
(13)
Ending balances
$ 8,407 
$ 7,724 
$ 6,900 
Debt - Additional Information (Details) (USD $)
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Debt Instrument [Line Items]
 
 
 
Commercial paper
$ 11,977,000,000 
$ 8,105,000,000 
 
Commercial paper, general maturity period (less than)
9 months 
 
 
Commercial paper, weighted-average interest rate
1.20% 
0.45% 
 
Floating- and fixed-rate notes, aggregate principal amount
104,021,000,000 
78,384,000,000 
 
Interest expense on term debt
2,200,000,000 
1,400,000,000 
722,000,000 
Level 2
 
 
 
Debt Instrument [Line Items]
 
 
 
Floating- and fixed-rate notes, aggregate fair value
106,100,000,000 
81,700,000,000 
 
Net investment hedges
 
 
 
Debt Instrument [Line Items]
 
 
 
Carrying value of debt designated as a net investment hedge
$ 1,600,000,000 
$ 1,900,000,000 
 
Debt - Summary of Cash Flows Associated with Commercial Paper (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Maturities less than 90 days:
 
 
 
Proceeds from/(Repayments of) commercial paper, net
$ (1,782)
$ (869)
 
Maturities greater than 90 days:
 
 
 
Proceeds from commercial paper
17,932 
3,632 
 
Repayments of commercial paper
(12,298)
(3,160)
 
