Apple 1995 Annual Report Download

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APPLE INC
FORM 10-K
(Annual Report)
Filed 12/19/95 for the Period Ending 09/29/95
Address ONE INFINITE LOOP
CUPERTINO, CA 95014
Telephone (408) 996-1010
CIK 0000320193
Symbol AAPL
SIC Code 3571 - Electronic Computers
Industry Computer Hardware
Sector Technology
Fiscal Year 09/30
http://www.edgar-online.com
© Copyright 2011, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ...INC FORM 10-K (Annual Report) Filed 12/19/95 for the Period Ending 09/29/95 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year ONE INFINITE LOOP CUPERTINO, CA 95014 (408) 996-1010 0000320193 AAPL 3571 - Electronic Computers Computer Hardware Technology 09/30 http://www.edgar-online...

  • Page 2
    ...,098,558 as of December 1, 1995, based upon the closing price on the Nasdaq National Market reported for such date. Shares of Common Stock held by each executive officer and director and by each person who beneficially owns more than 5% of the outstanding Common Stock have been excluded in that such...

  • Page 3
    DOCUMENTS INCORPORATED BY REFERENCE, Portions of the definitive Proxy Statement dated December 19, 1995 (the "Proxy Statement"), to be delivered to shareholders in connection with the Annual Meeting of Shareholders to be held January 23, 1996, are incorporated by reference into Parts I and III.

  • Page 4
    ... variety of growing markets. The Company's strategy is to maintain and expand its market share in the personal computer industry while developing and expanding new related businesses, such as its businesses in online services, licensing of the Macintosh operating system, client/server systems and...

  • Page 5
    ... system software business group also develops and distributes extensions to the Macintosh system software, such as utilities, languages, developer tools, and educational software. Claris Corporation, a wholly owned subsidiary of the Company, develops, publishes, and distributes application software...

  • Page 6
    ... as in parts of Africa and in the Middle East. Products sold by the Europe division are manufactured primarily in the Company's facility in Cork, Ireland. The Apple Pacific division focuses on opportunities in Japan and Asia; Australia and New Zealand; and the Caribbean region. Products sold by the...

  • Page 7
    ... revenue or financial performance. Warranty The Company offers a parts and labor limited warranty on its products. The warranty period is one year from the date of purchase by the end user. The Company also offers a 90-day warranty for Apple service parts used to repair Apple hardware products. In...

  • Page 8
    ... regarding financial data by geographic area and the risks associated with international operations is set forth under Part II, Item 8 of this Form 10-K under the heading "Industry Segment and Geographic Information", and under Part II, Item 7 of this Form 10-K under the subheading "Global Market...

  • Page 9
    ... appointed to the position of Chief Executive Officer in June 1993. Mr. Spindler is also director of Bertelsmann AG. James J. Buckley*, Senior Vice President and President, Apple Americas (age 45). Mr. Buckley joined the Company as K-12 and Higher Education Sales Manager in May 1985 and was promoted...

  • Page 10
    ...Instruments ("TI") Europe as President of TI Europe, Middle East, and Africa, responsible for all of TI's business operations in those regions. Prior to that assignment, Mr. Landi served for two years as President of TI Asia. David C. Nagel*, Senior Vice President, Worldwide Research and Development...

  • Page 11
    ... the consolidated financial statements and related notes thereto included elsewhere in this Form 10-K. (Dollars in millions, except per share amounts) ANNUAL Five fiscal years ended September 29, 1995 1995 1994 1993 1992 1991 Net sales Net income Earnings per common and common equivalent share Cash...

  • Page 12
    ... with the consolidated financial statements and notes thereto. All information is based on the Company's fiscal calendar. (Tabular information: Dollars in millions, except per share amounts) Results of Operations Net sales Gross margin Percentage of net sales Research and development Percentage of...

  • Page 13
    ... to page 13 of Management's Discussion and Analysis of Financial Condition and Results of Operations under the heading "Factors That May Affect Future Results and Financial Condition." Gross Margin Gross margin represents the difference between the Company's net sales and its cost of goods sold. The...

  • Page 14
    .... The success of new product introductions is dependent on a number of factors, including market acceptance, the Company's ability to manage the risks associated with product transitions, the availability of application software for new products, the effective management of inventory levels in line...

  • Page 15
    ...products, to successfully manage inventory levels of both product lines simultaneously, and to continue to coordinate the timely development and distribution by independent software vendors of new "native" software applications specifically designed for the PowerPC processor-based products. The rate...

  • Page 16
    ...DOS and Windows market. This analysis is based on factors such as the relative market share of the Company's products, the anticipated potential revenue that may be earned, and the costs of developing such software products. Microsoft Corporation is an important developer of application software for...

  • Page 17
    ... the costs associated with the Company's foreign exchange hedging programs, are carried at fair value and are adjusted on each balance sheet date for changes in exchange rates. Refer to the Financial Instruments footnote on pages 26 - 28 of the Notes to Consolidated Financial Statements for further...

