SEC Comment Letter for Apple (AAPL) — Dec 22, 2008
Apple Inc.
Date: Dec. 22, 2008 · CIK: 0000320193 · Accession: 0000000000-08-063179
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-10030
Letter
Mail Stop 4561 Via Fax (408) 974-2023 December 22, 2008 Peter Oppenheimer Senior VP and Chief Financial Officer Apple Inc. 1 Infinite Loop Cupertino, CA 95014 Re: Apple Inc. Form 10-K for the Fiscal Year Ended September 27, 2008 Filed on November 5, 2008 File No. 000-10030
Dear Mr. Oppenheimer: We have reviewed the above-referenced filing and have the following comments. If indicated, we think you should revise your document in response to these comments. If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. Please be as detailed as necessary in your explanation. In some of our comments, we may ask you to provide us with supplemental information so we may better understand your disclosure. After reviewing this information, we may raise additional comments. Please understand that the purpose of our re view process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter. Form 10-K for the fiscal year ended September 27, 2008
Consolidated Statements of Cash Flows, page 57
1. We note that you have recorded excess income tax benefits from stock-based compensation as a cash inflow from fina ncing activities in fiscal 2008, 2007, and 2006. Please tell us your consideration for separately presenting a corresponding cash outflow from operating activities for these excess tax benefits pursuant to paragraph 23(c) of SFAS No. 95 and paragraph A96 of SFAS No. 123R. In
Peter Oppenheimer Apple Inc. December 22, 2008 Page 2 addition, please tell us where you have classified the excess tax benefit within your cash flows from operat ing activities in each y ear presented and why you believe that offsetting the excess tax bene fits against changes in other operating cash flow activitie s is appropriate. Note 1. Summary of Significant Accounting Policies
Warranty Expense, page 61
2. We note that the Company recognizes warranty expense as incurred for arrangements accounted for under the subs cription model pursuant to SOP 97-2. Please confirm if warranty expense relate s to the basic warranty and/or the AppleCare Protection Plan (“APP”) extende d service and support. If it only includes the basic warranty costs, then please describe the Company’s accounting policy for recognizing costs for the A ppleCare Protection Plan for these arrangements. Additionally, please describe the accounting literature that the Company considered in determining that expensing warranty costs as incurred is appropriate. Note 8. Commitments and Contingencies, page 79
3. In the disclosure on pages 81 and 82, the Co mpany indicates that it does not have a “potential liability” for unresolved infringement claims subject to indemnification or current legal proceedi ngs and claims that would not have a material adverse effect on the fina ncial condition or operating results both individually or in aggregat e. Pursuant to Question 5 of SAB 92, please be advised that a statement that a con tingency is not expected to be material does not satisfy the requirements of SFAS 5 if there is at least a reasonable po ssibility that a loss exceeding amounts already recognized may ha ve been incurred and the amount of that additional loss would be material to a decision to buy or sell your securities. If these circumstances apply to th e Company, tell us how the Company considered disclosing either (a) the estimated additional loss, or range of loss, that is reasonably possible or (b) state that such an estimate cannot be made for indemnification clauses or outstanding legal claims.
* * * * * * *
Please respond to these comments within 10 business days or tell us when you will provide us with a response. Please submit all correspondence and supplemental materials on EDGAR as required by Rule 101 of Regulation S-T. If you amend your filing(s), you may wish to provide us with marked copies of any amendment to expedite our review. Please furnish a cover letter that keys your response to our comments and provides any requested information. Detailed co ver letters greatly faci litate our review.
Peter Oppenheimer Apple Inc. December 22, 2008 Page 3 Please understand that we may have addi tional comments after reviewing any amendment and your response to our comments. We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all in formation required under the Securities Exchange Act of 1934 and th at they have provided all information investors require for an informed invest ment decision. Since the company and its management are in possession of all facts re lating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclosure in the filing; • staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and • the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all information you provide to the staff of the Divi sion of Corporation Fi nance in our review of your filing or in response to our comments on your filing. You may contact Melissa Fe ider, Staff Accountant, at (202) 551-3379 if you have any questions. If you need further assist ance, you may contact me at (202) 551-3226. S i n c e r e l y , C r a i g W i l s o n Sr. Asst. Chief Accountant
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Mail Stop 4561
Via Fax (408) 974-2023
December 22, 2008 Peter Oppenheimer Senior VP and Chief Financial Officer Apple Inc. 1 Infinite Loop Cupertino, CA 95014
Re: Apple Inc.