Proceeds from/(Repayments of) commercial paper, net
5,634 
472 
 
Total change in commercial paper, net
$ 3,852 
$ (397)
$ 2,191 
Debt - Summary of Term Debt (Details)
12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Sep. 30, 2017
USD ($)
Sep. 24, 2016
USD ($)
Sep. 30, 2017
2013 debt issuance of $17.0 billion
USD ($)
Sep. 30, 2017
2013 debt issuance of $17.0 billion
Floating-rate notes
USD ($)
Sep. 24, 2016
2013 debt issuance of $17.0 billion
Floating-rate notes
USD ($)
Sep. 30, 2017
2013 debt issuance of $17.0 billion
Floating-rate notes
Minimum
Sep. 24, 2016
2013 debt issuance of $17.0 billion
Floating-rate notes
Minimum
Sep. 30, 2017
2013 debt issuance of $17.0 billion
Floating-rate notes
Maximum
Sep. 24, 2016
2013 debt issuance of $17.0 billion
Floating-rate notes
Maximum
Sep. 30, 2017
2013 debt issuance of $17.0 billion
Fixed-rate 1.000% – 3.850% notes
USD ($)
Sep. 24, 2016
2013 debt issuance of $17.0 billion
Fixed-rate 1.000% – 3.850% notes
USD ($)
Sep. 30, 2017
2013 debt issuance of $17.0 billion
Fixed-rate 1.000% – 3.850% notes
Minimum
Sep. 24, 2016
2013 debt issuance of $17.0 billion
Fixed-rate 1.000% – 3.850% notes
Minimum
Sep. 30, 2017
2013 debt issuance of $17.0 billion
Fixed-rate 1.000% – 3.850% notes
Maximum
Sep. 24, 2016
2013 debt issuance of $17.0 billion
Fixed-rate 1.000% – 3.850% notes
Maximum
Sep. 30, 2017
2014 debt issuance of $12.0 billion
USD ($)
Sep. 30, 2017
2014 debt issuance of $12.0 billion
Floating-rate notes
USD ($)
Sep. 24, 2016
2014 debt issuance of $12.0 billion
Floating-rate notes
USD ($)
Sep. 30, 2017
2014 debt issuance of $12.0 billion
Floating-rate notes
Minimum
Sep. 24, 2016
2014 debt issuance of $12.0 billion
Floating-rate notes
Minimum
Sep. 30, 2017
2014 debt issuance of $12.0 billion
Floating-rate notes
Maximum
Sep. 24, 2016
2014 debt issuance of $12.0 billion
Floating-rate notes
Maximum
Sep. 30, 2017
2014 debt issuance of $12.0 billion
Fixed-rate 2.100% – 4.450% notes
USD ($)
Sep. 24, 2016
2014 debt issuance of $12.0 billion
Fixed-rate 2.100% – 4.450% notes
USD ($)
Sep. 30, 2017
2014 debt issuance of $12.0 billion
Fixed-rate 2.100% – 4.450% notes
Minimum
Sep. 24, 2016
2014 debt issuance of $12.0 billion
Fixed-rate 2.100% – 4.450% notes
Minimum
Sep. 30, 2017
2014 debt issuance of $12.0 billion
Fixed-rate 2.100% – 4.450% notes
Maximum
Sep. 24, 2016
2014 debt issuance of $12.0 billion
Fixed-rate 2.100% – 4.450% notes
Maximum
Sep. 30, 2017
2015 debt issuances of $27.3 billion
USD ($)
Sep. 30, 2017
2015 debt issuances of $27.3 billion
Floating-rate notes
USD ($)
Sep. 24, 2016
2015 debt issuances of $27.3 billion
Floating-rate notes
USD ($)
Sep. 30, 2017
2015 debt issuances of $27.3 billion
Floating-rate notes
Minimum
Sep. 24, 2016
2015 debt issuances of $27.3 billion
Floating-rate notes
Minimum
Sep. 30, 2017
2015 debt issuances of $27.3 billion
Floating-rate notes
Maximum
Sep. 24, 2016
2015 debt issuances of $27.3 billion
Floating-rate notes
Maximum
Sep. 30, 2017
2015 debt issuances of $27.3 billion
Fixed-rate 0.350% – 4.375% notes
USD ($)
Sep. 24, 2016
2015 debt issuances of $27.3 billion
Fixed-rate 0.350% – 4.375% notes
USD ($)
Sep. 30, 2017
2015 debt issuances of $27.3 billion
Fixed-rate 0.350% – 4.375% notes
Minimum
Sep. 24, 2016
2015 debt issuances of $27.3 billion
Fixed-rate 0.350% – 4.375% notes
Minimum
Sep. 30, 2017
2015 debt issuances of $27.3 billion
Fixed-rate 0.350% – 4.375% notes
Maximum
Sep. 24, 2016
2015 debt issuances of $27.3 billion
Fixed-rate 0.350% – 4.375% notes
Maximum
Sep. 30, 2017
2016 debt issuances of $24.9 billion
USD ($)
Sep. 30, 2017
2016 debt issuances of $24.9 billion
Floating-rate notes
USD ($)
Sep. 24, 2016
2016 debt issuances of $24.9 billion
Floating-rate notes
USD ($)
Sep. 30, 2017
2016 debt issuances of $24.9 billion
Floating-rate notes
Minimum
Sep. 24, 2016
2016 debt issuances of $24.9 billion
Floating-rate notes
Minimum
Sep. 30, 2017
2016 debt issuances of $24.9 billion
Floating-rate notes
Maximum
Sep. 24, 2016
2016 debt issuances of $24.9 billion
Floating-rate notes
Maximum
Sep. 30, 2017
2016 debt issuances of $24.9 billion
Fixed-rate 1.100% – 4.650% notes
USD ($)
Sep. 24, 2016
2016 debt issuances of $24.9 billion
Fixed-rate 1.100% – 4.650% notes
USD ($)
Sep. 30, 2017
2016 debt issuances of $24.9 billion
Fixed-rate 1.100% – 4.650% notes
Minimum
Sep. 24, 2016
2016 debt issuances of $24.9 billion
Fixed-rate 1.100% – 4.650% notes
Minimum
Sep. 30, 2017
2016 debt issuances of $24.9 billion
Fixed-rate 1.100% – 4.650% notes
Maximum
Sep. 24, 2016
2016 debt issuances of $24.9 billion
Fixed-rate 1.100% – 4.650% notes
Maximum
Sep. 30, 2017
Second quarter 2017 debt issuance of $10.0 billion
USD ($)
Sep. 30, 2017
Second quarter 2017 debt issuance of $10.0 billion
Floating-rate notes due 2019
USD ($)
Sep. 24, 2016
Second quarter 2017 debt issuance of $10.0 billion
Floating-rate notes due 2019
USD ($)
Sep. 30, 2017
Second quarter 2017 debt issuance of $10.0 billion
Floating-rate notes due 2020
