8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

January 28, 2015

Date of Report (Date of earliest event reported)

Apple Inc.

(Exact name of registrant as specified in its charter)

California	001-36743	94-2404110
(State or other jurisdiction of incorporation)	(Commission     File Number)	(IRS. Employer Identification No.)

1 Infinite Loop

Cupertino, California 95014

(Address of principal executive offices) (Zip Code)

(408) 996-1010

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01 Other Events.

Apple Inc. (the “Company”) is furnishing herewith updated financial statements and other affected financial information for the periods included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 27, 2014 (the “Form 10-K”). These financial statements and other affected financial information have been updated to reflect changes made in fiscal year 2015 to the Company’s reportable operating segment data and categorization of product-level net sales reporting.

In fiscal year 2015, management began reporting business performance and making decisions primarily on a geographic basis, including the results of its retail stores in each respective geographic segment. Accordingly, to align with the way the business is currently managed, the Company’s reportable operating segments now consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. Retail is no longer reported as a separate reportable operating segment. Additionally, the Company began allocating certain costs to its operating segments that were previously included in other corporate expenses, including certain share-based compensation costs. The Company also changed its categorization of product-level net sales reporting to reflect its evolving products and services.

Pursuant to guidance prepared by the staff of the Securities and Exchange Commission, the Company has updated the applicable items that were contained in the Form 10-K reflecting the above mentioned changes in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8, “Financial Statements and Supplementary Data” in Exhibits 99.1 and 99.2 filed in this Current Report on Form 8-K (the “Form 8-K”), respectively. The information included in this Form 8-K is presented for information purposes only in connection with the changes in the Company’s reportable operating segment data and categorization of product-level net sales reporting. There is no change to the Company’s previously reported Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Shareholders’ Equity and Consolidated Statements of Cash Flows included in the Form 10-K. This Form 8-K does not reflect events occurring after the Company filed the Form 10-K and does not modify or update the disclosures therein in any way, other than as noted above. The Company began to report comparative results reflective of the above mentioned changes with the filing of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 27, 2014.

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Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are furnished herewith:

Exhibit Number	Exhibit Description
23.1	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
99.1	Updated Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, from the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 27, 2014, as filed with the Securities and Exchange Commission on October 27, 2014.
99.2	Updated Part II, Item 8. Financial Statements and Supplementary Data, from the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 27, 2014, as filed with the Securities and Exchange Commission on October 27, 2014.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Apple Inc.
Date: January 28, 2015	By:	/s/ Luca Maestri
		Luca Maestri Senior Vice President, Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Exhibit Description
23.1	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
99.1	Updated Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, from the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 27, 2014, as filed with the Securities and Exchange Commission on October 27, 2014.
99.2	Updated Part II, Item 8. Financial Statements and Supplementary Data, from the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 27, 2014, as filed with the Securities and Exchange Commission on October 27, 2014.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

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EX-23.1

Exhibit 23.1

Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statement (Form S-8 No. 333-195509) pertaining to Apple Inc. 2014 Employee Stock Plan,

(2) Registration Statement (Form S-8 No. 333-193709) pertaining to Topsy Labs, Inc. 2007 Stock Plan,

(3) Registration Statement (Form S-3 ASR No. 333-188191) of Apple Inc.,

(4) Registration Statement (Form S-8 No. 333-184706) pertaining to AuthenTec, Inc. 2007 Stock Incentive Plan and AuthenTec, Inc. 2010 Incentive Plan, as amended,

(5) Registration Statement (Form S-8 No. 333-180981) pertaining to Chomp Inc. 2009 Equity Incentive Plan,

(6) Registration Statement (Form S-8 No. 333-179189) pertaining to Anobit Technologies Ltd. Global Share Incentive Plan (2006),

(7) Registration Statement (Form S-8 No. 333-168279) pertaining to Siri, Inc. 2008 Stock Option/Stock Issuance Plan,

(8) Registration Statement (Form S-8 No. 333-165214) pertaining to Apple Inc. 2003 Employee Stock Plan, la la media, inc. 2005 Stock Plan and Quattro Wireless, Inc. 2006 Stock Option and Grant Plan,

(9) Registration Statement (Form S-8 No. 333-146026) pertaining to Apple Inc. 2003 Employee Stock Plan and Apple Inc. Amended Employee Stock Purchase Plan,

(10) Registration Statement (Form S-8 No. 333-125148) pertaining to Employee Stock Purchase Plan and 2003 Employee Stock Plan, and

(11) Registration Statement (Form S-8 No. 333-75930) pertaining to 1997 Employee Stock Option Plan;

of our report dated October 27, 2014, except for Note 11 – Segment Information and Geographic Data, as to which the date is January 28, 2015, with respect to the consolidated financial statements of Apple Inc., included in this Current Report on Form 8-K.

/s/ Ernst & Young LLP

San Jose, California

January 28, 2015

EX-99.1

Exhibit 99.1

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section and other parts of this Current Report on Form 8-K (“Form 8-K”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended September 27, 2014 (“Form 10-K”) under the heading “Risk Factors,” which are incorporated herein by reference. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in Exhibit 99.2 in this Form 8-K. All information presented herein is based on the Company’s fiscal calendar. Unless otherwise stated, references to particular years, quarters, months or periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years. Each of the terms the “Company” and “Apple” as used herein refers collectively to Apple Inc. and its wholly-owned subsidiaries, unless otherwise stated. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Overview and Highlights

The Company designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications. 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 iPhone, iPad, Mac and iPod compatible products, including application software, and various accessories through its online and retail stores. The Company sells to consumers; small and mid-sized businesses; and education, enterprise and government customers.

Fiscal 2014 Highlights

Net sales rose 7% or $11.9 billion during 2014 compared to 2013. This was driven by increases in net sales of iPhone, Mac and Services. Net sales and unit sales increased for iPhone primarily due to the successful introduction of iPhone 5s and 5c in the latter half of calendar year 2013, the successful launch of iPhone 6 and 6 Plus beginning in the fourth quarter of 2014, and expanded distribution. Mac net sales and unit sales increased primarily due to strong demand for MacBook Air and MacBook Pro which were updated in 2014 with faster processors and offered at lower prices. Net sales of Services grew primarily due to increased revenue from sales through the App Store, AppleCare and licensing. Growth in these areas was partially offset by the year-over-year decline in net sales for iPad due to lower unit sales in many markets, and a decline in net sales of Other Products. All of the Company’s operating segments other than the Rest of Asia Pacific segment experienced increased net sales in 2014, with growth being strongest in the Greater China and Japan operating segments.

During the first quarter of 2014, the Company introduced iPad Air, its fifth generation iPad and iPad mini with Retina display. At its Worldwide Developer Conference in June 2014, the Company announced iOS 8 and OS X Yosemite. In September 2014, the Company introduced iPhone 6 and 6 Plus, released iOS 8, announced Apple Pay, which became available in the U.S. in October 2014, and previewed Apple Watch, which is expected to be available in early calendar 2015. In October 2014, the Company introduced iPad Air 2, iPad mini 3, iMac with Retina 5K Display and an updated Mac mini; and released OS X Yosemite.

During 2014, the Company completed various business acquisitions, including the acquisitions of Beats Music, LLC, which offers a subscription streaming music service, and Beats Electronics, LLC, which makes Beats headphones, speakers and audio software.

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In April 2014, the Company increased its share repurchase authorization to $90 billion and the quarterly dividend was raised to $0.47 per common share, resulting in an overall increase in its capital return program from $100 billion to over $130 billion. During 2014, the Company utilized $45 billion to repurchase its common stock and paid dividends and dividend equivalents of $11.1 billion. The current share repurchase program is expected to be completed by the end of December 2015. The Company also issued $12.0 billion of long-term debt during 2014 with varying maturities through 2044 and launched a commercial paper program, with $6.3 billion outstanding as of September 27, 2014.

Fiscal 2013 Highlights

Net sales rose 9% or $14.4 billion during 2013 compared to 2012. This resulted from growth in net sales of iPhone; Services; and iPad. Growth in 2013 reflected strong sales of iPhone 5, strong continuing sales of iPhone 4 and 4s, the introduction of iPhone 5c and 5s, strong performance of the iPad mini and fourth generation iPad, and continued growth in the Company’s online sales of apps, digital content and services. Growth in these areas was partially offset by declines in net sales of Mac and Other Products. All of the Company’s operating segments experienced increased net sales in 2013, with net sales growth being particularly strong in the Americas, Greater China and Japan operating segments. Growth in total net sales was higher during the first half of 2013, rising $12.6 billion or 14.7% over the same period in 2012. First half growth in 2013 was driven by iPhone and iPad introductions at or near the beginning of 2013.

During the first quarter of 2013, the Company introduced the fourth generation iPad and iPad mini, a new MacBook Pro with Retina display, a new iPod touch, a new iMac, and expanded the rollout of iPhone 5 which began in September 2012. In June 2013 at its Worldwide Developer Conference, the Company announced iOS 7 and OS X Mavericks, announced iTunes Radio, introduced a significant upgrade to MacBook Air, and provided a preview of all new Mac Pro desktops that were introduced during 2014. In September 2013, the Company introduced iPhone 5s and 5c, released iOS 7, launched iTunes Radio, and announced that beginning in September 2013 iPhoto, iMovie and iWork Apps for iOS would be available as free downloads with all new iPhone, iPad and iPod touch devices (“iOS devices”).

In April 2013, the Company announced a significant increase to its program to return capital to shareholders by raising the total amount it expected to utilize for the program through December 2015 to $100 billion. This included increasing its share repurchase authorization to $60 billion and raising its quarterly dividend to $0.44 per common share beginning in May 2013. During 2013, the Company utilized $23.0 billion to repurchase common shares and paid dividends of $10.5 billion or $1.64 per common share. In conjunction with its capital return program, in May 2013 the Company issued $17.0 billion of long-term debt with varying maturities through 2043.

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Sales Data

In 2015, the Company changed its reportable operating segments and categorization of product-level net sales reporting to align with the way the business is currently managed and to better reflect its evolving products and services. The 2014, 2013 and 2012 presentation of this data has been reclassified to conform to the 2015 presentation.

The following table shows net sales by operating segment and net sales and unit sales by product during 2014, 2013 and 2012 (dollars in millions and units in thousands):

	2014		Change		2013		Change		2012
Net Sales by Operating Segment:
Americas	$	80,095		4%	$	77,093		8%	$	71,060
Europe		44,285		8%		40,980		4%		39,326
Greater China		31,853		18%		27,016		14%		23,756
Japan		15,314		11%		13,782		26%		10,913
Rest of Asia Pacific		11,248		(7)%		12,039		5%		11,453
Total net sales	$	182,795		7%	$	170,910		9%	$	156,508
Net Sales by Product:
iPhone (1)	$	101,991		12%	$	91,279		16%	$	78,692
iPad (1)		30,283		(5)%		31,980		3%		30,945
Mac (1)		24,079		12%		21,483		(7)%		23,221
Services (2)		18,063		13%		16,051		25%		12,890
Other Products (1)(3)		8,379		(17)%		10,117		(6)%		10,760
Total net sales	$	182,795		7%	$	170,910		9%	$	156,508
Unit Sales by Product:
iPhone		169,219		13%		150,257		20%		125,046
iPad		67,977		(4)%		71,033		22%		58,310
Mac		18,906		16%		16,341		(10)%		18,158

⁽¹⁾  Includes deferrals and amortization of related non-software services and software upgrade rights.

⁽²⁾  Includes revenue from the iTunes Store, App Store, Mac App Store and iBooks Store (collectively “iTunes”), AppleCare, licensing and other services.

⁽³⁾  Includes sales of iPod, Apple TV, Beats Electronics and Apple-branded and third-party accessories.

The Company’s fiscal year is the 52 or 53-week period that ends on the last Saturday of September. The Company’s fiscal years 2014, 2013 and 2012 ended on September 27, 2014, September 28, 2013 and September 29, 2012, respectively. Both fiscal years 2014 and 2013 spanned 52 weeks. Fiscal year 2012 spanned 53 weeks, with a 14^th week included in the first quarter of 2012, as is done approximately every six years to realign the Company’s fiscal quarters more closely to calendar quarters. Inclusion of the additional week in 2012 increased the Company’s overall net sales and operating expenses for the year.

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Product Performance

iPhone

The following table presents iPhone net sales and unit sales information for 2014, 2013 and 2012 (dollars in millions and units in thousands):

	2014		Change		2013		Change		2012
Net sales	$	101,991		12%	$	91,279		16%	$	78,692
Percentage of total net sales		56%				53%				50%
Unit sales		169,219		13%		150,257		20%		125,046

The year-over-year growth in iPhone net sales and unit sales in 2014 resulted primarily from the successful introduction of new iPhones in the latter half of calendar year 2013, the successful launch of iPhone 6 and 6 Plus beginning in September 2014, and expanded distribution. iPhone unit sales grew in all of the Company’s operating segments, while iPhone net sales grew in all segments except Rest of Asia Pacific. Overall average selling prices (“ASPs”) for iPhone were relatively flat in 2014 compared to 2013, with growth in ASPs in the Americas segment being offset by a decline in ASPs in the Greater China, Japan and Rest of Asia Pacific segments.

The growth in iPhone net sales and unit sales during 2013 resulted from increased demand for iPhone in all of the Company’s operating segments primarily due to the launch of iPhone 5 beginning in September 2012 and strong ongoing demand for iPhone 4 and 4s. All of the Company’s operating segments experienced increases in net sales and unit sales of iPhone during 2013 compared to 2012. The year-over-year impact of higher iPhone unit sales in 2013 was partially offset by a 3% decline in iPhone ASPs primarily as a result of a shift in product mix towards lower-priced iPhone models, particularly iPhone 4. All of the Company’s operating segments experienced a decline in iPhone ASPs during 2013.

iPad

The following table presents iPad net sales and unit sales information for 2014, 2013 and 2012 (dollars in millions and units in thousands):

	2014		Change		2013		Change		2012
Net sales	$	30,283		(5)%	$	31,980		3%	$	30,945
Percentage of total net sales		17%				19%				20%
Unit sales		67,977		(4)%		71,033		22%		58,310

Net sales and unit sales for iPad declined in 2014 compared to 2013. iPad net sales and unit sales grew in the Greater China and Japan segments but this growth was more than offset by a decline in all other segments. Overall iPad ASPs were relatively flat in 2014 compared to 2013 with a shift in mix to higher-priced iPads being offset by the October 2013 price reduction of iPad mini. ASPs increased in the Japan and Rest of Asia Pacific segments but were slightly down in other segments.

The growth in net sales and unit sales of iPad during 2013 resulted from growth in iPad unit sales in all of the Company’s operating segments. This growth was driven by the launch of iPad mini and the fourth generation iPad beginning in the first quarter of 2013. The year-over-year growth rate of total iPad unit sales was significantly higher than the growth rate of total iPad net sales for 2013 due to a reduction in iPad ASPs of 15% in 2013 compared to 2012. This decline resulted primarily from introduction of the lower priced iPad mini and the full year impact of the price reduction on iPad 2 made in 2012. The decline in iPad ASPs was experienced to various degrees by all of the Company’s operating segments.

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Mac

The following table presents Mac net sales and unit sales information for 2014, 2013 and 2012 (dollars in millions and units in thousands):

	2014		Change		2013		Change		2012
Net sales	$	24,079		12%	$	21,483		(7)%	$	23,221
Percentage of total net sales		13%				13%				15%
Unit sales		18,906		16%		16,341		(10)%		18,158

The year-over-year growth in Mac net sales and unit sales for 2014 was primarily driven by increased sales of MacBook Air, MacBook Pro and Mac Pro. Mac net sales and unit sales increased in all of the Company’s operating segments. Mac ASPs decreased during 2014 compared to 2013 primarily due to price reductions on certain Mac models and a shift in mix towards Mac portable systems.

Mac net sales and unit sales for 2013 were down or relatively flat in all of the Company’s operating segments. Mac ASPs increased slightly partially offsetting the impact of lower unit sales on net sales. The decline in Mac unit sales and net sales reflected the overall weakness in the market for personal computers.

Services

The following table presents net sales information of Services for 2014, 2013 and 2012 (dollars in millions):

	2014		Change		2013		Change		2012
Net sales	$	18,063		13%	$	16,051		25%	$	12,890
Percentage of total net sales		10%				9%				8%

The increase in net sales of Services in 2014 compared to 2013 was primarily due to growth in net sales from iTunes, AppleCare and licensing. iTunes generated a total of $10.2 billion in net sales during 2014 compared to $9.3 billion during 2013. Growth in net sales from iTunes was driven by increases in revenue from app sales reflecting continued growth in the installed base of iOS devices and the expanded offerings of iOS apps and related in-app purchases. This was partially offset by a decline in sales of digital music.

The increase in net sales of Services in 2013 compared to 2012 was primarily due to growth in net sales from iTunes, AppleCare and licensing. iTunes generated a total of $9.3 billion in net sales during 2013, a 24% increase from 2012. Growth from iTunes reflected continued growth in the installed base of iOS devices, expanded offerings of iOS apps and related in-app purchases, and expanded offerings of iTunes digital content.

Segment Operating Performance

The Company manages its business primarily on a geographic basis. As the Company continues to expand its business, management believes collaboration across its online, retail and indirect channels is integral to better serving its customers and optimizing its financial results. In 2015, the Company’s management began reporting business performance and making decisions primarily on a geographic basis, including the results of its retail stores in each respective geographic segment. Accordingly, to align with the way the business is currently managed, the Company’s reportable operating segments now consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. Retail is no longer reported as a separate reportable operating segment. The Americas segment includes both North and South America. The Europe segment includes European countries, as well as India, the Middle East and Africa. The Greater China segment includes China, Hong Kong and Taiwan. The Rest of Asia Pacific segment includes Australia and Asian countries, other than those countries included in the Company’s other operating segments. Each operating segment provides similar hardware and software products and similar services. Further information regarding the Company’s operating segments may be found in Exhibit 99.2 of this Form 8-K in the Notes to Consolidated Financial Statements in Note 11, “Segment Information and Geographic Data.”

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Americas

The following table presents Americas net sales information for 2014, 2013 and 2012 (dollars in millions):

	2014		Change		2013		Change		2012
Net sales	$	80,095		4%	$	77,093		8%	$	71,060
Percentage of total net sales		44%				45%				45%

The growth in the Americas segment in 2014 was due to increased net sales of iPhone, Mac and Services that were partially offset by a decline in net sales of iPad and Other Products and weakness in foreign currencies relative to the U.S. dollar compared to 2013. iPhone growth resulted primarily from the successful introduction of iPhone 5s and 5c in September 2013 and the successful launch of iPhone 6 and 6 Plus in September 2014. Mac growth was driven primarily by increased net sales and unit sales of MacBook Air and Mac Pro.

The growth in the Americas segment net sales during 2013 was driven by increased sales of iPhone following the introduction of iPhone 5 in September 2012 and iPhone 5s and 5c in September 2013, increased sales from iTunes, and increased sales of iPad, particularly iPad mini. These increases were partially offset by a decrease in net sales of Mac and Other Products and a decline in iPad ASPs.

Europe

The following table presents Europe net sales information for 2014, 2013 and 2012 (dollars in millions):

	2014		Change		2013		Change		2012
Net sales	$	44,285		8%	$	40,980		4%	$	39,326
Percentage of total net sales		24%				24%				25%

The growth in the Europe segment in 2014 was due to increased net sales of iPhone, Mac and Services, as well as strength in European currencies relative to the U.S. dollar, partially offset by a decline in net sales of iPad. iPhone growth resulted primarily from the successful introduction of iPhone 5s and 5c in the second half of calendar 2013 and the successful launch of iPhone 6 and 6 Plus in over 20 countries in Europe in September 2014. Mac growth was driven primarily by increased net sales and unit sales of MacBook Air, MacBook Pro and Mac Pro.

The growth in net sales in the Europe segment during 2013 was primarily driven by increased sales of iPhone, iPad and higher net sales from iTunes. These increases were partially offset by decreases in net sales of Mac and Other Products and a decline in iPad ASPs. Net sales in the Europe segment continued to be negatively impacted by unfavorable economic conditions in parts of the region reflected by second half 2013 net sales falling 4% compared to the second half of 2012, which followed an 11% increase in net sales during the first half of 2013.

Greater China

The following table presents Greater China net sales information for 2014, 2013 and 2012 (dollars in millions):

	2014		Change		2013		Change		2012
Net sales	$	31,853		18%	$	27,016		14%	$	23,756
Percentage of total net sales		17%				16%				15%

The Greater China segment experienced year-over-year growth in net sales in 2014 that was significantly higher than the growth rate for the Company overall. Greater China growth was driven by higher unit sales and net sales of all major product categories, in addition to higher net sales of Services. Growth in net sales and unit sales of iPhone was especially strong, driven by the successful launch of iPhone 5s and 5c in Mainland China and Hong Kong in September 2013, the successful launch of iPhone 6 and 6 Plus in Hong Kong in September 2014, increased demand for the Company’s entry-priced iPhones and the addition of a significant new carrier in the second quarter of 2014.

6

The growth in net sales in the Greater China segment during 2013 resulted from two major iPhone introductions during the year, iPhone 5 in December 2012 and iPhone 5c and 5s in September 2013. Further contributing to the growth in 2013 was the introduction of the fourth generation iPad and iPad mini during the second quarter of 2013 and an increase in iPhone channel inventory as of the end of 2013 compared to the end of 2012. While net sales in the Greater China segment were up 14% for all of 2013, net sales for the second half of 2013 declined 3% compared to the second half of 2012.

Japan

The following table presents Japan net sales information for 2014, 2013 and 2012 (dollars in millions):

	2014		Change		2013		Change		2012
Net sales	$	15,314		11%	$	13,782		26%	$	10,913
Percentage of total net sales		8%				8%				7%

In 2014 the Japan segment generated year-over-year increases in net sales and unit sales of every major product category and experienced growth in net sales of Services. The year-over-year growth in iPhone was driven by the successful launch of iPhone 5s and 5c in September 2013, the successful launch of iPhone 6 and 6 Plus in September 2014, increased demand for the Company’s entry-priced iPhones and the addition of a significant new carrier in the fourth quarter of 2013. These positive factors were partially offset by weakness in the Japanese Yen relative to the U.S. dollar.

The increase in net sales in the Japan segment during 2013 reflected significant increases in unit volumes of iPhone and iPad, strong growth from iTunes net sales and an increase in iPhone channel inventory as of the end of 2013 compared to the end of 2012. These positive factors were partially offset by declines in ASPs for iPhone and iPad and by weakness in the Japanese Yen relative to the U.S. dollar.

Rest of Asia Pacific

The following table presents Rest of Asia Pacific net sales information for 2014, 2013 and 2012 (dollars in millions):

	2014		Change		2013		Change		2012
Net sales	$	11,248		(7)%	$	12,039		5%	$	11,453
Percentage of total net sales		6%				7%				7%

Net sales in the Rest of Asia Pacific segment declined in 2014 compared to 2013 due to year-over-year reductions in net sales in all major product categories except Mac and reductions in unit sales of iPad. Net sales in 2014 were also negatively affected by the weakness in several foreign currencies relative to the U.S. dollar, including the Australian dollar.

The year-over-year growth in Rest of Asia Pacific segment net sales during 2013 was primarily driven by the launch of iPhone 5 and higher sales from iTunes, partially offset by a decrease in net sales of iPad and Mac.

Gross Margin

Gross margin for 2014, 2013 and 2012 are as follows (dollars in millions):

	2014		2013		2012
Net sales	$	182,795	$	170,910	$	156,508
Cost of sales		112,258		106,606		87,846
Gross margin	$	70,537	$	64,304	$	68,662
Gross margin percentage		38.6%		37.6%		43.9%

The year-over-year increase in the gross margin percentage in 2014 was driven by multiple factors including lower commodity costs, a favorable shift in mix to products with higher margins and improved leverage on fixed costs from higher net sales, which was partially offset by the weakness in several foreign currencies relative to the U.S. dollar, price reductions on select products and higher cost structures on certain new products.

7

The year-over-year decrease in gross margin in 2013 compared to 2012 was driven by multiple factors including introduction of new versions of existing products with higher cost structures and flat or reduced pricing; a shift in sales mix to products with lower margins; introduction of iPad mini with gross margin significantly below the Company’s average product margins; higher expenses associated with changes to certain of the Company’s service policies and other warranty costs; price reductions on certain products, including iPad 2 and iPhone 4; and unfavorable impact from foreign exchange fluctuations.

The Company anticipates gross margin during the first quarter of 2015 to be between 37.5% and 38.5%. The foregoing statement regarding the Company’s expected gross margin percentage in the first quarter of 2015 is forward-looking and could differ from actual results. The Company’s future gross margins can be impacted by multiple factors including, but not limited to those set forth in Part I, Item 1A of the Form 10-K under the heading “Risk Factors” and those described in this paragraph. In general, the Company believes gross margins will remain under downward pressure due to a variety of factors, including continued industry wide global product pricing pressures, increased competition, compressed product life cycles, product transitions, potential increases in the cost of components and potential strengthening of the U.S. dollar, as well as potential increases in the costs of outside manufacturing services and a potential shift in the Company’s sales mix towards products with lower gross margins. In response to competitive pressures, the Company expects it will continue to take product pricing actions, which would adversely affect gross margins. Gross margins could also be affected by the Company’s ability to manage product quality and 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 by fluctuations in exchange rates.

Operating Expenses

Operating expenses for 2014, 2013 and 2012 are as follows (dollars in millions):

	2014		Change		2013		Change		2012
Research and development	$	6,041		35%	$	4,475		32%	$	3,381
Percentage of total net sales		3%				3%				2%
Selling, general and administrative	$	11,993		11%	$	10,830		8%	$	10,040
Percentage of total net sales		7%				6%				6%
Total operating expenses	$	18,034		18%	$	15,305		14%	$	13,421
Percentage of total net sales		10%				9%				9%

Research and Development (“R&D”) Expense

The year-over-year growth in 2014 and 2013 R&D expense was driven primarily by an increase in headcount and related expenses, including share-based compensation costs and machinery and equipment to support expanded R&D activities. The Company continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace and are directly related to timely development of new and enhanced products that are central to the Company’s core business strategy. As such, the Company expects to make further investments in R&D to remain competitive.

Selling, General and Administrative (“SG&A”) Expense

The growth in SG&A expense during 2014 compared to 2013 was primarily due to increased headcount and related expenses, including share-based compensation costs; higher spending on marketing, advertising and professional services; and the Company’s continued expansion of its retail stores. The growth in SG&A during 2013 compared to 2012 was primarily due to the Company’s continued expansion of its retail stores and increased headcount and related expenses, partially offset by decreased spending on professional services.

8

Other Income and Expense

Other income and expense for 2014, 2013 and 2012 are as follows (dollars in millions):

	2014			Change		2013			Change		2012
Interest and dividend income	$	1,795				$	1,616				$	1,088
Interest expense		(384	)				(136	)				0
Other expense, net		(431	)				(324	)				(566	)
Total other income/(expense), net	$	980			(15)%	$	1,156			121%	$	522

The decrease in other income and expense during 2014 compared to 2013 was due primarily to higher interest expense on debt and higher expenses associated with foreign exchange rate movements, partially offset by lower premium expenses on foreign exchange contracts and higher interest income. The year-over-year increase in other income and expense during 2013 was due primarily to higher interest and dividend income resulting from the Company’s higher cash, cash equivalents and marketable securities balances and lower premium expenses on foreign exchange contracts, partially offset by interest expense on debt issued in the third quarter of 2013 and higher expenses associated with foreign exchange rate movements. The weighted-average interest rate earned by the Company on its cash, cash equivalents and marketable securities was 1.11%, 1.03% and 1.03% during 2014, 2013 and 2012, respectively. The Company had no debt outstanding during 2012 and accordingly did not incur any related interest expense.

