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APPLE INC
FORM 10-K
(Annual Report)
Filed 10/27/10 for the Period Ending 09/25/10
Address ONE INFINITE LOOP
CUPERTINO, CA 95014
Telephone (408) 996-1010
CIK 0000320193
Symbol AAPL
SIC Code 3571 - Electronic Computers
Industry Computer Hardware
Sector Technology
Fiscal Year 09/30
http://www.edgar-online.com
© Copyright 2011, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ...INC FORM 10-K (Annual Report) Filed 10/27/10 for the Period Ending 09/25/10 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year ONE INFINITE LOOP CUPERTINO, CA 95014 (408) 996-1010 0000320193 AAPL 3571 - Electronic Computers Computer Hardware Technology 09/30 http://www.edgar-online...

  • Page 2
    ..., California (Address of principal executive offices) 95014 (Zip Code) Registrant's telephone number, including area code: (408) 996-1010 Securities registered pursuant to Section 12(b) of the Act: Common Stock, no par value (Title of class) The NASDAQ Global Select Market (Name of exchange on...

  • Page 3
    ...,000 based upon the closing price reported for such date on the NASDAQ Global Select Market. For purposes of this disclosure, shares of common stock held by persons who hold more than 5% of the outstanding shares of common stock and shares held by executive officers and directors of the registrant...

  • Page 4
    ... and media devices, and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. The Company's products and services include Macintosh ("Mac") computers, iPhone, iPad, iPod, Apple TV...

  • Page 5
    ...and accessibility of education related materials through iTunes U, which allows students and teachers to share and distribute educational media directly through their computers and mobile communication and media devices. The Company sells its products to the education market through its direct sales...

  • Page 6
    ... Financial Statements at Note 9, "Segment Information and Geographic Data." Products The Company offers a range of personal computing products, mobile communication and media devices, and portable digital music players, as well as a variety of related software, services, peripherals, networking...

  • Page 7
    ...iPod classic is a hard-drive based portable digital music and video player. Displays & Peripheral Products The Company manufactures the Apple Cinema High Definition Displayâ„¢ and sells a variety of Apple-branded and third-party Mac-compatible peripheral products, including printers, storage devices...

  • Page 8
    ... files, and digital pictures into interactive DVDs. GarageBand is the Company's consumer-oriented music creation software application that allows customers to play, record and create music. iWeb allows customers to create online photo albums, blogs and podcasts, and to customize websites using...

  • Page 9
    ... email, contacts and calendars to and from native applications on iPhone, iPad, iPod touch, Macs, and Windowsbased computers. Product Support and Services AppleCare ® offers a range of support options for the Company's customers. These options include assistance that is built into software products...

  • Page 10
    ... of software and peripherals, marketing and distribution capability, service and support, and corporate reputation. The Company is focused on expanding its market opportunities related to mobile communication and media devices, including iPhone and iPad. The mobile communications and media device...

  • Page 11
    ... "iPad," "iPod," "iTunes," "iTunes Store," "Apple TV," "MobileMe" and numerous other trademarks and service marks. Although the Company believes the ownership of such patents, copyrights, trademarks and service marks is an important factor in its business and that its success does depend in part on...

  • Page 12
    ... all of the Company's Macs, iPhones, iPads and iPods. Margins on sales of the Company's products in foreign countries, and on sales of products that include components obtained from foreign suppliers, can be adversely affected by foreign currency exchange rate fluctuations and by international trade...

  • Page 13
    ... the Company's financial condition or operating results. Employees As of September 25, 2010, the Company had approximately 46,600 full-time equivalent employees and an additional 2,800 full-time equivalent temporary employees and contractors. Available Information The Company's Annual Report on Form...

  • Page 14
    .... An increasing number of Internet devices that include software applications and are smaller and simpler than traditional personal computers compete for market share with the Company's existing products. The Company is currently the only authorized maker of hardware using the Mac OS. The Mac OS has...