USD ($)
Sep. 24, 2016
Second quarter 2017 debt issuance of $10.0 billion
Floating-rate notes due 2020
USD ($)
Sep. 30, 2017
Second quarter 2017 debt issuance of $10.0 billion
Floating-rate notes due 2022
USD ($)
Sep. 24, 2016
Second quarter 2017 debt issuance of $10.0 billion
Floating-rate notes due 2022
USD ($)
Sep. 30, 2017
Second quarter 2017 debt issuance of $10.0 billion
Fixed-rate 1.550% notes
USD ($)
Sep. 24, 2016
Second quarter 2017 debt issuance of $10.0 billion
Fixed-rate 1.550% notes
USD ($)
Sep. 30, 2017
Second quarter 2017 debt issuance of $10.0 billion
Fixed-rate 1.900% notes
USD ($)
Sep. 24, 2016
Second quarter 2017 debt issuance of $10.0 billion
Fixed-rate 1.900% notes
USD ($)
Sep. 30, 2017
Second quarter 2017 debt issuance of $10.0 billion
Fixed-rate 2.500% notes
USD ($)
Sep. 24, 2016
Second quarter 2017 debt issuance of $10.0 billion
Fixed-rate 2.500% notes
USD ($)
Sep. 30, 2017
Second quarter 2017 debt issuance of $10.0 billion
Fixed-rate 3.000% notes
USD ($)
Sep. 24, 2016
Second quarter 2017 debt issuance of $10.0 billion
Fixed-rate 3.000% notes
USD ($)
Sep. 30, 2017
Second quarter 2017 debt issuance of $10.0 billion
Fixed-rate 3.350% notes
USD ($)
Sep. 24, 2016
Second quarter 2017 debt issuance of $10.0 billion
Fixed-rate 3.350% notes
USD ($)
Sep. 30, 2017
Second quarter 2017 debt issuance of $10.0 billion
Fixed-rate 4.250% notes
USD ($)
Sep. 24, 2016
Second quarter 2017 debt issuance of $10.0 billion
Fixed-rate 4.250% notes
USD ($)
Sep. 30, 2017
Second quarter 2017 debt issuance of $1.0 billion
USD ($)
Sep. 30, 2017
Second quarter 2017 debt issuance of $1.0 billion
Fixed-rate 4.300% notes
USD ($)
Sep. 24, 2016
Second quarter 2017 debt issuance of $1.0 billion
Fixed-rate 4.300% notes
USD ($)
Sep. 30, 2017
Third quarter 2017 debt issuance of $7.0 billion
USD ($)
Sep. 30, 2017
Third quarter 2017 debt issuance of $7.0 billion
Floating-rate notes due 2020
USD ($)
Sep. 24, 2016
Third quarter 2017 debt issuance of $7.0 billion
Floating-rate notes due 2020
USD ($)
Sep. 30, 2017
Third quarter 2017 debt issuance of $7.0 billion
Floating-rate notes due 2022
USD ($)
Sep. 24, 2016
Third quarter 2017 debt issuance of $7.0 billion
Floating-rate notes due 2022
USD ($)
Sep. 30, 2017
Third quarter 2017 debt issuance of $7.0 billion
Fixed-rate 1.800% notes
USD ($)
Sep. 24, 2016
Third quarter 2017 debt issuance of $7.0 billion
Fixed-rate 1.800% notes
USD ($)
Sep. 30, 2017
Third quarter 2017 debt issuance of $7.0 billion
Fixed-rate 2.300% notes
USD ($)
Sep. 24, 2016
Third quarter 2017 debt issuance of $7.0 billion
Fixed-rate 2.300% notes
USD ($)
Sep. 30, 2017
Third quarter 2017 debt issuance of $7.0 billion
Fixed-rate 2.850% notes
USD ($)
Sep. 24, 2016
Third quarter 2017 debt issuance of $7.0 billion
Fixed-rate 2.850% notes
USD ($)
Sep. 30, 2017
Third quarter 2017 debt issuance of $7.0 billion
Fixed-rate 3.200% notes
USD ($)
Sep. 24, 2016
Third quarter 2017 debt issuance of $7.0 billion
Fixed-rate 3.200% notes
USD ($)
Sep. 30, 2017
Third quarter 2017 euro-denominated debt issuance
EUR (€)
Sep. 30, 2017
Third quarter 2017 euro-denominated debt issuance
Fixed-rate 0.875% notes
USD ($)
Sep. 24, 2016
Third quarter 2017 euro-denominated debt issuance
Fixed-rate 0.875% notes
USD ($)
Sep. 30, 2017
Third quarter 2017 euro-denominated debt issuance
Fixed-rate 1.375% notes
USD ($)
Sep. 24, 2016
Third quarter 2017 euro-denominated debt issuance
Fixed-rate 1.375% notes
USD ($)
Sep. 30, 2017
Third quarter 2017 debt issuance of $1.0 billion
USD ($)
Sep. 30, 2017
Third quarter 2017 debt issuance of $1.0 billion
Fixed-rate 3.000% notes
USD ($)
Sep. 24, 2016
Third quarter 2017 debt issuance of $1.0 billion
Fixed-rate 3.000% notes
USD ($)
Sep. 30, 2017
Fourth quarter 2017 Canadian dollar-denominated debt issuance
CAD ($)
Sep. 30, 2017
Fourth quarter 2017 Canadian dollar-denominated debt issuance
Fixed-rate 2.513% notes
USD ($)
Sep. 24, 2016
Fourth quarter 2017 Canadian dollar-denominated debt issuance
Fixed-rate 2.513% notes
USD ($)
Sep. 30, 2017
Fourth quarter 2017 debt issuance of $5.0 billion
USD ($)
Sep. 30, 2017
Fourth quarter 2017 debt issuance of $5.0 billion
Fixed-rate 1.500% notes
USD ($)
Sep. 24, 2016
Fourth quarter 2017 debt issuance of $5.0 billion
Fixed-rate 1.500% notes
USD ($)
Sep. 30, 2017
Fourth quarter 2017 debt issuance of $5.0 billion
Fixed-rate 2.100% notes
USD ($)
Sep. 24, 2016
Fourth quarter 2017 debt issuance of $5.0 billion
Fixed-rate 2.100% notes
USD ($)
Sep. 30, 2017
Fourth quarter 2017 debt issuance of $5.0 billion
Fixed-rate 2.900% notes
USD ($)
Sep. 24, 2016
Fourth quarter 2017 debt issuance of $5.0 billion
Fixed-rate 2.900% notes
USD ($)
Sep. 30, 2017
Fourth quarter 2017 debt issuance of $5.0 billion
Fixed-rate 3.750% notes
USD ($)
Sep. 24, 2016
Fourth quarter 2017 debt issuance of $5.0 billion
Fixed-rate 3.750% notes
USD ($)
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total term debt
$ 104,021,000,000 
$ 78,384,000,000 
 