Provision for Income Taxes

Provision for income taxes and effective tax rates for 2014, 2013 and 2012 are as follows (dollars in millions):

	2014		2013		2012
Provision for income taxes	$	13,973	$	13,118	$	14,030
Effective tax rate		26.1%		26.2%		25.2%

The Company’s effective tax rates for all years differ from the statutory federal income tax rate of 35% due primarily to certain undistributed foreign earnings, a substantial portion of which was generated by subsidiaries organized in Ireland, for which no U.S. taxes are provided because such earnings are intended to be indefinitely reinvested outside the U.S.

As of September 27, 2014, the Company had deferred tax assets arising from deductible temporary differences, tax losses and tax credits of $5.1 billion and deferred tax liabilities of $20.3 billion. Management believes it is more likely than not that forecasted income, including income that may be generated as a result of certain tax planning strategies, together with future reversals of existing taxable temporary differences, will be sufficient to fully recover the deferred tax assets. The Company will continue to evaluate the realizability of deferred tax assets quarterly by assessing the need for and the amount of a valuation allowance.

During the fiscal year ended September 27, 2014, the U.S. Internal Revenue Service (“IRS”) concluded its review of the years 2004 through 2009. The IRS is currently examining the years 2010 through 2012. In addition, the Company is subject to audits by state, local and foreign tax authorities. Management believes that adequate provisions have 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.

9

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2018. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact of adopting the new revenue standard on its consolidated financial statements.

Liquidity and Capital Resources

The following table presents selected financial information and statistics as of and for the years ended September 27, 2014, September 28, 2013 and September 29, 2012 (in millions):

	2014			2013			2012
Cash, cash equivalents and marketable securities	$	155,239		$	146,761		$	121,251
Property, plant and equipment, net	$	20,624		$	16,597		$	15,452
Long-term debt	$	28,987		$	16,960		$	0
Working capital	$	5,083		$	29,628		$	19,111
Cash generated by operating activities	$	59,713		$	53,666		$	50,856
Cash used in investing activities	$	(22,579	)	$	(33,774	)	$	(48,227	)
Cash used in financing activities	$	(37,549	)	$	(16,379	)	$	(1,698	)

The Company believes its existing balances of cash, cash equivalents and marketable securities will be sufficient to satisfy its working capital needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with its existing operations over the next 12 months. To provide additional flexibility in managing liquidity, the Company began accessing the commercial paper markets in the third quarter of 2014. The Company currently anticipates the cash used for future dividends and the share repurchase program will come from its current domestic cash, cash generated from on-going U.S. operating activities and from borrowings.

As of September 27, 2014 and September 28, 2013, $137.1 billion and $111.3 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. The Company’s marketable securities investment portfolio is invested primarily in highly-rated securities and its investment policy generally limits the amount of credit exposure to any one issuer. The policy requires investments generally to be investment grade with the objective of minimizing the potential risk of principal loss.

During 2014, cash generated from operating activities of $59.7 billion was a result of $39.5 billion of net income, non-cash adjustments to net income of $13.2 billion and an increase in net change in operating assets and liabilities of $7.0 billion. Cash used in investing activities of $22.6 billion during 2014 consisted primarily of cash used for purchases of marketable securities, net of sales and maturities, of $9.0 billion; cash used to acquire property, plant and equipment of $9.6 billion; and cash paid for business acquisitions, net of cash acquired, of $3.8 billion. Cash used in financing activities of $37.5 billion during 2014 consisted primarily of cash used to repurchase common stock of $45.0 billion and cash used to pay dividends and dividend equivalents of $11.1 billion, partially offset by net proceeds from the issuance of long-term debt and commercial paper of $12.0 billion and $6.3 billion, respectively.

During 2013, cash generated from operating activities of $53.7 billion was a result of $37.0 billion of net income, non-cash adjustments to net income of $10.2 billion and an increase in net change in operating assets and liabilities of $6.5 billion. Cash used in investing activities of $33.8 billion during 2013 consisted primarily of cash used for purchases of marketable securities, net of sales and maturities, of $24.0 billion and cash used to acquire property, plant and equipment of $8.2 billion. Cash used in financing activities of $16.4 billion during 2013 consisted primarily of cash used to repurchase common stock of $22.9 billion and cash used to pay dividends and dividend equivalents of $10.6 billion, partially offset by net proceeds from the issuance of long-term debt of $16.9 billion.

10

Capital Assets

The Company’s capital expenditures were $11.0 billion during 2014. The Company anticipates utilizing approximately $13.0 billion for capital expenditures during 2015, which includes product tooling and manufacturing process equipment; data centers; corporate facilities and infrastructure, including information systems hardware, software and enhancements; and retail store facilities.

Debt

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 the 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.

In the third quarter of 2014 and 2013, the Company issued $12.0 billion and $17.0 billion of long-term debt, respectively. The debt issuances included floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $29.0 billion (collectively the “Notes”). The Company has entered, and may enter in the future, into interest rate swaps to manage interest rate risk on the Notes. Interest rate swaps allow the Company to effectively convert fixed-rate payments into floating-rate payments or floating-rate payments into fixed-rate payments. In the third quarter of 2014, the Company entered into interest rate swaps with an aggregate notional amount of $9.0 billion, which effectively converted most of the fixed-rate notes into floating-rate notes, and in the third quarter of 2013, the Company entered into interest rate swaps with an aggregate notional amount of $3.0 billion, which effectively converted the floating-rate notes into fixed-rate notes.

Capital Return Program

In April 2014, the Company’s Board of Directors increased the share repurchase program authorization from $60 billion to $90 billion of the Company’s common stock, of which $67.9 billion had been utilized as of September 27, 2014. The share repurchase program is expected to be completed by the end of December 2015. 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 or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

The increase to the Company’s share repurchase program authorization resulted in a total capital return program of over $130 billion. The Company expects to complete the capital return program by the end of December 2015 by paying dividends and dividend equivalents, repurchasing shares and remitting withheld taxes related to net share settlement of restricted stock units. To assist in funding its capital return program, the Company expects to access the debt markets, both domestically and internationally.

The following table presents the Company’s dividends, dividend equivalents, share repurchases and net share settlement activity from the start of the capital return program in August 2012 through September 2014 (in millions):

	Dividends and Dividend Equivalents Paid		Accelerated Share Repurchases		Open  Market Share Repurchases		Taxes Related to Settlement of Equity Awards		Total
2014	$	11,126	$	21,000	$	24,000	$	1,158	$	57,284
2013		10,564		13,950		9,000		1,082		34,596
2012		2,488		0		0		56		2,544
Total	$	24,178	$	34,950	$	33,000	$	2,296	$	94,424

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Off-Balance Sheet Arrangements and Contractual Obligations

The Company has not entered into any transactions with unconsolidated entities whereby the Company has financial guarantees, subordinated retained interests, derivative instruments, or other contingent arrangements that expose the Company to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to the Company, or engages in leasing, hedging, or R&D services with the Company.

The following table presents certain payments due by the Company under contractual obligations with minimum firm commitments as of September 27, 2014, 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	$	5,000	$	9,000	$	15,000	$	29,000
Operating leases		662		1,321		1,127		1,877		4,987
Purchase commitments		24,529		0		0		0		24,529
Other obligations		2,056		1,276		19		0		3,351
Total	$	27,247	$	7,597	$	10,146	$	16,877	$	61,867

Operating Leases

The Company’s major facility leases are typically for terms not exceeding 10 years and generally contain multi-year renewal options. 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 27, 2014, the Company’s total future minimum lease payments under noncancelable operating leases were $5.0 billion, of which $3.6 billion related to leases for retail space.

Purchase Commitments

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.

Other Obligations

The Company’s other obligations were comprised mainly of commitments to acquire capital assets, including product tooling and manufacturing process equipment and commitments related to advertising, R&D, 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 27, 2014, the Company had non-current deferred tax liabilities of $20.3 billion. Additionally, as of September 27, 2014, the Company had gross unrecognized tax benefits of $4.0 billion and an additional $630 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.

12

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 the Company sometimes include indemnification provisions under which the Company could be subject to costs and/or damages in the event of an infringement claim against the Company or an indemnified third-party. However, the Company has not been required to make any significant payments resulting from such an infringement claim asserted against it or 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 with respect to indemnification of end-users of its operating system or application software for infringement of third-party intellectual property rights. The Company did not record a liability for infringement costs related to indemnification as of September 27, 2014 or September 28, 2013.

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 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. However, the Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations and payments made under these agreements historically have not been material.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. Note 1, “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in Exhibit 99.2 in this Form 8-K describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and such differences 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 valuation of manufacturing-related assets and estimated purchase commitment cancellation fees, warranty costs, income taxes and legal and other contingencies. Management considers these policies critical because they are both important to the portrayal of the Company’s financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters. The Company’s senior management has reviewed these critical accounting policies and related disclosures with the Audit and Finance Committee of the Company’s Board of Directors.

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. 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.

13

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/or 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 sales of qualifying versions of iOS devices, Mac and Apple TV, the Company has indicated it may from time to time provide future unspecified software upgrades and features free of charge to customers. The Company also provides various non-software services to owners of qualifying versions of iOS devices and Mac. Because the Company has neither VSOE nor TPE for the unspecified software upgrade rights or the non-software services, revenue is allocated to these rights and services based on the Company’s ESPs. Revenue allocated to the unspecified software upgrade rights and non-software services based on the Company’s ESPs 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 for each of these devices, which ranges from two to four years.

The Company’s process for determining ESPs involves management’s judgment and considers multiple factors that may vary over time depending upon the unique facts and circumstances related to each deliverable. Should future facts and circumstances change, the Company’s ESPs and the future rate of related amortization for software upgrades and non-software services related to future sales of these devices could change. Factors subject to change include the unspecified software upgrade rights offered, the estimated value of unspecified software upgrade rights, the estimated or actual costs incurred to provide non-software services and the estimated period software upgrades and non-software services are expected to be provided.

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, provided the refund amount can be reasonably and reliably estimated and the other conditions for revenue recognition have been met. The Company’s policy requires that, if refunds cannot be reliably estimated, revenue is not recognized until reliable estimates can be made or the price protection lapses. For the Company’s other customer incentive programs, the estimated cost 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. Future market conditions and product transitions may require the Company to increase customer incentive programs that could result in reductions to future revenue. Additionally, certain customer incentive programs require management to estimate the number of customers who will actually redeem the incentive. Management’s estimates are based on historical experience and the specific terms and conditions of particular incentive programs. If a greater than estimated proportion of customers redeems such incentives, the Company would be required to record additional reductions to revenue, which would have an adverse impact on the Company’s results of operations.

Valuation and Impairment of Marketable Securities

The Company’s investments in available-for-sale securities are reported at fair value. Unrealized gains and losses related to changes in the fair value of securities are recognized in accumulated other comprehensive income, net of tax, in the Company’s Consolidated Balance Sheets. Changes in the fair value of available-for-sale securities impact the Company’s net income only when such securities are sold or an other-than-temporary impairment is recognized. Realized gains and losses on the sale of securities are determined by specific identification of each security’s cost basis. The Company regularly reviews its investment portfolio to determine if any security is other-than-temporarily impaired, which would require the Company to record an impairment charge in the period any such determination is made. In making this judgment, the Company evaluates, among other things, the duration and extent to which the fair value of a security is less than its cost; the financial condition of the issuer and any changes thereto; and the Company’s intent to sell, or whether it will more likely than not be required to sell, the security before recovery of its amortized cost basis. The Company’s assessment on whether a security is other-than-temporarily impaired could change in the future due to new developments or changes in assumptions related to any particular security.

14

Inventory Valuation and Valuation of Manufacturing-Related Assets and Estimated Purchase Commitment Cancellation Fees

The Company must order components for its products and build inventory in advance of product shipments and has invested in manufacturing process equipment, including capital assets held at its suppliers’ facilities. In addition, the Company has made prepayments to certain of its suppliers associated with long-term supply agreements to secure supply of inventory components. The Company records a write-down for inventories of components and products, including third-party products held for resale, which have become obsolete or are in excess of anticipated demand or net realizable value. The Company performs a detailed review of inventory that considers multiple factors including demand forecasts, product life cycle status, product development plans, current sales levels and component cost trends. The Company also reviews its manufacturing-related capital assets and inventory prepayments for impairment whenever events or circumstances indicate the carrying amount of such assets may not be recoverable. If the Company determines that an asset is not recoverable, it records an impairment loss equal to the amount by which the carrying value of such an asset exceeds its fair value.

The industries in which the Company competes are subject to a rapid and unpredictable pace of product and component obsolescence and demand changes. In certain circumstances the Company may be required to record additional write-downs of inventory, inventory prepayments and/or manufacturing-related capital assets. These circumstances include future demand or market conditions for the Company’s products being less favorable than forecasted, unforeseen technological changes or changes to the Company’s product development plans that negatively impact the utility of any of these assets, or significant deterioration in the financial condition of one or more of the Company’s suppliers that hold any of the Company’s manufacturing process equipment or to whom the Company has made an inventory prepayment. Such write-downs would adversely affect the Company’s results of operations in the period when the write-downs were recorded.

The Company records accruals for estimated cancellation fees related to component orders that have been cancelled or are expected to be cancelled. Consistent with industry practice, the Company acquires components through a combination of purchase orders, supplier contracts and open orders in each case based on projected demand. Where appropriate, the purchases are applied to inventory component prepayments that are outstanding with the respective supplier. Purchase commitments typically cover the Company’s forecasted component and manufacturing requirements for periods up to 150 days. If there is an abrupt and substantial decline in demand for one or more of the Company’s products, if the Company’s product development plans change, or if there is an unanticipated change in technological requirements for any of the Company’s products, then the Company may be required to record additional accruals for cancellation fees that would adversely affect its results of operations in the period when the cancellation fees are identified and recorded.

Warranty Costs

The Company provides for the estimated cost of warranties at the time the related revenue is recognized based on historical and projected warranty claim rates, historical and projected cost-per-claim and knowledge of specific product failures that are outside of the Company’s typical experience. Each quarter, the Company re-evaluates these estimates to assess the adequacy of its recorded warranty liabilities considering the size of the installed base of products subject to warranty protection and adjusts the amounts as necessary. If actual product failure rates or repair costs differ from estimates, revisions to the estimated warranty liabilities would be required and could materially affect the Company’s results of operations.

Income Taxes

The Company records a tax provision for the anticipated tax consequences of the reported results of operations. 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 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 tax benefits from uncertain tax positions only if it is more likely than not that 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 ultimate settlement.

15

Management believes it is more likely than not that forecasted income, including income that may be generated as a result of certain tax planning strategies, together with future reversals of existing taxable temporary differences, will be sufficient to fully recover the deferred tax assets. In the event that the Company determines all or part of the net deferred tax assets are not realizable in the future, the Company will make an adjustment to the valuation allowance that would be charged to earnings in the period such determination is made. In addition, the calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of GAAP and complex tax laws. Resolution of these uncertainties in a manner inconsistent with management’s expectations could have a material impact on the Company’s financial condition and operating results.

Legal and Other Contingencies

As discussed in Part I, Item 3 of the Form 10-K under the heading “Legal Proceedings” and in Exhibit 99.2 of this Form 8-K in the Notes to Consolidated Financial Statements in Note 10, “Commitments and Contingencies,” the Company is subject to various legal proceedings and claims that arise in the ordinary course of business. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. There is significant judgment required in both the probability determination and as to whether an exposure can be reasonably estimated. 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 legal and other contingencies. However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty. 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.

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EX-99.2

Exhibit 99.2

Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements	Page
Consolidated Statements of Operations for the years ended September 27, 2014, September  28, 2013 and September 29, 2012		2
Consolidated Statements of Comprehensive Income for the years ended September 27, 2014, September  28, 2013 and September 29, 2012		3
Consolidated Balance Sheets as of September 27, 2014 and September 28, 2013		4
Consolidated Statements of Shareholders’ Equity for the years ended September 27, 2014, September  28, 2013 and September 29, 2012		5
Consolidated Statements of Cash Flows for the years ended September 27, 2014, September  28, 2013 and September 29, 2012		6
Notes to Consolidated Financial Statements		7
Selected Quarterly Financial Information (Unaudited)		33
Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm		34

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.

1

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except number of shares which are reflected in thousands and per share amounts)

	Years ended
	September 27, 2014		September 28, 2013		September 29, 2012
Net sales	$	182,795	$	170,910	$	156,508
Cost of sales		112,258		106,606		87,846
Gross margin		70,537		64,304		68,662
Operating expenses:
Research and development		6,041		4,475		3,381
Selling, general and administrative		11,993		10,830		10,040
Total operating expenses		18,034		15,305		13,421
Operating income		52,503		48,999		55,241
Other income/(expense), net		980		1,156		522
Income before provision for income taxes		53,483		50,155		55,763
Provision for income taxes		13,973		13,118		14,030
Net income	$	39,510	$	37,037	$	41,733
Earnings per share:
Basic	$	6.49	$	5.72	$	6.38
Diluted	$	6.45	$	5.68	$	6.31
Shares used in computing earnings per share:
Basic		6,085,572		6,477,320		6,543,726
Diluted		6,122,663		6,521,634		6,617,483
Cash dividends declared per common share	$	1.82	$	1.64	$	0.38

See accompanying Notes to Consolidated Financial Statements.

2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

	Years ended
	September 27, 2014			September 28, 2013			September 29, 2012
Net income	$	39,510		$	37,037		$	41,733
Other comprehensive income/(loss):
Change in foreign currency translation, net of tax effects of $50, $35 and $13, respectively		(137	)		(112	)		(15	)
Change in unrecognized gains/losses on derivative instruments:
Change in fair value of derivatives, net of tax benefit/(expense) of $(297), $(351) and $73, respectively		1,390			522			(131	)
Adjustment for net losses/(gains) realized and included in net income, net of tax expense/(benefit) of $(36), $255 and $220, respectively		149			(458	)		(399	)
Total change in unrecognized gains/losses on derivative instruments, net of tax		1,539			64			(530	)
Change in unrealized gains/losses on marketable securities:
Change in fair value of marketable securities, net of tax benefit/(expense) of $(153), $458 and $(421), respectively		285			(791	)		715
Adjustment for net losses/(gains) realized and included in net income, net of tax expense/(benefit) of $71, $82 and $68, respectively		(134	)		(131	)		(114	)
Total change in unrealized gains/losses on marketable securities, net of tax		151			(922	)		601
Total other comprehensive income/(loss)		1,553			(970	)		56
Total comprehensive income	$	41,063		$	36,067		$	41,789

See accompanying Notes to Consolidated Financial Statements.

3

CONSOLIDATED BALANCE SHEETS

(In millions, except number of shares which are reflected in thousands and par value)

	September 27, 2014		September 28, 2013
ASSETS:
Current assets:
Cash and cash equivalents	$	13,844	$	14,259
Short-term marketable securities		11,233		26,287
Accounts receivable, less allowances of $86 and $99, respectively		17,460		13,102
Inventories		2,111		1,764
Deferred tax assets		4,318		3,453
Vendor non-trade receivables		9,759		7,539
Other current assets		9,806		6,882
Total current assets		68,531		73,286
Long-term marketable securities		130,162		106,215
Property, plant and equipment, net		20,624		16,597
Goodwill		4,616		1,577
Acquired intangible assets, net		4,142		4,179
Other assets		3,764		5,146
Total assets	$	231,839	$	207,000
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	30,196	$	22,367
Accrued expenses		18,453		13,856
Deferred revenue		8,491		7,435
Commercial paper		6,308		0
Total current liabilities		63,448		43,658
Deferred revenue – non-current		3,031		2,625
Long-term debt		28,987		16,960
Other non-current liabilities		24,826		20,208
Total liabilities		120,292		83,451
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value; 12,600,000 shares authorized; 5,866,161 and 6,294,494 shares issued and outstanding, respectively		23,313		19,764
Retained earnings		87,152		104,256
Accumulated other comprehensive income/(loss)		1,082		(471	)
Total shareholders’ equity		111,547		123,549
Total liabilities and shareholders’ equity	$	231,839	$	207,000

See accompanying Notes to Consolidated Financial Statements.

4

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In millions, except number of shares which are reflected in thousands)

	Common Stock and Additional Paid-In Capital						Retained			Accumulated Other Comprehensive			Total Shareholders’
	Shares			Amount			Earnings			Income/(Loss)			Equity
Balances as of September 24, 2011		6,504,937		$	13,331		$	62,841		$	443		$	76,615
Net income		0			0			41,733			0			41,733
Other comprehensive income/(loss)		0			0			0			56			56
Dividends and dividend equivalents declared		0			0			(2,523	)		0			(2,523	)
Share-based compensation		0			1,740			0			0			1,740
Common stock issued, net of shares withheld for employee taxes		69,521			200			(762	)		0			(562	)
Tax benefit from equity awards, including transfer pricing adjustments		0			1,151			0			0			1,151
Balances as of September 29, 2012		6,574,458			16,422			101,289			499			118,210
Net income		0			0			37,037			0			37,037
Other comprehensive income/(loss)		0			0			0			(970	)		(970	)
Dividends and dividend equivalents declared		0			0			(10,676	)		0			(10,676	)
Repurchase of common stock		(328,837	)		0			(22,950	)		0			(22,950	)
Share-based compensation		0			2,253			0			0			2,253
Common stock issued, net of shares withheld for employee taxes		48,873			(143	)		(444	)		0			(587	)
Tax benefit from equity awards, including transfer pricing adjustments		0			1,232			0			0			1,232
Balances as of September 28, 2013		6,294,494			19,764			104,256			(471	)		123,549
Net income		0			0			39,510			0			39,510
Other comprehensive income/(loss)		0			0			0			1,553			1,553
Dividends and dividend equivalents declared		0			0			(11,215	)		0			(11,215	)
Repurchase of common stock		(488,677	)		0			(45,000	)		0			(45,000	)
Share-based compensation		0			2,863			0			0			2,863
Common stock issued, net of shares withheld for employee taxes		60,344			(49	)		(399	)		0			(448	)
Tax benefit from equity awards, including transfer pricing adjustments		0			735			0			0			735
Balances as of September 27, 2014		5,866,161		$	23,313		$	87,152		$	1,082		$	111,547

See accompanying Notes to Consolidated Financial Statements.

5

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

	Years ended
	September 27, 2014			September 28, 2013			September 29, 2012
Cash and cash equivalents, beginning of the year	$	14,259		$	10,746		$	9,815
Operating activities:
Net income		39,510			37,037			41,733
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization		7,946			6,757			3,277
Share-based compensation expense		2,863			2,253			1,740
Deferred income tax expense		2,347			1,141			4,405
Changes in operating assets and liabilities:
Accounts receivable, net		(4,232	)		(2,172	)		(5,551	)
Inventories		(76	)		(973	)		(15	)
Vendor non-trade receivables		(2,220	)		223			(1,414	)
Other current and non-current assets		167			1,080			(3,162	)
Accounts payable		5,938			2,340			4,467
Deferred revenue		1,460			1,459			2,824
Other current and non-current liabilities		6,010			4,521			2,552
Cash generated by operating activities		59,713			53,666			50,856
Investing activities:
Purchases of marketable securities		(217,128	)		(148,489	)		(151,232	)
Proceeds from maturities of marketable securities		18,810			20,317			13,035
Proceeds from sales of marketable securities		189,301			104,130			99,770
Payments made in connection with business acquisitions, net		(3,765	)		(496	)		(350	)
Payments for acquisition of property, plant and equipment		(9,571	)		(8,165	)		(8,295	)
Payments for acquisition of intangible assets		(242	)		(911	)		(1,107	)
Other		16			(160	)		(48	)
Cash used in investing activities		(22,579	)		(33,774	)		(48,227	)
Financing activities:
Proceeds from issuance of common stock		730			530			665
Excess tax benefits from equity awards		739			701			1,351
Taxes paid related to net share settlement of equity awards		(1,158	)		(1,082	)		(1,226	)
Dividends and dividend equivalents paid		(11,126	)		(10,564	)		(2,488	)
Repurchase of common stock		(45,000	)		(22,860	)		0
Proceeds from issuance of long-term debt, net		11,960			16,896			0
Proceeds from issuance of commercial paper, net		6,306			0			0
Cash used in financing activities		(37,549	)		(16,379	)		(1,698	)
Increase/(decrease) in cash and cash equivalents		(415	)		3,513			931
Cash and cash equivalents, end of the year	$	13,844		$	14,259		$	10,746
Supplemental cash flow disclosure:
Cash paid for income taxes, net	$	10,026		$	9,128		$	7,682
Cash paid for interest	$	339		$	0		$	0

See accompanying Notes to Consolidated Financial Statements.

6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – 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, personal computers and portable digital music players, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications. 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 iPhone, iPad, Mac and iPod compatible products, including application software, and various accessories through its online and retail 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. 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.

The Company’s fiscal year is the 52 or 53-week period that ends on the last Saturday of September. The Company’s fiscal years 2014, 2013 and 2012 ended on September 27, 2014, September 28, 2013 and September 29, 2012, respectively. An additional week is included in the first fiscal quarter approximately every six years to realign fiscal quarters with calendar quarters. Fiscal years 2014 and 2013 spanned 52 weeks each. Fiscal year 2012 spanned 53 weeks, with a 14th week included in the first quarter of 2012. 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.

During the first quarter of 2014, the Company adopted updated accounting standards that (i) required disclosure of additional information about the amounts reclassified out of accumulated other comprehensive income (“AOCI”) by component and (ii) required gross and net disclosures about offsetting assets and liabilities. The adoption of these updated standards only impacted the disclosures in the Notes to Consolidated Financial Statements; accordingly, the adoption had no impact on the Company’s financial position or results of operations. The Company has provided these additional disclosures in Note 8, “Comprehensive Income” and Note 2, “Financial Instruments,” respectively.

In 2015, the Company changed its reportable operating segments, began allocating certain costs to its operating segments that were previously included in other corporate expenses and changed its categorization of product-level net sales reporting. The Company has reclassified the 2014, 2013 and 2012 amounts to conform to the 2015 presentation as further described in Note 11, “Segment Information and Geographic Data.”

Common Stock Split

On June 6, 2014, the Company effected a seven-for-one stock split to shareholders of record as of June 2, 2014. All share and per share information has been retroactively adjusted to reflect the stock split.

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. 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.

7

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 the iTunes 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 and iPod touch (“iOS devices”), Mac and Apple TV, the Company has indicated it may from time to time provide future unspecified software upgrades and features to the essential software bundled with each of these hardware products free of charge to customers. Essential software for iOS devices includes iOS and related applications and for Mac includes OS X and related applications. The Company also provides various non-software services to owners of qualifying versions of iOS devices and Mac. The Company has identified up to three deliverables regularly included in arrangements involving the sale of these devices. The first deliverable 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 the purchase of iOS devices, Mac 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 third deliverable is the non-software services to be provided to qualifying versions of iOS devices and Mac. 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 for each of these devices, which ranges from two to four years. 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.

8

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. The Company believes its customers would be reluctant to buy unspecified software upgrade rights for the essential software included with its qualifying hardware products. This view is primarily based on the fact that unspecified software upgrade rights do not obligate the Company to provide upgrades at a particular time or at all, and do not specify to customers which upgrades or features will be delivered. The Company also believes its customers would be unwilling to pay a significant amount for access to the non-software services because other companies offer similar services at little or no cost to users. Therefore, the Company has concluded that if it were to sell upgrade rights or access to the non-software services on a standalone basis, including those rights and services attached to iOS devices, Mac and Apple TV, the selling prices would be relatively low. Key factors considered by the Company in developing the ESPs for software upgrade rights include prices charged by the Company for similar offerings, market trends in the pricing of Apple-branded and third-party Mac and iOS compatible software, the nature of the upgrade rights (e.g., unspecified versus specified) and the relative ESP of the upgrade rights as compared to the total selling price of the product. The Company may also consider additional factors as appropriate, including the impact of other products and services provided to customers, the pricing of competitive alternatives if they exist, product-specific business objectives and the length of time a particular version of a device has been available. When relevant, the same factors are considered by the Company in developing ESPs for offerings such as the non-software services with additional consideration given to the estimated cost to provide such services.

