Discuss the implications of potentially unrecorded assets for Apple Inc. (Using December 31, 2019, for the financial statements.
Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 30, September 24 September 29, 2018 285,595 163,756 101.839 S Net sales Cost of sales Gross margin S 229,234 141,048 88,186 215,639 131,376 84.263 Operating expenses: Research and development Selling, general and administrative Total operating expenses 14.236 16.705 30.941 11,581 15,261 26.842 10,015 14,194 24.239 60,024 Operating income Other income expense), riel Income before provision for income taxes Provision for income taxes Net income 70,898 2,005 72.003 13 372 59.531 61,344 2,745 64,089 15.738 48,351 1.349 61,372 15,685 S S S 45,687 Earnings per Share: Basic Diluted 12.01 11.91 S S 9.27 9.21 S S 8.35 8.31 Shares used in computing earnings per Share: Basic Diluted 4,955,377 5,000.109 5,217,242 5,251,692 5,470,820 5,500,281 Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Ini milions) Years ended September 30, September 29. September 24, 2018 2016 59,531 48,351 S 45,687 Net income Other comprehensive incono loss): Change in foreign currency translation, net of tax effects of $11), $177) and SB, respectively (525) 224 75 523 Change in unrealized gains losses on derivative instruments: Change in fair value of derivatives, net of tax benefit(expense) of $(149), S(478) and S(7), respectively Adjustment for net (gains)/osses realized and included in net income, net of tax expense (benefit) of $(101), S175 and $131, respectively Total change in unrealized gains losses on derivative instruments, net of tax 382 905 1.315 (1,477) (162) (741) (734) (8,407) (7821 1.582 Change in unrealized gainalosses on marketable securities: Change in fair value of marketable securities, net of tax benefit (expense) of $1.156, $425 and S(363), respectively Adjustment for net (pains/losses realized and included in net income, net of tax expense (benefit) of $21, $35 and S(31), respectively Total change in unrealized galna losses on marketable securities, net of tax (64) (3,406) (846) 1,638 979 Total other comprehensive income loss) Total comprehensive income (3,026) 58,505 (784) 47,587 $ $ 46,666 See accompanying Notes to Consolidated Financial Statements. Apple Inc. I 2018 Form 10-K 139 Apple Inc. CONSOLIDATED BALANCE SHEETS (in millions, except number of shares which are reflected in thousands and par value) September 23, 2018 September 30, 2017 ASSETS: S Ourrent assets: Cash and cash equivalents Markelab securities Accounts receivable, net Inventories Vendor non-trade receivables Other current assels Total current assets 25,913 40,388 23,186 3.958 25,809 12,087 131,339 20,289 53,892 17.874 4,855 17,799 13,938 128,645 Non-current assets: Marketable securities Property, plant and equipment, net Other non-current assels Total non current assets Total assets 170,799 41,304 22,283 234.386 365,725 194,714 33,783 18,177 246,674 375,319 LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable Other current abilities S Deferred revenue 55,889 32,687 7,543 11,984 3,784 116,866 44,242 30,651 7,548 11,977 6,496 100,814 Commercial paper Term debt Talal current liabilities Non-current liabilities: Deferred revenue Term debt Other non-current liabilities Total non-current liabilities Total liabilities 2,797 93,735 45,180 141,712 258,578 2,836 97,207 40,415 140,456 241,272 Commitments and contingencies Shareholders' equity: Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,754,986 and 5,126,201 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income/(loss) Total shareholders' equity Total liabilities and shareholders' equity 40,201 70,400 (3,454) 107,147 365,725 35,867 98,330 (150) 134,047 375,319 See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in Millions, except number of shares which are reflected in thousands and per share amounts) Common Stock and Additional Paid-In Capital Shares Amount 5,578,753 $ 27,416 Retained Earnings 92,284 45,687 Accumulated Other Comprehensive Income Loa) (345) 979 (12.186) (29,000) (279,609) 37,022 4,262 (806) (419) Total Shareholders' Equity 119.355 45,687 979 (12,188) (29,000) 4,262 (1,225) 379 128,249 48,351 (784) (12,803) (33,001) 4,909 (1,494) 620 134,047 5,336,166 31,251 96.364 Balances as of September 26, 2015 Net income Other comprehensive income foss) Dividends and dividend equivalents declared at $2.18 per share or RSU Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee texes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 24, 