  • Page 15
    ... not limited to timely and successful product development, market acceptance, the Company's ability to manage the risks associated with new products and production ramp issues, the availability of application software for new products, the effective management of purchase commitments and inventory...

  • Page 16
    ... products that have higher cost structures and deliver greater value to customers, and expected and potential future component cost and other cost increases. For additional information refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations...

  • Page 17
    ... and iPods. If manufacturing or logistics in these locations is disrupted for any reason, including but not limited to, natural disasters, information technology system failures, military actions or economic, business, labor, environmental, public health, or political issues, the Company's financial...

  • Page 18
    ... perceived strength of the Company and its products, the anticipated revenue that may be generated, continued acceptance by customers of Mac OS X, and the costs of developing such applications and services. If the Company's minority share of the global personal computer market causes developers to...

  • Page 19
    ... upgrade similar or competitive applications for the iPhone, iPad and iPod touch platforms. As with applications for the Company's Mac products, the availability and development of these applications also depend on developers' perceptions and analysis of the relative benefits of developing software...

  • Page 20
    ... adversely affect the Company's financial condition and operating results. The Company's products and services experience quality problems from time to time that can result in decreased sales and operating margin. The Company sells highly complex hardware and software products and services that can...

  • Page 21
    ... the Company's operations by causing delays or cancellation of customer, including channel partner, orders, negatively affecting the Company's online, iTunes, MobileMe and retail offerings and services, impeding the manufacture or shipment of products, processing transactions and reporting financial...

  • Page 22
    ... associated with international activities, including but not limited to, economic and labor conditions, increased duties, taxes and other costs, political instability, and changes in the value of the U.S. dollar versus local currencies. Margins on sales of the Company's products in foreign countries...

  • Page 23
    .... The Company's investigation into its past stock option practices and its restatement of prior financial statements in the Annual Report on Form 10-K for the year ended September 30, 2006 gave rise to litigation and government investigations. As described in Part I, Item 3, "Legal Proceedings...

  • Page 24
    ... operations and a customer support call center. In addition, the Company owned facilities for research and development and corporate functions in Cupertino, California, including land for the future development of the Company's second corporate campus. The Company also owned a data center...

  • Page 25
    ..."shorted" the coverage provided under its warranties and AppleCare Protection Plan extended service contracts and sold plaintiffs used products that were represented to be new. In general, the reseller plaintiffs allege that the Company damaged their businesses by opening the Apple retail stores and...

  • Page 26
    ... California against the Company and certain current and former officers and directors, alleging improper backdating of stock option grants to maximize certain defendants' profits, failing to properly account for those grants and issuing false financial statements. On June 27, 2008, plaintiffs filed...

  • Page 27
    ... Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's common stock is traded on the over-the-counter market and is quoted on the NASDAQ Global Select Market under the symbol AAPL. Price Range of Common Stock The price range per share of common stock presented...

  • Page 28
    ... the graph to capture the stock performance of companies whose products and services more closely relate to those of the Company. The Dow Jones U.S. Technology Index incorporates software and computer services companies, as well as technology hardware and equipment companies. The graph assumes $100...

  • Page 29
    ... Net sales Net income Earnings per common share: Basic Diluted Cash dividends declared per common share Shares used in computing earnings per share: Basic Diluted Total cash, cash equivalents and marketable securities Total assets Total long-term obligations (a) Total liabilities Total shareholders...

  • Page 30
    ... mobile communication and media devices, and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. The Company's products and services include Mac computers, iPhone, iPad, iPod, Apple TV...

  • Page 31
    ... may be material. Management believes the Company's critical accounting policies and estimates are those related to revenue recognition, valuation and impairment of marketable securities, inventory valuation and inventory purchase commitments, warranty costs, income taxes, and legal and other...

  • Page 32
    ... embedded right included with the purchase of iPhone, iPad, iPod touch and Apple TV to receive on a when-and-if-available basis, future unspecified software upgrades and features relating to the product's essential software. The Company has allocated revenue between these two deliverables using the...