In 2014, 2013 and 2012, the Company’s combined ESPs for the unspecified software upgrade rights and the rights to receive the non-software services included with its qualifying hardware devices have ranged from $5 to $40. As of September 27, 2014, the combined ESPs for Mac was $40 and for iPhone and iPad ranged from $15 to $25. Revenue allocated to such rights is deferred and recognized on a straight-line basis over the estimated period the rights are expected to be provided for each device, which ranges from two to four years.

Shipping Costs

For all periods presented, amounts billed to customers related to shipping and handling are classified as revenue, and the Company’s shipping and handling costs are included in cost of sales.

Warranty Costs

The Company generally provides for the estimated cost of hardware and software warranties at the time the related revenue is recognized. The Company assesses the adequacy of its pre-existing 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. Costs incurred subsequent to achievement of technological feasibility were not significant, and software development costs were expensed as incurred during 2014, 2013 and 2012.

Advertising Costs

Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Advertising expense was $1.2 billion, $1.1 billion and $1.0 billion for 2014, 2013 and 2012, respectively.

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 enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. Share-based compensation cost for restricted stock and restricted stock units (“RSUs”) is measured based on the closing fair market value of the Company’s common stock on the date of grant. The Company recognizes share-based compensation cost 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 metrics. The Company recognizes a benefit from share-based compensation in the Consolidated Statements of Shareholders’ Equity if an incremental 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.”

9

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 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 outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan, unvested restricted stock and unvested RSUs. 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 2014, 2013 and 2012 (net income in millions and shares in thousands):

	2014		2013		2012
Numerator:
Net income	$	39,510	$	37,037	$	41,733
Denominator:
Weighted-average shares outstanding		6,085,572		6,477,320		6,543,726
Effect of dilutive securities		37,091		44,314		73,757
Weighted-average diluted shares		6,122,663		6,521,634		6,617,483
Basic earnings per share	$	6.49	$	5.72	$	6.38
Diluted earnings per share	$	6.45	$	5.68	$	6.31

Potentially dilutive securities, the effect of which would have been antidilutive, were not significant for 2014, 2013 and 2012. The Company excluded these securities 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 designations 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. The Company classifies its marketable equity securities, including mutual funds, 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 the unrealized gains and losses, net of taxes, reported as a component of shareholders’ equity. The cost of securities sold is based upon the specific identification method.

10

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 income 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 current income. 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 income. 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 attributable to the hedged risk are recognized in earnings in the current period. For derivative instruments designated as a hedge of the foreign currency translation exposure of the net investment in a foreign operation, 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 component are recognized in current income. Derivatives that do not qualify as hedges are adjusted to fair value through current income.

Allowance for Doubtful Accounts

The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay.

Inventories

Inventories are stated at the lower of cost, computed using the first-in, first-out method, or market. If the cost of the inventories exceeds their market value, provisions are made currently for the difference between the cost and the market value.

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 two to five years for machinery and equipment, including product tooling and manufacturing process 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 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 $6.9 billion, $5.8 billion and $2.6 billion during 2014, 2013 and 2012, respectively.

Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets

The Company reviews property, plant and equipment, inventory component prepayments and certain identifiable intangibles, excluding goodwill, 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 assets exceeds its fair value. The Company did not record any significant impairments during 2014, 2013 and 2012.

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 whenever 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 2014, 2013 and 2012. The Company established reporting units based on its current reporting structure. For purposes of testing goodwill for impairment, goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. In 2014 and 2013, the Company’s goodwill was allocated to the Americas and Europe reportable operating segments.

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.

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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, which 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 in pricing 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. Gains and losses from these remeasurements were not significant during 2014, 2013 and 2012 and have been included in the Company’s results of operations.

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Note 2 – Financial Instruments

Cash, Cash Equivalents and Marketable Securities

The following tables show the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term marketable securities as of September 27, 2014 and September 28, 2013 (in millions):

	2014
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	10,232	$	0	$	0		$	10,232	$	10,232	$	0	$	0
Level 1:
Money market funds		1,546		0		0			1,546		1,546		0		0
Mutual funds		2,531		1		(132	)		2,400		0		2,400		0
Subtotal		4,077		1		(132	)		3,946		1,546		2,400		0
Level 2:
U.S. Treasury securities		23,140		15		(9	)		23,146		12		607		22,527
U.S. agency securities		7,373		3		(11	)		7,365		652		157		6,556
Non-U.S. government securities		6,925		69		(69	)		6,925		0		204		6,721
Certificates of deposit and time deposits		3,832		0		0			3,832		1,230		1,233		1,369
Commercial paper		475		0		0			475		166		309		0
Corporate securities		85,431		296		(241	)		85,486		6		6,298		79,182
Municipal securities		940		8		0			948		0		0		948
Mortgage- and asset-backed securities		12,907		26		(49	)		12,884		0		25		12,859
Subtotal		141,023		417		(379	)		141,061		2,066		8,833		130,162
Total	$	155,332	$	418	$	(511	)	$	155,239	$	13,844	$	11,233	$	130,162

	2013
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	8,705	$	0	$	0		$	8,705	$	8,705	$	0	$	0
Level 1:
Money market funds		1,793		0		0			1,793		1,793		0		0
Mutual funds		3,999		0		(197	)		3,802		0		3,802		0
Subtotal		5,792		0		(197	)		5,595		1,793		3,802		0
Level 2:
U.S. Treasury securities		27,642		24		(47	)		27,619		431		7,554		19,634
U.S. agency securities		16,878		12		(52	)		16,838		177		3,412		13,249
Non-U.S. government securities		5,545		35		(137	)		5,443		50		313		5,080
Certificates of deposit and time deposits		2,344		0		0			2,344		1,264		844		236
Commercial paper		2,998		0		0			2,998		1,835		1,163		0
Corporate securities		54,586		275		(252	)		54,609		0		8,077		46,532
Municipal securities		6,257		45		(22	)		6,280		4		1,114		5,162
Mortgage- and asset-backed securities		16,396		23		(89	)		16,330		0		8		16,322
Subtotal		132,646		414		(599	)		132,461		3,761		22,485		106,215
Total	$	147,143	$	414	$	(796	)	$	146,761	$	14,259	$	26,287	$	106,215

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 net realized gains or losses recognized by the Company, related to such sales, were not significant during 2014, 2013 and 2012. The maturities of the Company’s long-term marketable securities generally range from one to five years.

13

As of September 27, 2014 and September 28, 2013, gross unrealized losses related to individual securities that had been in a continuous loss position for 12 months or longer were not significant.

As of September 27, 2014, the Company considers the declines in market value of its marketable securities investment portfolio to be temporary in nature and does not consider any of its investments other-than-temporarily impaired. The Company typically invests in highly-rated securities, and its investment policy 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. During 2014, 2013 and 2012 the Company did not recognize any significant impairment charges.

Derivative Financial Instruments

The Company uses derivatives to partially offset its business exposure to foreign currency and interest rate risk. The Company may enter into forward contracts, option contracts, swaps, or other derivative instruments to offset some of the 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 hedge a portion of forecasted foreign currency revenue. The Company’s 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 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.

The Company may also enter into foreign currency forward contracts and option contracts to partially offset the foreign currency exchange gains and losses generated by the re-measurement 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 long-term debt or investments.

The Company records all derivatives in the Consolidated Balance Sheets at fair value. The Company’s accounting treatment for these instruments is based on the hedge designation. The effective portions of cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings. 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. The effective portions of net investment hedges are recorded in other comprehensive income (“OCI”) as a part of the cumulative translation adjustment. The ineffective portions of cash flow hedges and net investment hedges are recorded in other income and expense. 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.

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 as a component of other income/(expense), net in the same period as the related income or expense is recognized. The Company’s foreign currency and interest rate transactions hedged with cash flow hedges as of September 27, 2014 are expected to occur within 12 months and four years, respectively.

14

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 immediately into other income and expense. Any subsequent changes in fair value of such derivative instruments are reflected in other income and expense unless they are re-designated as hedges of other transactions. The Company did not recognize any significant net gains or losses related to the loss of hedge designation on discontinued cash flow hedges during 2014, 2013 and 2012.

The gain/loss recognized in other income and expense for foreign currency forward and option contracts not designated as hedging instruments was not significant during 2014, 2013 and 2012. These amounts represent the net gain or loss on the derivative contracts and do not include changes in the related exposures, which generally offset a portion of the gain or loss on the derivative contracts.

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 27, 2014 and September 28, 2013 (in millions):

	2014				2013
	Notional Amount		Credit Risk Amounts		Notional Amount		Credit Risk Amounts
Instruments designated as accounting hedges:
Foreign exchange contracts	$	42,945	$	1,333	$	35,013	$	159
Interest rate contracts	$	12,000	$	89	$	3,000	$	44
Instruments not designated as accounting hedges:
Foreign exchange contracts	$	38,510	$	222	$	16,131	$	25

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 gross exposure on these transactions may be further mitigated by collateral received from certain counterparties. 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. As of September 27, 2014, the Company received $2.1 billion of cash collateral related to the derivative instruments under its collateral security arrangements, which were recorded as accrued expenses in the Consolidated Balance Sheet. As of September 28, 2013, the Company posted cash collateral related to the derivative instruments under its collateral security arrangements of $164 million, which were recorded as other current assets in the Consolidated Balance Sheet. The Company did not have any derivative instruments with credit-risk related contingent features that would require it to post additional collateral as of September 27, 2014 or September 28, 2013.

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 27, 2014 and September 28, 2013, 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 $1.6 billion and $333 million, respectively, resulting in net derivative liabilities of $549 million and $57 million, respectively.

15

The following tables show the Company’s derivative instruments at gross fair value as reflected in the Consolidated Balance Sheets as of September 27, 2014 and September 28, 2013 (in millions):

	2014
	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	$	1,332	$	222	$	1,554
Interest rate contracts	$	81	$	0	$	81
Derivative liabilities (2):
Foreign exchange contracts	$	41	$	40	$	81

	2013
	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	$	145	$	25	$	170
Interest rate contracts	$	44	$	0	$	44
Derivative liabilities (2):
Foreign exchange contracts	$	389	$	46	$	435

⁽¹⁾ The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other 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 in the Consolidated Balance Sheets.

The following tables show the pre-tax effect of the Company’s derivative instruments designated as cash flow, net investment and fair value hedges on OCI and the Consolidated Statements of Operations for 2014, 2013 and 2012 (in millions):

	Gains/(Losses) Recognized in OCI - Effective  Portion								Gains/(Losses) Reclassified from AOCI into  Net Income - Effective Portion
	2014			2013		2012			2014			2013			2012
Cash flow hedges:
Foreign exchange contracts	$	1,750		$	891	$	(175	)	$	(154	)	$	676		$	607
Interest rate contracts		(15	)		12		0			(16	)		(6	)		0
Total	$	1,735		$	903	$	(175	)	$	(170	)	$	670		$	607
Net investment hedges:
Foreign exchange contracts	$	53		$	143	$	(5	)	$	0		$	0		$	0
	Gains/(Losses) On Derivative Instruments								Gains/(Losses) Related to Hedged Items
	2014			2013		2012			2014			2013			2012
Fair value hedges:
Interest rate contracts	$	39		$	0	$	0		$	(39	)	$	0		$	0

The Company recognized a charge of $120 million, $301 million and $658 million in other income and expense during 2014, 2013 and 2012, respectively, for the ineffective portions of and amounts excluded from the effectiveness testing of cash flow hedges. The ineffective portions of and amounts excluded from the effectiveness testing of net investment and fair value hedges recognized in other income and expense were not significant during 2014, 2013 and 2012.

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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 27, 2014, the Company had two customers that represented 10% or more of total trade receivables, one of which accounted for 16% and the other 13%. As of September 28, 2013, the Company had two customers that represented 10% or more of total trade receivables, one of which accounted for 13% and the other 10%. The Company’s cellular network carriers accounted for 72% and 68% of trade receivables as of September 27, 2014 and September 28, 2013, respectively. The additions and write-offs to the Company’s allowance for doubtful accounts during 2014, 2013 and 2012 were not significant.

Vendor Non-Trade Receivables

The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these manufacturing vendors who manufacture sub-assemblies or assemble final products for the Company. The Company purchases these components directly from suppliers. Three of the Company’s vendors accounted for 51%, 16% and 14% of total vendor non-trade receivables as of September 27, 2014 and three of the Company’s vendors accounted for 47%, 21% and 15% of total vendor non-trade receivables as of September 28, 2013. The Company does not reflect the sale of these components in net sales and does not recognize any profits on these sales until the related products are sold by the Company, at which time any profit is recognized as a reduction of cost of sales.

Note 3 – Consolidated Financial Statement Details

The following tables show the Company’s consolidated balance sheet details as of September 27, 2014 and September 28, 2013 (in millions):

Inventories

	2014		2013
Components	$	471	$	683
Finished goods		1,640		1,081
Total inventories	$	2,111	$	1,764

Property, Plant and Equipment

	2014			2013
Land and buildings	$	4,863		$	3,309
Machinery, equipment and internal-use software		29,639			21,242
Leasehold improvements		4,513			3,968
Gross property, plant and equipment		39,015			28,519
Accumulated depreciation and amortization		(18,391	)		(11,922	)
Net property, plant and equipment	$	20,624		$	16,597

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Accrued Expenses

	2014		2013
Accrued warranty and related costs	$	4,159	$	2,967
Accrued marketing and selling expenses		2,321		1,291
Accrued taxes		1,209		1,200
Accrued compensation and employee benefits		1,209		959
Deferred margin on component sales		1,057		1,262
Other current liabilities		8,498		6,177
Total accrued expenses	$	18,453	$	13,856

Non-Current Liabilities

	2014		2013
Deferred tax liabilities	$	20,259	$	16,489
Other non-current liabilities		4,567		3,719
Total other non-current liabilities	$	24,826	$	20,208

Other Income and Expense

The following table shows the detail of other income and expense for 2014, 2013 and 2012 (in millions):

	2014			2013			2012
Interest and dividend income	$	1,795		$	1,616		$	1,088
Interest expense		(384	)		(136	)		0
Other expense, net		(431	)		(324	)		(566	)
Total other income/(expense), net	$	980		$	1,156		$	522

Note 4 – Goodwill and Other Intangible Assets

On July 31, 2014, the Company completed the acquisitions of Beats Music, LLC, which offers a subscription streaming music service, and Beats Electronics, LLC, which makes Beats^® headphones, speakers and audio software (collectively, “Beats”). The total purchase price consideration for these acquisitions was $2.6 billion, which consisted primarily of cash, of which $2.2 billion was allocated to goodwill, $636 million to acquired intangible assets and $258 million to net liabilities assumed. Concurrent with the close of the acquisition, the Company repaid $295 million of existing Beats outstanding debt to third-party creditors. In conjunction with the Beats acquisitions, the Company issued approximately 5.1 million shares of its common stock to certain former equity holders of Beats. The restricted stock was valued at approximately $485 million based on the Company’s common stock on the acquisition date. The majority of these shares, valued at approximately $417 million, will vest over time based on continued employment with Apple.

The Company also completed various other business acquisitions during 2014 for an aggregate cash consideration, net of cash acquired, of $957 million, of which $828 million was allocated to goodwill, $257 million to acquired intangible assets and $128 million to net liabilities assumed.

The Company completed various business acquisitions during 2013 for an aggregate cash consideration, net of cash acquired, of $496 million, of which $419 million was allocated to goodwill, $179 million to acquired intangible assets and $102 million to net liabilities assumed.

The Company’s gross carrying amount of goodwill was $4.6 billion and $1.6 billion as of September 27, 2014 and September 28, 2013, respectively. The Company did not have any goodwill impairments during 2014, 2013 or 2012.

18

The following table summarizes the components of gross and net intangible asset balances as of September 27, 2014 and September 28, 2013 (in millions):

	2014							2013
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Definite-lived and amortizable acquired intangible assets	$	7,127	$	(3,085	)	$	4,042	$	6,081	$	(2,002	)	$	4,079
Indefinite-lived and non-amortizable acquired intangible assets		100		0			100		100		0			100
Total acquired intangible assets	$	7,227	$	(3,085	)	$	4,142	$	6,181	$	(2,002	)	$	4,179

Amortization expense related to acquired intangible assets was $1.1 billion, $960 million and $605 million in 2014, 2013 and 2012, respectively. As of September 27, 2014, the remaining weighted-average amortization period for acquired intangible assets is 3.8 years. The expected annual amortization expense related to acquired intangible assets as of September 27, 2014, is as follows (in millions):

2015	$	1,204
2016		1,083
2017		825
2018		592
2019		175
Thereafter		163
Total	$	4,042

Note 5 – Income Taxes

The provision for income taxes for 2014, 2013 and 2012, consisted of the following (in millions):

	2014			2013			2012
Federal:
Current	$	8,624		$	9,334		$	7,240
Deferred		3,183			1,878			5,018
		11,807			11,212			12,258
State:
Current		855			1,084			1,182
Deferred		(178	)		(311	)		(123	)
		677			773			1,059
Foreign:
Current		2,147			1,559			1,203
Deferred		(658	)		(426	)		(490	)
		1,489			1,133			713
Provision for income taxes	$	13,973		$	13,118		$	14,030

The foreign provision for income taxes is based on foreign pre-tax earnings of $33.6 billion, $30.5 billion and $36.8 billion in 2014, 2013 and 2012, 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 27, 2014, U.S. income taxes have not been provided on a cumulative total of $69.7 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be approximately $23.3 billion.

19

As of September 27, 2014 and September 28, 2013, $137.1 billion and $111.3 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 2014, 2013 and 2012) to income before provision for income taxes for 2014, 2013 and 2012, is as follows (dollars in millions):

	2014			2013			2012
Computed expected tax	$	18,719		$	17,554		$	19,517
State taxes, net of federal effect		469			508			677
Indefinitely invested earnings of foreign subsidiaries		(4,744	)		(4,614	)		(5,895	)
Research and development credit, net		(88	)		(287	)		(103	)
Domestic production activities deduction		(495	)		(308	)		(328	)
Other		112			265			162
Provision for income taxes	$	13,973		$	13,118		$	14,030
Effective tax rate		26.1%			26.2%			25.2%

The Company’s income taxes payable have been reduced by the tax benefits from employee stock plan awards. For stock options, the Company receives an income tax benefit calculated as the tax effect of the difference between the fair market value of the stock issued at the time of the exercise and the exercise price. 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 $706 million, $643 million and $1.4 billion in 2014, 2013 and 2012, respectively, which were reflected as increases to common stock.

As of September 27, 2014 and September 28, 2013, the significant components of the Company’s deferred tax assets and liabilities were (in millions):

	2014			2013
Deferred tax assets:
Accrued liabilities and other reserves	$	2,761		$	1,892
Deferred revenue		1,787			1,475
Basis of capital assets and investments		898			1,020
Share-based compensation		454			458
Other		644			1,029
Total deferred tax assets		6,544			5,874
Less valuation allowance		0			0
Deferred tax assets, net of valuation allowance		6,544			5,874
Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries		21,544			18,044
Other		120			112
Total deferred tax liabilities		21,664			18,156
Net deferred tax liabilities	$	(15,120	)	$	(12,282	)

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.

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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 27, 2014, the total amount of gross unrecognized tax benefits was $4.0 billion, of which $1.4 billion, if recognized, would affect the Company’s effective tax rate. As of September 28, 2013, the total amount of gross unrecognized tax benefits was $2.7 billion, of which $1.4 billion, if recognized, would affect the Company’s effective tax rate.

The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2014, 2013 and 2012, is as follows (in millions):

	2014			2013			2012
Beginning Balance	$	2,714		$	2,062		$	1,375
Increases related to tax positions taken during a prior year		1,295			745			340
Decreases related to tax positions taken during a prior year		(280	)		(118	)		(107	)
Increases related to tax positions taken during the current year		882			626			467
Decreases related to settlements with taxing authorities		(574	)		(592	)		(3	)
Decreases related to expiration of statute of limitations		(4	)		(9	)		(10	)
Ending Balance	$	4,033		$	2,714		$	2,062

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.

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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

Long-Term Debt

In the third quarter of 2014 and 2013, the Company issued $12.0 billion and $17.0 billion of long-term debt, respectively. The debt issuances included floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $29.0 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, quarterly for the floating-rate notes and semi-annually for the fixed-rate notes.

The following table provides a summary of the Company’s long-term debt as of September 27, 2014 and September 28, 2013:

	2014					2013
	Amount (in millions)			Effective Interest Rate		Amount (in millions)			Effective Interest Rate
Floating-rate notes due 2016	$	1,000			0.51%	$	1,000			0.51%
Floating-rate notes due 2017		1,000			0.31%		0			0
Floating-rate notes due 2018		2,000			1.10%		2,000			1.10%
Floating-rate notes due 2019		1,000			0.54%		0			0
Fixed-rate 0.45% notes due 2016		1,500			0.51%		1,500			0.51%
Fixed-rate 1.05% notes due 2017		1,500			0.30%		0			0
Fixed-rate 1.00% notes due 2018		4,000			1.08%		4,000			1.08%
Fixed-rate 2.10% notes due 2019		2,000			0.53%		0			0
Fixed-rate 2.85% notes due 2021		3,000			0.79%		0			0
Fixed-rate 2.40% notes due 2023		5,500			2.44%		5,500			2.44%
Fixed-rate 3.45% notes due 2024		2,500			0.90%		0			0
Fixed-rate 3.85% notes due 2043		3,000			3.91%		3,000			3.91%
Fixed-rate 4.45% notes due 2044		1,000			4.48%		0			0
Total borrowings		29,000					17,000
Unamortized discount		(52	)				(40	)
Hedge accounting fair value adjustments		39					0
Total long-term debt	$	28,987				$	16,960

The Company has entered, and may enter in the future, into interest rate swaps to manage interest rate risk on the Notes. Such swaps allow the Company to effectively convert fixed-rate payments into floating-rate payments or floating-rate payments into fixed-rate payments. In the third quarter of 2014, the Company entered into interest rate swaps with an aggregate notional amount of $9.0 billion, which effectively converted the fixed-rate notes due 2017, 2019, 2021 and 2024 into floating-rate notes. In the third quarter of 2013, the Company entered into interest rate swaps with an aggregate notional amount of $3.0 billion, which effectively converted the floating-rate notes due 2016 and 2018 into fixed-rate notes.

The effective rates for the Notes include the interest on the Notes, amortization of the discount and, if applicable, adjustments related to hedging. The Company recognized $381 million and $136 million of interest expense on its long-term debt for the years ended September 27, 2014 and September 28, 2013, respectively. The Company did not have any long-term debt in 2012.

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Future principal payments for the Company’s Notes as of September 27, 2014, are as follows (in millions):

2015	$	0
2016		2,500
2017		2,500
2018		6,000
2019		3,000
Thereafter		15,000
Total	$	29,000

As of September 27, 2014 and September 28, 2013, the fair value of the Company’s Notes, based on Level 2 inputs, was $28.5 billion and $15.9 billion, respectively.

Note 7 – Shareholders’ Equity

Preferred and Common Stock

During the second quarter of 2014, the Company’s shareholders approved amendments (the “Amendments”) to the Company’s Restated Articles of Incorporation. The Amendments included the elimination of the Board of Directors’ authority to issue preferred stock and established a par value for the Company’s common stock of $0.00001 per share.

Dividends

The Company declared and paid cash dividends per common share during the periods presented as follows:

	Dividends Per Share		Amount (in millions)
2014:
Fourth quarter	$	0.47	$	2,807
Third quarter		0.47		2,830
Second quarter		0.44		2,655
First quarter		0.44		2,739
Total	$	1.82	$	11,031
2013:
Fourth quarter	$	0.44	$	2,763
Third quarter		0.44		2,789
Second quarter		0.38		2,490
First quarter		0.38		2,486
Total	$	1.64	$	10,528

The Company paid cash dividends of $0.38 per share, totaling $2.5 billion, during the fourth quarter of 2012. Future dividends are subject to declaration by the Board of Directors.

Share Repurchase Program

In 2012, the Company’s Board of Directors authorized a program to repurchase up to $10 billion of the Company’s common stock beginning in 2013. The Company’s Board of Directors increased the share repurchase authorization to $60 billion in April 2013 and to $90 billion in April 2014. As of September 27, 2014, $67.9 billion of the $90 billion had been utilized. 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”).

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The Company has entered into four accelerated share repurchase arrangements (“ASRs”) with financial institutions beginning in August 2012. 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, will be 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 Sheet 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 presents the Company’s ASRs:

	Purchase Period End Date		Number of Shares (in thousands)		Average Repurchase Price Per Share		ASR Amount (in millions)
August 2014 ASR		(1)		59,924 (1)		(1)	$	9,000
January 2014 ASR		(1)		134,247 (1)		(1)	$	12,000
April 2013 ASR		March 2014		172,548 (2)	$	69.55	$	12,000
August 2012 ASR		April 2013		28,544	$	68.31	$	1,950

⁽¹⁾ “Number of Shares” represents those shares delivered in advance of settlement and does not represent the final number of shares to be delivered under the ASRs. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, will be determined at the end of the applicable purchase period based on the volume weighted-average price of the Company’s common stock during that period. The August 2014 ASR and January 2014 ASR purchase periods will end in or before February 2015 and December 2014, respectively.

⁽²⁾  Includes 8.0 million shares that were delivered and retired at the end of the purchase period, which concluded in the second quarter of 2014.

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)
2014:
Fourth quarter		81,255	$	98.46	$	8,000
Third quarter		58,661	$	85.23		5,000
Second quarter		79,749	$	75.24		6,000
First quarter		66,847	$	74.79		5,000
Total		286,512			$	24,000
2013:
Fourth quarter		73,064	$	68.43	$	5,000
Third quarter		62,676	$	63.82		4,000
Second quarter		0	$	0		0
First quarter		0	$	0		0
Total		135,740			$	9,000

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Note 8 – 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 gross amounts reclassified from AOCI into the Consolidated Statements of Operations and the associated financial statement line item for 2014 (in millions):

Comprehensive Income Components	Financial Statement Line Item	2014
Unrecognized gains/losses on derivative instruments:
Foreign exchange contracts	Revenue	$	449
	Cost of sales		(295	)
	Other income/expense, net		15
Interest rate contracts	Other income/expense, net		16
			185
Unrealized gains/losses on marketable securities	Other income/expense, net		(205	)
Total amounts reclassified from AOCI		$	(20	)

The following table shows the changes in AOCI by component for 2014 (in millions):

	Cumulative Foreign Currency Translation			Unrecognized Gains/Losses on Derivative Instruments			Unrealized Gains /Losses on Marketable Securities			Total
Balance at September 28, 2013	$	(105	)	$	(175	)	$	(191	)	$	(471	)
Other comprehensive income/(loss) before reclassifications		(187	)		1,687			438			1,938
Amounts reclassified from AOCI		0			185			(205	)		(20	)
Tax effect		50			(333	)		(82	)		(365	)
Other comprehensive income/(loss)		(137	)		1,539			151			1,553
Balance at September 27, 2014	$	(242	)	$	1,364		$	(40	)	$	1,082

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Note 9 – Benefit Plans

Stock 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 cancelled 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 cancelled 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 cancelled 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 27, 2014, approximately 492.6 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 27, 2014, approximately 1.2 million shares were reserved for future issuance under the Director Plan.

Rule 10b5-1 Trading Plans

During the fourth quarter of 2014, Section 16 officers Timothy D. Cook, Luca Maestri, Daniel Riccio, Philip W. Schiller, D. Bruce Sewell and Jeffrey E. Williams 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.

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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 27, 2014, approximately 7.6 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 ($17,500 for calendar year 2014). 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. The Company’s matching contributions to the 401(k) Plan were $163 million, $135 million and $114 million in 2014, 2013 and 2012, respectively.

