Apple 2013 Annual Report Download - page 39

The following table presents certain payments due by the Company under contractual obligations with minimum
firm commitments as of September 28, 2013 and excludes amounts already recorded on the Consolidated
Balance Sheet, except for long-term debt (in millions):
Payments
Due in
Less
Than 1
Year
Payments
Due in
1-3
Years
Payments
Due in
4-5
Years
Payments
Due in
More
Than 5
Years Total
Long-term debt ................................... $ 0 $ 2,500 $ 6,000 $ 8,500 $17,000
Operating leases .................................. 610 1,200 1,056 1,855 4,721
Purchase obligations ............................... 18,61600018,616
Other obligations .................................. 1,081 248 16 3 1,348
Total ....................................... $20,307 $ 3,948 $ 7,072 $10,358 $41,685
Lease Commitments
The Company’s major facility leases are typically for terms not exceeding 10 years and generally provide
renewal options for terms not exceeding five additional years. Leases for retail space are for terms ranging from
five to 20 years, the majority of which are for 10 years, and often contain multi-year renewal options. As of
September 28, 2013, the Company’s total future minimum lease payments under noncancelable operating leases
were $4.7 billion, of which $3.5 billion related to leases for retail space.
Purchase Commitments with Outsourcing Partners and Component Suppliers
The Company utilizes several outsourcing partners to manufacture sub-assemblies for the Company’s products
and to perform final assembly and testing of finished products. These outsourcing partners acquire components
and build product based on demand information supplied by the Company, which typically covers periods up to
150 days. The Company also obtains individual components for its products from a wide variety of individual
suppliers. Consistent with industry practice, the Company acquires components through a combination of
purchase orders, supplier contracts, and open orders based on projected demand information. Where
appropriate, the purchases are applied to inventory component prepayments that are outstanding with
the respective supplier. As of September 28, 2013, the Company had outstanding off-balance sheet third-party
manufacturing commitments and component purchase commitments of $18.6 billion.
Other Obligations
In addition to the off-balance sheet commitments mentioned above, the Company had outstanding obligations of
$1.3 billion as of September 28, 2013, that consisted mainly of commitments to acquire capital assets, including
product tooling and manufacturing process equipment, and commitments related to advertising, research and
development, 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, gross unrecognized tax benefits and the related gross interest and penalties. As of September 28, 2013,
the Company had non-current deferred tax liabilities of $16.5 billion. Additionally, as of September 28, 2013, the
Company had gross unrecognized tax benefits of $2.7 billion and an additional $590 million for gross interest
and penalties classified as non-current liabilities. At this time, the Company is unable to make a reasonably
reliable estimate of the timing of payments in individual years in connection with these tax liabilities; therefore,
such amounts are not included in the above contractual obligation table.
Indemnification
The Company generally does not indemnify end-users of its operating system and application software against
legal claims that the software infringes third-party intellectual property rights. Other agreements entered into by
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