  • Page 33
    ...embedded software upgrade rights included with iPhone, iPad and iPod touch reflect the positive financial impact expected by the Company as a result of its introduction of a mobile advertising platform for these devices and the expectation of customers regarding software that includes or supports an...

  • Page 34
    ... of operations. The Company periodically provides updates to its applications and operating system software to maintain the software's compliance with specifications. The estimated cost to develop such updates is accounted for as warranty cost that is recognized at the time related software revenue...

  • Page 35
    ... As discussed in Part I, Item 3 of this Form 10-K under the heading "Legal Proceedings" and in Note 8 "Commitments and Contingencies" in Notes to Consolidated Financial Statements, the Company is subject to various legal proceedings and claims that arise in the ordinary course of business. In...

  • Page 36
    ...Mac unit sales Total Mac unit sales Net Sales by Product: Desktops (a) Portables (b) Total Mac net sales iPod Other music related products and services (c) iPhone and related products and services (d) iPad and related products and services (e) Peripherals and other hardware (f) Software, service and...

  • Page 37
    ..., iPad, and iPod customers, and the expansion of third-party audio and video content available for sale and rent via the iTunes Store. The Company continues to expand its iTunes content and applications offerings around the world. Net sales of other music related products and services accounted for...

  • Page 38
    ... U.S. Each reportable operating segment provides similar hardware and software products and similar services. Further information regarding the Company's operating segments may be found in Note 9, "Segment Information and Geographic Data" in Notes to Consolidated Financial Statements of this Form 10...

  • Page 39
    ... was attributable to the significant year-over-year increase in iPhone revenue, higher sales of third-party digital content and applications from the iTunes Store, and increased sales of Mac portable systems, partially offset by a decrease in sales of Mac desktop systems and iPods. Americas Mac net...

  • Page 40
    ... full-time equivalent employees and had outstanding lease commitments associated with retail space and related facilities of $1.7 billion. The Company would incur substantial costs if it were to close multiple retail stores and such costs could adversely affect the Company's financial condition and...

  • Page 41
    ... warranty costs effectively and to stimulate demand for certain of its products. Due to the Company's significant international operations, financial results can be significantly affected in the short-term by fluctuations in exchange rates. Operating Expenses Operating expenses for the three years...

  • Page 42
    ... in headcount and related expenses in the current year to support expanded R&D activities. Also contributing to this increase in R&D expense in 2010 was the capitalization in 2009 of software development costs of $71 million related to Mac OS X Snow Leopard. Although total R&D expense increased 34...

  • Page 43
    ... with management's expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Liquidity and Capital Resources The following table presents selected financial information and statistics as of and for the three years ended September...

  • Page 44
    ... for product tooling and manufacturing process equipment, and corporate facilities and infrastructure, including information systems hardware, software and enhancements. Historically the Company has opened between 25 and 50 new retail stores per year. During 2011, the Company expects to open 40...

  • Page 45
    ..., which related to advertising, research and development, product tooling and manufacturing process equipment, Internet and telecommunications services and other obligations. The Company's other non-current liabilities in the Consolidated Balance Sheets consist primarily of deferred tax liabilities...

  • Page 46
    ... rates affect the interest earned on the Company's cash, cash equivalents and marketable securities, the fair value of those investments, as well as costs associated with foreign currency hedges. The Company's investment policy and strategy are focused on preservation of capital and supporting...

  • Page 47
    ..., to the Company's foreign exchange portfolio due to adverse movements in rates. The VAR model is not intended to represent actual losses but is used as a risk estimation and management tool. The model assumes normal market conditions. Forecasted transactions, firm commitments, and assets and...

  • Page 48
    ... ended September 25, 2010 Consolidated Statements of Cash Flows for the three years ended September 25, 2010 Notes to Consolidated Financial Statements Selected Quarterly Financial Information (Unaudited) Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm Report of KPMG LLP...

