Page 33 - 2018 Apple Annual Report

CENTRALIZED SUPPLY CHAIN SERVICES, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2018 and 2017

NOTE 2 - DEFERRED COMPENSATION (Continued)

Awards granted for 2018, 2017, and 2016 are as follows:

Award 100%
Plan Year Grant Vesting Award
End Date Date Amount

12/31/2016 3/31/2017 1/1/2019 $ 260,576
12/31/2017 3/31/2018 1/1/2020 297,347
12/31/2018 3/31/2019 1/1/2021 619,885

The deferred compensation liability, deferred compensation expense, and payments made to participants
as of December 31, 2018 and 2017 and the years then ended is as follows:

Deferred Compensation Liability
2015 2016 2017 2018
Awards Awards Awards Awards Total

Balance January 1, 2017 $ 109,695 $ - $ - $ - $ 109,695

2017 compensation expense 146,262 173,717 86,859 - 406,838

Balance December 31, 2017 255,957 173,717 86,859 - 516,533

2018 payments (255,957) - - - (255,957)
2018 compensation expense - 86,859 111,372 206,628 404,859

Balance December 31, 2018 $ - $ 260,576 $ 198,231 $ 206,628 $ 665,435

The deferred compensation expense is included in fringe benefits in the statements of operations. The
related liability is recorded in accrued payroll and related liabilities in the balance sheets. The 2017 and
2018 Contribution Credit awards will be fully vested by December 31, 2019 and December 31, 2020,
respectively. The 2019 deferred compensation expense for the 2017 and 2018 Contribution Credits is
expected to be $305,745, assuming no forfeitures.

NOTE 3 - COMMITMENTS AND CONTINGENCIES

During 2013, the Company entered into a service agreement with an unrelated third party to provide a web-
based interface that allows the Company to access vendor data. The service agreement is for six years.
Under the agreement, the Company pays a monthly subscription fee. For each of the years ended
December 31, 2018 and 2017, the Company paid approximately $1,329,000 in subscription fees. During
2019, the Company renewed this agreement for an additional three years at a fixed rate of $951,000 per
year.

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