2016 Net income Other comprehensive incomelloss) Dividends and dividend equivalents declared at $2.40 per share or RSU Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 30, 2017 Cumulative effect of change in accounting principle Net income Other comprehensive income/floss) Dividends and dividend equivalents declared at $2.72 per share or RSU Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes 48.351 (12,803) (33.001) (246.496) 36,531 (581) 4,909 (913) 620 35,857 5,126,201 98.330 (150) 278 (278) 59,531 (3.028) (13,735) 173,056) 59,531 (3,026) (13,785) (73,056) 5,443 (405,519) 34.334 5,443 (1.109) 194B) (2,057) Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in millions, excepl number of shares which are rellected in thousands and per share amounts) Common Stock and Additional Paid-In Capital Shares Amount 5,578,753 27,416 Retained Earnings 92.284 45.827 Accumulated Other Comprehensive incoma/Loss) (345) Total Shareholders' Equity 119.355 45.687 979 979 (12,188) (29,000) (279,609) 37,022 (419) 4.262 (806) 379 31.251 5.336,166 96 364 48,351 Balances as of September 26, 2015 Net Income Other comprehensive income (loss) Dividends and dividiend equivalents diedaredi al $2.16 per share or RSU Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 24, 2016 Net income Other comprehensive income (los) Dividends and dividend equivalents declared at $2.40 per share or RSU Repurchase of corn nan slock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 30, 2017 Cumulative effect of change in accounting principle Net income Other comprehensive Income (loss) Dividends and dividend equivalents declared at $2.72 per share or RSU Repurchase of pornnan slock Share-based compensation Common stock issued, net of shares withheld for employee taxes Balances as of September 29, 2018 (12,186) (29,000) 4.262 (1.225) 379 129.249 48.351 (784) (12,803) 133,001) 4,909 (1.494) 620 134,047 (12,803) (33,001) (246,496) 38,531 (581) 4,909 (913) 620 35,867 5,126,201 98.330 278 59.531 (150) (278) (2.026) (13,735) 1405,549) 173,056) 59.531 (2.026) (13,735) 173,055) 5,443 (2,057) 107.147 34,331 4.754,986 5,443 (1,109) 40.201 1948) 70.400 13.454) See accompanying Notes to Consolidaleci Financial Statemenils. CONSOLIDATED STATEMENTS OF CASH FLOWS in millions Years ended September 30. September 24, September 23, 2018 20,783 20,484 59.531 48,351 45,687 10,000 10,506 4210 10.157 4,840 5.766 (1661 182.590) 486 (6,922) 9 18,010) (423) 9,175 (2,092) 12,723) 14.2541 15,318) 3,966 527 217 (511 1.055 2,117 (1.604) (1.9CG) 86.231 38,490 77.434 1,125 B4 225 Cash and cash equivalents, beginning of the year Operating activities Not income Adjustments to reconcile net income to cash generated by operating activities Depreciation and amortization Share-based compensation Expense Datorred name tax expensoben ) Other Changes in operating sets and liabilities: Accounts receivable.net Inventonics Vardor non-trade neceivables Other current and non-current assets Accounts payable Deferred revenue thar aurrent and non-current abilities Cash generated by operating activities Investing activities Purchases af markulale securities Proceeds from maturities of marketable securities Proceeds from sales of marketable securities Payments for acquisition of property, plant and equipment Payments made in connection with business acuisitions, nel Purchases of non-marketable securities Proceeds from nen markata la securities Other Cash generated by used in investing act M e Financing activities: Proceeds from issuance of common stock Payments for S ated to not share seriament of equity and Payments for dividends and didend equivalents Repurchases of common stock Proceeds from issuance after debt met Repayments after det Change in commercial paper, net Cash used in financing activities Increase Decrease in cash and cash equivalents (159,486) 31,775 171,860) 56,881 47.838 113,313) (142428) 21 958 90,536 (12.7341 (297) (1.398) (12.451 (229 (721) (1,871) (521) 125 745) 16.00 (46.445 (45.977 12.527) 113,712) 172,738) G. 18.500) 11.574 (12,769 (32,900 28,662 [5.500) 8.852 (17,974) (195) (1,5701 (12.1501 (20.7223 24.954 2.500 (397) (20.8901 167.870) 5,094 (696 (20,890) Cash used in financing activities Increase/(Decrease) in cash and cash equivalents Cash and cash equivalents, end of the year (87,876) 5,624 (17,974) (195) 20,289 (636) 20,484 25,913 Supplemental cash flow disclosure: Cash paid for income taxes, net Cash paid for interest 10,417 3,022 $ $ 11,591 2,092 $ $ 10,444 1,316 See accompanying Notes to