Restricted Stock Units

A summary of the Company’s RSU activity and related information for 2014, 2013 and 2012, is as follows:

	Number of RSUs (in thousands)			Weighted-Average Grant  Date Fair Value Per Share		Aggregate Intrinsic Value (in millions)
Balance at September 24, 2011		101,122		$	33.07
RSUs granted		54,597		$	61.62
RSUs vested		(44,137	)	$	29.32
RSUs cancelled		(6,545	)	$	36.57
Balance at September 29, 2012		105,037		$	49.27
RSUs granted		39,415		$	78.23
RSUs vested		(42,291	)	$	45.96
RSUs cancelled		(8,877	)	$	57.31
Balance at September 28, 2013		93,284		$	62.24
RSUs granted		59,269		$	74.54
RSUs vested		(43,111	)	$	57.29
RSUs cancelled		(5,620	)	$	68.47
Balance at September 27, 2014		103,822		$	70.98	$	10,460

The fair value as of the respective vesting dates of RSUs was $3.4 billion, $3.1 billion and $3.3 billion for 2014, 2013 and 2012, respectively. The majority of RSUs that vested in 2014, 2013 and 2012 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 15.6 million, 15.5 million and 16.1 million for 2014, 2013 and 2012, 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 $1.2 billion, $1.1 billion and $1.2 billion in 2014, 2013 and 2012, 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 and retired 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.

Stock Options

The Company had 6.6 million stock options outstanding as of September 27, 2014, with a weighted-average exercise price per share of $21.99 and weighted-average remaining contractual term of 1.4 years, substantially all of which are exercisable. The aggregate intrinsic value of the stock options outstanding as of September 27, 2014 was $520 million, which represents the value of the Company’s closing stock price on the last trading day of the period in excess of the weighted-average exercise price multiplied by the number of options outstanding. Total intrinsic value of options at time of exercise was $1.5 billion, $1.0 billion and $2.3 billion for 2014, 2013 and 2012, respectively.

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Share-based Compensation

The following table shows a summary of the share-based compensation expense included in the Consolidated Statements of Operations for 2014, 2013 and 2012 (in millions):

	2014		2013		2012
Cost of sales	$	450	$	350	$	265
Research and development		1,216		917		668
Selling, general and administrative		1,197		986		807
Total share-based compensation expense	$	2,863	$	2,253	$	1,740

The income tax benefit related to share-based compensation expense was $1.0 billion, $816 million and $567 million for 2014, 2013 and 2012, respectively. As of September 27, 2014, the total unrecognized compensation cost related to outstanding stock options, RSUs and restricted stock was $6.3 billion, which the Company expects to recognize over a weighted-average period of 2.9 years.

Note 10 – Commitments and Contingencies

Accrued Warranty and Indemnification

The Company offers a basic limited parts and labor warranty on its hardware products. The basic warranty period for hardware products is typically one year from the date of purchase by the end-user. The Company also offers a 90-day basic warranty for its service parts used to repair the Company’s hardware products. The Company provides currently for the estimated cost that may be incurred under its basic limited product warranties at the time related revenue is recognized. Factors considered in determining appropriate accruals for product warranty obligations include the size of the installed base of products subject to warranty protection, historical and projected warranty claim rates, historical and projected cost-per-claim and knowledge of specific product failures that are outside of the Company’s typical experience. The Company assesses the adequacy of its pre-existing warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in future estimates.

The following table shows changes in the Company’s accrued warranties and related costs for 2014, 2013 and 2012 (in millions):

	2014			2013			2012
Beginning accrued warranty and related costs	$	2,967		$	1,638		$	1,240
Cost of warranty claims		(3,760	)		(3,703	)		(1,786	)
Accruals for product warranty		4,952			5,032			2,184
Ending accrued warranty and related costs	$	4,159		$	2,967		$	1,638

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 the Company sometimes include indemnification provisions under which the Company could be subject to costs and/or damages in the event of an infringement claim against the Company or an indemnified third-party. However, the Company has not been required to make any significant payments resulting from such an infringement claim asserted against it or 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 with respect to indemnification of end-users of its operating system or application software for infringement of third-party intellectual property rights. The Company did not record a liability for infringement costs related to indemnification as of September 27, 2014 or September 28, 2013.

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 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. However, the Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations, and payments made under these agreements historically have not been material.

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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 number of 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 concentrated 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. 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 purchase commitments 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. The major facility leases are typically for terms not exceeding 10 years and generally contain multi-year renewal options. 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 27, 2014, the Company’s total future minimum lease payments under noncancelable operating leases were $5.0 billion, of which $3.6 billion related to leases for retail space.

Rent expense under all operating leases, including both cancelable and noncancelable leases, was $717 million, $645 million and $488 million in 2014, 2013 and 2012, respectively. Future minimum lease payments under noncancelable operating leases having remaining terms in excess of one year as of September 27, 2014, are as follows (in millions):

2015	$	662
2016		676
2017		645
2018		593
2019		534
Thereafter		1,877
Total	$	4,987

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Other Commitments

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 27, 2014, the Company had outstanding off-balance sheet third-party manufacturing commitments and component purchase commitments of $24.5 billion.

In addition to the off-balance sheet commitments mentioned above, the Company had outstanding obligations of $3.4 billion as of September 27, 2014, which consisted mainly of commitments to acquire capital assets, including product tooling and manufacturing process equipment, and commitments related to advertising, R&D, Internet and telecommunications services and other obligations.

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. 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. 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. Because the award is now subject to appeal, the Company has not recognized the award in its results of operations.

VirnetX, Inc. v. Apple Inc. et al.

On August 11, 2010, VirnetX, Inc. filed an action against the Company alleging that certain of its products infringed on four patents relating to network communications technology. On November 6, 2012, a jury returned a verdict against the Company, and awarded damages of $368 million. On September 16, 2014, the Court of Appeals for the Federal Circuit affirmed the District Court’s decision in part, reversed in part, and vacated the damages award. The case has been remanded for further proceedings.

30

Note 11 – 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. As the Company continues to expand its business, management believes collaboration across its online, retail and indirect channels is integral to better serving its customers and optimizing its financial results. In 2015, management began reporting business performance and making decisions primarily on a geographic basis, including the results of its retail stores in each respective geographic segment. Accordingly, to align with the way the business is currently managed, the Company’s reportable operating segments now consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. Retail is no longer reported as a separate reportable operating segment. The Americas segment includes both North and South America. The Europe segment includes European countries, as well as India, the Middle East and Africa. The Greater China segment includes China, Hong Kong and Taiwan. The Rest of Asia Pacific segment includes Australia and Asian countries, other than those countries included in the Company’s other operating segments. Each operating segment provides similar hardware and software products and similar services. 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 operating 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. In 2015, the Company also began allocating certain costs to its operating segments that were previously included in other corporate expenses, including certain share-based compensation costs. 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 operating segments. Costs excluded from segment operating income include various corporate expenses such as R&D, corporate marketing expenses, certain share-based compensation expense, 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 operating segment for 2014, 2013 and 2012 (in millions):

	2014		2013		2012
Americas:
Net sales	$	80,095	$	77,093	$	71,060
Operating income	$	26,158	$	24,829	$	26,244
Europe:
Net sales	$	44,285	$	40,980	$	39,326
Operating income	$	14,434	$	12,767	$	15,129
Greater China:
Net sales	$	31,853	$	27,016	$	23,756
Operating income	$	11,039	$	8,499	$	9,978
Japan:
Net sales	$	15,314	$	13,782	$	10,913
Operating income	$	6,904	$	6,668	$	5,826
Rest of Asia Pacific:
Net sales	$	11,248	$	12,039	$	11,453
Operating income	$	3,674	$	3,762	$	4,321

31

A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2014, 2013 and 2012, is as follows (in millions):

	2014			2013			2012
Segment operating income	$	62,209		$	56,525		$	61,498
Research and development expense		(6,041	)		(4,475	)		(3,381	)
Other corporate expenses, net		(3,665	)		(3,051	)		(2,876	)
Total operating income	$	52,503		$	48,999		$	55,241

The U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2014, 2013 and 2012. There was no single customer that accounted for more than 10% of net sales in 2014, 2013 or 2012. Net sales for 2014, 2013 and 2012 and long-lived assets as of September 27, 2014 and September 28, 2013 are as follows (in millions):

	2014		2013		2012
Net sales:
U.S.	$	68,909	$	66,197	$	60,949
China (1)		30,638		25,946		22,797
Other countries		83,248		78,767		72,762
Total net sales	$	182,795	$	170,910	$	156,508
	2014		2013
Long-lived assets:
U.S.	$	9,108	$	7,399
China (1)		9,477		7,403
Other countries		2,917		2,786
Total long-lived assets	$	21,502	$	17,588

⁽¹⁾  China includes Hong Kong. Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure.

In 2015, the Company changed its categorization of product-level net sales reporting to better reflect its evolving products and services. Net sales by product for 2014, 2013 and 2012 have been reclassified to conform to the Company’s 2015 presentation and are as follows (in millions):

	2014		2013		2012
Net Sales by Product:
iPhone (1)	$	101,991	$	91,279	$	78,692
iPad (1)		30,283		31,980		30,945
Mac (1)		24,079		21,483		23,221
Services (2)		18,063		16,051		12,890
Other Products (1)(3)		8,379		10,117		10,760
Total net sales	$	182,795	$	170,910	$	156,508

⁽¹⁾  Includes deferrals and amortization of related non-software services and software upgrade rights.

⁽²⁾  Includes revenue from the iTunes Store, App Store, Mac App Store and iBooks Store (collectively “iTunes”), AppleCare, licensing and other services.

⁽³⁾  Includes sales of iPod, Apple TV, Beats Electronics and Apple-branded and third-party accessories.

32

Note 12 – 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 2014 and 2013 (in millions, except per share amounts):

	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
2014:
Net sales	$	42,123	$	37,432	$	45,646	$	57,594
Gross margin	$	16,009	$	14,735	$	17,947	$	21,846
Net income	$	8,467	$	7,748	$	10,223	$	13,072
Earnings per share (1):
Basic	$	1.43	$	1.29	$	1.67	$	2.08
Diluted	$	1.42	$	1.28	$	1.66	$	2.07

	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
2013:
Net sales	$	37,472	$	35,323	$	43,603	$	54,512
Gross margin	$	13,871	$	13,024	$	16,349	$	21,060
Net income	$	7,512	$	6,900	$	9,547	$	13,078
Earnings per share (1):
Basic	$	1.19	$	1.07	$	1.45	$	1.99
Diluted	$	1.18	$	1.07	$	1.44	$	1.97

⁽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.

33

Report of Ernst & Young LLP, Independent 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 27, 2014 and September 28, 2013, and the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended September 27, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Apple Inc. at September 27, 2014 and September 28, 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended September 27, 2014, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Apple Inc.’s internal control over financial reporting as of September 27, 2014, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) and our report dated October 27, 2014 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

San Jose, California

October 27, 2014,

except for Note 11 – Segment Information and Geographic Data, as to which the date is January 28, 2015

34

XML

Derivative Instruments at Gross Fair Value as Reflected in Consolidated Balance Sheets (Detail) (Level 2, USD $) In Millions, unless otherwise specified	Sep. 27, 2014		Sep. 28, 2013
Foreign exchange contracts | Other Current Assets
Derivative assets:
Fair Value of Derivative Assets	$ 1,554	[1]	$ 170	[1]
Foreign exchange contracts | Accrued expenses
Derivative liabilities:
Fair Value of Derivative Liabilities	81	[2]	435	[2]
Interest rate contracts | Other Current Assets
Derivative assets:
Fair Value of Derivative Assets	81	[1]	44	[1]
Derivatives Designated as Hedging Instruments | Foreign exchange contracts | Other Current Assets
Derivative assets:
Fair Value of Derivative Assets	1,332	[1]	145	[1]
Derivatives Designated as Hedging Instruments | Foreign exchange contracts | Accrued expenses
Derivative liabilities:
Fair Value of Derivative Liabilities	41	[2]	389	[2]
Derivatives Designated as Hedging Instruments | Interest rate contracts | Other Current Assets
Derivative assets:
Fair Value of Derivative Assets	81	[1]	44	[1]
Not Designated as Hedging Instrument | Foreign exchange contracts | Other Current Assets
Derivative assets:
Fair Value of Derivative Assets	222	[1]	25	[1]
Not Designated as Hedging Instrument | Foreign exchange contracts | Accrued expenses
Derivative liabilities:
Fair Value of Derivative Liabilities	40	[2]	46	[2]
Not Designated as Hedging Instrument | Interest rate contracts | Other Current Assets
Derivative assets:
Fair Value of Derivative Assets	$ 0	[1]	$ 0	[1]

[1] The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other 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 in the Consolidated Balance Sheets.

XML

Debt - Additional Information (Detail) (USD $)	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Jun. 28, 2014	Jun. 29, 2013
Debt Instrument [Line Items]
Commercial paper	$ 6,308,000,000	$ 0
Commercial paper, weighted-average interest rate	0.12%
Debt instrument aggregate principal amount	29,000,000,000	17,000,000,000
Interest expense	381,000,000	136,000,000
2014 Debt Issuance
Debt Instrument [Line Items]
Debt instrument aggregate principal amount			12,000,000,000
2013 Debt Issuance
Debt Instrument [Line Items]
Debt instrument aggregate principal amount				17,000,000,000
Interest Rate Swap
Debt Instrument [Line Items]
Notional Amount			9,000,000,000	3,000,000,000
Maximum
Debt Instrument [Line Items]
Commercial paper, maturity period	9 months
Level 2
Debt Instrument [Line Items]
Debt instrument fair value	$ 28,500,000,000	$ 15,900,000,000

XML

Expected Annual Amortization Expense Related to Acquired Intangible Assets (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2015	$ 1,204
2016	1,083
2017	825
2018	592
2019	175
Thereafter	163
Definite-lived and amortizable acquired intangible assets, Net Carrying Amount	$ 4,042	$ 4,079

XML

Changes in Accrued Warranties and Related Costs (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning accrued warranty and related costs	$ 2,967	$ 1,638	$ 1,240
Cost of warranty claims	(3,760)	(3,703)	(1,786)
Accruals for product warranty	4,952	5,032	2,184
Ending accrued warranty and related costs	$ 4,159	$ 2,967	$ 1,638

XML

Summary of Cash Flows Associated With Issuance and Maturities of Commercial Paper (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014
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

XML

Summary of Quarterly Financial Information (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended																12 Months Ended
	Sep. 27, 2014		Jun. 28, 2014		Mar. 29, 2014		Dec. 28, 2013		Sep. 28, 2013		Jun. 29, 2013		Mar. 30, 2013		Dec. 29, 2012		Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Selected Quarterly Financial Information [Abstract]
Net sales	$ 42,123		$ 37,432		$ 45,646		$ 57,594		$ 37,472		$ 35,323		$ 43,603		$ 54,512		$ 182,795	$ 170,910	$ 156,508
Gross margin	16,009		14,735		17,947		21,846		13,871		13,024		16,349		21,060		70,537	64,304	68,662
Net income	$ 8,467		$ 7,748		$ 10,223		$ 13,072		$ 7,512		$ 6,900		$ 9,547		$ 13,078		$ 39,510	$ 37,037	$ 41,733
Earnings per share:
Basic	$ 1.43	[1]	$ 1.29	[1]	$ 1.67	[1]	$ 2.08	[1]	$ 1.19	[1]	$ 1.07	[1]	$ 1.45	[1]	$ 1.99	[1]	$ 6.49	$ 5.72	$ 6.38
Diluted	$ 1.42	[1]	$ 1.28	[1]	$ 1.66	[1]	$ 2.07	[1]	$ 1.18	[1]	$ 1.07	[1]	$ 1.44	[1]	$ 1.97	[1]	$ 6.45	$ 5.68	$ 6.31

[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.

XML

Goodwill and Other Intangible Assets - Additional Information (Detail) (USD $) Share data in Millions, unless otherwise specified	12 Months Ended			0 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012	Jul. 31, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
Business acquisitions, aggregate cash consideration paid, net of cash acquired	$ 3,765,000,000	$ 496,000,000	$ 350,000,000
Goodwill	4,616,000,000	1,577,000,000
Goodwill impairment charges	0	0	0
Amortization expense related to acquired intangible assets	1,100,000,000	960,000,000	605,000,000
Weighted-average amortization period for acquired intangible assets	3 years 9 months 18 days
Beats
Acquired Finite-Lived Intangible Assets [Line Items]
Business acquisitions, total purchase price consideration				2,600,000,000
Business acquisitions allocated to goodwill				2,200,000,000
Business acquisitions allocated to intangible assets				636,000,000
Business acquisitions allocated to net liabilities assumed				258,000,000
Repayment of the outstanding debt of acquired entity				295,000,000
Beats | Restricted Stock
Acquired Finite-Lived Intangible Assets [Line Items]
Common stock issued in connection with the acquisition, shares				5.1
Common stock issued in connection with the acquisition				485,000,000
Beats | Restricted Stock | Vesting over time, based on continued employment of certain executives
Acquired Finite-Lived Intangible Assets [Line Items]
Common stock issued in connection with the acquisition				417,000,000
Various Business Acquisitions
Acquired Finite-Lived Intangible Assets [Line Items]
Business acquisitions allocated to goodwill	828,000,000	419,000,000
Business acquisitions allocated to intangible assets	257,000,000	179,000,000
Business acquisitions allocated to net liabilities assumed	128,000,000	102,000,000
Business acquisitions, aggregate cash consideration paid, net of cash acquired	$ 957,000,000	$ 496,000,000

XML

Selected Quarterly Financial Information (Unaudited) (Tables)

12 Months Ended

Sep. 27, 2014

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 2014 and 2013 (in millions, except per share amounts):

	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
2014:
Net sales	$	42,123	$	37,432	$	45,646	$	57,594
Gross margin	$	16,009	$	14,735	$	17,947	$	21,846
Net income	$	8,467	$	7,748	$	10,223	$	13,072
Earnings per share (1):
Basic	$	1.43	$	1.29	$	1.67	$	2.08
Diluted	$	1.42	$	1.28	$	1.66	$	2.07

	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
2013:
Net sales	$	37,472	$	35,323	$	43,603	$	54,512
Gross margin	$	13,871	$	13,024	$	16,349	$	21,060
Net income	$	7,512	$	6,900	$	9,547	$	13,078
Earnings per share (1):
Basic	$	1.19	$	1.07	$	1.45	$	1.99
Diluted	$	1.18	$	1.07	$	1.44	$	1.97

⁽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.

XML

Reconciliation of Segment Operating Income to Consolidated Statements of Operations (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income	$ 52,503	$ 48,999	$ 55,241
Research and development expense	(6,041)	(4,475)	(3,381)
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating income	62,209	56,525	61,498
Segment Reconciling Items
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Research and development expense	(6,041)	(4,475)	(3,381)
Corporate assets
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Other corporate expenses, net	$ (3,665)	$ (3,051)	$ (2,876)

XML

Summary of Long-Term Debt (Parenthetical) (Detail)	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013
Floating-rate notes due 2016
Debt Instrument [Line Items]
Debt instrument maturity year	2016	2016
Floating-rate notes due 2017
Debt Instrument [Line Items]
Debt instrument maturity year	2017	2017
Floating-rate notes due 2018
Debt Instrument [Line Items]
Debt instrument maturity year	2018	2018
Floating-rate notes due 2019
Debt Instrument [Line Items]
Debt instrument maturity year	2019	2019
Fixed-rate 0.45% notes due 2016
Debt Instrument [Line Items]
Debt instrument interest rate	0.45%	0.45%
Debt instrument maturity year	2016	2016
Fixed-rate 1.05% notes due 2017
Debt Instrument [Line Items]
Debt instrument interest rate	1.05%	1.05%
Debt instrument maturity year	2017	2017
Fixed-rate 1.00% notes due 2018
Debt Instrument [Line Items]
Debt instrument interest rate	1.00%	1.00%
Debt instrument maturity year	2018	2018
Fixed-rate 2.10% notes due 2019
Debt Instrument [Line Items]
Debt instrument interest rate	2.10%	2.10%
Debt instrument maturity year	2019	2019
Fixed-rate 2.85% notes due 2021
Debt Instrument [Line Items]
Debt instrument interest rate	2.85%	2.85%
Debt instrument maturity year	2021	2021
Fixed-rate 2.40% notes due 2023
Debt Instrument [Line Items]
Debt instrument interest rate	2.40%	2.40%
Debt instrument maturity year	2023	2023
Fixed-rate 3.45% notes due 2024
Debt Instrument [Line Items]
Debt instrument interest rate	3.45%	3.45%
Debt instrument maturity year	2024	2024
Fixed-rate 3.85% notes due 2043
Debt Instrument [Line Items]
Debt instrument interest rate	3.85%	3.85%
Debt instrument maturity year	2043	2043
Fixed-rate 4.45% notes due 2044
Debt Instrument [Line Items]
Debt instrument interest rate	4.45%	4.45%
Debt instrument maturity year	2044	2044

XML

Long-Lived Assets (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014		Sep. 28, 2013
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 21,502		$ 17,588
U.S.
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	9,108		7,399
CHINA
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	9,477	[1]	7,403	[1]
Other countries
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 2,917		$ 2,786

[1] China includes Hong Kong. Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure.

XML

Net Sales by Product (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Dec. 28, 2013	Sep. 28, 2013	Jun. 29, 2013	Mar. 30, 2013	Dec. 29, 2012	Sep. 27, 2014		Sep. 28, 2013		Sep. 29, 2012
Segment Reporting Information [Line Items]
Net sales	$ 42,123	$ 37,432	$ 45,646	$ 57,594	$ 37,472	$ 35,323	$ 43,603	$ 54,512	$ 182,795		$ 170,910		$ 156,508
iPhone
Segment Reporting Information [Line Items]
Net sales									101,991	[1]	91,279	[1]	78,692	[1]
iPad
Segment Reporting Information [Line Items]
Net sales									30,283	[1]	31,980	[1]	30,945	[1]
Mac
Segment Reporting Information [Line Items]
Net sales									24,079	[1]	21,483	[1]	23,221	[1]
Services
Segment Reporting Information [Line Items]
Net sales									18,063	[2]	16,051	[2]	12,890	[2]
Other Products
Segment Reporting Information [Line Items]
Net sales									$ 8,379	[1],[3]	$ 10,117	[1],[3]	$ 10,760	[1],[3]

[1] Includes deferrals and amortization of related non-software services and software upgrade rights.

[2] Includes revenue from the iTunes Store, App Store, Mac App Store and iBooks Store (collectively "iTunes"), AppleCare, licensing and other services.

[3] Includes sales of iPod, Apple TV, Beats Electronics and Apple-branded and third-party accessories.

XML

Future Minimum Lease Payments under Noncancelable Operating Leases (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2015	$ 662
2016	676
2017	645
2018	593
2019	534
Thereafter	1,877
Total	$ 4,987

XML

Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Sep. 27, 2014

Components of Gross and Net Intangible Asset Balances

The following table summarizes the components of gross and net intangible asset balances as of September 27, 2014 and September 28, 2013 (in millions):

	2014							2013
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Definite-lived and amortizable acquired intangible assets	$	7,127	$	(3,085	)	$	4,042	$	6,081	$	(2,002	)	$	4,079
Indefinite-lived and non-amortizable acquired intangible assets		100		0			100		100		0			100
Total acquired intangible assets	$	7,227	$	(3,085	)	$	4,142	$	6,181	$	(2,002	)	$	4,179

Components of Gross and Net Intangible Asset Balances

The following table summarizes the components of gross and net intangible asset balances as of September 27, 2014 and September 28, 2013 (in millions):

	2014							2013
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Definite-lived and amortizable acquired intangible assets	$	7,127	$	(3,085	)	$	4,042	$	6,081	$	(2,002	)	$	4,079
Indefinite-lived and non-amortizable acquired intangible assets		100		0			100		100		0			100
Total acquired intangible assets	$	7,227	$	(3,085	)	$	4,142	$	6,181	$	(2,002	)	$	4,179

Expected Annual Amortization Expense Related to Acquired Intangible Assets

The expected annual amortization expense related to acquired intangible assets as of September 27, 2014, is as follows (in millions):

2015	$	1,204
2016		1,083
2017		825
2018		592
2019		175
Thereafter		163
Total	$	4,042

XML

Income Taxes - Additional Information (Detail) (USD $)	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012	Sep. 24, 2011
Income Taxes [Line Items]
Foreign pretax earnings	$ 33,600,000,000	$ 30,500,000,000	$ 36,800,000,000
Statutory tax rate in foreign operations	12.50%
Undistributed earnings of foreign subsidiaries	69,700,000,000
Deferred tax liability related to foreign earnings that may be repatriated	23,300,000,000
Cash, cash equivalents and marketable securities held by foreign subsidiaries	137,100,000,000	111,300,000,000
Reconciliation of provision for income taxes, statutory federal income tax rate	35.00%	35.00%	35.00%
Tax benefits from equity awards	706,000,000	643,000,000	1,400,000,000
Measurement of tax position, minimum likelihood of tax benefits being realized upon the ultimate settlement, percentage	50.00%
Gross unrecognized tax benefits	4,033,000,000	2,714,000,000	2,062,000,000	1,375,000,000
Unrecognized tax benefits that would affect effective tax rate, if recognized	1,400,000,000	1,400,000,000
Unrecognized tax benefits, gross interest and penalties accrued	630,000,000	590,000,000
Recognized interest and penalty expense of tax matters	40,000,000	189,000,000	140,000,000
Reduction in gross unrecognized tax benefits due to review by IRS	570,000,000
Tax benefit recognized in connection with the IRS review	$ 166,000,000

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Property, Plant and Equipment (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013
Property, Plant and Equipment [Line Items]
Gross property, plant and equipment	$ 39,015	$ 28,519
Accumulated depreciation and amortization	(18,391)	(11,922)
Net property, plant and equipment	20,624	16,597
Land and Buildings
Property, Plant and Equipment [Line Items]
Gross property, plant and equipment	4,863	3,309
Machinery, Equipment and Internal-Use Software
Property, Plant and Equipment [Line Items]
Gross property, plant and equipment	29,639	21,242
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Gross property, plant and equipment	$ 4,513	$ 3,968

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Net Sales (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Dec. 28, 2013	Sep. 28, 2013	Jun. 29, 2013	Mar. 30, 2013	Dec. 29, 2012	Sep. 27, 2014		Sep. 28, 2013		Sep. 29, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 42,123	$ 37,432	$ 45,646	$ 57,594	$ 37,472	$ 35,323	$ 43,603	$ 54,512	$ 182,795		$ 170,910		$ 156,508
U.S.
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									68,909		66,197		60,949
CHINA
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									30,638	[1]	25,946	[1]	22,797	[1]
Other countries
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									$ 83,248		$ 78,767		$ 72,762

[1] China includes Hong Kong.