$ 2,000,000,000 
$ 2,000,000,000 
 
 
 
 
$ 12,500,000,000 
$ 12,500,000,000 
 
 
 
 
 
$ 1,000,000,000 
$ 2,000,000,000 
 
 
 
 
$ 8,500,000,000 
$ 10,000,000,000 
 
 
 
 
 
$ 1,549,000,000 
$ 1,781,000,000 
 
 
 
 
$ 24,522,000,000 
$ 25,144,000,000 
 
 
 
 
 
$ 1,350,000,000 
$ 1,350,000,000 
 
 
 
 
$ 23,645,000,000 
$ 23,609,000,000 
 
 
 
 
 
$ 500,000,000 
$ 0 
$ 500,000,000 
$ 0 
$ 1,000,000,000 
$ 0 
$ 500,000,000 
$ 0 
$ 1,000,000,000 
$ 0 
$ 1,500,000,000 
$ 0 
$ 1,750,000,000 
$ 0 
$ 2,250,000,000 
$ 0 
$ 1,000,000,000 
$ 0 
 
$ 1,000,000,000 
$ 0 
 
$ 500,000,000 
$ 0 
$ 750,000,000 
$ 0 
$ 1,000,000,000 
$ 0 
$ 1,000,000,000 
$ 0 
$ 1,750,000,000 
$ 0 
$ 2,000,000,000 
$ 0 
 
$ 1,469,000,000 
$ 0 
$ 1,469,000,000 
$ 0 
 
$ 1,000,000,000 
$ 0 
 
$ 2,017,000,000 
$ 0 
 
$ 1,000,000,000 
$ 0 
$ 1,000,000,000 
$ 0 
$ 2,000,000,000 
$ 0 
$ 1,000,000,000 
$ 0 
Unamortized premium/(discount) and issuance costs, net
(225,000,000)
(174,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hedge accounting fair value adjustments
(93,000,000)
717,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Current portion of long-term debt
(6,496,000,000)
(3,500,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total long-term debt
97,207,000,000 
75,427,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, face amount
 
 
$ 17,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
$ 12,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
$ 27,300,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
$ 24,900,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
$ 10,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 1,000,000,000 
 
 
$ 7,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
€ 2,500,000,000.0 
 
 
 
 
$ 1,000,000,000 
 
 
$ 2,500,000,000.0 
 
 
$ 5,000,000,000 
 
 
 
 
 
 
 
 
Debt instrument maturity year, start
 
 
 
2018 
 
 
 
 
 
2018 
 
 
 
 
 
 
2019 
 
 
 
 
 
2019 
 
 
 
 
 
 
2019 
 
 
 
 
 
2019 
 
 
 
 
 
 
2019 
 
 
 
 
 
2018 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument maturity year, end
 
 
 
2018 
 
 
 
 
 
2043 
 
 
 
 
 
 
2019 
 
 
 
 
 
2044 
 
 
 
 
 
 
2020 
 
 
 
 
 
2045 
 
 
 
 
 
 
2021 
 
 
 
 
 
2046 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, maturity year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 
 
2020 
 
2022 
 
2019 
 
2020 
 
2022 
 
2024 
 
2027 
 
2047 
 
 
2047 
 
 
2020 
 
2022 
 
2020 
 
2022 
 
2024 
 
2027 
 
 
2025 
 
2029 
 
 
2027 
 
 
2024 
 
 
2019 
 
2022 
 
2027 
 
2047 
 
Debt instrument, stated interest rate
 
 
 
 
 
 
 
 
 
 
 
1.00% 
 
3.85% 
 
 
 
 
 
 
 
 
 
 
2.10% 
 
4.45% 
 
 
 
 
 
 
 
 
 
 
0.35% 
 
4.375% 
 
 
 
 
 
 
 
 
 
 
1.10% 
 
4.65% 
 
 
 
 
 
 
 
 
1.55% 
 
1.90% 
 
2.50% 
 
3.00% 
 
3.35% 
 
4.25% 
 
 
4.30% 
 
 
 
 
 
 
1.80% 
 
2.30% 
 
2.85% 
 
3.20% 
 
 
0.875% 
 
1.375% 
 
 
3.00% 
 
 
2.513% 
 
 
1.50% 
 
2.10% 
 
2.90% 
 
3.75% 
 
Debt instrument, effective interest rate
 
 
 
 
 
1.10% 
1.10% 
1.10% 
1.10% 
 
 
1.08% 
1.08% 
3.91% 
3.91% 
 
 
 
1.61% 
0.86% 
1.61% 
1.09% 
 
 
1.61% 
0.85% 
4.48% 
4.48% 
 
 
 
1.56% 
0.87% 
1.87% 
1.87% 
 
 
0.28% 
0.28% 
4.51% 
4.51% 
 
 
 
1.45% 
0.91% 
2.44% 
1.95% 
 
 
1.13% 
1.13% 
4.78% 
4.58% 
 
1.39% 
0.00% 
1.51% 
0.00% 
1.81% 
0.00% 
1.59% 
0.00% 
1.51% 
0.00% 
1.80% 
0.00% 
2.11% 
0.00% 
2.25% 
0.00% 
4.26% 
0.00% 
 