  • Page 49
    ... per share amounts) Three years ended September 25, 2010 2010 2009 2008 Net sales Cost of sales Gross margin Operating expenses: Research and development Selling, general and administrative Total operating expenses Operating income Other income and expense Income before provision for income taxes...

  • Page 50
    ... assets: Cash and cash equivalents Short-term marketable securities Accounts receivable, less allowances of $55 and $52, respectively Inventories Deferred tax assets Vendor non-trade receivables Other current assets Total current assets Long-term marketable securities Property, plant and equipment...

  • Page 51
    ...for-sale securities, net of tax Change in unrealized gain on derivative instruments, net of tax Total comprehensive income Stock-based compensation Common stock issued under stock plans, net of shares withheld for employee taxes Tax benefit from employee stock plan awards, including transfer pricing...

  • Page 52
    ... income tax expense Loss on disposition of property, plant and equipment Changes in operating assets and liabilities: Accounts receivable, net Inventories Vendor non-trade receivables Other current assets Other assets Accounts payable Deferred revenue Other liabilities Cash generated by operating...

  • Page 53
    ..., online stores, and direct sales force, and third-party cellular network carriers, wholesalers, resellers and value-added resellers. In addition, the Company sells a variety of third-party Macintosh ("Mac"), iPhone, iPad and iPod compatible products including application software, printers, storage...

  • Page 54
    ...and online stores, and also sells gift cards redeemable on the iTunes Store for the purchase of 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...

  • Page 55
    ... embedded right included with the purchase of iPhone, iPad, iPod touch and Apple TV to receive on a when-and-if-available basis, future unspecified software upgrades and features relating to the product's essential software. The Company has allocated revenue between these two deliverables using the...

  • Page 56
    ... as revenue. Except as described for iPhone, iPad, iPod touch and Apple TV, the Company generally does not offer unspecified upgrade rights to its customers in connection with software sales or the sale of AppleCare extended warranty and support contracts. A limited number of the Company's software...

  • Page 57
    ...the Company accounts for the indirect effects of stock-based compensation on the research tax credit, the foreign tax credit and the domestic manufacturing deduction through the income statement. Further information regarding stock-based compensation can be found in Note 7, "Shareholders' Equity and...

  • Page 58
    ... 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 debt and marketable equity securities have been classified and accounted for as available-for-sale. Management...

  • Page 59
    ... five years for equipment, and the shorter of lease terms or ten years 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...

  • Page 60
    ... income 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...

  • Page 61
    ... September 26, 2009 Cash Money market funds U.S. Treasury securities U.S. agency securities Non-U.S. government securities Certificates of deposit and time deposits Commercial paper Corporate securities Municipal securities Total cash equivalents U.S. Treasury securities U.S. agency securities Non...

  • Page 62
    ... Unrealized Adjusted Cost Gains Losses Fair Value Money market funds U.S. Treasury securities U.S. agency securities Non-U.S. government securities Certificates of deposit and time deposits Commercial paper Corporate securities Municipal securities Total cash equivalents and marketable securities...

  • Page 63
    ... exchange risk of expected future cash flows on certain forecasted revenue and cost of sales, of net investments in certain foreign subsidiaries, and on certain existing assets and liabilities. To help protect gross margins from fluctuations in foreign currency exchange rates, certain of the Company...

  • Page 64
    ... the same period as the related revenue is recognized, and other comprehensive income related to cash flow hedges of inventory purchases is recognized as a component of cost of sales in the same period as the related costs are recognized. Substantially all of the Company's hedged transactions as of...

  • Page 65
    ... estimates of fair value are based on applicable and commonly used pricing models and prevailing financial market information as of September 25, 2010. Refer to Note 3, "Fair Value Measurements" of this Form 10-K, for additional information on the fair value measurements for all financial assets and...