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Financial Instruments - Additional Information (Detail) (USD $)	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Financial Instruments [Line Items]
Maturities of long-term marketable securities, minimum	1 year
Maturities of long-term marketable securities, maximum	5 years
Hedged foreign currency transactions, expected occurrence	12 months
Hedged interest rate transactions, expected occurrence	4 years
Cash collateral posted, derivative instruments		$ 164,000,000
Net cash collateral received, derivative instruments	2,100,000,000
Reduction to derivative assets by rights of set-off associated with derivative contracts	1,600,000,000	333,000,000
Reduction to derivative liabilities by rights of set-off associated with derivative contracts	1,600,000,000	333,000,000
Net derivative assets (liabilities)	(549,000,000)	(57,000,000)
Number of customers representing 10% or more of trade receivables	2	2
Number of vendors representing a significant portion of non-trade receivables	3	3
Cash flow hedges | Other income/expense, net
Financial Instruments [Line Items]
Loss recognized for ineffective portions of and amounts excluded from effectiveness testing	$ 120,000,000	$ 301,000,000	$ 658,000,000
Trade Receivables | Customer One
Financial Instruments [Line Items]
Concentration risk, percentage	16.00%	13.00%
Trade Receivables | Customer Two
Financial Instruments [Line Items]
Concentration risk, percentage	13.00%	10.00%
Trade Receivables | Total Cellular Network Carriers
Financial Instruments [Line Items]
Concentration risk, percentage	72.00%	68.00%
Non-Trade Receivables | Vendor One
Financial Instruments [Line Items]
Concentration risk, percentage	51.00%	47.00%
Non-Trade Receivables | Vendor Two
Financial Instruments [Line Items]
Concentration risk, percentage	16.00%	21.00%
Non-Trade Receivables | Vendor Three
Financial Instruments [Line Items]
Concentration risk, percentage	14.00%	15.00%

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Significant Components of the Company's Deferred Tax Assets and Liabilities (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013
Deferred tax assets:
Accrued liabilities and other reserves	$ 2,761	$ 1,892
Deferred revenue	1,787	1,475
Basis of capital assets and investments	898	1,020
Share-based compensation	454	458
Other	644	1,029
Total deferred tax assets	6,544	5,874
Less valuation allowance	0	0
Deferred tax assets, net of valuation allowance	6,544	5,874
Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries	21,544	18,044
Other	120	112
Total deferred tax liabilities	21,664	18,156
Net deferred tax liabilities	$ (15,120)	$ (12,282)

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Restricted Stock Units Activity and Related Information (Detail) (Restricted Stock Units, USD $) In Millions, except Share data in Thousands, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Restricted Stock Units
Number of Restricted Stock Units
Beginning Balance	93,284	105,037	101,122
Restricted stock units granted	59,269	39,415	54,597
Restricted stock units vested	(43,111)	(42,291)	(44,137)
Restricted stock units cancelled	(5,620)	(8,877)	(6,545)
Ending Balance	103,822	93,284	105,037
Weighted-Average Grant Date Fair Value Per Share
Beginning Balance	$ 62.24	$ 49.27	$ 33.07
Restricted stock units granted	$ 74.54	$ 78.23	$ 61.62
Restricted stock units vested	$ 57.29	$ 45.96	$ 29.32
Restricted stock units cancelled	$ 68.47	$ 57.31	$ 36.57
Ending Balance	$ 70.98	$ 62.24	$ 49.27
Aggregate Intrinsic Value
Aggregate intrinsic value of Restricted stock units	$ 10,460

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Accelerated Share Repurchase Arrangements (Detail) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	12 Months Ended
	Sep. 27, 2014
August 2014 ASR
Accelerated Share Repurchases [Line Items]
Purchase Period End Date		[1]
Number of Shares	59,924	[1]
Average Repurchase Price Per Share		[1]
ASR Amount	$ 9,000
January 2014 ASR
Accelerated Share Repurchases [Line Items]
Purchase Period End Date		[1]
Number of Shares	134,247	[1]
Average Repurchase Price Per Share		[1]
ASR Amount	12,000
April 2013 ASR
Accelerated Share Repurchases [Line Items]
Purchase Period End Date	March 2014
Number of Shares	172,548	[2]
Average Repurchase Price Per Share	$ 69.55
ASR Amount	12,000
August 2012 ASR
Accelerated Share Repurchases [Line Items]
Purchase Period End Date	April 2013
Number of Shares	28,544
Average Repurchase Price Per Share	$ 68.31
ASR Amount	$ 1,950

[1] "Number of Shares" represents those shares delivered in advance of settlement and does not represent the final number of shares to be delivered under the ASRs. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, will be determined at the end of the applicable purchase period based on the volume weighted-average price of the Company's common stock during that period. The August 2014 ASR and January 2014 ASR purchase periods will end in or before February 2015 and December 2014, respectively.

[2] Includes 8.0 million shares that were delivered and retired at the end of the purchase period, which concluded in the second quarter of 2014.

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Components of Gross and Net Intangible Asset Balances (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013
Acquired Intangible Assets [Line Items]
Definite-lived and amortizable acquired intangible assets, Gross Carrying Amount	$ 7,127	$ 6,081
Definite-lived and amortizable acquired intangible assets, Accumulated Amortization	(3,085)	(2,002)
Definite-lived and amortizable acquired intangible assets, Net Carrying Amount	4,042	4,079
Indefinite-lived and non-amortizable acquired intangible assets	100	100
Total acquired intangible assets, Net Carrying Amount	$ 4,142	$ 4,179

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Summary of Significant Accounting Policies

12 Months Ended

Sep. 27, 2014

Summary of Significant Accounting Policies

Note 1 – 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, personal computers and portable digital music players, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications. 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 iPhone, iPad, Mac and iPod compatible products, including application software, and various accessories through its online and retail 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. 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.

The Company’s fiscal year is the 52 or 53-week period that ends on the last Saturday of September. The Company’s fiscal years 2014, 2013 and 2012 ended on September 27, 2014, September 28, 2013 and September 29, 2012, respectively. An additional week is included in the first fiscal quarter approximately every six years to realign fiscal quarters with calendar quarters. Fiscal years 2014 and 2013 spanned 52 weeks each. Fiscal year 2012 spanned 53 weeks, with a 14th week included in the first quarter of 2012. 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.

During the first quarter of 2014, the Company adopted updated accounting standards that (i) required disclosure of additional information about the amounts reclassified out of accumulated other comprehensive income (“AOCI”) by component and (ii) required gross and net disclosures about offsetting assets and liabilities. The adoption of these updated standards only impacted the disclosures in the Notes to Consolidated Financial Statements; accordingly, the adoption had no impact on the Company’s financial position or results of operations. The Company has provided these additional disclosures in Note 8, “Comprehensive Income” and Note 2, “Financial Instruments,” respectively.

In 2015, the Company changed its reportable operating segments, began allocating certain costs to its operating segments that were previously included in other corporate expenses and changed its categorization of product-level net sales reporting. The Company has reclassified the 2014, 2013 and 2012 amounts to conform to the 2015 presentation as further described in Note 11, “Segment Information and Geographic Data.”

Common Stock Split

On June 6, 2014, the Company effected a seven-for-one stock split to shareholders of record as of June 2, 2014. All share and per share information has been retroactively adjusted to reflect the stock split.

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. 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 the iTunes 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 and iPod touch (“iOS devices”), Mac and Apple TV, the Company has indicated it may from time to time provide future unspecified software upgrades and features to the essential software bundled with each of these hardware products free of charge to customers. Essential software for iOS devices includes iOS and related applications and for Mac includes OS X and related applications. The Company also provides various non-software services to owners of qualifying versions of iOS devices and Mac. The Company has identified up to three deliverables regularly included in arrangements involving the sale of these devices. The first deliverable 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 the purchase of iOS devices, Mac 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 third deliverable is the non-software services to be provided to qualifying versions of iOS devices and Mac. 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 for each of these devices, which ranges from two to four years. 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. The Company believes its customers would be reluctant to buy unspecified software upgrade rights for the essential software included with its qualifying hardware products. This view is primarily based on the fact that unspecified software upgrade rights do not obligate the Company to provide upgrades at a particular time or at all, and do not specify to customers which upgrades or features will be delivered. The Company also believes its customers would be unwilling to pay a significant amount for access to the non-software services because other companies offer similar services at little or no cost to users. Therefore, the Company has concluded that if it were to sell upgrade rights or access to the non-software services on a standalone basis, including those rights and services attached to iOS devices, Mac and Apple TV, the selling prices would be relatively low. Key factors considered by the Company in developing the ESPs for software upgrade rights include prices charged by the Company for similar offerings, market trends in the pricing of Apple-branded and third-party Mac and iOS compatible software, the nature of the upgrade rights (e.g., unspecified versus specified) and the relative ESP of the upgrade rights as compared to the total selling price of the product. The Company may also consider additional factors as appropriate, including the impact of other products and services provided to customers, the pricing of competitive alternatives if they exist, product-specific business objectives and the length of time a particular version of a device has been available. When relevant, the same factors are considered by the Company in developing ESPs for offerings such as the non-software services with additional consideration given to the estimated cost to provide such services.

In 2014, 2013 and 2012, the Company’s combined ESPs for the unspecified software upgrade rights and the rights to receive the non-software services included with its qualifying hardware devices have ranged from $5 to $40. As of September 27, 2014, the combined ESPs for Mac was $40 and for iPhone and iPad ranged from $15 to $25. Revenue allocated to such rights is deferred and recognized on a straight-line basis over the estimated period the rights are expected to be provided for each device, which ranges from two to four years.

Shipping Costs

For all periods presented, amounts billed to customers related to shipping and handling are classified as revenue, and the Company’s shipping and handling costs are included in cost of sales.

Warranty Costs

The Company generally provides for the estimated cost of hardware and software warranties at the time the related revenue is recognized. The Company assesses the adequacy of its pre-existing 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. Costs incurred subsequent to achievement of technological feasibility were not significant, and software development costs were expensed as incurred during 2014, 2013 and 2012.

Advertising Costs

Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Advertising expense was $1.2 billion, $1.1 billion and $1.0 billion for 2014, 2013 and 2012, respectively.

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 enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. Share-based compensation cost for restricted stock and restricted stock units (“RSUs”) is measured based on the closing fair market value of the Company’s common stock on the date of grant. The Company recognizes share-based compensation cost 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 metrics. The Company recognizes a benefit from share-based compensation in the Consolidated Statements of Shareholders’ Equity if an incremental 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 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 outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan, unvested restricted stock and unvested RSUs. 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 2014, 2013 and 2012 (net income in millions and shares in thousands):

	2014		2013		2012
Numerator:
Net income	$	39,510	$	37,037	$	41,733
Denominator:
Weighted-average shares outstanding		6,085,572		6,477,320		6,543,726
Effect of dilutive securities		37,091		44,314		73,757
Weighted-average diluted shares		6,122,663		6,521,634		6,617,483
Basic earnings per share	$	6.49	$	5.72	$	6.38
Diluted earnings per share	$	6.45	$	5.68	$	6.31

Potentially dilutive securities, the effect of which would have been antidilutive, were not significant for 2014, 2013 and 2012. The Company excluded these securities 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 designations 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. The Company classifies its marketable equity securities, including mutual funds, 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 the unrealized gains and losses, net of taxes, reported as a component of shareholders’ equity. 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 income 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 current income. 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 income. 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 attributable to the hedged risk are recognized in earnings in the current period. For derivative instruments designated as a hedge of the foreign currency translation exposure of the net investment in a foreign operation, 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 component are recognized in current income. Derivatives that do not qualify as hedges are adjusted to fair value through current income.

Allowance for Doubtful Accounts

The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay.

Inventories

Inventories are stated at the lower of cost, computed using the first-in, first-out method, or market. If the cost of the inventories exceeds their market value, provisions are made currently for the difference between the cost and the market value.

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 two to five years for machinery and equipment, including product tooling and manufacturing process 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 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 $6.9 billion, $5.8 billion and $2.6 billion during 2014, 2013 and 2012, respectively.

Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets

The Company reviews property, plant and equipment, inventory component prepayments and certain identifiable intangibles, excluding goodwill, 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 assets exceeds its fair value. The Company did not record any significant impairments during 2014, 2013 and 2012.

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 whenever 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 2014, 2013 and 2012. The Company established reporting units based on its current reporting structure. For purposes of testing goodwill for impairment, goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. In 2014 and 2013, the Company’s goodwill was allocated to the Americas and Europe reportable operating segments.

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, which 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 in pricing 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. Gains and losses from these remeasurements were not significant during 2014, 2013 and 2012 and have been included in the Company’s results of operations.

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Accelerated Share Repurchase Arrangements (Parenthetical) (Detail) (April 2013 ASR) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014
April 2013 ASR
Accelerated Share Repurchases [Line Items]
Additional shares repurchased and retired	8.0

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Accrued Expenses (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012	Sep. 24, 2011
Schedule of Accrued Liabilities [Line Items]
Accrued warranty and related costs	$ 4,159	$ 2,967	$ 1,638	$ 1,240
Accrued marketing and selling expenses	2,321	1,291
Accrued taxes	1,209	1,200
Accrued compensation and employee benefits	1,209	959
Deferred margin on component sales	1,057	1,262
Other current liabilities	8,498	6,177
Total accrued expenses	$ 18,453	$ 13,856

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Comprehensive Income (Tables)

12 Months Ended

Sep. 27, 2014

Gross Amounts Reclassified from AOCI into Consolidated Statements of Operations

The following table shows the gross amounts reclassified from AOCI into the Consolidated Statements of Operations and the associated financial statement line item for 2014 (in millions):

Comprehensive Income Components	Financial Statement Line Item	2014
Unrecognized gains/losses on derivative instruments:
Foreign exchange contracts	Revenue	$	449
	Cost of sales		(295	)
	Other income/expense, net		15
Interest rate contracts	Other income/expense, net		16
			185
Unrealized gains/losses on marketable securities	Other income/expense, net		(205	)
Total amounts reclassified from AOCI		$	(20	)

Change in Accumulated Other Comprehensive Income by Component

The following table shows the changes in AOCI by component for 2014 (in millions):

	Cumulative Foreign Currency Translation			Unrecognized Gains/Losses on Derivative Instruments			Unrealized Gains /Losses on Marketable Securities			Total
Balance at September 28, 2013	$	(105	)	$	(175	)	$	(191	)	$	(471	)
Other comprehensive income/(loss) before reclassifications		(187	)		1,687			438			1,938
Amounts reclassified from AOCI		0			185			(205	)		(20	)
Tax effect		50			(333	)		(82	)		(365	)
Other comprehensive income/(loss)		(137	)		1,539			151			1,553
Balance at September 27, 2014	$	(242	)	$	1,364		$	(40	)	$	1,082

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Shareholders' Equity (Tables)

12 Months Ended

Sep. 27, 2014

Cash Dividends Declared and Paid Per Common Share

The Company declared and paid cash dividends per common share during the periods presented as follows:

	Dividends Per Share		Amount (in millions)
2014:
Fourth quarter	$	0.47	$	2,807
Third quarter		0.47		2,830
Second quarter		0.44		2,655
First quarter		0.44		2,739
Total	$	1.82	$	11,031
2013:
Fourth quarter	$	0.44	$	2,763
Third quarter		0.44		2,789
Second quarter		0.38		2,490
First quarter		0.38		2,486
Total	$	1.64	$	10,528

Accelerated Share Repurchase Arrangements

The following table presents the Company’s ASRs:

	Purchase Period End Date		Number of Shares (in thousands)		Average Repurchase Price Per Share		ASR Amount (in millions)
August 2014 ASR		(1)		59,924 (1)		(1)	$	9,000
January 2014 ASR		(1)		134,247 (1)		(1)	$	12,000
April 2013 ASR		March 2014		172,548 (2)	$	69.55	$	12,000
August 2012 ASR		April 2013		28,544	$	68.31	$	1,950

⁽¹⁾ “Number of Shares” represents those shares delivered in advance of settlement and does not represent the final number of shares to be delivered under the ASRs. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, will be determined at the end of the applicable purchase period based on the volume weighted-average price of the Company’s common stock during that period. The August 2014 ASR and January 2014 ASR purchase periods will end in or before February 2015 and December 2014, respectively.

⁽²⁾  Includes 8.0 million shares that were delivered and retired at the end of the purchase period, which concluded in the second quarter of 2014.

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)
2014:
Fourth quarter		81,255	$	98.46	$	8,000
Third quarter		58,661	$	85.23		5,000
Second quarter		79,749	$	75.24		6,000
First quarter		66,847	$	74.79		5,000
Total		286,512			$	24,000
2013:
Fourth quarter		73,064	$	68.43	$	5,000
Third quarter		62,676	$	63.82		4,000
Second quarter		0	$	0		0
First quarter		0	$	0		0
Total		135,740			$	9,000

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Summary of Long-Term Debt (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013
Debt Instrument [Line Items]
Total borrowings	$ 29,000	$ 17,000
Unamortized discount	(52)	(40)
Hedge accounting fair value adjustments	39	0
Total long-term debt	28,987	16,960
Floating-rate notes due 2016
Debt Instrument [Line Items]
Debt instrument, senior notes	1,000	1,000
Debt instrument effective interest rate	0.51%	0.51%
Floating-rate notes due 2017
Debt Instrument [Line Items]
Debt instrument, senior notes	1,000	0
Debt instrument effective interest rate	0.31%	0.00%
Floating-rate notes due 2018
Debt Instrument [Line Items]
Debt instrument, senior notes	2,000	2,000
Debt instrument effective interest rate	1.10%	1.10%
Floating-rate notes due 2019
Debt Instrument [Line Items]
Debt instrument, senior notes	1,000	0
Debt instrument effective interest rate	0.54%	0.00%
Fixed-rate 0.45% notes due 2016
Debt Instrument [Line Items]
Debt instrument, senior notes	1,500	1,500
Debt instrument effective interest rate	0.51%	0.51%
Fixed-rate 1.05% notes due 2017
Debt Instrument [Line Items]
Debt instrument, senior notes	1,500	0
Debt instrument effective interest rate	0.30%	0.00%
Fixed-rate 1.00% notes due 2018
Debt Instrument [Line Items]
Debt instrument, senior notes	4,000	4,000
Debt instrument effective interest rate	1.08%	1.08%
Fixed-rate 2.10% notes due 2019
Debt Instrument [Line Items]
Debt instrument, senior notes	2,000	0
Debt instrument effective interest rate	0.53%	0.00%
Fixed-rate 2.85% notes due 2021
Debt Instrument [Line Items]
Debt instrument, senior notes	3,000	0
Debt instrument effective interest rate	0.79%	0.00%
Fixed-rate 2.40% notes due 2023
Debt Instrument [Line Items]
Debt instrument, senior notes	5,500	5,500
Debt instrument effective interest rate	2.44%	2.44%
Fixed-rate 3.45% notes due 2024
Debt Instrument [Line Items]
Debt instrument, senior notes	2,500	0
Debt instrument effective interest rate	0.90%	0.00%
Fixed-rate 3.85% notes due 2043
Debt Instrument [Line Items]
Debt instrument, senior notes	3,000	3,000
Debt instrument effective interest rate	3.91%	3.91%
Fixed-rate 4.45% notes due 2044
Debt Instrument [Line Items]
Debt instrument, senior notes	$ 1,000	$ 0
Debt instrument effective interest rate	4.48%	0.00%

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Non-Current Liabilities (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013
Schedule of Other Liabilities [Line Items]
Deferred tax liabilities	$ 20,259	$ 16,489
Other non-current liabilities	4,567	3,719
Total other non-current liabilities	$ 24,826	$ 20,208

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Benefit Plans (Tables)

12 Months Ended

Sep. 27, 2014

Restricted Stock Activity

A summary of the Company’s RSU activity and related information for 2014, 2013 and 2012, is as follows:

	Number of RSUs (in thousands)			Weighted-Average Grant  Date Fair Value Per Share		Aggregate Intrinsic Value (in millions)
Balance at September 24, 2011		101,122		$	33.07
RSUs granted		54,597		$	61.62
RSUs vested		(44,137	)	$	29.32
RSUs cancelled		(6,545	)	$	36.57
Balance at September 29, 2012		105,037		$	49.27
RSUs granted		39,415		$	78.23
RSUs vested		(42,291	)	$	45.96
RSUs cancelled		(8,877	)	$	57.31
Balance at September 28, 2013		93,284		$	62.24
RSUs granted		59,269		$	74.54
RSUs vested		(43,111	)	$	57.29
RSUs cancelled		(5,620	)	$	68.47
Balance at September 27, 2014		103,822		$	70.98	$	10,460

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 2014, 2013 and 2012 (in millions):

	2014		2013		2012
Cost of sales	$	450	$	350	$	265
Research and development		1,216		917		668
Selling, general and administrative		1,197		986		807
Total share-based compensation expense	$	2,863	$	2,253	$	1,740

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Commitments and Contingencies (Tables)

12 Months Ended

Sep. 27, 2014

Changes in Accrued Warranties and Related Costs

The following table shows changes in the Company’s accrued warranties and related costs for 2014, 2013 and 2012 (in millions):

	2014			2013			2012
Beginning accrued warranty and related costs	$	2,967		$	1,638		$	1,240
Cost of warranty claims		(3,760	)		(3,703	)		(1,786	)
Accruals for product warranty		4,952			5,032			2,184
Ending accrued warranty and related costs	$	4,159		$	2,967		$	1,638

Future Minimum Lease Payments under Noncancelable Operating Leases

Future minimum lease payments under noncancelable operating leases having remaining terms in excess of one year as of September 27, 2014, are as follows (in millions):

2015	$	662
2016		676
2017		645
2018		593
2019		534
Thereafter		1,877
Total	$	4,987

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Cash and cash equivalents, beginning of the year	$ 14,259	$ 10,746	$ 9,815
Operating activities:
Net income	39,510	37,037	41,733
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation and amortization	7,946	6,757	3,277
Share-based compensation expense	2,863	2,253	1,740
Deferred income tax expense	2,347	1,141	4,405
Changes in operating assets and liabilities:
Accounts receivable, net	(4,232)	(2,172)	(5,551)
Inventories	(76)	(973)	(15)
Vendor non-trade receivables	(2,220)	223	(1,414)
Other current and non-current assets	167	1,080	(3,162)
Accounts payable	5,938	2,340	4,467
Deferred revenue	1,460	1,459	2,824
Other current and non-current liabilities	6,010	4,521	2,552
Cash generated by operating activities	59,713	53,666	50,856
Investing activities:
Purchases of marketable securities	(217,128)	(148,489)	(151,232)
Proceeds from maturities of marketable securities	18,810	20,317	13,035
Proceeds from sales of marketable securities	189,301	104,130	99,770
Payments made in connection with business acquisitions, net	(3,765)	(496)	(350)
Payments for acquisition of property, plant and equipment	(9,571)	(8,165)	(8,295)
Payments for acquisition of intangible assets	(242)	(911)	(1,107)
Other	16	(160)	(48)
Cash used in investing activities	(22,579)	(33,774)	(48,227)
Financing activities:
Proceeds from issuance of common stock	730	530	665
Excess tax benefits from equity awards	739	701	1,351
Taxes paid related to net share settlement of equity awards	(1,158)	(1,082)	(1,226)
Dividends and dividend equivalents paid	(11,126)	(10,564)	(2,488)
Repurchase of common stock	(45,000)	(22,860)	0
Proceeds from issuance of long-term debt, net	11,960	16,896	0
Proceeds from issuance of commercial paper, net	6,306	0	0
Cash used in financing activities	(37,549)	(16,379)	(1,698)
Increase/(decrease) in cash and cash equivalents	(415)	3,513	931
Cash and cash equivalents, end of the year	13,844	14,259	10,746
Supplemental cash flow disclosure:
Cash paid for income taxes, net	10,026	9,128	7,682
Cash paid for interest	$ 339	$ 0	$ 0

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Segment Information and Geographic Data (Tables)

12 Months Ended

Sep. 27, 2014

Summary Information by Operating Segment

The following table shows information by operating segment for 2014, 2013 and 2012 (in millions):

	2014		2013		2012
Americas:
Net sales	$	80,095	$	77,093	$	71,060
Operating income	$	26,158	$	24,829	$	26,244
Europe:
Net sales	$	44,285	$	40,980	$	39,326
Operating income	$	14,434	$	12,767	$	15,129
Greater China:
Net sales	$	31,853	$	27,016	$	23,756
Operating income	$	11,039	$	8,499	$	9,978
Japan:
Net sales	$	15,314	$	13,782	$	10,913
Operating income	$	6,904	$	6,668	$	5,826
Rest of Asia Pacific:
Net sales	$	11,248	$	12,039	$	11,453
Operating income	$	3,674	$	3,762	$	4,321

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 2014, 2013 and 2012, is as follows (in millions):

	2014			2013			2012
Segment operating income	$	62,209		$	56,525		$	61,498
Research and development expense		(6,041	)		(4,475	)		(3,381	)
Other corporate expenses, net		(3,665	)		(3,051	)		(2,876	)
Total operating income	$	52,503		$	48,999		$	55,241

Net Sales

Net sales for 2014, 2013 and 2012 are as follows (in millions):

	2014		2013		2012
Net sales:
U.S.	$	68,909	$	66,197	$	60,949
China (1)		30,638		25,946		22,797
Other countries		83,248		78,767		72,762
Total net sales	$	182,795	$	170,910	$	156,508

⁽¹⁾  China includes Hong Kong.

Long-Lived Assets

Long-lived assets as of September 27, 2014 and September 28, 2013 are as follows (in millions):

	2014		2013
Long-lived assets:
U.S.	$	9,108	$	7,399
China (1)		9,477		7,403
Other countries		2,917		2,786
Total long-lived assets	$	21,502	$	17,588

⁽¹⁾  China includes Hong Kong. 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 2014, 2013 and 2012 have been reclassified to conform to the Company’s 2015 presentation and are as follows (in millions):

	2014		2013		2012
Net Sales by Product:
iPhone (1)	$	101,991	$	91,279	$	78,692
iPad (1)		30,283		31,980		30,945
Mac (1)		24,079		21,483		23,221
Services (2)		18,063		16,051		12,890
Other Products (1)(3)		8,379		10,117		10,760
Total net sales	$	182,795	$	170,910	$	156,508

⁽¹⁾  Includes deferrals and amortization of related non-software services and software upgrade rights.

⁽²⁾  Includes revenue from the iTunes Store, App Store, Mac App Store and iBooks Store (collectively “iTunes”), AppleCare, licensing and other services.

⁽³⁾  Includes sales of iPod, Apple TV, Beats Electronics and Apple-branded and third-party accessories.