4.30% 
0.00% 
 
1.38% 
0.00% 
1.66% 
0.00% 
1.84% 
0.00% 
2.34% 
0.00% 
2.25% 
0.00% 
2.43% 
0.00% 
 
3.03% 
0.00% 
3.37% 
0.00% 
 
3.03% 
0.00% 
 
2.66% 
0.00% 
 
1.54% 
0.00% 
1.92% 
0.00% 
2.55% 
0.00% 
3.78% 
0.00% 
Debt - Future Principal Payments for Term Debt (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Sep. 24, 2016
Debt Disclosure [Abstract]
 
 
2018
$ 6,500 
 
2019
8,863 
 
2020
9,220 
 
2021
7,750 
 
2022
10,297 
 
Thereafter
61,391 
 
Total term debt
$ 104,021 
$ 78,384 
Shareholders' Equity - Additional Information (Details) (USD $)
Sep. 30, 2017
May 31, 2017
Apr. 30, 2017
Equity [Abstract]
 
 
 
Maximum amount authorized for repurchase of common stock
 
$ 210,000,000,000 
$ 175,000,000,000 
Share repurchase program, amount utilized
$ 166,000,000,000 
 
 
Shareholders' Equity - Accelerated Share Repurchase Activity and Related Information (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
2 Months Ended 3 Months Ended 4 Months Ended 6 Months Ended
Sep. 30, 2017
August 2017 ASR
Sep. 30, 2017
May 2017 ASR
Jul. 1, 2017
May 2017 ASR
Aug. 31, 2017
May 2017 ASR
May 31, 2017
February 2017 ASR
Feb. 28, 2017
November 2016 ASR
Nov. 30, 2016
August 2016 ASR
Aug. 31, 2016
May 2016 ASR
Apr. 30, 2016
November 2015 ASR
Accelerated Share Repurchases [Line Items]
 
 
 
 
 
 
 
 
 
Stock repurchase program completion date
2017-11 
 
 
2017-08 
2017-05 
2017-02 
2016-11 
2016-08 
2016-04 
Number of shares repurchased (in shares)
15,069 
4,500 
15,600 
20,108 
20,949 
51,157 
26,850 
60,452 
29,122 
Average repurchase price per share (in dollars per share)
 
 
 
$ 149.20 
$ 143.20 
$ 117.29 
$ 111.73 
$ 99.25 
$ 103.02 
ASR amount
$ 3,000 
 
 
$ 3,000 
$ 3,000 
$ 6,000 
$ 3,000 
$ 6,000 
$ 3,000 
Shareholders' Equity - Repurchases of Common Shares in Open Market (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended 3 Months Ended 12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Sep. 30, 2017
Open Market Repurchases
Jul. 1, 2017
Open Market Repurchases
Apr. 1, 2017
Open Market Repurchases
Dec. 31, 2016
Open Market Repurchases
Sep. 24, 2016
Open Market Repurchases
Jun. 25, 2016
Open Market Repurchases
Mar. 26, 2016
Open Market Repurchases
Dec. 26, 2015
Open Market Repurchases
Sep. 30, 2017
Open Market Repurchases
Sep. 24, 2016
Open Market Repurchases
Stock Repurchase Program [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares repurchased (in shares)
 
 
 
29,073 
30,356 
31,070 
44,333 
28,579 
41,238 
71,766 
25,984 
134,832 
167,567 
Average repurchase price per share (in dollars per share)
 
 
 
$ 154.78 
$ 148.24 
$ 128.74 
$ 112.78 
$ 104.97 
$ 97.00 
$ 97.54 
$ 115.45 
 
 
Amount
$ 33,001 
$ 29,000 
$ 36,026 
$ 4,500 
$ 4,500 
$ 4,001 
$ 5,000 
$ 3,000 
$ 4,000 
$ 7,000 
$ 3,000 
$ 18,001 
$ 17,000 
Comprehensive Income - Pre-tax Amounts Reclassified from AOCI into Consolidated Statements of Operations (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Sep. 30, 2017
Jul. 1, 2017
Apr. 1, 2017
Dec. 31, 2016
Sep. 24, 2016
Jun. 25, 2016
Mar. 26, 2016
Dec. 26, 2015
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ (52,579)
$ (45,408)
$ (52,896)
$ (78,351)
$ (46,852)
$ (42,358)
$ (50,557)
$ (75,872)
$ (229,234)
$ (215,639)
$ (233,715)
Cost of sales
 
 
 
 
 
 
 
 
141,048 
131,376 
140,089 
Other income/(expense), net
 
 
 
 
 
 
 
 
(2,745)
(1,348)
(1,285)
Total amounts reclassified from AOCI
 
 
 
 
 
 
 
 
(64,089)
(61,372)
(72,515)
Reclassifications out of AOCI
 
 
 
 
 
 
 
 
 
 
 
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Total amounts reclassified from AOCI
 
 
 
 
 
 
 
 
(2,051)
(785)
 
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
 
 
 
 
 
 
 
 
(1,952)
(872)
 
Reclassifications out of AOCI |
Unrealized (gains)/losses on derivative instruments |
Foreign exchange contracts
 
