Apple 1994 Annual Report Download - page 16

General and administrative expenses decreased in 1993 compared with 1992, primarily because of reduced employee-
related expenses resulting
from the restructuring actions taken in the third quarter of 1993. This decrease in general and administrative expenses was offset slightly by an
increase in sales and marketing expenses as a result of increases in costs for product marketing and advertising programs related to new product
introductions and efforts to increase product demand.
The Company will continue to face the challenge of managing growth in selling, general and administrative expenses relative to gross margin
levels, particularly in light of the Company's expectation of continued pressure on gross margins and continued competitive pressures
worldwide. The Company anticipates an increase in selling, general and administrative expenses in 1995 from current levels, primarily
resulting from marketing and advertising expenditures.
For information regarding the Company's restructuring actions, refer to pages 33-34 of the Notes to Consolidated Financial Statements.
Interest and other income (expense), net, decreased by $51 million, to $22 million in expense in 1994 compared with $29 million of income in
1993. Higher interest rates and larger average borrowing balances used to fund working capital needs served to significantly increase interest
expense, and accounted for $28 million of the $51 million increase in expenses during 1994. Other factors contributing to this variance include
interest income, which was higher in 1993 than in 1994 primarily due to a $15 million interest payment received on a non-
recurring income tax
refund from the Internal Revenue Service in 1993, and interest income from the Company's interest rate risk management program, which
contributed $6 million in 1993, and reduced interest income by $7 million in 1994.
Interest and other income (expense), net, decreased in amount in 1993 compared with 1992 because of lower interest rates, lower cash
balances, expenses associated with certain financing transactions, lower gains on the sale of certain of the Company's venture capital
investments, an increase in the cost of hedging certain foreign currency exposures, and an increase in interest expense due to higher
commercial paper borrowing levels. This decrease was partially offset by interest earned on an income tax refund from the Internal Revenue
Service and gains realized on the Company's ongoing foreign exchange risk management programs.
For more information regarding the Company's strategy and accounting for financial and other derivative instruments, refer to pages 28-31 of
the Notes to Consolidated Financial Statements.
The Company's effective tax rate remained unchanged in 1994, 1993 and 1992. For additional information regarding income taxes, refer to
pages 35-36 of the Notes to Consolidated Financial Statements.
14
1994 Change 1993 Change 1992
Restructuring costs $(127) -140% $ 321 -- --
Percentage of net sales (1.4%) 4.0% --
Interest and Other Income
(Expense), Net 1994 Change 1993 Change 1992
Interest and other income (expense),
net $ (22) -175% $ 29 -41% $ 50
Provision for Income Taxes 1994 Change 1993 Change 1992
Provision for income taxes $190 258% $53 -84% $325
Effective tax rate 38% 38% 38%