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The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes. As of
September 27, 2014 and September 28, 2013, the total amount of gross interest and penalties accrued was $630 million and
$590 million, 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 2014, 2013 and 2012 of $40 million, $189 million and
$140 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. During the fiscal year ended September 27, 2014, the U.S. Internal Revenue Service (“IRS”) concluded its review of
the years 2004 through 2009, which resulted in the Company reducing its gross unrecognized tax benefits by $570 million and
recognizing a tax benefit of $166 million. The IRS is currently examining the years 2010 through 2012. In addition, 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 1996 and 2002, respectively, generally remain open and could be subject to examination by the taxing authorities.
Management 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 management’s 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 unrecognized tax benefits would materially change in
the next 12 months.
Note 6 – Debt
Commercial Paper
In April 2014, the Board of Directors authorized the Company to issue unsecured short-term promissory notes (“Commercial
Paper”) pursuant to a commercial paper program. The Company intends to use net proceeds from the commercial paper
program for general corporate purposes, including dividends and share repurchases. As of September 27, 2014, the Company
had $6.3 billion of Commercial Paper outstanding, with a weighted-average interest rate of 0.12% and maturities generally less
than nine months.
The following table provides a summary of cash flows associated with the issuance and maturities of Commercial Paper for
2014 (in millions):
Maturities less than 90 days:
Proceeds from (repayments of) commercial paper, net $1,865
Maturities greater than 90 days:
Proceeds from commercial paper 4,771
Repayments of commercial paper (330)
Maturities greater than 90 days, net 4,441
Total proceeds from issuance of commercial paper, net $6,306
Apple Inc. | 2014 Form 10-K | 66