  • Page 66
    ... income related to derivatives. (b) (c) Accounts Receivable Trade Receivables The Company distributes its products through third-party cellular network carriers, wholesalers, retailers and value-added resellers and directly to certain education, consumer and enterprise customers. The Company...

  • Page 67
    ... Assets: Money market funds U.S. Treasury securities U.S. agency securities Non-U.S. government securities Certificates of deposit and time deposits Commercial paper Corporate securities Municipal securities Marketable equity securities Foreign exchange contracts Total assets measured at fair value...

  • Page 68
    ... Assets: Money market funds U.S. Treasury securities U.S. agency securities Non-U.S. government securities Certificates of deposit and time deposits Commercial paper Corporate securities Municipal securities Marketable equity securities Foreign exchange contracts Total assets measured at fair value...

  • Page 69
    ...665 4,667 (1,713) $ 2,954 2010 2009 Accrued warranty and related costs Deferred margin on component sales Accrued compensation and employee benefits Accrued marketing and distribution Income taxes payable Other current liabilities Total accrued expenses Non-Current Liabilities $ 761 663 436 396...

  • Page 70
    ... did not have any goodwill impairment during 2010, 2009 or 2008. The Company's goodwill is allocated primarily to the America's reportable operating segment. Amortization expense related to acquired intangible assets was $69 million, $53 million and $46 million in 2010, 2009 and 2008, respectively...

  • Page 71
    ... 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...

  • Page 72
    ... the tax benefits from employee stock plan awards. For stock options, the Company receives an income tax benefit calculated as the difference between the fair market value of the stock issued at the time of the exercise and the option price, tax effected. For RSUs, the Company receives an income tax...

  • Page 73
    ... and files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. For U.S. federal income tax purposes, all years prior to 2004 are closed. The Internal Revenue Service (the "IRS") has completed its field audit of the Company's federal income tax returns for...

  • Page 74
    ... Stock Plan The 2003 Employee Stock Plan (the "2003 Plan") is a shareholder approved plan that provides for broad-based equity grants to employees, including executive officers. The 2003 Plan permits the granting of incentive stock options, nonstatutory stock options, RSUs, stock appreciation rights...

  • Page 75
    ... Plan In August 1997, the Company's Board of Directors approved the 1997 Employee Stock Option Plan (the "1997 Plan"), a non-shareholder approved plan for grants of stock options to employees who are not officers of the Company. Options granted under the 1997 Plan generally expire seven to ten years...

  • Page 76
    ... number of shares of common stock. The majority of RSUs that vested in 2010, 2009 and 2008, 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...

  • Page 77
    ... Company's stock option and RSU activity and related information for the three years ended September 25, 2010, is as follows (in thousands, except per share amounts and contractual term in years): Outstanding Options WeightedAverage WeightedRemaining Contractual Average Exercise Price Term Shares...

  • Page 78
    ... of Contents Stock-Based Compensation Stock-based compensation cost for RSUs is measured based on the closing fair market value of the Company's common stock on the date of grant. Stock-based compensation cost for stock options and employee stock purchase plan rights ("stock purchase rights") is...

  • Page 79
    ... The Company periodically provides updates to its applications and system software to maintain the software's compliance with published specifications. The estimated cost to develop such updates is accounted for as warranty costs that are recognized at the time related software revenue is recognized...

  • Page 80
    ... prices, or if a key manufacturing vendor 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 adversely affected depending on the time...

  • Page 81
    ... the Company's Macs, iPhones, iPads and iPods. 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 purchase...

  • Page 82
    ... based on the location of customers, while Retail segment net sales are based on sales from the Company's retail stores. 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...

  • Page 83
    ...below. Retail segment depreciation and asset figures reflect the cost and related depreciation of its retail stores and related infrastructure. A reconciliation of the Company's segment operating income and assets to the consolidated financial statements for the three years ended September 25, 2010...

  • Page 84
    ... hardware accessories. Includes sales of Apple-branded operating system and application software, third-party software, Mac and Internet services. Note 10 - Related Party Transactions and Certain Other Transactions The Company entered into a Reimbursement Agreement with its CEO, Steve Jobs, for the...