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Pre-Tax Effect of Derivative Instruments Designated as Cash Flow, Net Investment and Fair Value Hedges (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Cash flow hedges
Derivative Instruments, Gain (Loss) [Line Items]
Gains/ (Losses) Recognized in OCI - Effective Portion	$ 1,735	$ 903	$ (175)
Gains/ (Losses) Reclassified from AOCI into Net Income - Effective Portion	(170)	670	607
Cash flow hedges | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Gains/ (Losses) Recognized in OCI - Effective Portion	1,750	891	(175)
Gains/ (Losses) Reclassified from AOCI into Net Income - Effective Portion	(154)	676	607
Cash flow hedges | Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Gains/ (Losses) Recognized in OCI - Effective Portion	(15)	12	0
Gains/ (Losses) Reclassified from AOCI into Net Income - Effective Portion	(16)	(6)	0
Net investment hedges | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Gains/ (Losses) Recognized in OCI - Effective Portion	53	143	(5)
Gains/ (Losses) Reclassified from AOCI into Net Income - Effective Portion	0	0	0
Fair Value Hedges | Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Gains/ (Losses) On Derivative Instruments	39	0	0
Gains/ (Losses) Related to Hedged Items	$ (39)	$ 0	$ 0

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Aggregate Changes in the Balance of Gross Unrecognized Tax Benefits, which Excludes Interest and Penalties (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Income Taxes [Line Items]
Beginning Balance	$ 2,714	$ 2,062	$ 1,375
Increases related to tax positions taken during a prior year	1,295	745	340
Decreases related to tax positions taken during a prior year	(280)	(118)	(107)
Increases related to tax positions taken during the current year	882	626	467
Decreases related to settlements with taxing authorities	(574)	(592)	(3)
Decreases related to expiration of statute of limitations	(4)	(9)	(10)
Ending Balance	$ 4,033	$ 2,714	$ 2,062

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Summary Information by Operating Segment (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Dec. 28, 2013	Sep. 28, 2013	Jun. 29, 2013	Mar. 30, 2013	Dec. 29, 2012	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Segment Reporting Information [Line Items]
Net sales	$ 42,123	$ 37,432	$ 45,646	$ 57,594	$ 37,472	$ 35,323	$ 43,603	$ 54,512	$ 182,795	$ 170,910	$ 156,508
Operating income									52,503	48,999	55,241
Americas
Segment Reporting Information [Line Items]
Net sales									80,095	77,093	71,060
Operating income									26,158	24,829	26,244
Europe
Segment Reporting Information [Line Items]
Net sales									44,285	40,980	39,326
Operating income									14,434	12,767	15,129
Greater China
Segment Reporting Information [Line Items]
Net sales									31,853	27,016	23,756
Operating income									11,039	8,499	9,978
Japan
Segment Reporting Information [Line Items]
Net sales									15,314	13,782	10,913
Operating income									6,904	6,668	5,826
Rest of Asia Pacific
Segment Reporting Information [Line Items]
Net sales									11,248	12,039	11,453
Operating income									$ 3,674	$ 3,762	$ 4,321

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Millions, except Share data in Thousands, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Net sales	$ 182,795	$ 170,910	$ 156,508
Cost of sales	112,258	106,606	87,846
Gross margin	70,537	64,304	68,662
Operating expenses:
Research and development	6,041	4,475	3,381
Selling, general and administrative	11,993	10,830	10,040
Total operating expenses	18,034	15,305	13,421
Operating income	52,503	48,999	55,241
Other income/(expense), net	980	1,156	522
Income before provision for income taxes	53,483	50,155	55,763
Provision for income taxes	13,973	13,118	14,030
Net income	$ 39,510	$ 37,037	$ 41,733
Earnings per share:
Basic	$ 6.49	$ 5.72	$ 6.38
Diluted	$ 6.45	$ 5.68	$ 6.31
Shares used in computing earnings per share:
Basic	6,085,572	6,477,320	6,543,726
Diluted	6,122,663	6,521,634	6,617,483
Cash dividends declared per common share	$ 1.82	$ 1.64	$ 0.38

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Other Income and Expense (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Other Income Expense [Line Items]
Interest and dividend income	$ 1,795	$ 1,616	$ 1,088
Interest expense	(384)	(136)	0
Other expense, net	(431)	(324)	(566)
Total other income/(expense), net	$ 980	$ 1,156	$ 522

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013
Accounts receivable, allowances	$ 86	$ 99
Common stock, par value	$ 0.00001	$ 0.00000
Common stock, shares authorized	12,600,000	12,600,000
Common stock, shares issued	5,866,161	6,294,494
Common stock, shares outstanding	5,866,161	6,294,494

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Shareholders' Equity - Additional Information (Detail) (USD $)	3 Months Ended									12 Months Ended
	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Dec. 28, 2013	Sep. 28, 2013	Jun. 29, 2013	Mar. 30, 2013	Dec. 29, 2012	Sep. 29, 2012	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012	Apr. 30, 2014	Apr. 30, 2013
Stockholders Equity Note Disclosure [Line Items]
Common stock, par value	$ 0.00001		$ 0.00001		$ 0.00000					$ 0.00001	$ 0.00000
Dividends paid	$ 2,807,000,000	$ 2,830,000,000	$ 2,655,000,000	$ 2,739,000,000	$ 2,763,000,000	$ 2,789,000,000	$ 2,490,000,000	$ 2,486,000,000	$ 2,500,000,000	$ 11,031,000,000	$ 10,528,000,000
Quarterly dividends per share declared	$ 0.47	$ 0.47	$ 0.44	$ 0.44	$ 0.44	$ 0.44	$ 0.38	$ 0.38	$ 0.38	$ 1.82	$ 1.64	$ 0.38
Maximum amount authorized for repurchase of common stock									10,000,000,000			10,000,000,000	90,000,000,000	60,000,000,000
Share repurchase program, utilized amount	$ 67,900,000,000									$ 67,900,000,000

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Computation of Basic and Diluted Earnings Per Share (Detail) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended																12 Months Ended
	Sep. 27, 2014		Jun. 28, 2014		Mar. 29, 2014		Dec. 28, 2013		Sep. 28, 2013		Jun. 29, 2013		Mar. 30, 2013		Dec. 29, 2012		Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Numerator:
Net income	$ 8,467		$ 7,748		$ 10,223		$ 13,072		$ 7,512		$ 6,900		$ 9,547		$ 13,078		$ 39,510	$ 37,037	$ 41,733
Denominator:
Weighted-average shares outstanding																	6,085,572	6,477,320	6,543,726
Effect of dilutive securities																	37,091	44,314	73,757
Weighted-average diluted shares																	6,122,663	6,521,634	6,617,483
Basic earnings per share	$ 1.43	[1]	$ 1.29	[1]	$ 1.67	[1]	$ 2.08	[1]	$ 1.19	[1]	$ 1.07	[1]	$ 1.45	[1]	$ 1.99	[1]	$ 6.49	$ 5.72	$ 6.38
Diluted earnings per share	$ 1.42	[1]	$ 1.28	[1]	$ 1.66	[1]	$ 2.07	[1]	$ 1.18	[1]	$ 1.07	[1]	$ 1.44	[1]	$ 1.97	[1]	$ 6.45	$ 5.68	$ 6.31

[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.

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Change in Accumulated Other Comprehensive Income by Component (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ (471)
Other comprehensive income/(loss) before reclassifications	1,938
Amounts reclassified from AOCI	(20)
Tax effect	(365)
Total other comprehensive income/(loss)	1,553	(970)	56
Ending balance	1,082	(471)
Cumulative Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(105)
Other comprehensive income/(loss) before reclassifications	(187)
Amounts reclassified from AOCI	0
Tax effect	50
Total other comprehensive income/(loss)	(137)
Ending balance	(242)
Unrecognized Gains/Losses on Derivative Instruments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(175)
Other comprehensive income/(loss) before reclassifications	1,687
Amounts reclassified from AOCI	185
Tax effect	(333)
Total other comprehensive income/(loss)	1,539
Ending balance	1,364
Unrealized Gains/Losses on Marketable Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(191)
Other comprehensive income/(loss) before reclassifications	438
Amounts reclassified from AOCI	(205)
Tax effect	(82)
Total other comprehensive income/(loss)	151
Ending balance	$ (40)

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Sep. 27, 2014

Computation of Basic and Diluted Earnings Per Share

The following table shows the computation of basic and diluted earnings per share for 2014, 2013 and 2012 (net income in millions and shares in thousands):

	2014		2013		2012
Numerator:
Net income	$	39,510	$	37,037	$	41,733
Denominator:
Weighted-average shares outstanding		6,085,572		6,477,320		6,543,726
Effect of dilutive securities		37,091		44,314		73,757
Weighted-average diluted shares		6,122,663		6,521,634		6,617,483
Basic earnings per share	$	6.49	$	5.72	$	6.38
Diluted earnings per share	$	6.45	$	5.68	$	6.31

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Cash and Available-for-Sale Securities' Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value Recorded as Cash and Cash Equivalents or Short-Term or Long-Term Marketable Securities (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012	Sep. 24, 2011
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	$ 155,332	$ 147,143
Unrealized Gains	418	414
Unrealized Losses	(511)	(796)
Fair Value	155,239	146,761
Cash and cash equivalents	13,844	14,259	10,746	9,815
Short-term marketable securities	11,233	26,287
Long-term marketable securities	130,162	106,215
Cash
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	10,232	8,705
Unrealized Gains	0	0
Unrealized Losses	0	0
Fair Value	10,232	8,705
Cash and cash equivalents	10,232	8,705
Short-term marketable securities	0	0
Long-term marketable securities	0	0
Level 1
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	4,077	5,792
Unrealized Gains	1	0
Unrealized Losses	(132)	(197)
Fair Value	3,946	5,595
Cash and cash equivalents	1,546	1,793
Short-term marketable securities	2,400	3,802
Long-term marketable securities	0	0
Level 1 | Money market funds
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	1,546	1,793
Unrealized Gains	0	0
Unrealized Losses	0	0
Fair Value	1,546	1,793
Cash and cash equivalents	1,546	1,793
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	2,531	3,999
Unrealized Gains	1	0
Unrealized Losses	(132)	(197)
Fair Value	2,400	3,802
Cash and cash equivalents	0	0
Short-term marketable securities	2,400	3,802
Long-term marketable securities	0	0
Level 2
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	141,023	132,646
Unrealized Gains	417	414
Unrealized Losses	(379)	(599)
Fair Value	141,061	132,461
Cash and cash equivalents	2,066	3,761
Short-term marketable securities	8,833	22,485
Long-term marketable securities	130,162	106,215
Level 2 | U.S. Treasury securities
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	23,140	27,642
Unrealized Gains	15	24
Unrealized Losses	(9)	(47)
Fair Value	23,146	27,619
Cash and cash equivalents	12	431
Short-term marketable securities	607	7,554
Long-term marketable securities	22,527	19,634
Level 2 | U.S. agency securities
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	7,373	16,878
Unrealized Gains	3	12
Unrealized Losses	(11)	(52)
Fair Value	7,365	16,838
Cash and cash equivalents	652	177
Short-term marketable securities	157	3,412
Long-term marketable securities	6,556	13,249
Level 2 | Non-U.S. government securities
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	6,925	5,545
Unrealized Gains	69	35
Unrealized Losses	(69)	(137)
Fair Value	6,925	5,443
Cash and cash equivalents	0	50
Short-term marketable securities	204	313
Long-term marketable securities	6,721	5,080
Level 2 | Certificates of deposit and time deposits
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	3,832	2,344
Unrealized Gains	0	0
Unrealized Losses	0	0
Fair Value	3,832	2,344
Cash and cash equivalents	1,230	1,264
Short-term marketable securities	1,233	844
Long-term marketable securities	1,369	236
Level 2 | Commercial paper
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	475	2,998
Unrealized Gains	0	0
Unrealized Losses	0	0
Fair Value	475	2,998
Cash and cash equivalents	166	1,835
Short-term marketable securities	309	1,163
Long-term marketable securities	0	0
Level 2 | Corporate securities
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	85,431	54,586
Unrealized Gains	296	275
Unrealized Losses	(241)	(252)
Fair Value	85,486	54,609
Cash and cash equivalents	6	0
Short-term marketable securities	6,298	8,077
Long-term marketable securities	79,182	46,532
Level 2 | Municipal securities
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	940	6,257
Unrealized Gains	8	45
Unrealized Losses	0	(22)
Fair Value	948	6,280
Cash and cash equivalents	0	4
Short-term marketable securities	0	1,114
Long-term marketable securities	948	5,162
Level 2 | Mortgage- and asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Adjusted Cost	12,907	16,396
Unrealized Gains	26	23
Unrealized Losses	(49)	(89)
Fair Value	12,884	16,330
Cash and cash equivalents	0	0
Short-term marketable securities	25	8
Long-term marketable securities	$ 12,859	$ 16,322

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Consolidated Financial Statement Details (Tables)

12 Months Ended

Sep. 27, 2014

Inventories

Inventories

	2014		2013
Components	$	471	$	683
Finished goods		1,640		1,081
Total inventories	$	2,111	$	1,764

Property, Plant and Equipment

Property, Plant and Equipment

	2014			2013
Land and buildings	$	4,863		$	3,309
Machinery, equipment and internal-use software		29,639			21,242
Leasehold improvements		4,513			3,968
Gross property, plant and equipment		39,015			28,519
Accumulated depreciation and amortization		(18,391	)		(11,922	)
Net property, plant and equipment	$	20,624		$	16,597

Accrued Expenses

Accrued Expenses

	2014		2013
Accrued warranty and related costs	$	4,159	$	2,967
Accrued marketing and selling expenses		2,321		1,291
Accrued taxes		1,209		1,200
Accrued compensation and employee benefits		1,209		959
Deferred margin on component sales		1,057		1,262
Other current liabilities		8,498		6,177
Total accrued expenses	$	18,453	$	13,856

Non-Current Liabilities

Non-Current Liabilities

	2014		2013
Deferred tax liabilities	$	20,259	$	16,489
Other non-current liabilities		4,567		3,719
Total other non-current liabilities	$	24,826	$	20,208

Other Income and Expense

Other Income and Expense

The following table shows the detail of other income and expense for 2014, 2013 and 2012 (in millions):

	2014			2013			2012
Interest and dividend income	$	1,795		$	1,616		$	1,088
Interest expense		(384	)		(136	)		0
Other expense, net		(431	)		(324	)		(566	)
Total other income/(expense), net	$	980		$	1,156		$	522

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Summary of Share-Based Compensation Expense (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	$ 2,863	$ 2,253	$ 1,740
Cost of sales
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	450	350	265
Research and Development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	1,216	917	668
Selling, General and Administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation expense	$ 1,197	$ 986	$ 807

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) In Millions, except Share data in Thousands	Total	Common Stock and Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income/(Loss)
Balances at Sep. 24, 2011	$ 76,615	$ 13,331	$ 62,841	$ 443
Balances (in shares) at Sep. 24, 2011		6,504,937
Net income	41,733	0	41,733	0
Other comprehensive income/(loss)	56	0	0	56
Dividends and dividend equivalents declared	(2,523)	0	(2,523)	0
Share-based compensation	1,740	1,740	0	0
Common stock issued, net of shares withheld for employee taxes (in shares)		69,521
Common stock issued, net of shares withheld for employee taxes	(562)	200	(762)	0
Tax benefit from equity awards, including transfer pricing adjustments	1,151	1,151	0	0
Balances at Sep. 29, 2012	118,210	16,422	101,289	499
Balances (in shares) at Sep. 29, 2012		6,574,458
Net income	37,037	0	37,037	0
Other comprehensive income/(loss)	(970)	0	0	(970)
Dividends and dividend equivalents declared	(10,676)	0	(10,676)	0
Repurchase of common stock (in shares)		(328,837)
Repurchase of common stock	(22,950)	0	(22,950)	0
Share-based compensation	2,253	2,253	0	0
Common stock issued, net of shares withheld for employee taxes (in shares)		48,873
Common stock issued, net of shares withheld for employee taxes	(587)	(143)	(444)	0
Tax benefit from equity awards, including transfer pricing adjustments	1,232	1,232	0	0
Balances at Sep. 28, 2013	123,549	19,764	104,256	(471)
Balances (in shares) at Sep. 28, 2013	6,294,494	6,294,494
Net income	39,510	0	39,510	0
Other comprehensive income/(loss)	1,553	0	0	1,553
Dividends and dividend equivalents declared	(11,215)	0	(11,215)	0
Repurchase of common stock (in shares)		(488,677)
Repurchase of common stock	(45,000)	0	(45,000)	0
Share-based compensation	2,863	2,863	0	0
Common stock issued, net of shares withheld for employee taxes (in shares)		60,344
Common stock issued, net of shares withheld for employee taxes	(448)	(49)	(399)	0
Tax benefit from equity awards, including transfer pricing adjustments	735	735	0	0
Balances at Sep. 27, 2014	$ 111,547	$ 23,313	$ 87,152	$ 1,082
Balances (in shares) at Sep. 27, 2014	5,866,161	5,866,161

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Net income	$ 39,510	$ 37,037	$ 41,733
Other comprehensive income/(loss):
Change in foreign currency translation, net of tax effects of $50, $35 and $13, respectively	(137)	(112)	(15)
Change in unrecognized gains/losses on derivative instruments:
Change in fair value of derivatives, net of tax benefit/(expense) of $(297), $(351) and $73, respectively	1,390	522	(131)
Adjustment for net losses/(gains) realized and included in net income, net of tax expense/(benefit) of $(36), $255 and $220, respectively	149	(458)	(399)
Total change in unrecognized gains/losses on derivative instruments, net of tax	1,539	64	(530)
Change in unrealized gains/losses on marketable securities:
Change in fair value of marketable securities, net of tax benefit/(expense) of $(153), $458 and $(421), respectively	285	(791)	715
Adjustment for net losses/(gains) realized and included in net income, net of tax expense/(benefit) of $71, $82 and $68, respectively	(134)	(131)	(114)
Total change in unrealized gains/losses on marketable securities, net of tax	151	(922)	601
Total other comprehensive income/(loss)	1,553	(970)	56
Total comprehensive income	$ 41,063	$ 36,067	$ 41,789

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Benefit Plans

12 Months Ended

Sep. 27, 2014

Benefit Plans

Note 9 – Benefit Plans

Stock 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 cancelled 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 cancelled 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 cancelled 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 27, 2014, approximately 492.6 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 27, 2014, approximately 1.2 million shares were reserved for future issuance under the Director Plan.

Rule 10b5-1 Trading Plans

During the fourth quarter of 2014, Section 16 officers Timothy D. Cook, Luca Maestri, Daniel Riccio, Philip W. Schiller, D. Bruce Sewell and Jeffrey E. Williams 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 27, 2014, approximately 7.6 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 ($17,500 for calendar year 2014). 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. The Company’s matching contributions to the 401(k) Plan were $163 million, $135 million and $114 million in 2014, 2013 and 2012, respectively.

Restricted Stock Units

A summary of the Company’s RSU activity and related information for 2014, 2013 and 2012, is as follows:

	Number of RSUs (in thousands)			Weighted-Average Grant  Date Fair Value Per Share		Aggregate Intrinsic Value (in millions)
Balance at September 24, 2011		101,122		$	33.07
RSUs granted		54,597		$	61.62
RSUs vested		(44,137	)	$	29.32
RSUs cancelled		(6,545	)	$	36.57
Balance at September 29, 2012		105,037		$	49.27
RSUs granted		39,415		$	78.23
RSUs vested		(42,291	)	$	45.96
RSUs cancelled		(8,877	)	$	57.31
Balance at September 28, 2013		93,284		$	62.24
RSUs granted		59,269		$	74.54
RSUs vested		(43,111	)	$	57.29
RSUs cancelled		(5,620	)	$	68.47
Balance at September 27, 2014		103,822		$	70.98	$	10,460

The fair value as of the respective vesting dates of RSUs was $3.4 billion, $3.1 billion and $3.3 billion for 2014, 2013 and 2012, respectively. The majority of RSUs that vested in 2014, 2013 and 2012 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 15.6 million, 15.5 million and 16.1 million for 2014, 2013 and 2012, 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 $1.2 billion, $1.1 billion and $1.2 billion in 2014, 2013 and 2012, 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 and retired 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.

Stock Options

The Company had 6.6 million stock options outstanding as of September 27, 2014, with a weighted-average exercise price per share of $21.99 and weighted-average remaining contractual term of 1.4 years, substantially all of which are exercisable. The aggregate intrinsic value of the stock options outstanding as of September 27, 2014 was $520 million, which represents the value of the Company’s closing stock price on the last trading day of the period in excess of the weighted-average exercise price multiplied by the number of options outstanding. Total intrinsic value of options at time of exercise was $1.5 billion, $1.0 billion and $2.3 billion for 2014, 2013 and 2012, respectively.

Share-based Compensation

The following table shows a summary of the share-based compensation expense included in the Consolidated Statements of Operations for 2014, 2013 and 2012 (in millions):

	2014		2013		2012
Cost of sales	$	450	$	350	$	265
Research and development		1,216		917		668
Selling, general and administrative		1,197		986		807
Total share-based compensation expense	$	2,863	$	2,253	$	1,740

The income tax benefit related to share-based compensation expense was $1.0 billion, $816 million and $567 million for 2014, 2013 and 2012, respectively. As of September 27, 2014, the total unrecognized compensation cost related to outstanding stock options, RSUs and restricted stock was $6.3 billion, which the Company expects to recognize over a weighted-average period of 2.9 years.

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Document and Entity Information	12 Months Ended
	Sep. 27, 2014
Document Type	8-K
Amendment Flag	false
Document Period End Date	Sep. 27, 2014
Trading Symbol	AAPL
Entity Registrant Name	APPLE INC
Entity Central Index Key	0000320193

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Commitments and Contingencies

12 Months Ended

Sep. 27, 2014

Commitments and Contingencies

Note 10 – Commitments and Contingencies

Accrued Warranty and Indemnification

The Company offers a basic limited parts and labor warranty on its hardware products. The basic warranty period for hardware products is typically one year from the date of purchase by the end-user. The Company also offers a 90-day basic warranty for its service parts used to repair the Company’s hardware products. The Company provides currently for the estimated cost that may be incurred under its basic limited product warranties at the time related revenue is recognized. Factors considered in determining appropriate accruals for product warranty obligations include the size of the installed base of products subject to warranty protection, historical and projected warranty claim rates, historical and projected cost-per-claim and knowledge of specific product failures that are outside of the Company’s typical experience. The Company assesses the adequacy of its pre-existing warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in future estimates.

The following table shows changes in the Company’s accrued warranties and related costs for 2014, 2013 and 2012 (in millions):

	2014			2013			2012
Beginning accrued warranty and related costs	$	2,967		$	1,638		$	1,240
Cost of warranty claims		(3,760	)		(3,703	)		(1,786	)
Accruals for product warranty		4,952			5,032			2,184
Ending accrued warranty and related costs	$	4,159		$	2,967		$	1,638

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 the Company sometimes include indemnification provisions under which the Company could be subject to costs and/or damages in the event of an infringement claim against the Company or an indemnified third-party. However, the Company has not been required to make any significant payments resulting from such an infringement claim asserted against it or 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 with respect to indemnification of end-users of its operating system or application software for infringement of third-party intellectual property rights. The Company did not record a liability for infringement costs related to indemnification as of September 27, 2014 or September 28, 2013.

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 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. However, the Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations, and payments made under these agreements historically have not been material.

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 number of 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 concentrated 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. 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 purchase commitments 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. The major facility leases are typically for terms not exceeding 10 years and generally contain multi-year renewal options. 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 27, 2014, the Company’s total future minimum lease payments under noncancelable operating leases were $5.0 billion, of which $3.6 billion related to leases for retail space.

Rent expense under all operating leases, including both cancelable and noncancelable leases, was $717 million, $645 million and $488 million in 2014, 2013 and 2012, respectively. Future minimum lease payments under noncancelable operating leases having remaining terms in excess of one year as of September 27, 2014, are as follows (in millions):

2015	$	662
2016		676
2017		645
2018		593
2019		534
Thereafter		1,877
Total	$	4,987

Other Commitments

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 27, 2014, the Company had outstanding off-balance sheet third-party manufacturing commitments and component purchase commitments of $24.5 billion.

In addition to the off-balance sheet commitments mentioned above, the Company had outstanding obligations of $3.4 billion as of September 27, 2014, which consisted mainly of commitments to acquire capital assets, including product tooling and manufacturing process equipment, and commitments related to advertising, R&D, Internet and telecommunications services and other obligations.

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. 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. 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. Because the award is now subject to appeal, the Company has not recognized the award in its results of operations.

VirnetX, Inc. v. Apple Inc. et al.

On August 11, 2010, VirnetX, Inc. filed an action against the Company alleging that certain of its products infringed on four patents relating to network communications technology. On November 6, 2012, a jury returned a verdict against the Company, and awarded damages of $368 million. On September 16, 2014, the Court of Appeals for the Federal Circuit affirmed the District Court’s decision in part, reversed in part, and vacated the damages award. The case has been remanded for further proceedings.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Change in foreign currency translation, tax effects	$ 50	$ 35	$ 13
Change in fair value of derivatives, tax benefit/(expense)	(297)	(351)	73
Adjustment for net losses/(gains) realized and included in net income, tax expense/(benefit)	(36)	255	220
Change in fair value of marketable securities, tax benefit/(expense)	(153)	458	(421)
Adjustment for net losses/(gains) realized and included in net income, tax expense/(benefit)	$ 71	$ 82	$ 68

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Goodwill and Other Intangible Assets

12 Months Ended

Sep. 27, 2014

Goodwill and Other Intangible Assets

Note 4 – Goodwill and Other Intangible Assets

On July 31, 2014, the Company completed the acquisitions of Beats Music, LLC, which offers a subscription streaming music service, and Beats Electronics, LLC, which makes Beats^® headphones, speakers and audio software (collectively, “Beats”). The total purchase price consideration for these acquisitions was $2.6 billion, which consisted primarily of cash, of which $2.2 billion was allocated to goodwill, $636 million to acquired intangible assets and $258 million to net liabilities assumed. Concurrent with the close of the acquisition, the Company repaid $295 million of existing Beats outstanding debt to third-party creditors. In conjunction with the Beats acquisitions, the Company issued approximately 5.1 million shares of its common stock to certain former equity holders of Beats. The restricted stock was valued at approximately $485 million based on the Company’s common stock on the acquisition date. The majority of these shares, valued at approximately $417 million, will vest over time based on continued employment with Apple.

The Company also completed various other business acquisitions during 2014 for an aggregate cash consideration, net of cash acquired, of $957 million, of which $828 million was allocated to goodwill, $257 million to acquired intangible assets and $128 million to net liabilities assumed.

The Company completed various business acquisitions during 2013 for an aggregate cash consideration, net of cash acquired, of $496 million, of which $419 million was allocated to goodwill, $179 million to acquired intangible assets and $102 million to net liabilities assumed.

The Company’s gross carrying amount of goodwill was $4.6 billion and $1.6 billion as of September 27, 2014 and September 28, 2013, respectively. The Company did not have any goodwill impairments during 2014, 2013 or 2012.

