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Introduction

Apple Inc. is a multinational corporation that creates consumer electronics, personal computers,
computer software, and commercial servers, and is a digital distributor of media content. Apple's
core product lines are the iPhone smart phone, iPad tablet computer, iPod portable media
players, and Macintosh computer line. Founders Steve Jobs and Steve Wozniak created Apple
Computer on April 1, 1976, and incorporated the company on January 3, 1977, in Cupertino,
California. ("Apple Investor Relations FAQ". Apple Inc. Retrieved January 28, 2014.)
Apple established itself as a leader in the consumer electronics and media sales industries,
leading it to drop "Computer" from the company's name in 2007. The company is now also
known for its iOS range of smart phone, media player, and tablet computer products that began
with the iPhone, followed by the iPod Touch and then iPad. As of 2012, Apple is the largest
publicly traded corporation in the world by market capitalization, with an estimated value of
US$626 billion as of September 2012 ( Kim, Susanna, 2012). Apple Inc's market cap is larger
than that of Google and Microsoft combined. Apple's worldwide annual revenue in 2010 totaled
US$65 billion, growing to US$127.8 billion in 2011 and $156 billion in 2012. (CNN, January
24, 2012).

1. Corporate governance
Corporate governance has been defined in many ways, including The system by which
companies are directed and controlled, and The process by which corporations are made
responsive to the rights and wishes of stakeholders. Corporate governance is also the manner in
which management and those charged with oversight accountability meet their obligations and
fiduciary responsibilities to stakeholders. Business stakeholders (e.g., shareholders, employees,
customers, vendors, governmental entities, community organizations, and media) have raised the
awareness and expectation of corporate behavior and corporate governance practices. Some
organizations have developed corporate cultures that encompass strong board governance
practices, including:
Board ownership of agendas and information flow.
Access to multiple layers of management and effective control of a whistleblower hotline.
Independent nomination processes.
Effective senior management team (including chief executive officer (CEO), chief financial
officer, and chief
operating officer) evaluations, performance management, compensation, and succession
planning.
A code of conduct specific for senior management, in addition to the organizations code of
conduct.

Apple Inc. Corporate governance


The Board oversees the Chief Executive Officer (the CEO) and other senior management in
the competent and ethical operation of the Corporation on a day-to-day basis and assures that the
long-term interests of the shareholders are being served. To satisfy its duties, directors are
expected to take a proactive, focused approach to their position, and set standards to ensure that
the Corporation is committed to business success through the maintenance of high standards of
responsibility and ethics.
The Nominating and Corporate Governance Committee will consider the individuals
background, skills and abilities, and whether such characteristics qualify the individual to fulfill
the needs of the Board at that time. The Board should monitor the mix of skills and experience of
its directors in order to assure that the Board has the necessary tools to perform its oversight
function effectively. Shareholders also may nominate directors for election at the Corporations
annual meeting of shareholders by following the provisions set forth in the Corporations bylaws,
whose qualifications the Nominating and Corporate Governance Committee will consider.
Candidates should be selected for, among other things, their independence, character, ability to
exercise sound judgment, diversity, age, demonstrated leadership, skills, including financial
literacy, and experience in the context of the needs of the Board.

2. Environment
The proponent of this regulation is the Assistant Chief of Staff for Installation Management. The
proponent has the authority to approve exceptions or waivers to this regulation that are consistent
with law and regulations. The proponent may delegate this approval authority, in writing to a
division chief within the proponent agency or its direct reporting unit or field operating agency,
in the grade of colonel or the civilian equivalent. Activities may request a waiver to this regulate
on by providing justification that includes a full analysis of the expected benefits and must
include formal review by the activitys senior legal officer. All waiver requests will be endorsed
by the commander or senior leader of the revue sting activity and forwarded through their higher
headquarters to the policy proponent.

Apple Inc. Environment


Apple encourages a creative, culturally diverse, and supportive work environment. Apple does
not tolerate harassment or discrimination based on factors such as race, color, sex, sexual
orientation, gender identity characteristics or expression, religion, national origin, age, marital
status, disability, medical condition, veteran status, or pregnancy. Additional restrictions may
apply based on regional laws and regulations.
Subject to rules or regulations affecting an employees rights, Apple may monitor or search its
work environments, including equipment, networks, mail, and electronic systems, without notice.
Apple monitors facilities and equipment to promote safety, prevent unlawful activity, investigate
misconduct, manage information systems, comply with legal guidelines, and for other business
purposes.

3. Financial
The preparation of financial statements and related disclosures in conformity with U.S. generally
accepted accounting principles (GAAP) and the Companys discussion and analysis of its
financial condition and operating results require the Companys management to make judgments,
assumptions, and estimates that affect the amounts reported in its consolidated financial
statements and accompanying notes. 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 Companys 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 Companys financial
condition and operating results, and they require management to make judgments and estimates
about inherently uncertain matters. The Companys senior management has reviewed these
critical accounting policies and related disclosures with the Audit and Finance Committee of the
Companys Board of Directors.

Apple Inc. Financial


Risks and uncertainties include without limitation the effect of competitive and economic
factors, and the Companys reaction to those factors, on consumer and business buying decisions
with respect to the Companys products; continued competitive pressures in the marketplace; the
ability of the Company to deliver to the marketplace and stimulate customer demand for new
programs, products, and technological innovations on a timely basis; the effect that product
introductions and transitions, changes in product pricing or mix, and/or increases in component
costs could have on the Companys gross margin; the inventory risk associated with the
Companys need to order or commit to order product components in advance of customer orders;
the continued availability on acceptable terms, or at all, of certain components and services
essential to the Companys business currently obtained by the Company from sole or limited
sources; the effect that the Companys dependency on manufacturing and logistics services
provided by third parties may have on the quality, quantity or cost of products manufactured or
services rendered; risks associated with the Companys international operations; the Companys
reliance on third-party intellectual property and digital content; the potential impact of a finding
that the Company has infringed on the intellectual property rights of others; the Companys
dependency on the performance of distributors, carriers and other resellers of the Companys
products; the effect that product and service quality problems could have on the Companys sales
and operating profits; the continued service and availability of key executives and employees;
war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt
supply, delivery, or demand of products; and unfavorable results of other legal proceedings.
More information on potential factors that could affect the Companys financial results is
included from time to time in the Risk Factors and Managements Discussion and Analysis of

Financial Condition and Results of Operations sections of the Companys public reports filed
with the SEC, including the Companys Form 10-K for the fiscal year ended September 28,
2013, its Form 10-Q for the quarter ended December 28, 2013, its Form 10-Q for the quarter
ended March 29, 2014, and its Form 10-Q for the quarter ended June 28, 2014 to be filed with
the SEC. The Company assumes no obligation to update any forward-looking statements or
information, which speak as of their respective dates.

Controls and risk mitigation strategies financial


Controls and risk mitigation strategies onsider a simple example of a risk-averse
manager5 weighing whether to invest $50 million today in a project that has an equal likelihood
of returning either $100 million or $0 a year from now. If we were to ignore the time value of
money, we would expect a risk-neutral manager to be indifferent to the projectbecause the
potential gains are equal to the potential losses. If the upside were greater than $100 million, we
would expect the same manager to make the investment. However, the upside would have to be
almost $170 million to entice the typical risk-averse manager to make the investment. In other
words, the upside would have to be about 70 percent larger in order for that manager to
overcome his or her aversion to risk.