Consolidated Financial Statements. Apple Inc. I 2018 Form 10-KI 42 Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 30, September 24 September 29, 2018 285,595 163,756 101.839 S Net sales Cost of sales Gross margin S 229,234 141,048 88,186 215,639 131,376 84.263 Operating expenses: Research and development Selling, general and administrative Total operating expenses 14.236 16.705 30.941 11,581 15,261 26.842 10,015 14,194 24.239 60,024 Operating income Other income expense), riel Income before provision for income taxes Provision for income taxes Net income 70,898 2,005 72.003 13 372 59.531 61,344 2,745 64,089 15.738 48,351 1.349 61,372 15,685 S S S 45,687 Earnings per Share: Basic Diluted 12.01 11.91 S S 9.27 9.21 S S 8.35 8.31 Shares used in computing earnings per Share: Basic Diluted 4,955,377 5,000.109 5,217,242 5,251,692 5,470,820 5,500,281 Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Ini milions) Years ended September 30, September 29. September 24, 2018 2016 59,531 48,351 S 45,687 Net income Other comprehensive incono loss): Change in foreign currency translation, net of tax effects of $11), $177) and SB, respectively (525) 224 75 523 Change in unrealized gains losses on derivative instruments: Change in fair value of derivatives, net of tax benefit(expense) of $(149), S(478) and S(7), respectively Adjustment for net (gains)/osses realized and included in net income, net of tax expense (benefit) of $(101), S175 and $131, respectively Total change in unrealized gains losses on derivative instruments, net of tax 382 905 1.315 (1,477) (162) (741) (734) (8,407) (7821 1.582 Change in unrealized gainalosses on marketable securities: Change in fair value of marketable securities, net of tax benefit (expense) of $1.156, $425 and S(363), respectively Adjustment for net (pains/losses realized and included in net income, net of tax expense (benefit) of $21, $35 and S(31), respectively Total change in unrealized galna losses on marketable securities, net of tax (64) (3,406) (846) 1,638 979 Total other comprehensive income loss) Total comprehensive income (3,026) 58,505 (784) 47,587 $ $ 46,666 See accompanying Notes to Consolidated Financial Statements. Apple Inc. I 2018 Form 10-K 139 Apple Inc. CONSOLIDATED BALANCE SHEETS (in millions, except number of shares which are reflected in thousands and par value) September 23, 2018 September 30, 2017 ASSETS: S Ourrent assets: Cash and cash equivalents Markelab securities Accounts receivable, net Inventories Vendor non-trade receivables Other current assels Total current assets 25,913 40,388 23,186 3.958 25,809 12,087 131,339 20,289 53,892 17.874 4,855 17,799 13,938 128,645 Non-current assets: Marketable securities Property, plant and equipment, net Other non-current assels Total non current assets Total assets 170,799 41,304 22,283 234.386 365,725 194,714 33,783 18,177 246,674 375,319 LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable Other current abilities S Deferred revenue 55,889 32,687 7,543 11,984 3,784 116,866 44,242 30,651 7,548 11,977 6,496 100,814 Commercial paper Term debt Talal current liabilities Non-current liabilities: Deferred revenue Term debt Other non-current liabilities Total non-current liabilities Total liabilities 2,797 93,735 45,180 141,712 258,578 2,836 97,207 40,415 140,456 241,272 Commitments and contingencies Shareholders' equity: Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,754,986 and 5,126,201 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income/(loss) Total shareholders' equity Total liabilities and shareholders' equity 40,201 70,400 (3,454) 107,147 365,725 35,867 98,330 (150) 134,047 375,319 See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in Millions, except number of shares which are reflected in thousands and per share amounts) Common Stock and Additional Paid-In Capital Shares Amount 5,578,753 $ 27,416 Retained Earnings 92,284 45,687 Accumulated Other Comprehensive Income Loa) (345) 979 (12.186) (29,000) (279,609) 37,022 4,262 (806) (419) Total Shareholders' Equity 119.355 45,687 979 (12,188) (29,000) 4,262 (1,225) 379 128,249 48,351 (784) (12,803) (33,001) 4,909 (1,494) 620 134,047 5,336,166 31,251 96.364 Balances as of September 26, 2015 Net income Other comprehensive income foss) Dividends and dividend equivalents declared at $2.18 per share or RSU Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee texes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 24, 2016 Net income Other comprehensive incomelloss) Dividends and