 
 
 
 
 
 
 
 
 
 
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
(662)
(865)
 
Cost of sales
 
 
 
 
 
 
 
 
(654)
(130)
 
Other income/(expense), net
 
 
 
 
 
 
 
 
(638)
111 
 
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 
12 
 
Reclassifications out of AOCI |
Unrealized (gains)/losses on marketable securities
 
 
 
 
 
 
 
 
 
 
 
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Other income/(expense), net
 
 
 
 
 
 
 
 
$ (99)
$ 87 
 
Comprehensive Income - Change in AOCI by Component (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
AOCI Attributable to Parent, Net of Tax [Roll Forward]
 
 
 
Beginning balances
$ 128,249 
$ 119,355 
$ 111,547 
Total other comprehensive income/(loss)
(784)
979 
(1,427)
Ending balances
134,047 
128,249 
119,355 
Cumulative Foreign Currency Translation
 
 
 
AOCI Attributable to Parent, Net of Tax [Roll Forward]
 
 
 
Beginning balances
(578)
(653)
 
Other comprehensive income/(loss) before reclassifications
301 
67 
 
Amounts reclassified from AOCI
0 
0 
 
Tax effect
(77)
8 
 
Total other comprehensive income/(loss)
224 
75 
 
Ending balances
(354)
(578)
 
Unrealized Gains/Losses on Derivative Instruments
 
 
 
AOCI Attributable to Parent, Net of Tax [Roll Forward]
 
 
 
Beginning balances
38 
772 
 
Other comprehensive income/(loss) before reclassifications
1,793 
14 
 
Amounts reclassified from AOCI
(1,952)
(872)
 
Tax effect
(3)
124 
 
Total other comprehensive income/(loss)
(162)
(734)
 
Ending balances
(124)
38 
 
Unrealized Gains/Losses on Marketable Securities
 
 
 
AOCI Attributable to Parent, Net of Tax [Roll Forward]
 
 
 
Beginning balances
1,174 
(464)
 
Other comprehensive income/(loss) before reclassifications
(1,207)
2,445 
 
Amounts reclassified from AOCI
(99)
87 
 
Tax effect
460 
(894)
 
Total other comprehensive income/(loss)
(846)
1,638 
 
Ending balances
328 
1,174 
 
Total AOCI
 
 
 
AOCI Attributable to Parent, Net of Tax [Roll Forward]
 
 
 
Beginning balances
634 
(345)
1,082 
Other comprehensive income/(loss) before reclassifications
887 
2,526 
 
Amounts reclassified from AOCI
(2,051)
(785)
 
Tax effect
380 
(762)
 
Total other comprehensive income/(loss)
(784)
979 
(1,427)
Ending balances
$ (150)
$ 634 
$ (345)
Benefit Plans - Additional Information (Details) (USD $)
12 Months Ended 12 Months Ended 12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Sep. 30, 2017
Minimum
Sep. 30, 2017
Maximum
Sep. 30, 2017
Restricted stock units
Sep. 24, 2016
Restricted stock units
Sep. 26, 2015
Restricted stock units
Sep. 30, 2017
Employee Stock Purchase Plan
Sep. 30, 2017
2014 Employee Stock Plan
Mar. 29, 2014
2014 Employee Stock Plan
Sep. 30, 2017
2014 Employee Stock Plan
Restricted stock units
Sep. 30, 2017
2003 Employee Stock Plan
Restricted stock units
Sep. 30, 2017
2003 Employee Stock Plan
Restricted stock units
Minimum
Sep. 30, 2017
2003 Employee Stock Plan
Restricted stock units
Maximum
Sep. 30, 2017
2003 Employee Stock Plan
Employee stock option
Sep. 30, 2017
2003 Employee Stock Plan
Employee stock option
Minimum
Sep. 30, 2017
2003 Employee Stock Plan
Employee stock option
Maximum
Sep. 30, 2017
1997 Director Stock Plan
Sep. 30, 2017
1997 Director Stock Plan
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based award, vesting period
 
 
 
 
 
 
 
 
 
 
 
4 years 
 
2 years 
4 years 
4 years 
 
 
 
 
Number of shares of common stock issued per RSU upon vesting
 
 
 
 
 
 
 
 
 
 
 
1 
1 
 
 
 
 
 
 
 
Reduction in number of shares available for grant per share issued with respect to RSUs granted (in shares)
 
 
 
 
 
 
 
 
 
 
 
2 
 
 
 
 
 
 
 
2 
Factor by which each RSU canceled or share withheld for taxes increases the number of shares available for grant
 
 
 
 
 
 
 
 
 
 
 
2 
 
 
 
 
 
 
 
 
Shares authorized for future issuance under stock plans (in shares)
 
 
 
 
 
 
 
 
 
 
385,000,000 
 
 
 
 
 
 
 
 
 
Shares reserved for future issuance under stock plans (in shares)
 
 
 
 
 
 
 
 
41,500,000 
327,900,000 
 
 
 
 
 
 
 
 
1,100,000 
 
Expiration term of options granted under Employee Benefit Plans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7 years 
10 years 
 