The following table summarizes the components of gross and net intangible asset balances as of September 27, 2014 and September 28, 2013 (in millions):

	2014							2013
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Definite-lived and amortizable acquired intangible assets	$	7,127	$	(3,085	)	$	4,042	$	6,081	$	(2,002	)	$	4,079
Indefinite-lived and non-amortizable acquired intangible assets		100		0			100		100		0			100
Total acquired intangible assets	$	7,227	$	(3,085	)	$	4,142	$	6,181	$	(2,002	)	$	4,179

Amortization expense related to acquired intangible assets was $1.1 billion, $960 million and $605 million in 2014, 2013 and 2012, respectively. As of September 27, 2014, the remaining weighted-average amortization period for acquired intangible assets is 3.8 years. The expected annual amortization expense related to acquired intangible assets as of September 27, 2014, is as follows (in millions):

2015	$	1,204
2016		1,083
2017		825
2018		592
2019		175
Thereafter		163
Total	$	4,042

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Consolidated Financial Statement Details

12 Months Ended

Sep. 27, 2014

Consolidated Financial Statement Details

Note 3 – Consolidated Financial Statement Details

The following tables show the Company’s consolidated balance sheet details as of September 27, 2014 and September 28, 2013 (in millions):

Inventories

	2014		2013
Components	$	471	$	683
Finished goods		1,640		1,081
Total inventories	$	2,111	$	1,764

Property, Plant and Equipment

	2014			2013
Land and buildings	$	4,863		$	3,309
Machinery, equipment and internal-use software		29,639			21,242
Leasehold improvements		4,513			3,968
Gross property, plant and equipment		39,015			28,519
Accumulated depreciation and amortization		(18,391	)		(11,922	)
Net property, plant and equipment	$	20,624		$	16,597

Accrued Expenses

	2014		2013
Accrued warranty and related costs	$	4,159	$	2,967
Accrued marketing and selling expenses		2,321		1,291
Accrued taxes		1,209		1,200
Accrued compensation and employee benefits		1,209		959
Deferred margin on component sales		1,057		1,262
Other current liabilities		8,498		6,177
Total accrued expenses	$	18,453	$	13,856

Non-Current Liabilities

	2014		2013
Deferred tax liabilities	$	20,259	$	16,489
Other non-current liabilities		4,567		3,719
Total other non-current liabilities	$	24,826	$	20,208

Other Income and Expense

The following table shows the detail of other income and expense for 2014, 2013 and 2012 (in millions):

	2014			2013			2012
Interest and dividend income	$	1,795		$	1,616		$	1,088
Interest expense		(384	)		(136	)		0
Other expense, net		(431	)		(324	)		(566	)
Total other income/(expense), net	$	980		$	1,156		$	522

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Financial Instruments (Tables)

12 Months Ended

Sep. 27, 2014

Cash and Available-for-Sale Securities' Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value Recorded as Cash and Cash Equivalents or Short-Term or Long-Term Marketable Securities

The following tables show the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term marketable securities as of September 27, 2014 and September 28, 2013 (in millions):

	2014
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	10,232	$	0	$	0		$	10,232	$	10,232	$	0	$	0
Level 1:
Money market funds		1,546		0		0			1,546		1,546		0		0
Mutual funds		2,531		1		(132	)		2,400		0		2,400		0
Subtotal		4,077		1		(132	)		3,946		1,546		2,400		0
Level 2:
U.S. Treasury securities		23,140		15		(9	)		23,146		12		607		22,527
U.S. agency securities		7,373		3		(11	)		7,365		652		157		6,556
Non-U.S. government securities		6,925		69		(69	)		6,925		0		204		6,721
Certificates of deposit and time deposits		3,832		0		0			3,832		1,230		1,233		1,369
Commercial paper		475		0		0			475		166		309		0
Corporate securities		85,431		296		(241	)		85,486		6		6,298		79,182
Municipal securities		940		8		0			948		0		0		948
Mortgage- and asset-backed securities		12,907		26		(49	)		12,884		0		25		12,859
Subtotal		141,023		417		(379	)		141,061		2,066		8,833		130,162
Total	$	155,332	$	418	$	(511	)	$	155,239	$	13,844	$	11,233	$	130,162

	2013
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	8,705	$	0	$	0		$	8,705	$	8,705	$	0	$	0
Level 1:
Money market funds		1,793		0		0			1,793		1,793		0		0
Mutual funds		3,999		0		(197	)		3,802		0		3,802		0
Subtotal		5,792		0		(197	)		5,595		1,793		3,802		0
Level 2:
U.S. Treasury securities		27,642		24		(47	)		27,619		431		7,554		19,634
U.S. agency securities		16,878		12		(52	)		16,838		177		3,412		13,249
Non-U.S. government securities		5,545		35		(137	)		5,443		50		313		5,080
Certificates of deposit and time deposits		2,344		0		0			2,344		1,264		844		236
Commercial paper		2,998		0		0			2,998		1,835		1,163		0
Corporate securities		54,586		275		(252	)		54,609		0		8,077		46,532
Municipal securities		6,257		45		(22	)		6,280		4		1,114		5,162
Mortgage- and asset-backed securities		16,396		23		(89	)		16,330		0		8		16,322
Subtotal		132,646		414		(599	)		132,461		3,761		22,485		106,215
Total	$	147,143	$	414	$	(796	)	$	146,761	$	14,259	$	26,287	$	106,215

Cash and Available-for-Sale Securities' Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value Recorded as Cash and Cash Equivalents or Short-Term or Long-Term Marketable Securities

The following tables show the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term marketable securities as of September 27, 2014 and September 28, 2013 (in millions):

	2014
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	10,232	$	0	$	0		$	10,232	$	10,232	$	0	$	0
Level 1:
Money market funds		1,546		0		0			1,546		1,546		0		0
Mutual funds		2,531		1		(132	)		2,400		0		2,400		0
Subtotal		4,077		1		(132	)		3,946		1,546		2,400		0
Level 2:
U.S. Treasury securities		23,140		15		(9	)		23,146		12		607		22,527
U.S. agency securities		7,373		3		(11	)		7,365		652		157		6,556
Non-U.S. government securities		6,925		69		(69	)		6,925		0		204		6,721
Certificates of deposit and time deposits		3,832		0		0			3,832		1,230		1,233		1,369
Commercial paper		475		0		0			475		166		309		0
Corporate securities		85,431		296		(241	)		85,486		6		6,298		79,182
Municipal securities		940		8		0			948		0		0		948
Mortgage- and asset-backed securities		12,907		26		(49	)		12,884		0		25		12,859
Subtotal		141,023		417		(379	)		141,061		2,066		8,833		130,162
Total	$	155,332	$	418	$	(511	)	$	155,239	$	13,844	$	11,233	$	130,162

	2013
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	8,705	$	0	$	0		$	8,705	$	8,705	$	0	$	0
Level 1:
Money market funds		1,793		0		0			1,793		1,793		0		0
Mutual funds		3,999		0		(197	)		3,802		0		3,802		0
Subtotal		5,792		0		(197	)		5,595		1,793		3,802		0
Level 2:
U.S. Treasury securities		27,642		24		(47	)		27,619		431		7,554		19,634
U.S. agency securities		16,878		12		(52	)		16,838		177		3,412		13,249
Non-U.S. government securities		5,545		35		(137	)		5,443		50		313		5,080
Certificates of deposit and time deposits		2,344		0		0			2,344		1,264		844		236
Commercial paper		2,998		0		0			2,998		1,835		1,163		0
Corporate securities		54,586		275		(252	)		54,609		0		8,077		46,532
Municipal securities		6,257		45		(22	)		6,280		4		1,114		5,162
Mortgage- and asset-backed securities		16,396		23		(89	)		16,330		0		8		16,322
Subtotal		132,646		414		(599	)		132,461		3,761		22,485		106,215
Total	$	147,143	$	414	$	(796	)	$	146,761	$	14,259	$	26,287	$	106,215

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 27, 2014 and September 28, 2013 (in millions):

	2014				2013
	Notional Amount		Credit Risk Amounts		Notional Amount		Credit Risk Amounts
Instruments designated as accounting hedges:
Foreign exchange contracts	$	42,945	$	1,333	$	35,013	$	159
Interest rate contracts	$	12,000	$	89	$	3,000	$	44
Instruments not designated as accounting hedges:
Foreign exchange contracts	$	38,510	$	222	$	16,131	$	25

Derivative Instruments at Gross Fair Value as Reflected in Consolidated Balance Sheets

The following tables show the Company’s derivative instruments at gross fair value as reflected in the Consolidated Balance Sheets as of September 27, 2014 and September 28, 2013 (in millions):

	2014
	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	$	1,332	$	222	$	1,554
Interest rate contracts	$	81	$	0	$	81
Derivative liabilities (2):
Foreign exchange contracts	$	41	$	40	$	81

	2013
	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	$	145	$	25	$	170
Interest rate contracts	$	44	$	0	$	44
Derivative liabilities (2):
Foreign exchange contracts	$	389	$	46	$	435

⁽¹⁾ The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other 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 in the Consolidated Balance Sheets.

Pre-Tax Effect of Derivative Instruments Designated as Cash Flow, Net Investment and Fair Value Hedges

The following tables show the pre-tax effect of the Company’s derivative instruments designated as cash flow, net investment and fair value hedges on OCI and the Consolidated Statements of Operations for 2014, 2013 and 2012 (in millions):

	Gains/(Losses) Recognized in OCI - Effective  Portion								Gains/(Losses) Reclassified from AOCI into  Net Income - Effective Portion
	2014			2013		2012			2014			2013			2012
Cash flow hedges:
Foreign exchange contracts	$	1,750		$	891	$	(175	)	$	(154	)	$	676		$	607
Interest rate contracts		(15	)		12		0			(16	)		(6	)		0
Total	$	1,735		$	903	$	(175	)	$	(170	)	$	670		$	607
Net investment hedges:
Foreign exchange contracts	$	53		$	143	$	(5	)	$	0		$	0		$	0
	Gains/(Losses) On Derivative Instruments								Gains/(Losses) Related to Hedged Items
	2014			2013		2012			2014			2013			2012
Fair value hedges:
Interest rate contracts	$	39		$	0	$	0		$	(39	)	$	0		$	0

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Segment Information and Geographic Data

12 Months Ended

Sep. 27, 2014

Segment Information and Geographic Data

Note 11 – 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. As the Company continues to expand its business, management believes collaboration across its online, retail and indirect channels is integral to better serving its customers and optimizing its financial results. In 2015, management began reporting business performance and making decisions primarily on a geographic basis, including the results of its retail stores in each respective geographic segment. Accordingly, to align with the way the business is currently managed, the Company’s reportable operating segments now consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. Retail is no longer reported as a separate reportable operating segment. The Americas segment includes both North and South America. The Europe segment includes European countries, as well as India, the Middle East and Africa. The Greater China segment includes China, Hong Kong and Taiwan. The Rest of Asia Pacific segment includes Australia and Asian countries, other than those countries included in the Company’s other operating segments. Each operating segment provides similar hardware and software products and similar services. 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 operating 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. In 2015, the Company also began allocating certain costs to its operating segments that were previously included in other corporate expenses, including certain share-based compensation costs. 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 operating segments. Costs excluded from segment operating income include various corporate expenses such as R&D, corporate marketing expenses, certain share-based compensation expense, 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 operating segment for 2014, 2013 and 2012 (in millions):

	2014		2013		2012
Americas:
Net sales	$	80,095	$	77,093	$	71,060
Operating income	$	26,158	$	24,829	$	26,244
Europe:
Net sales	$	44,285	$	40,980	$	39,326
Operating income	$	14,434	$	12,767	$	15,129
Greater China:
Net sales	$	31,853	$	27,016	$	23,756
Operating income	$	11,039	$	8,499	$	9,978
Japan:
Net sales	$	15,314	$	13,782	$	10,913
Operating income	$	6,904	$	6,668	$	5,826
Rest of Asia Pacific:
Net sales	$	11,248	$	12,039	$	11,453
Operating income	$	3,674	$	3,762	$	4,321

A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2014, 2013 and 2012, is as follows (in millions):

	2014			2013			2012
Segment operating income	$	62,209		$	56,525		$	61,498
Research and development expense		(6,041	)		(4,475	)		(3,381	)
Other corporate expenses, net		(3,665	)		(3,051	)		(2,876	)
Total operating income	$	52,503		$	48,999		$	55,241

The U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2014, 2013 and 2012. There was no single customer that accounted for more than 10% of net sales in 2014, 2013 or 2012. Net sales for 2014, 2013 and 2012 and long-lived assets as of September 27, 2014 and September 28, 2013 are as follows (in millions):

	2014		2013		2012
Net sales:
U.S.	$	68,909	$	66,197	$	60,949
China (1)		30,638		25,946		22,797
Other countries		83,248		78,767		72,762
Total net sales	$	182,795	$	170,910	$	156,508
	2014		2013
Long-lived assets:
U.S.	$	9,108	$	7,399
China (1)		9,477		7,403
Other countries		2,917		2,786
Total long-lived assets	$	21,502	$	17,588

⁽¹⁾  China includes Hong Kong. Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure.

In 2015, the Company changed its categorization of product-level net sales reporting to better reflect its evolving products and services. Net sales by product for 2014, 2013 and 2012 have been reclassified to conform to the Company’s 2015 presentation and are as follows (in millions):

	2014		2013		2012
Net Sales by Product:
iPhone (1)	$	101,991	$	91,279	$	78,692
iPad (1)		30,283		31,980		30,945
Mac (1)		24,079		21,483		23,221
Services (2)		18,063		16,051		12,890
Other Products (1)(3)		8,379		10,117		10,760
Total net sales	$	182,795	$	170,910	$	156,508

⁽¹⁾  Includes deferrals and amortization of related non-software services and software upgrade rights.

⁽²⁾  Includes revenue from the iTunes Store, App Store, Mac App Store and iBooks Store (collectively “iTunes”), AppleCare, licensing and other services.

⁽³⁾  Includes sales of iPod, Apple TV, Beats Electronics and Apple-branded and third-party accessories.

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Shareholders' Equity

12 Months Ended

Sep. 27, 2014

Shareholders' Equity

Note 7 – Shareholders’ Equity

Preferred and Common Stock

During the second quarter of 2014, the Company’s shareholders approved amendments (the “Amendments”) to the Company’s Restated Articles of Incorporation. The Amendments included the elimination of the Board of Directors’ authority to issue preferred stock and established a par value for the Company’s common stock of $0.00001 per share.

Dividends

The Company declared and paid cash dividends per common share during the periods presented as follows:

	Dividends Per Share		Amount (in millions)
2014:
Fourth quarter	$	0.47	$	2,807
Third quarter		0.47		2,830
Second quarter		0.44		2,655
First quarter		0.44		2,739
Total	$	1.82	$	11,031
2013:
Fourth quarter	$	0.44	$	2,763
Third quarter		0.44		2,789
Second quarter		0.38		2,490
First quarter		0.38		2,486
Total	$	1.64	$	10,528

The Company paid cash dividends of $0.38 per share, totaling $2.5 billion, during the fourth quarter of 2012. Future dividends are subject to declaration by the Board of Directors.

Share Repurchase Program

In 2012, the Company’s Board of Directors authorized a program to repurchase up to $10 billion of the Company’s common stock beginning in 2013. The Company’s Board of Directors increased the share repurchase authorization to $60 billion in April 2013 and to $90 billion in April 2014. As of September 27, 2014, $67.9 billion of the $90 billion had been utilized. 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 into four accelerated share repurchase arrangements (“ASRs”) with financial institutions beginning in August 2012. 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, will be 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 Sheet 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 presents the Company’s ASRs:

	Purchase Period End Date		Number of Shares (in thousands)		Average Repurchase Price Per Share		ASR Amount (in millions)
August 2014 ASR		(1)		59,924 (1)		(1)	$	9,000
January 2014 ASR		(1)		134,247 (1)		(1)	$	12,000
April 2013 ASR		March 2014		172,548 (2)	$	69.55	$	12,000
August 2012 ASR		April 2013		28,544	$	68.31	$	1,950

⁽¹⁾ “Number of Shares” represents those shares delivered in advance of settlement and does not represent the final number of shares to be delivered under the ASRs. The total number of shares ultimately delivered, and therefore the average repurchase price paid per share, will be determined at the end of the applicable purchase period based on the volume weighted-average price of the Company’s common stock during that period. The August 2014 ASR and January 2014 ASR purchase periods will end in or before February 2015 and December 2014, respectively.

⁽²⁾  Includes 8.0 million shares that were delivered and retired at the end of the purchase period, which concluded in the second quarter of 2014.

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)
2014:
Fourth quarter		81,255	$	98.46	$	8,000
Third quarter		58,661	$	85.23		5,000
Second quarter		79,749	$	75.24		6,000
First quarter		66,847	$	74.79		5,000
Total		286,512			$	24,000
2013:
Fourth quarter		73,064	$	68.43	$	5,000
Third quarter		62,676	$	63.82		4,000
Second quarter		0	$	0		0
First quarter		0	$	0		0
Total		135,740			$	9,000

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Summary of Dividends Declared and Paid (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended									12 Months Ended
	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Dec. 28, 2013	Sep. 28, 2013	Jun. 29, 2013	Mar. 30, 2013	Dec. 29, 2012	Sep. 29, 2012	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Dividends [Line Items]
Dividend Per Share	$ 0.47	$ 0.47	$ 0.44	$ 0.44	$ 0.44	$ 0.44	$ 0.38	$ 0.38	$ 0.38	$ 1.82	$ 1.64	$ 0.38
Amount	$ 2,807	$ 2,830	$ 2,655	$ 2,739	$ 2,763	$ 2,789	$ 2,490	$ 2,486	$ 2,500	$ 11,031	$ 10,528

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Income Taxes

12 Months Ended

Sep. 27, 2014

Income Taxes

Note 5 – Income Taxes

The provision for income taxes for 2014, 2013 and 2012, consisted of the following (in millions):

	2014			2013			2012
Federal:
Current	$	8,624		$	9,334		$	7,240
Deferred		3,183			1,878			5,018
		11,807			11,212			12,258
State:
Current		855			1,084			1,182
Deferred		(178	)		(311	)		(123	)
		677			773			1,059
Foreign:
Current		2,147			1,559			1,203
Deferred		(658	)		(426	)		(490	)
		1,489			1,133			713
Provision for income taxes	$	13,973		$	13,118		$	14,030

The foreign provision for income taxes is based on foreign pre-tax earnings of $33.6 billion, $30.5 billion and $36.8 billion in 2014, 2013 and 2012, 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 27, 2014, U.S. income taxes have not been provided on a cumulative total of $69.7 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be approximately $23.3 billion.

As of September 27, 2014 and September 28, 2013, $137.1 billion and $111.3 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 2014, 2013 and 2012) to income before provision for income taxes for 2014, 2013 and 2012, is as follows (dollars in millions):

	2014			2013			2012
Computed expected tax	$	18,719		$	17,554		$	19,517
State taxes, net of federal effect		469			508			677
Indefinitely invested earnings of foreign subsidiaries		(4,744	)		(4,614	)		(5,895	)
Research and development credit, net		(88	)		(287	)		(103	)
Domestic production activities deduction		(495	)		(308	)		(328	)
Other		112			265			162
Provision for income taxes	$	13,973		$	13,118		$	14,030
Effective tax rate		26.1%			26.2%			25.2%

The Company’s income taxes payable have been reduced by the tax benefits from employee stock plan awards. For stock options, the Company receives an income tax benefit calculated as the tax effect of the difference between the fair market value of the stock issued at the time of the exercise and the exercise price. 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 $706 million, $643 million and $1.4 billion in 2014, 2013 and 2012, respectively, which were reflected as increases to common stock.

As of September 27, 2014 and September 28, 2013, the significant components of the Company’s deferred tax assets and liabilities were (in millions):

	2014			2013
Deferred tax assets:
Accrued liabilities and other reserves	$	2,761		$	1,892
Deferred revenue		1,787			1,475
Basis of capital assets and investments		898			1,020
Share-based compensation		454			458
Other		644			1,029
Total deferred tax assets		6,544			5,874
Less valuation allowance		0			0
Deferred tax assets, net of valuation allowance		6,544			5,874
Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries		21,544			18,044
Other		120			112
Total deferred tax liabilities		21,664			18,156
Net deferred tax liabilities	$	(15,120	)	$	(12,282	)

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 27, 2014, the total amount of gross unrecognized tax benefits was $4.0 billion, of which $1.4 billion, if recognized, would affect the Company’s effective tax rate. As of September 28, 2013, the total amount of gross unrecognized tax benefits was $2.7 billion, of which $1.4 billion, if recognized, would affect the Company’s effective tax rate.

The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for 2014, 2013 and 2012, is as follows (in millions):

	2014			2013			2012
Beginning Balance	$	2,714		$	2,062		$	1,375
Increases related to tax positions taken during a prior year		1,295			745			340
Decreases related to tax positions taken during a prior year		(280	)		(118	)		(107	)
Increases related to tax positions taken during the current year		882			626			467
Decreases related to settlements with taxing authorities		(574	)		(592	)		(3	)
Decreases related to expiration of statute of limitations		(4	)		(9	)		(10	)
Ending Balance	$	4,033		$	2,714		$	2,062

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.

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Debt

12 Months Ended

Sep. 27, 2014

Debt

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

Long-Term Debt

In the third quarter of 2014 and 2013, the Company issued $12.0 billion and $17.0 billion of long-term debt, respectively. The debt issuances included floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $29.0 billion (collectively the “Notes”). The Notes are senior unsecured obligations, and interest is payable in arrears, quarterly for the floating-rate notes and semi-annually for the fixed-rate notes.

The following table provides a summary of the Company’s long-term debt as of September 27, 2014 and September 28, 2013:

	2014					2013
	Amount (in millions)			Effective Interest Rate		Amount (in millions)			Effective Interest Rate
Floating-rate notes due 2016	$	1,000			0.51%	$	1,000			0.51%
Floating-rate notes due 2017		1,000			0.31%		0			0
Floating-rate notes due 2018		2,000			1.10%		2,000			1.10%
Floating-rate notes due 2019		1,000			0.54%		0			0
Fixed-rate 0.45% notes due 2016		1,500			0.51%		1,500			0.51%
Fixed-rate 1.05% notes due 2017		1,500			0.30%		0			0
Fixed-rate 1.00% notes due 2018		4,000			1.08%		4,000			1.08%
Fixed-rate 2.10% notes due 2019		2,000			0.53%		0			0
Fixed-rate 2.85% notes due 2021		3,000			0.79%		0			0
Fixed-rate 2.40% notes due 2023		5,500			2.44%		5,500			2.44%
Fixed-rate 3.45% notes due 2024		2,500			0.90%		0			0
Fixed-rate 3.85% notes due 2043		3,000			3.91%		3,000			3.91%
Fixed-rate 4.45% notes due 2044		1,000			4.48%		0			0
Total borrowings		29,000					17,000
Unamortized discount		(52	)				(40	)
Hedge accounting fair value adjustments		39					0
Total long-term debt	$	28,987				$	16,960

The Company has entered, and may enter in the future, into interest rate swaps to manage interest rate risk on the Notes. Such swaps allow the Company to effectively convert fixed-rate payments into floating-rate payments or floating-rate payments into fixed-rate payments. In the third quarter of 2014, the Company entered into interest rate swaps with an aggregate notional amount of $9.0 billion, which effectively converted the fixed-rate notes due 2017, 2019, 2021 and 2024 into floating-rate notes. In the third quarter of 2013, the Company entered into interest rate swaps with an aggregate notional amount of $3.0 billion, which effectively converted the floating-rate notes due 2016 and 2018 into fixed-rate notes.

The effective rates for the Notes include the interest on the Notes, amortization of the discount and, if applicable, adjustments related to hedging. The Company recognized $381 million and $136 million of interest expense on its long-term debt for the years ended September 27, 2014 and September 28, 2013, respectively. The Company did not have any long-term debt in 2012.

Future principal payments for the Company’s Notes as of September 27, 2014, are as follows (in millions):

2015	$	0
2016		2,500
2017		2,500
2018		6,000
2019		3,000
Thereafter		15,000
Total	$	29,000

As of September 27, 2014 and September 28, 2013, the fair value of the Company’s Notes, based on Level 2 inputs, was $28.5 billion and $15.9 billion, respectively.

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Comprehensive Income

12 Months Ended

Sep. 27, 2014

Comprehensive Income

Note 8 – 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 gross amounts reclassified from AOCI into the Consolidated Statements of Operations and the associated financial statement line item for 2014 (in millions):

Comprehensive Income Components	Financial Statement Line Item	2014
Unrecognized gains/losses on derivative instruments:
Foreign exchange contracts	Revenue	$	449
	Cost of sales		(295	)
	Other income/expense, net		15
Interest rate contracts	Other income/expense, net		16
			185
Unrealized gains/losses on marketable securities	Other income/expense, net		(205	)
Total amounts reclassified from AOCI		$	(20	)

The following table shows the changes in AOCI by component for 2014 (in millions):

	Cumulative Foreign Currency Translation			Unrecognized Gains/Losses on Derivative Instruments			Unrealized Gains /Losses on Marketable Securities			Total
Balance at September 28, 2013	$	(105	)	$	(175	)	$	(191	)	$	(471	)
Other comprehensive income/(loss) before reclassifications		(187	)		1,687			438			1,938
Amounts reclassified from AOCI		0			185			(205	)		(20	)
Tax effect		50			(333	)		(82	)		(365	)
Other comprehensive income/(loss)		(137	)		1,539			151			1,553
Balance at September 27, 2014	$	(242	)	$	1,364		$	(40	)	$	1,082

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Gross Amounts Reclassified from AOCI into Consolidated Statements of Operations (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Unrecognized gains/losses on derivative instruments reclassified from AOCI	$ 185
Unrealized gains/losses on marketable securities reclassified from AOCI	(205)
Total amounts reclassified from AOCI	(20)
Foreign exchange contracts | Revenue
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Unrecognized gains/losses on derivative instruments reclassified from AOCI	449
Foreign exchange contracts | Cost of sales
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Unrecognized gains/losses on derivative instruments reclassified from AOCI	(295)
Foreign exchange contracts | Other income/expense, net
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Unrecognized gains/losses on derivative instruments reclassified from AOCI	15
Interest rate contracts | Other income/expense, net
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Unrecognized gains/losses on derivative instruments reclassified from AOCI	$ 16

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Benefit Plans - Additional Information (Detail) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum portion of pre-tax earnings under Savings Plan that can be deferred by participating U.S. employees	$ 17,500
Employer contribution to Savings Plan	163,000,000	135,000,000	114,000,000
Fair value of vested RSUs as of vesting date	3,400,000,000	3,100,000,000	3,300,000,000
The total shares withheld upon vesting of RSUs	15.6	15.5	16.1
Taxes paid related to net share settlement of equity awards	1,200,000,000	1,100,000,000	1,200,000,000
Stock options outstanding	6.6
Stock options, Weighted average exercise price per share	$ 21.99
Stock options, Weighted average remaining contractual term	1 year 4 months 24 days
Stock options, Aggregate intrinsic value	520,000,000
Total intrinsic value of options at the time of exercise	1,500,000,000	1,000,000,000	2,300,000,000
Income tax benefit related to share-based compensation expense	1,000,000,000	816,000,000	567,000,000
Total unrecognized compensation cost on stock options and RSUs	6,300,000,000
Total unrecognized compensation cost on stock options and RSUs, weighted-average recognition period (in years)	2 years 10 months 24 days
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance under Employee Benefit Plans (in shares)	7.6
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%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Rate of contribution to Savings Plan as a percentage of employees contribution	50.00%
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Rate of contribution to Savings Plan as a percentage of employees contribution	100.00%
Rate of contribution to Savings Plan as a percentage of employees earning	6.00%
Maximum | Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee stock purchase program authorized amount	$ 25,000
Employee Stock Plan, 2014 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized for future issuance under stock plans (in shares)	385
Shares reserved for future issuance under Employee Benefit Plans (in shares)	492.6
Employee Stock Plan, 2003 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted exercisable period	4 years
Employee Stock Plan, 2003 Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration term of options granted under Employee Benefit Plans	7 years
RSUs granted vesting period	2 years
Employee Stock Plan, 2003 Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration term of options granted under Employee Benefit Plans	10 years
RSUs granted vesting period	4 years
Directors Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance under Employee Benefit Plans (in shares)	1.2
Share based compensation, expiration date	Nov. 09, 2019

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Repurchases of Common Shares in Open Market (Detail) (Open Market Repurchases, USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Sep. 27, 2014	Jun. 28, 2014	Mar. 29, 2014	Dec. 28, 2013	Sep. 28, 2013	Jun. 29, 2013	Mar. 30, 2013	Dec. 29, 2012	Sep. 27, 2014	Sep. 28, 2013
Open Market Repurchases
Stock Repurchase Program [Line Items]
Number of Shares	81,255	58,661	79,749	66,847	73,064	62,676	0	0	286,512	135,740
Average Repurchase Price Per Share	$ 98.46	$ 85.23	$ 75.24	$ 74.79	$ 68.43	$ 63.82	$ 0.00	$ 0.00
Amount	$ 8,000	$ 5,000	$ 6,000	$ 5,000	$ 5,000	$ 4,000	$ 0	$ 0	$ 24,000	$ 9,000

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)	0 Months Ended	12 Months Ended
	Jun. 06, 2014	Sep. 27, 2014 Item	Sep. 28, 2013	Sep. 29, 2012
Significant Accounting Policies [Line Items]
Stock split ratio	7
Deliverable in arrangements		3
Advertising expense		$ 1,200,000,000	$ 1,100,000,000	$ 1,000,000,000
Measurement of tax position, minimum likelihood of tax benefits being realized upon ultimate settlement, percentage		50.00%
Depreciation and amortization expense		6,900,000,000	5,800,000,000	2,600,000,000
Goodwill impairment charges		0	0	0
Indefinite lived intangible asset impairment charges		0	0	0
Minimum
Significant Accounting Policies [Line Items]
Estimated selling price for software upgrade right and non-software services for qualifying hardware devices (USD/unit sold)		5	5	5
Estimated life of hardware device		2 years	2 years	2 years
Amortized acquired intangible assets with definite useful lives period (in years)		3 years
Maximum
Significant Accounting Policies [Line Items]
Estimated selling price for software upgrade right and non-software services for qualifying hardware devices (USD/unit sold)		40	40	40
Estimated life of hardware device		4 years	4 years	4 years
Amortized acquired intangible assets with definite useful lives period (in years)		7 years
Building | Maximum
Significant Accounting Policies [Line Items]
Estimated useful lives of assets (Years)		30 years
Machinery and Equipment | Minimum
Significant Accounting Policies [Line Items]
Estimated useful lives of assets (Years)		2 years
Machinery and Equipment | Maximum
Significant Accounting Policies [Line Items]
Estimated useful lives of assets (Years)		5 years
Leasehold Improvements | Maximum
Significant Accounting Policies [Line Items]
Estimated useful lives of assets (Years)		10 years
Internal-Use Software | Minimum
Significant Accounting Policies [Line Items]
Estimated useful lives of assets (Years)		3 years
Internal-Use Software | Maximum
Significant Accounting Policies [Line Items]
Estimated useful lives of assets (Years)		5 years
Mac
Significant Accounting Policies [Line Items]
Estimated selling price for software upgrade right and non-software services for qualifying hardware devices (USD/unit sold)		40
iPhone and iPad | Minimum
Significant Accounting Policies [Line Items]
Estimated selling price for software upgrade right and non-software services for qualifying hardware devices (USD/unit sold)		15
iPhone and iPad | Maximum
Significant Accounting Policies [Line Items]
Estimated selling price for software upgrade right and non-software services for qualifying hardware devices (USD/unit sold)		$ 25

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Reconciliation of the Provision for Income Taxes (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Income Taxes [Line Items]
Computed expected tax	$ 18,719	$ 17,554	$ 19,517
State taxes, net of federal effect	469	508	677
Indefinitely invested earnings of foreign subsidiaries	(4,744)	(4,614)	(5,895)
Research and development credit, net	(88)	(287)	(103)
Domestic production activities deduction	(495)	(308)	(328)
Other	112	265	162
Provision for income taxes	$ 13,973	$ 13,118	$ 14,030
Effective tax rate	26.10%	26.20%	25.20%

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Sep. 27, 2014

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. 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.