  • Page 85
    ... Reimbursement Agreement have been included in selling, general and administrative expenses in the Consolidated Statements of Operations. Note 11 - Selected Quarterly Financial Information (Unaudited) The following tables set forth a summary of the Company's quarterly financial information for each...

  • Page 86
    ... Registered Public Accounting Firm The Board of Directors and Shareholders of Apple Inc. We have audited the accompanying consolidated balance sheets of Apple Inc. as of September 25, 2010 and September 26, 2009, and the related consolidated statements of operations, shareholders' equity and cash...

  • Page 87
    ..., in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 2010 consolidated financial statements of Apple Inc. and our report dated October 27, 2010 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP San Jose, California October 27, 2010 84

  • Page 88
    ...Public Accounting Firm The Board of Directors and Shareholders Apple Inc.: We have audited the accompanying consolidated statements of operations, shareholders' equity, and cash flows for the year ended September 27, 2008. These consolidated financial statements are the responsibility of the Company...

  • Page 89
    ... it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company's management, including its principal executive officer and...

  • Page 90
    ... connection with management's evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. Item 9B. Other Information Not applicable. 87

  • Page 91
    ...the Company's 2011 Annual Meeting of Shareholders ("2011 Proxy Statement") and is incorporated herein by reference. Such Proxy Statement will be filed with the SEC within 120 days after the end of the fiscal year to which this report relates. Item 11. Executive Compensation The information required...

  • Page 92
    ... ended September 25, 2010 Consolidated Statements of Cash Flows for the three years ended September 25, 2010 Notes to Consolidated Financial Statements Selected Quarterly Financial Information (Unaudited) Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm Report of KPMG LLP...

  • Page 93
    ... power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of...

  • Page 94
    ...09 10-Q 12/30/06 10-Q 3/27/10 Form of Indemnification Agreement between the Registrant and each director and executive officer of the Registrant. 10-Q 6/27/09 1997 Employee Stock Option Plan, as amended through October 19, 2001. 1997 Director Stock Plan, as amended through February 25, 2010. 2003...

  • Page 95
    ... Contents Indicates management contract or compensatory plan or arrangement. Filed herewith. Furnished herewith. Pursuant to applicable securities laws and regulations, the Company is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such...

  • Page 96
    Exhibit 14.1 Business Conduct The way we do business worldwide

  • Page 97
    ... business conduct, review our policies, review legal requirements, and then decide what to do. Need some help? When in doubt about how to proceed, discuss pending decisions with your manager, your Human Resources representative, or the Legal Department. If you need more support, contact the Business...

  • Page 98
    ...-Party Information Nondisclosure Agreements Obtaining and Using Business Intelligence Third-Party Intellectual Property Copyright-Protected Content Giving and Receiving Business Gifts Kickbacks Side Deals or Side Letters Competition and Trade Practices Endorsements Open Source Software Governments...

  • Page 99
    ...example, you own the original CD or you purchased the music on iTunes), you may keep the music on your computer. Copyright-Protected Content Never use or copy software, music, videos, publications, or other copyright-protected content at work or for business purposes unless you or Apple are legally...

  • Page 100
    ...is not intended to preclude Apple from giving equipment to a company or organization, provided the gift is openly given, consistent with legal requirements, and in Apple's business interests. The policy also does not preclude the attendance of Apple employees at business-related social functions, if...

  • Page 101
    ... a free software or open source license. Before using or modifying any open source software for Apple infrastructure or as part of an Apple product or service development effort, you must review Apple's Open Source Policy and contact the Legal Department for approval using the forms referenced in...

  • Page 102
    ... may not use Apple assets (including employee work time, or use of Apple premises, equipment, or funds) to personally support candidates and campaigns. It is illegal for Apple to reimburse an employee for a contribution. For more information, see the Apple Corporate Political Compliance Policy and...