 
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 program, authorized amount per employee
 
 
 
 
 
 
 
 
$ 25,000 
 
 
 
 
 
 
 
 
 
 
 
Maximum portion of pre-tax earnings under 401(k) Plan that can be deferred by participating U.S. employees
18,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employer matching contribution to 401(k) Plan as a percentage of employee's contribution
 
 
 
50.00% 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employer matching contribution to 401(k) Plan as a percentage of employee's eligible earnings
 
 
 
 
6.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of vested RSUs as of vesting date
 
 
 
 
 
6,100,000,000 
5,100,000,000 
4,800,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
The total shares withheld upon vesting of RSUs (in shares)
15,400,000 
15,900,000 
14,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxes paid related to net share settlement of equity awards
2,000,000,000 
1,700,000,000 
1,600,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit related to share-based compensation expense
1,600,000,000 
1,400,000,000 
1,200,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total unrecognized compensation cost related to RSUs, restricted stock and stock options
$ 8,100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total unrecognized compensation cost related to RSUs, restricted stock and stock options, weighted-average recognition period
2 years 6 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefit Plans - Restricted Stock Units Activity and Related Information (Details) (Restricted stock units, USD $)
In Millions, except Share data in Thousands, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Restricted stock units
 
 
 
Number of Restricted Stock Units
 
 
 
Beginning balance (in shares)
99,089 
101,467 
103,822 
RSUs granted (in shares)
50,112 
49,468 
45,587 
RSUs vested (in shares)
(45,735)
(46,313)
(41,684)
RSUs canceled (in shares)
(5,895)
(5,533)
(6,258)
Ending balance (in shares)
97,571 
99,089 
101,467 
Weighted-Average Grant Date Fair Value Per Share
 
 
 
Beginning balance (in dollars per share)
$ 97.54 
$ 85.77 
$ 70.98 
RSUs granted (in dollars per share)
$ 121.65 
$ 109.28 
$ 105.51 
RSUs vested (in dollars per share)
$ 95.48 
$ 84.44 
$ 71.32 
RSUs canceled (in dollars per share)
$ 106.87 
$ 96.48 
$ 80.34 
Ending balance (in dollars per share)
$ 110.33 
$ 97.54 
$ 85.77 
Aggregate Fair Value
 
 
 
Aggregate fair value of restricted stock units
$ 15,038 
 
 
Benefit Plans - Summary of Share-Based Compensation Expense (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
Share-based compensation expense
$ 4,840 
$ 4,210 
$ 3,586 
Cost of sales
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
Share-based compensation expense
877 
769 
575 
Research and development
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
Share-based compensation expense
2,299 
1,889 
1,536 
Selling, general and administrative
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
Share-based compensation expense
$ 1,664 
$ 1,552 
$ 1,475 
Commitments and Contingencies - Changes in Accrued Warranties and Related Costs (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Changes in Accrued Warranties and Related Costs [Roll Forward]
 
 
 
Beginning accrued warranty and related costs
$ 3,702 
$ 4,780 
$ 4,159 
Cost of warranty claims
(4,322)
(4,663)
(4,401)
Accruals for product warranty
4,454 
3,585 
5,022 
Ending accrued warranty and related costs
$ 3,834 
$ 3,702 
$ 4,780 
Commitments and Contingencies - Additional Information (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 0 Months Ended 1 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
May 18, 2015
Samsung Electronics Co., Ltd.
Mar. 6, 2014
Samsung Electronics Co., Ltd.
Aug. 24, 2012
Samsung Electronics Co., Ltd.
Dec. 31, 2015
Samsung Electronics Co., Ltd.
Net sales
Commitments and Contingencies Disclosure [Line Items]
 
 
 
 
 
 
 
Purchase commitments, period (up to)
150 days 
 
 
 
 
 
 
Total future minimum lease payments under noncancelable operating leases
$ 9,545 
 
 
 
 
 
 
Typical term of leases (not exceeding)
10 years 
 
 
 
 
 
 
Rent expense under cancelable and noncancelable operating leases
1,100 
939 
794 
 
 
 
 
Result of legal proceedings
 
 
 
548 
930 
1,050 
 
Proceeds from legal settlement
 
 
 
 
 
 
$ 548 
Commitments and Contingencies - Future Minimum Lease Payments Under Noncancelable Operating Leases (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
 
2018
$ 1,223 
2019
1,187 
2020
1,108 
2021
1,033 
2022
871 
Thereafter
4,123 
Total
$ 9,545 
Commitments and Contingencies - Future Payments Under Unconditional Purchase Obligations (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Unconditional Purchase Obligation, Fiscal Year Maturity [Abstract]
 
2018
$ 1,798 
2019
2,675 
2020
1,626 
2021
1,296 
2022
1,268 
Thereafter
14 
Total
$ 8,677 
Segment Information and Geographic Data - Summary Information by Operating Segment (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Sep. 30, 2017
Jul. 1, 2017
Apr. 1, 2017
Dec. 31, 2016
Sep. 24, 2016
Jun. 25, 2016
Mar. 26, 2016
Dec. 26, 2015
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
$ 52,579 
$ 45,408 
$ 52,896 
$ 78,351 
$ 46,852 
$ 42,358 
$ 50,557 
$ 75,872 
$ 229,234 
$ 215,639 
$ 233,715 
Operating income
 
