SEC Comment Letter for Apple (AAPL) — May 19, 2015
Apple Inc.
Date: May 19, 2015 · CIK: 0000320193 · Accession: 0000000000-15-027161
AI Filing Summary & Sentiment
Reasoning
Letter
May 19, 2015 Mr. Luca Maestri Chief Financial Officer Apple Inc. 1 Infinite Loop Cupertino, CA 95014
Re: Apple Inc. Form 10-K for the Fiscal Year Ended September 27, 2014 Filed October 27, 2014 File No. 000 -10030 Form 10 -Q for the Quarterly Period Ended December 27, 2014 Filed January 28, 2015 File No. 001 -36743
Dear Mr. Maestri :
We have reviewed your April 1, 2015 response to our comment letter and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to this comment within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments, we may have ad ditional comments. Unless we note otherwise, our references to prior comments are to c omments in our March 4, 2015 letter.
Form 10 -K for the Fiscal Year Ended September 27, 2014
Item 7. Management’s Discussion and Analysis of Financial Condition and Res ults of Operations
General
1. We note your response to prior comments 2 and 3. We also note in your response to prior comment 8 that your chief operating decision maker (CODM) receives additional information to monitor performance of the company. With a v iew towards looking at the company through the eyes of management, please tell us whether any of this additional
Mr. Luca Maestri Apple Inc. May 19, 2015 Page 2
information contains key performance indicators used by the CODM or management to manage the business and whether it would be considered materi al to investors thus requiring MD&A disclosure. Please also tell us whether there are any other key performance indicators management uses to analyze the business. For example, does management monitor or analyze the sales of products by generation (e.g. iPhone 6, iPhone 5, etc.)? Refer to Section I.B. of SEC Release No. 33 -8350.
Form 10 -Q for the Quarterly Period Ended December 27, 2014
Notes to Condensed Consolidated Financial Statements
Note 11 – Segment Information and Geographic Data, page 22
2. We note your response to prior comment 6 in which you provided an organizational chart that includes the individuals who report directly to the CODM. In an effort to better understand the nature of your segment management and how they communicate to your COD M, please tell us who your segment managers are and what they are responsible for. We refer you to 280 -10-50-7.
3. In your response to prior comment 6, you state that no group or individual has overall responsibility for a product throughout its entire lif ecycle and that no group or individual is measured or compensated on product profitability. Please tell us how the CODM determines which products to introduce or discontinue, the information he uses to make such decisions, and the individuals he in volves in those discussions.
4. To the extent that your CODM receives profitability information at a level below the consolidated financial statements (e.g., by product, product generation) please tell us how the CODM uses this information. Please also tell us with whom the CODM discusses the disaggregated results to understand the reasons for the results.
5. Please explain the process in which your budgets are developed, including the nature of the information prepared (e.g., by geography, by product) at each stage of the process and the individuals involved in the review and approval of each stage of the process. Please also tell us whom the CODM discusses budget -to-actual variations with and the nature and frequency of those conversations .
Mr. Luca Maestri Apple Inc. May 19, 2015 Page 3
You may conta ct Melissa Kindelan, Staff Accountant at (202) 551 -3564 if you have questions regarding comments on the financial statements and re lated matters. Please contact me at (202) 551 -3406 with any other questions.
Sincerely,
/s/ Patrick Gilmore
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May 19, 2015 Mr. Luca Maestri Chief Financial Officer Apple Inc. 1 Infinite Loop Cupertino, CA 95014 Re: Apple Inc. Form 10-K for the Fiscal Year Ended September 27, 2014 Filed October 27, 2014 File No. 000 -10030 Form 10 -Q for the Quarterly Period Ended December 27, 2014 Filed January 28, 2015 File No. 001 -36743 Dear Mr. Maestri : We have reviewed your April 1, 2015 response to our comment letter and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to this comment within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments, we may have ad ditional comments. Unless we note otherwise, our references to prior comments are to c omments in our March 4, 2015 letter. Form 10 -K for the Fiscal Year Ended September 27, 2014 Item 7. Management’s Discussion and Analysis of Financial Condition and Res ults of Operations General 1. We note your response to prior comments 2 and 3. We also note in your response to prior comment 8 that your chief operating decision maker (CODM) receives additional information to monitor performance of the company. With a v iew towards looking at the company through the eyes of management, please tell us whether any of this additional Mr. Luca Maestri Apple Inc. May 19, 2015 Page 2 information contains key performance indicators used by the CODM or management to manage the business and whether it would be considered materi al to investors thus requiring MD&A disclosure. Please also tell us whether there are any other key performance indicators management uses to analyze the business. For example, does management monitor or analyze the sales of products by generation (e.g. iPhone 6, iPhone 5, etc.)? Refer to Section I.B. of SEC Release No. 33 -8350. Form 10 -Q for the Quarterly Period Ended December 27, 2014 Notes to Condensed Consolidated Financial Statements Note 11 – Segment Information and Geographic Data, page 22 2. We note your response to prior comment 6 in which you provided an organizational chart that includes the individuals who report directly to the CODM. In an effort to better understand the nature of your segment management and how they communicate to your COD M, please tell us who your segment managers are and what they are responsible for. We refer you to 280 -10-50-7. 3. In your response to prior comment 6, you state that no group or individual has overall responsibility for a product throughout its entire lif ecycle and that no group or individual is measured or compensated on product profitability. Please tell us how the CODM determines which products to introduce or discontinue, the information he uses to make such decisions, and the individuals he in volves in those discussions. 4. To the extent that your CODM receives profitability information at a level below the consolidated financial statements (e.g., by product, product generation) please tell us how the CODM uses this information. Please also tell us with whom the CODM discusses the disaggregated results to understand the reasons for the results. 5. Please explain the process in which your budgets are developed, including the nature of the information prepared (e.g., by geography, by product) at each stage of the process and the individuals involved in the review and approval of each stage of the process. Please also tell us whom the CODM discusses budget -to-actual variations with and the nature and frequency of those conversations . Mr. Luca Maestri Apple Inc. May 19, 2015 Page 3 You may conta ct Melissa Kindelan, Staff Accountant at (202) 551 -3564 if you have questions regarding comments on the financial statements and re lated matters. Please contact me at (202) 551 -3406 with any other questions. Sincerely, /s/ Patrick Gilmore Patrick Gilmore Accounting Branch Chief