  • Page 103
    ... support is provided without the use or furnishing of Apple assets (including employee work time, or use of Apple premises, equipment, or funds). Any charitable donations involving Apple assets require the approval of the Chief Executive Officer or Chief Financial Officer. For additional information...

  • Page 104
    ... to Apple What are assets? Assets include Apple's extremely valuable proprietary information (such as intellectual property, confidential business plans, unannounced product plans, sales and marketing strategies, and other trade secrets); as well as physical assets like cash, equipment, supplies...

  • Page 105
    ...or advances of corporate funds to its employees, officers, Board members, or their families and does not guarantee their obligations. If I suspect money laundering, what should I do? Advise your manager or contact the Apple Legal Department. Money Laundering Money laundering is the process by which...

  • Page 106
    ... and Legal Hold As an Apple employee, you have a responsibility to manage documents and make decisions on document retention. The definition of "document" is extremely broad. For example, every email or other electronic file, every customer record, and every transaction involves the creation of...

  • Page 107
    ... Presidents and Executive Team members must obtain the approval of their manager and the CEO before they can accept a position on the board of directors of a private or publicly traded company (other than nonprofit entities). Outside Employment and Inventions Full-time Apple employees must notify...

  • Page 108
    ...nonpublic information concerning that stock. In addition, employees are prohibited from investing in derivatives of Apple's securities. This includes, but is not limited to, trading in put or call options related to securities of the company. Members of Apple's Board of Directors, executive officers...

  • Page 109
    ... personal use of Apple equipment and systems is allowed, but subject to local regulations, Apple may monitor equipment and systems. If in doubt, check with the Legal Department. Privacy Subject to rules or regulations affecting an employee's rights, Apple may monitor or search its work environments...

  • Page 110
    ...about a possible violation of Apple's Business Conduct Policy or legal or regulatory requirements, you are required to notify your manager (provided your manager is not involved in the violation), Human Resources, Legal, Internal Audit, Finance, or the Business Conduct Helpline. Failure to do so may...

  • Page 111
    ...Books and Publications Business Conduct Helpline Buying and Selling Stock: Blackout Periods Buying and Selling Stock: Insider Trading Community Affairs Confidential, Proprietary, and Trade Secret Information Copyright Information Copyright Policy Corporate Identity Guidelines Customer Privacy Policy...

  • Page 112
    ... Information Security Intellectual Property Legal Department Contacts Mail and Electronic Communications Name and Logo Use Questions: [email protected] Nondisclosure and Confidentiality Agreements Open Communication Open Source Software Outside Business Activities Patent Information Patent Policy...

  • Page 113
    Exhibit 21.1 SUBSIDIARIES OF APPLE INC.* Jurisdiction of Incorporation Apple Sales International Apple Operations International Braeburn Capital, Inc. * Ireland Ireland Nevada, U.S. Pursuant to Item 601(b)(21)(ii) of Regulation S-K, the names of other subsidiaries of Apple Inc. are omitted ...

  • Page 114
    ... 2010, with respect to the consolidated financial statements of Apple Inc., and the effectiveness of internal control over financial reporting of Apple Inc., included in this Annual Report on Form 10-K for the year ended September 25, 2010. /s/ Ernst & Young LLP San Jose, California October 27, 2010

  • Page 115
    ... annual report on Form 10-K of Apple Inc. As discussed in note 1, the consolidated financial statements for the year ended September 27, 2008 have been restated to give effect to the retrospective adoption of the Financial Accounting Standards Board's amended accounting standards related to revenue...

  • Page 116
    ..., not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of...

  • Page 117
    ..., not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of...

  • Page 118
    ... information contained in such Form 10-K fairly presents in all material respects the financial condition and results of operations of Apple Inc. October 27, 2010 By: /s/ Peter Oppenheimer Peter Oppenheimer Senior Vice President, Chief Financial Officer A signed original of this written statement...