The Company’s fiscal year is the 52 or 53-week period that ends on the last Saturday of September. The Company’s fiscal years 2014, 2013 and 2012 ended on September 27, 2014, September 28, 2013 and September 29, 2012, respectively. An additional week is included in the first fiscal quarter approximately every six years to realign fiscal quarters with calendar quarters. Fiscal years 2014 and 2013 spanned 52 weeks each. Fiscal year 2012 spanned 53 weeks, with a 14th week included in the first quarter of 2012. 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.

During the first quarter of 2014, the Company adopted updated accounting standards that (i) required disclosure of additional information about the amounts reclassified out of accumulated other comprehensive income (“AOCI”) by component and (ii) required gross and net disclosures about offsetting assets and liabilities. The adoption of these updated standards only impacted the disclosures in the Notes to Consolidated Financial Statements; accordingly, the adoption had no impact on the Company’s financial position or results of operations. The Company has provided these additional disclosures in Note 8, “Comprehensive Income” and Note 2, “Financial Instruments,” respectively.

In 2015, the Company changed its reportable operating segments, began allocating certain costs to its operating segments that were previously included in other corporate expenses and changed its categorization of product-level net sales reporting. The Company has reclassified the 2014, 2013 and 2012 amounts to conform to the 2015 presentation as further described in Note 11, “Segment Information and Geographic Data.”

Common Stock Split

Common Stock Split

On June 6, 2014, the Company effected a seven-for-one stock split to shareholders of record as of June 2, 2014. All share and per share information has been retroactively adjusted to reflect the stock split.

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. 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 the iTunes 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 and iPod touch (“iOS devices”), Mac and Apple TV, the Company has indicated it may from time to time provide future unspecified software upgrades and features to the essential software bundled with each of these hardware products free of charge to customers. Essential software for iOS devices includes iOS and related applications and for Mac includes OS X and related applications. The Company also provides various non-software services to owners of qualifying versions of iOS devices and Mac. The Company has identified up to three deliverables regularly included in arrangements involving the sale of these devices. The first deliverable 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 the purchase of iOS devices, Mac 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 third deliverable is the non-software services to be provided to qualifying versions of iOS devices and Mac. 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 for each of these devices, which ranges from two to four years. 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. The Company believes its customers would be reluctant to buy unspecified software upgrade rights for the essential software included with its qualifying hardware products. This view is primarily based on the fact that unspecified software upgrade rights do not obligate the Company to provide upgrades at a particular time or at all, and do not specify to customers which upgrades or features will be delivered. The Company also believes its customers would be unwilling to pay a significant amount for access to the non-software services because other companies offer similar services at little or no cost to users. Therefore, the Company has concluded that if it were to sell upgrade rights or access to the non-software services on a standalone basis, including those rights and services attached to iOS devices, Mac and Apple TV, the selling prices would be relatively low. Key factors considered by the Company in developing the ESPs for software upgrade rights include prices charged by the Company for similar offerings, market trends in the pricing of Apple-branded and third-party Mac and iOS compatible software, the nature of the upgrade rights (e.g., unspecified versus specified) and the relative ESP of the upgrade rights as compared to the total selling price of the product. The Company may also consider additional factors as appropriate, including the impact of other products and services provided to customers, the pricing of competitive alternatives if they exist, product-specific business objectives and the length of time a particular version of a device has been available. When relevant, the same factors are considered by the Company in developing ESPs for offerings such as the non-software services with additional consideration given to the estimated cost to provide such services.

In 2014, 2013 and 2012, the Company’s combined ESPs for the unspecified software upgrade rights and the rights to receive the non-software services included with its qualifying hardware devices have ranged from $5 to $40. As of September 27, 2014, the combined ESPs for Mac was $40 and for iPhone and iPad ranged from $15 to $25. Revenue allocated to such rights is deferred and recognized on a straight-line basis over the estimated period the rights are expected to be provided for each device, which ranges from two to four years.

Shipping Costs

Shipping Costs

For all periods presented, amounts billed to customers related to shipping and handling are classified as revenue, and the Company’s shipping and handling costs are included in cost of sales.

Warranty Costs

Warranty Costs

The Company generally provides for the estimated cost of hardware and software warranties at the time the related revenue is recognized. The Company assesses the adequacy of its pre-existing 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. Costs incurred subsequent to achievement of technological feasibility were not significant, and software development costs were expensed as incurred during 2014, 2013 and 2012.

Advertising Costs

Advertising Costs

Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Advertising expense was $1.2 billion, $1.1 billion and $1.0 billion for 2014, 2013 and 2012, respectively.

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 enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. Share-based compensation cost for restricted stock and restricted stock units (“RSUs”) is measured based on the closing fair market value of the Company’s common stock on the date of grant. The Company recognizes share-based compensation cost 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 metrics. The Company recognizes a benefit from share-based compensation in the Consolidated Statements of Shareholders’ Equity if an incremental 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 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

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 outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan, unvested restricted stock and unvested RSUs. 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 2014, 2013 and 2012 (net income in millions and shares in thousands):

	2014		2013		2012
Numerator:
Net income	$	39,510	$	37,037	$	41,733
Denominator:
Weighted-average shares outstanding		6,085,572		6,477,320		6,543,726
Effect of dilutive securities		37,091		44,314		73,757
Weighted-average diluted shares		6,122,663		6,521,634		6,617,483
Basic earnings per share	$	6.49	$	5.72	$	6.38
Diluted earnings per share	$	6.45	$	5.68	$	6.31

Potentially dilutive securities, the effect of which would have been antidilutive, were not significant for 2014, 2013 and 2012. The Company excluded these securities from the computation of diluted earnings per share.

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 designations 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. The Company classifies its marketable equity securities, including mutual funds, 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 the unrealized gains and losses, net of taxes, reported as a component of shareholders’ equity. 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 income 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 current income. 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 income. 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 attributable to the hedged risk are recognized in earnings in the current period. For derivative instruments designated as a hedge of the foreign currency translation exposure of the net investment in a foreign operation, 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 component are recognized in current income. Derivatives that do not qualify as hedges are adjusted to fair value through current income.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect customers’ ability to pay.

Inventories

Inventories

Inventories are stated at the lower of cost, computed using the first-in, first-out method, or market. If the cost of the inventories exceeds their market value, provisions are made currently for the difference between the cost and the market value.

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 two to five years for machinery and equipment, including product tooling and manufacturing process 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 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 $6.9 billion, $5.8 billion and $2.6 billion during 2014, 2013 and 2012, respectively.

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 certain identifiable intangibles, excluding goodwill, 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 assets exceeds its fair value. The Company did not record any significant impairments during 2014, 2013 and 2012.

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 whenever 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 2014, 2013 and 2012. The Company established reporting units based on its current reporting structure. For purposes of testing goodwill for impairment, goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. In 2014 and 2013, the Company’s goodwill was allocated to the Americas and Europe reportable operating segments.

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, which 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 in pricing 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. Gains and losses from these remeasurements were not significant during 2014, 2013 and 2012 and have been included in the Company’s results of operations.

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Income Taxes (Tables)

12 Months Ended

Sep. 27, 2014

Provision for Income Taxes

The provision for income taxes for 2014, 2013 and 2012, consisted of the following (in millions):

	2014			2013			2012
Federal:
Current	$	8,624		$	9,334		$	7,240
Deferred		3,183			1,878			5,018
		11,807			11,212			12,258
State:
Current		855			1,084			1,182
Deferred		(178	)		(311	)		(123	)
		677			773			1,059
Foreign:
Current		2,147			1,559			1,203
Deferred		(658	)		(426	)		(490	)
		1,489			1,133			713
Provision for income taxes	$	13,973		$	13,118		$	14,030

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 2014, 2013 and 2012) to income before provision for income taxes for 2014, 2013 and 2012, is as follows (dollars in millions):

	2014			2013			2012
Computed expected tax	$	18,719		$	17,554		$	19,517
State taxes, net of federal effect		469			508			677
Indefinitely invested earnings of foreign subsidiaries		(4,744	)		(4,614	)		(5,895	)
Research and development credit, net		(88	)		(287	)		(103	)
Domestic production activities deduction		(495	)		(308	)		(328	)
Other		112			265			162
Provision for income taxes	$	13,973		$	13,118		$	14,030
Effective tax rate		26.1%			26.2%			25.2%

Significant Components of Deferred Tax Assets and Liabilities

As of September 27, 2014 and September 28, 2013, the significant components of the Company’s deferred tax assets and liabilities were (in millions):

	2014			2013
Deferred tax assets:
Accrued liabilities and other reserves	$	2,761		$	1,892
Deferred revenue		1,787			1,475
Basis of capital assets and investments		898			1,020
Share-based compensation		454			458
Other		644			1,029
Total deferred tax assets		6,544			5,874
Less valuation allowance		0			0
Deferred tax assets, net of valuation allowance		6,544			5,874
Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries		21,544			18,044
Other		120			112
Total deferred tax liabilities		21,664			18,156
Net deferred tax liabilities	$	(15,120	)	$	(12,282	)

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 2014, 2013 and 2012, is as follows (in millions):

	2014			2013			2012
Beginning Balance	$	2,714		$	2,062		$	1,375
Increases related to tax positions taken during a prior year		1,295			745			340
Decreases related to tax positions taken during a prior year		(280	)		(118	)		(107	)
Increases related to tax positions taken during the current year		882			626			467
Decreases related to settlements with taxing authorities		(574	)		(592	)		(3	)
Decreases related to expiration of statute of limitations		(4	)		(9	)		(10	)
Ending Balance	$	4,033		$	2,714		$	2,062

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Provision for Income Taxes (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012
Federal:
Current	$ 8,624	$ 9,334	$ 7,240
Deferred	3,183	1,878	5,018
Federal Income Tax Expense (Benefit), Continuing Operations, Total	11,807	11,212	12,258
State:
Current	855	1,084	1,182
Deferred	(178)	(311)	(123)
State and Local Income Tax Expense (Benefit), Continuing Operations, Total	677	773	1,059
Foreign:
Current	2,147	1,559	1,203
Deferred	(658)	(426)	(490)
Foreign Income Tax Expense (Benefit), Continuing Operations, Total	1,489	1,133	713
Provision for income taxes	$ 13,973	$ 13,118	$ 14,030

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Inventory (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013
Inventory [Line Items]
Components	$ 471	$ 683
Finished goods	1,640	1,081
Total inventories	$ 2,111	$ 1,764

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CONSOLIDATED BALANCE SHEETS (USD $) In Millions, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013
Current assets:
Cash and cash equivalents	$ 13,844	$ 14,259
Short-term marketable securities	11,233	26,287
Accounts receivable, less allowances of $86 and $99, respectively	17,460	13,102
Inventories	2,111	1,764
Deferred tax assets	4,318	3,453
Vendor non-trade receivables	9,759	7,539
Other current assets	9,806	6,882
Total current assets	68,531	73,286
Long-term marketable securities	130,162	106,215
Property, plant and equipment, net	20,624	16,597
Goodwill	4,616	1,577
Acquired intangible assets, net	4,142	4,179
Other assets	3,764	5,146
Total assets	231,839	207,000
Current liabilities:
Accounts payable	30,196	22,367
Accrued expenses	18,453	13,856
Deferred revenue	8,491	7,435
Commercial paper	6,308	0
Total current liabilities	63,448	43,658
Deferred revenue - non-current	3,031	2,625
Long-term debt	28,987	16,960
Other non-current liabilities	24,826	20,208
Total liabilities	120,292	83,451
Commitments and contingencies
Shareholders' equity:
Common stock and additional paid-in capital, $0.00001 par value; 12,600,000 shares authorized; 5,866,161 and 6,294,494 shares issued and outstanding, respectively	23,313	19,764
Retained earnings	87,152	104,256
Accumulated other comprehensive income/(loss)	1,082	(471)
Total shareholders' equity	111,547	123,549
Total liabilities and shareholders' equity	$ 231,839	$ 207,000

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Financial Instruments

12 Months Ended

Sep. 27, 2014

Financial Instruments

Note 2 – Financial Instruments

Cash, Cash Equivalents and Marketable Securities

The following tables show the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- or long-term marketable securities as of September 27, 2014 and September 28, 2013 (in millions):

	2014
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	10,232	$	0	$	0		$	10,232	$	10,232	$	0	$	0
Level 1:
Money market funds		1,546		0		0			1,546		1,546		0		0
Mutual funds		2,531		1		(132	)		2,400		0		2,400		0
Subtotal		4,077		1		(132	)		3,946		1,546		2,400		0
Level 2:
U.S. Treasury securities		23,140		15		(9	)		23,146		12		607		22,527
U.S. agency securities		7,373		3		(11	)		7,365		652		157		6,556
Non-U.S. government securities		6,925		69		(69	)		6,925		0		204		6,721
Certificates of deposit and time deposits		3,832		0		0			3,832		1,230		1,233		1,369
Commercial paper		475		0		0			475		166		309		0
Corporate securities		85,431		296		(241	)		85,486		6		6,298		79,182
Municipal securities		940		8		0			948		0		0		948
Mortgage- and asset-backed securities		12,907		26		(49	)		12,884		0		25		12,859
Subtotal		141,023		417		(379	)		141,061		2,066		8,833		130,162
Total	$	155,332	$	418	$	(511	)	$	155,239	$	13,844	$	11,233	$	130,162

	2013
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	8,705	$	0	$	0		$	8,705	$	8,705	$	0	$	0
Level 1:
Money market funds		1,793		0		0			1,793		1,793		0		0
Mutual funds		3,999		0		(197	)		3,802		0		3,802		0
Subtotal		5,792		0		(197	)		5,595		1,793		3,802		0
Level 2:
U.S. Treasury securities		27,642		24		(47	)		27,619		431		7,554		19,634
U.S. agency securities		16,878		12		(52	)		16,838		177		3,412		13,249
Non-U.S. government securities		5,545		35		(137	)		5,443		50		313		5,080
Certificates of deposit and time deposits		2,344		0		0			2,344		1,264		844		236
Commercial paper		2,998		0		0			2,998		1,835		1,163		0
Corporate securities		54,586		275		(252	)		54,609		0		8,077		46,532
Municipal securities		6,257		45		(22	)		6,280		4		1,114		5,162
Mortgage- and asset-backed securities		16,396		23		(89	)		16,330		0		8		16,322
Subtotal		132,646		414		(599	)		132,461		3,761		22,485		106,215
Total	$	147,143	$	414	$	(796	)	$	146,761	$	14,259	$	26,287	$	106,215

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 net realized gains or losses recognized by the Company, related to such sales, were not significant during 2014, 2013 and 2012. The maturities of the Company’s long-term marketable securities generally range from one to five years.

As of September 27, 2014 and September 28, 2013, gross unrealized losses related to individual securities that had been in a continuous loss position for 12 months or longer were not significant.

As of September 27, 2014, the Company considers the declines in market value of its marketable securities investment portfolio to be temporary in nature and does not consider any of its investments other-than-temporarily impaired. The Company typically invests in highly-rated securities, and its investment policy 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. During 2014, 2013 and 2012 the Company did not recognize any significant impairment charges.

Derivative Financial Instruments

The Company uses derivatives to partially offset its business exposure to foreign currency and interest rate risk. The Company may enter into forward contracts, option contracts, swaps, or other derivative instruments to offset some of the 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 hedge a portion of forecasted foreign currency revenue. The Company’s 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 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.

The Company may also enter into foreign currency forward contracts and option contracts to partially offset the foreign currency exchange gains and losses generated by the re-measurement 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 long-term debt or investments.

The Company records all derivatives in the Consolidated Balance Sheets at fair value. The Company’s accounting treatment for these instruments is based on the hedge designation. The effective portions of cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings. 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. The effective portions of net investment hedges are recorded in other comprehensive income (“OCI”) as a part of the cumulative translation adjustment. The ineffective portions of cash flow hedges and net investment hedges are recorded in other income and expense. 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.

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 as a component of other income/(expense), net in the same period as the related income or expense is recognized. The Company’s foreign currency and interest rate transactions hedged with cash flow hedges as of September 27, 2014 are expected to occur within 12 months and four years, respectively.

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 immediately into other income and expense. Any subsequent changes in fair value of such derivative instruments are reflected in other income and expense unless they are re-designated as hedges of other transactions. The Company did not recognize any significant net gains or losses related to the loss of hedge designation on discontinued cash flow hedges during 2014, 2013 and 2012.

The gain/loss recognized in other income and expense for foreign currency forward and option contracts not designated as hedging instruments was not significant during 2014, 2013 and 2012. These amounts represent the net gain or loss on the derivative contracts and do not include changes in the related exposures, which generally offset a portion of the gain or loss on the derivative contracts.

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 27, 2014 and September 28, 2013 (in millions):

	2014				2013
	Notional Amount		Credit Risk Amounts		Notional Amount		Credit Risk Amounts
Instruments designated as accounting hedges:
Foreign exchange contracts	$	42,945	$	1,333	$	35,013	$	159
Interest rate contracts	$	12,000	$	89	$	3,000	$	44
Instruments not designated as accounting hedges:
Foreign exchange contracts	$	38,510	$	222	$	16,131	$	25

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 gross exposure on these transactions may be further mitigated by collateral received from certain counterparties. 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. As of September 27, 2014, the Company received $2.1 billion of cash collateral related to the derivative instruments under its collateral security arrangements, which were recorded as accrued expenses in the Consolidated Balance Sheet. As of September 28, 2013, the Company posted cash collateral related to the derivative instruments under its collateral security arrangements of $164 million, which were recorded as other current assets in the Consolidated Balance Sheet. The Company did not have any derivative instruments with credit-risk related contingent features that would require it to post additional collateral as of September 27, 2014 or September 28, 2013.

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 27, 2014 and September 28, 2013, 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 $1.6 billion and $333 million, respectively, resulting in net derivative liabilities of $549 million and $57 million, respectively.

The following tables show the Company’s derivative instruments at gross fair value as reflected in the Consolidated Balance Sheets as of September 27, 2014 and September 28, 2013 (in millions):

	2014
	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	$	1,332	$	222	$	1,554
Interest rate contracts	$	81	$	0	$	81
Derivative liabilities (2):
Foreign exchange contracts	$	41	$	40	$	81

	2013
	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	$	145	$	25	$	170
Interest rate contracts	$	44	$	0	$	44
Derivative liabilities (2):
Foreign exchange contracts	$	389	$	46	$	435

⁽¹⁾ The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other 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 in the Consolidated Balance Sheets.

The following tables show the pre-tax effect of the Company’s derivative instruments designated as cash flow, net investment and fair value hedges on OCI and the Consolidated Statements of Operations for 2014, 2013 and 2012 (in millions):

	Gains/(Losses) Recognized in OCI - Effective  Portion								Gains/(Losses) Reclassified from AOCI into  Net Income - Effective Portion
	2014			2013		2012			2014			2013			2012
Cash flow hedges:
Foreign exchange contracts	$	1,750		$	891	$	(175	)	$	(154	)	$	676		$	607
Interest rate contracts		(15	)		12		0			(16	)		(6	)		0
Total	$	1,735		$	903	$	(175	)	$	(170	)	$	670		$	607
Net investment hedges:
Foreign exchange contracts	$	53		$	143	$	(5	)	$	0		$	0		$	0
	Gains/(Losses) On Derivative Instruments								Gains/(Losses) Related to Hedged Items
	2014			2013		2012			2014			2013			2012
Fair value hedges:
Interest rate contracts	$	39		$	0	$	0		$	(39	)	$	0		$	0

The Company recognized a charge of $120 million, $301 million and $658 million in other income and expense during 2014, 2013 and 2012, respectively, for the ineffective portions of and amounts excluded from the effectiveness testing of cash flow hedges. The ineffective portions of and amounts excluded from the effectiveness testing of net investment and fair value hedges recognized in other income and expense were not significant during 2014, 2013 and 2012.

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 27, 2014, the Company had two customers that represented 10% or more of total trade receivables, one of which accounted for 16% and the other 13%. As of September 28, 2013, the Company had two customers that represented 10% or more of total trade receivables, one of which accounted for 13% and the other 10%. The Company’s cellular network carriers accounted for 72% and 68% of trade receivables as of September 27, 2014 and September 28, 2013, respectively. The additions and write-offs to the Company’s allowance for doubtful accounts during 2014, 2013 and 2012 were not significant.

Vendor Non-Trade Receivables

The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these manufacturing vendors who manufacture sub-assemblies or assemble final products for the Company. The Company purchases these components directly from suppliers. Three of the Company’s vendors accounted for 51%, 16% and 14% of total vendor non-trade receivables as of September 27, 2014 and three of the Company’s vendors accounted for 47%, 21% and 15% of total vendor non-trade receivables as of September 28, 2013. The Company does not reflect the sale of these components in net sales and does not recognize any profits on these sales until the related products are sold by the Company, at which time any profit is recognized as a reduction of cost of sales.

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Debt Instrument Future Principal Payments (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013
Long Term Debt Maturities Repayments Of Principal [Line Items]
2015	$ 0
2016	2,500
2017	2,500
2018	6,000
2019	3,000
Thereafter	15,000
Total	$ 29,000	$ 17,000

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Commitments and Contingencies - Additional Information (Detail) (USD $)	12 Months Ended			0 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 29, 2012	Nov. 06, 2012	Mar. 06, 2014	Aug. 24, 2012
Commitments and Contingencies Disclosure [Line Items]
Basic limited parts and labor warranty	The Company offers a basic limited parts and labor warranty on its hardware products. The basic warranty period for hardware products is typically one year from the date of purchase by the end-user. The Company also offers a 90-day basic warranty for its service parts used to repair the Company's hardware products. The Company provides currently for the estimated cost that may be incurred under its basic limited product warranties at the time related revenue is recognized.
Purchase commitments maximum period	150 days
Total future minimum lease payments under noncancelable operating leases	$ 4,987,000,000
Rent expense under cancelable and noncancelable operating leases	717,000,000	645,000,000	488,000,000
Outstanding off-balance sheet third party manufacturing commitments and component purchase commitments	24,500,000,000
Additional off-balance sheet obligations	3,400,000,000
Indemnification Agreement
Commitments and Contingencies Disclosure [Line Items]
Liability for infringement costs	0	0
Major Facility Lease | Maximum
Commitments and Contingencies Disclosure [Line Items]
Term of leases	10 years
Retail Space Lease
Commitments and Contingencies Disclosure [Line Items]
Total future minimum lease payments under noncancelable operating leases	3,600,000,000
Retail Space Lease | Maximum
Commitments and Contingencies Disclosure [Line Items]
Term of leases	20 years
Retail Space Lease | Minimum
Commitments and Contingencies Disclosure [Line Items]
Term of leases	5 years
Retail Space Lease | Majority
Commitments and Contingencies Disclosure [Line Items]
Term of leases	10 years
Samsung Electronics Co Ltd
Commitments and Contingencies Disclosure [Line Items]
Result of legal proceedings						1,050,000,000
Award from legal proceeding					930,000,000
VirnetX, Inc.
Commitments and Contingencies Disclosure [Line Items]
Result of legal proceedings				$ 368,000,000
Hardware products
Commitments and Contingencies Disclosure [Line Items]
Warranty period	1 year
Service parts
Commitments and Contingencies Disclosure [Line Items]
Warranty period	90 days

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Debt (Tables)

12 Months Ended

Sep. 27, 2014

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 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

Summary of Long-Term Debt

The following table provides a summary of the Company’s long-term debt as of September 27, 2014 and September 28, 2013:

	2014					2013
	Amount (in millions)			Effective Interest Rate		Amount (in millions)			Effective Interest Rate
Floating-rate notes due 2016	$	1,000			0.51%	$	1,000			0.51%
Floating-rate notes due 2017		1,000			0.31%		0			0
Floating-rate notes due 2018		2,000			1.10%		2,000			1.10%
Floating-rate notes due 2019		1,000			0.54%		0			0
Fixed-rate 0.45% notes due 2016		1,500			0.51%		1,500			0.51%
Fixed-rate 1.05% notes due 2017		1,500			0.30%		0			0
Fixed-rate 1.00% notes due 2018		4,000			1.08%		4,000			1.08%
Fixed-rate 2.10% notes due 2019		2,000			0.53%		0			0
Fixed-rate 2.85% notes due 2021		3,000			0.79%		0			0
Fixed-rate 2.40% notes due 2023		5,500			2.44%		5,500			2.44%
Fixed-rate 3.45% notes due 2024		2,500			0.90%		0			0
Fixed-rate 3.85% notes due 2043		3,000			3.91%		3,000			3.91%
Fixed-rate 4.45% notes due 2044		1,000			4.48%		0			0
Total borrowings		29,000					17,000
Unamortized discount		(52	)				(40	)
Hedge accounting fair value adjustments		39					0
Total long-term debt	$	28,987				$	16,960

Future Principal Payments for Notes

Future principal payments for the Company’s Notes as of September 27, 2014, are as follows (in millions):

2015	$	0
2016		2,500
2017		2,500
2018		6,000
2019		3,000
Thereafter		15,000
Total	$	29,000

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Segment Information and Geographic Data - Additional Information (Detail)	12 Months Ended
	Sep. 27, 2014
Segment Reporting Information [Line Items]
Countries representing greater than 10% of net sales	The U.S. and China were the only countries that accounted for more than 10% of the Company's net sales in 2014, 2013 and 2012
Customers representing greater than 10% of net sales	No single customer that accounted for more than 10% of net sales in 2014, 2013 or 2012

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Notional Amounts of Outstanding Derivative Instruments and Credit Risk Amounts Associated with Outstanding or Unsettled Derivative Instruments (Detail) (USD $) In Millions, unless otherwise specified	Sep. 27, 2014	Sep. 28, 2013
Derivatives Designated as Hedging Instruments | Foreign exchange contracts
Derivative [Line Items]
Notional Amount	$ 42,945	$ 35,013
Credit Risk	1,333	159
Derivatives Designated as Hedging Instruments | Interest rate contracts
Derivative [Line Items]
Notional Amount	12,000	3,000
Credit Risk	89	44
Not Designated as Hedging Instrument | Foreign exchange contracts
Derivative [Line Items]
Notional Amount	38,510	16,131
Credit Risk	$ 222	$ 25

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Selected Quarterly Financial Information (Unaudited)

12 Months Ended

Sep. 27, 2014

Selected Quarterly Financial Information (Unaudited)

Note 12 – 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 2014 and 2013 (in millions, except per share amounts):

	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
2014:
Net sales	$	42,123	$	37,432	$	45,646	$	57,594
Gross margin	$	16,009	$	14,735	$	17,947	$	21,846
Net income	$	8,467	$	7,748	$	10,223	$	13,072
Earnings per share (1):
Basic	$	1.43	$	1.29	$	1.67	$	2.08
Diluted	$	1.42	$	1.28	$	1.66	$	2.07

	Fourth Quarter		Third Quarter		Second Quarter		First Quarter
2013:
Net sales	$	37,472	$	35,323	$	43,603	$	54,512
Gross margin	$	13,871	$	13,024	$	16,349	$	21,060
Net income	$	7,512	$	6,900	$	9,547	$	13,078
Earnings per share (1):
Basic	$	1.19	$	1.07	$	1.45	$	1.99
Diluted	$	1.18	$	1.07	$	1.44	$	1.97

⁽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.