Form 10-K for the Fiscal Year Ended September 27, 2008
Filed on November 5, 2008
File No. 000-10030
Dear Mr. Oppenheimer:
We have reviewed the above-referenced filing and have the following comments.
If indicated, we think you should revise your document in response to these comments.
If you disagree, we will consider your explanation as to why our comment is inapplicable
or a revision is unnecessary. Please be as detailed as necessary in your explanation. In some of our comments, we may ask you to provide us with supplemental information so we may better understand your disclosure. After reviewing this information, we may
raise additional comments.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We
welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Form 10-K for the fiscal year ended September 27, 2008
Consolidated Statements of Cash Flows, page 57
1. We note that you have recorded excess income tax benefits from stock-based
compensation as a cash inflow from fina ncing activities in fiscal 2008, 2007, and
2006. Please tell us your consideration for separately presenting a corresponding cash outflow from operating activities for these excess tax benefits pursuant to
paragraph 23(c) of SFAS No. 95 and paragraph A96 of SFAS No. 123R. In
Peter Oppenheimer
Apple Inc.
December 22, 2008 Page 2
addition, please tell us where you have classified the excess tax benefit within your cash flows from operat ing activities in each y ear presented and why you
believe that offsetting the excess tax bene fits against changes in other operating
cash flow activitie s is appropriate.
Note 1. Summary of Significant Accounting Policies
Warranty Expense, page 61
2. We note that the Company recognizes warranty expense as incurred for
arrangements accounted for under the subs cription model pursuant to SOP 97-2.
Please confirm if warranty expense relate s to the basic warranty and/or the
AppleCare Protection Plan (“APP”) extende d service and support. If it only
includes the basic warranty costs, then please describe the Company’s accounting
policy for recognizing costs for the A ppleCare Protection Plan for these
arrangements. Additionally, please describe the accounting literature that the Company considered in determining that expensing warranty costs as incurred is
appropriate.
Note 8. Commitments and Contingencies, page 79
3. In the disclosure on pages 81 and 82, the Co mpany indicates that it does not have
a “potential liability” for unresolved infringement claims subject to
indemnification or current legal proceedi ngs and claims that would not have a
material adverse effect on the fina ncial condition or operating results both
individually or in aggregat e. Pursuant to Question 5 of SAB 92, please be advised
that a statement that a con tingency is not expected to be material does not satisfy
the requirements of SFAS 5 if there is at least a reasonable po ssibility that a loss
exceeding amounts already recognized may ha ve been incurred and the amount of
that additional loss would be material to a decision to buy or sell your securities.
If these circumstances apply to th e Company, tell us how the Company
considered disclosing either (a) the estimated additional loss, or range of loss, that is reasonably possible or (b) state that such an estimate cannot be made for
indemnification clauses or outstanding legal claims.
* * * * * * *
Please respond to these comments within 10 business days or tell us when you
will provide us with a response. Please submit all correspondence and supplemental
materials on EDGAR as required by Rule 101 of Regulation S-T. If you amend your
filing(s), you may wish to provide us with marked copies of any amendment to expedite our review. Please furnish a cover letter that keys your response to our comments and provides any requested information. Detailed co ver letters greatly faci litate our review.
Peter Oppenheimer
Apple Inc. December 22, 2008 Page 3 Please understand that we may have addi tional comments after reviewing any
amendment and your response to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision. Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please provide, in writing, a
statement from the company acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclosure in the
filing;
• staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.
You may contact Melissa Fe ider, Staff Accountant, at (202) 551-3379 if you have
any questions. If you need further assist ance, you may contact me at (202) 551-3226.
S i n c e r e l y , C r a i g W i l s o n
Sr. Asst. Chief Accountant