dividend equivalents declared at $2.40 per share or RSU Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 30, 2017 Cumulative effect of change in accounting principle Net income Other comprehensive income/floss) Dividends and dividend equivalents declared at $2.72 per share or RSU Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes 48.351 (12,803) (33.001) (246.496) 36,531 (581) 4,909 (913) 620 35,857 5,126,201 98.330 (150) 278 (278) 59,531 (3.028) (13,735) 173,056) 59,531 (3,026) (13,785) (73,056) 5,443 (405,519) 34.334 5,443 (1.109) 194B) (2,057) Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in millions, excepl number of shares which are rellected in thousands and per share amounts) Common Stock and Additional Paid-In Capital Shares Amount 5,578,753 27,416 Retained Earnings 92.284 45.827 Accumulated Other Comprehensive incoma/Loss) (345) Total Shareholders' Equity 119.355 45.687 979 979 (12,188) (29,000) (279,609) 37,022 (419) 4.262 (806) 379 31.251 5.336,166 96 364 48,351 Balances as of September 26, 2015 Net Income Other comprehensive income (loss) Dividends and dividiend equivalents diedaredi al $2.16 per share or RSU Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 24, 2016 Net income Other comprehensive income (los) Dividends and dividend equivalents declared at $2.40 per share or RSU Repurchase of corn nan slock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 30, 2017 Cumulative effect of change in accounting principle Net income Other comprehensive Income (loss) Dividends and dividend equivalents declared at $2.72 per share or RSU Repurchase of pornnan slock Share-based compensation Common stock issued, net of shares withheld for employee taxes Balances as of September 29, 2018 (12,186) (29,000) 4.262 (1.225) 379 129.249 48.351 (784) (12,803) 133,001) 4,909 (1.494) 620 134,047 (12,803) (33,001) (246,496) 38,531 (581) 4,909 (913) 620 35,867 5,126,201 98.330 278 59.531 (150) (278) (2.026) (13,735) 1405,549) 173,056) 59.531 (2.026) (13,735) 173,055) 5,443 (2,057) 107.147 34,331 4.754,986 5,443 (1,109) 40.201 1948) 70.400 13.454) See accompanying Notes to Consolidaleci Financial Statemenils. CONSOLIDATED STATEMENTS OF CASH FLOWS in millions Years ended September 30. September 24, September 23, 2018 20,783 20,484 59.531 48,351 45,687 10,000 10,506 4210 10.157 4,840 5.766 (1661 182.590) 486 (6,922) 9 18,010) (423) 9,175 (2,092) 12,723) 14.2541 15,318) 3,966 527 217 (511 1.055 2,117 (1.604) (1.9CG) 86.231 38,490 77.434 1,125 B4 225 Cash and cash equivalents, beginning of the year Operating activities Not income Adjustments to reconcile net income to cash generated by operating activities Depreciation and amortization Share-based compensation Expense Datorred name tax expensoben ) Other Changes in operating sets and liabilities: Accounts receivable.net Inventonics Vardor non-trade neceivables Other current and non-current assets Accounts payable Deferred revenue thar aurrent and non-current abilities Cash generated by operating activities Investing activities Purchases af markulale securities Proceeds from maturities of marketable securities Proceeds from sales of marketable securities Payments for acquisition of property, plant and equipment Payments made in connection with business acuisitions, nel Purchases of non-marketable securities Proceeds from nen markata la securities Other Cash generated by used in investing act M e Financing activities: Proceeds from issuance of common stock Payments for S ated to not share seriament of equity and Payments for dividends and didend equivalents Repurchases of common stock Proceeds from issuance after debt met Repayments after det Change in commercial paper, net Cash used in financing activities Increase Decrease in cash and cash equivalents (159,486) 31,775 171,860) 56,881 47.838 113,313) (142428) 21 958 90,536 (12.7341 (297) (1.398) (12.451 (229 (721) (1,871) (521) 125 745) 16.00 (46.445 (45.977 12.527) 113,712) 172,738) G. 18.500) 11.574 (12,769 (32,900 28,662 [5.500) 8.852 (17,974) (195) (1,5701 (12.1501 (20.7223 24.954 2.500 (397) (20.8901 167.870) 5,094 (696 (20,890) Cash used in financing activities Increase/(Decrease) in cash and cash equivalents Cash and cash equivalents, end of the year (87,876) 5,624 (17,974) (195) 20,289 (636) 20,484 25,913 Supplemental cash flow disclosure: Cash paid for income taxes, net Cash paid for interest 10,417 3,022 $ $ 11,591 2,092 $ $ 10,444 1,316 See accompanying Notes to Consolidated Financial Statements. Apple Inc. I 2018 Form 10-KI 42