 
 
 
 
 
 
 
61,344 
60,024 
71,230 
Americas
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
96,600 
86,613 
93,864 
Operating income
 
 
 
 
 
 
 
 
30,684 
28,172 
31,186 
Europe
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
54,938 
49,952 
50,337 
Operating income
 
 
 
 
 
 
 
 
16,514 
15,348 
16,527 
Greater China
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
44,764 
48,492 
58,715 
Operating income
 
 
 
 
 
 
 
 
17,032 
18,835 
23,002 
Japan
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
17,733 
16,928 
15,706 
Operating income
 
 
 
 
 
 
 
 
8,097 
7,165 
7,617 
Rest of Asia Pacific
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
15,199 
13,654 
15,093 
Operating income
 
 
 
 
 
 
 
 
$ 5,304 
$ 4,781 
$ 5,518 
Segment Information and Geographic Data - Reconciliation of Segment Operating Income to Consolidated Statements of Operations (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
 
 
 
Operating income
$ 61,344 
$ 60,024 
$ 71,230 
Research and development expense
(11,581)
(10,045)
(8,067)
Operating segments
 
 
 
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
 
 
 
Operating income
77,631 
74,301 
83,850 
Segment reconciling items
 
 
 
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
 
 
 
Research and development expense
(11,581)
(10,045)
(8,067)
Corporate non-segment
 
 
 
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
 
 
 
Other corporate expenses, net
$ (4,706)
$ (4,232)
$ (4,553)
Segment Information and Geographic Data - Net Sales (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Sep. 30, 2017
Jul. 1, 2017
Apr. 1, 2017
Dec. 31, 2016
Sep. 24, 2016
Jun. 25, 2016
Mar. 26, 2016
Dec. 26, 2015
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
$ 52,579 
$ 45,408 
$ 52,896 
$ 78,351 
$ 46,852 
$ 42,358 
$ 50,557 
$ 75,872 
$ 229,234 
$ 215,639 
$ 233,715 
U.S.
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
84,339 
75,667 
81,732 
China
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
44,764 
48,492 
58,715 
Other countries
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
$ 100,131 
$ 91,480 
$ 93,268 
Segment Information and Geographic Data - Long-Lived Assets (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Sep. 24, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Long-lived assets
$ 33,783 
$ 27,010 
U.S.
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Long-lived assets
20,637 
16,364 
China
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Long-lived assets
10,211 
7,875 
Other countries
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Long-lived assets
$ 2,935 
$ 2,771 
Segment Information and Geographic Data - Net Sales by Product (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Sep. 30, 2017
Jul. 1, 2017
Apr. 1, 2017
Dec. 31, 2016
Sep. 24, 2016
Jun. 25, 2016
Mar. 26, 2016
Dec. 26, 2015
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
$ 52,579 
$ 45,408 
$ 52,896 
$ 78,351 
$ 46,852 
$ 42,358 
$ 50,557 
$ 75,872 
$ 229,234 
$ 215,639 
$ 233,715 
Services revenue, one-time adjustment
640 
 
 
 
 
 
 
 
 
 
 
iPhone
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
141,319 
136,700 
155,041 
iPad
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
19,222 
20,628 
23,227 
Mac
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
25,850 
22,831 
25,471 
Services
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
29,980 
24,348 
19,909 
Other Products
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
$ 12,863 
$ 11,132 
$ 10,067 
Selected Quarterly Financial Information (Unaudited) - Summary of Quarterly Financial Information (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Sep. 30, 2017
Jul. 1, 2017
Apr. 1, 2017
Dec. 31, 2016
Sep. 24, 2016
Jun. 25, 2016
Mar. 26, 2016
Dec. 26, 2015
Sep. 30, 2017
Sep. 24, 2016
Sep. 26, 2015
Selected Quarterly Financial Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Net sales
$ 52,579 
$ 45,408 
$ 52,896 
$ 78,351 
$ 46,852 
$ 42,358 
$ 50,557 
$ 75,872 
$ 229,234 
$ 215,639 
$ 233,715 
Gross margin
19,931 
17,488 
20,591 
30,176 
17,813 
16,106 
19,921 
30,423 
88,186 
84,263 
93,626 
Net income
$ 10,714 
$ 8,717 
$ 11,029 
$ 17,891 
$ 9,014 
$ 7,796 
$ 10,516 
$ 18,361 
$ 48,351 
$ 45,687 
$ 53,394 
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic (in dollars per share)
$ 2.08 
$ 1.68 
$ 2.11 
$ 3.38 
$ 1.68 
$ 1.43 
$ 1.91 
$ 3.30 
$ 9.27 
$ 8.35 
$ 9.28 
Diluted (in dollars per share)
$ 2.07 
$ 1.67 
$ 2.10 
$ 3.36 
$ 1.67 
$ 1.42 
$ 1.90 
$ 3.28 
$ 9.21 
$ 8.31 
$ 9.22