  • Page 18
    ... sales, marketing, and customer solutions organization into three geographic business units, namely, the Americas, Europe, and Japan and Asia. The Company's future operating results and financial condition could be adversely affected by its ability to effectively manage the transition to these new...

  • Page 19
    ... fully provide for any related tax liability on amounts that may be repatriated. Refer to the Income Taxes footnote on pages 31 - 32 of the Notes to Consolidated Financial Statements for further discussion. The Company believes that its balances of cash, cash equivalents, and short-term investments...

  • Page 20
    ... of Cash Flows for the three fiscal years ended September 29, 1995 Notes to Consolidated Financial Statements Selected Quarterly Financial Information (Unaudited) Financial Statement Schedules: For the three fiscal years ended September 29, 1995 Schedule II - Valuation and qualifying accounts Page...

  • Page 21
    ... and Board of Directors of Apple Computer, Inc. We have audited the accompanying consolidated balance sheets of Apple Computer, Inc. as of September 29, 1995 and September 30, 1994, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in...

  • Page 22
    ... Accounts payable Accrued compensation and employee benefits Accrued marketing and distribution Other current liabilities Total current liabilities Long-term debt Deferred tax liabilities Commitments and contingencies Shareholders' equity: Common stock, no par value; 320,000,000 shares authorized...

  • Page 23
    ... sales Costs and expenses: Cost of sales Research and development Selling, general and administrative Restructuring costs Operating income Interest and other income (expense), net Income before income taxes Provision for income taxes Net income Earnings per common and common equivalent share Common...

  • Page 24
    ... purchase plans, including related tax benefits Repurchase of common stock Cash dividends of $0.48 per common share Accumulated translation adjustment Net income Balance at September 24, 1993 Common stock issued under stock option and purchase plans, including related tax benefits Cash dividends of...

  • Page 25
    ... common stock Cash dividends Other Cash generated by (used for ) financing activities Total cash generated (used) Cash and cash equivalents, end of the period Supplemental cash flow disclosures: Cash paid during the year for: Interest Income taxes, net Schedule of non-cash transactions: Tax benefit...

  • Page 26
    ... equivalents, short-term investments, and marketable equity securities are classified and accounted for as available-for-sale and are generally held until maturity. Financial Instruments with Off-Balance-Sheet Risk In the ordinary course of business and as part of the Company's asset and liability...

  • Page 27
    ... committed transactions, currently does not exceed one year. For further information regarding the Company's accounting treatment of its investments and other financial and derivative instruments, refer to pages 26 - 28 of the Notes to Consolidated Financial Statements. Income Taxes The income tax...

  • Page 28
    ...compensation expense. Reclassifications Certain prior year amounts on the Consolidated Balance Sheets and Consolidated Statements of Cash Flows and the Industry Segment and Geographic Information and Income Taxes footnotes have been reclassified to conform to the current year presentation. Financial...

  • Page 29
    ... levels. The entire structure generally qualifies as an accounting hedge. All interest rate option contracts outstanding at September 29, 1995, expire within three years. Interest rate contracts not accounted for as hedges are carried at fair value with gains and losses recorded currently in income...

  • Page 30
    ... losses associated with these financial instruments are recorded currently in income. As of September 29, 1995, maturity dates for these sold option contracts ranged from one to six months. The Company monitors its interest rate and foreign exchange positions daily based on applicable and commonly...

  • Page 31
    ... in worldwide office space, which primarily consisted of approximately 1.6 million square feet of office space in the San Francisco Bay Area, within one year from the date the restructuring was initiated. In the third quarter of 1994, the Company lowered its estimate of the total costs associated...

  • Page 32
    ... in its current locations, the salary growth rate differentials between the Bay Area and alternative locations were reduced, and changes to the California income tax laws made it more attractive for companies to do business in California. The Company canceled this action in the third quarter of 1994...

  • Page 33
    ... directly to common stock as a result of compensation expense attributable to employee stock option and purchase plans recognized differently for financial reporting and tax purposes was $15 million in 1995. Under FAS 109, deferred tax assets and liabilities reflect the future income tax effects...

  • Page 34
    ... items for financial and tax reporting purposes. The sources of timing differences and the related tax effects for 1993 are as follows: (In millions) 1993 Income of foreign subsidiaries not taxable in current year Warranty, bad debt, and other expenses Depreciation Inventory valuation State income...

  • Page 35
    ... rates over the subsequent seven years, based on continued service to the Company. In July 1995, the Board of Directors adopted an amendment to the 1990 Plan to increase the number of shares reserved for issuance by 8.6 million shares, subject to shareholder approval at the Company's Annual Meeting...

  • Page 36
    ... under Section 401(k) of the Internal Revenue Code. Under the Savings Plan, participating U.S. employees may defer a portion of their pretax earnings, up to the Internal Revenue Service annual contribution limit ($9,240 for calendar year 1995). Effective October 1, 1995, the Company matches 50% to...

  • Page 37
    ... products. The Company's products are sold primarily to the business, education, home, and government markets. Geographic financial information is as follows: (In millions) 1995 Net sales to unaffiliated customers: North America Europe Japan Pacific Total net sales Transfers between geographic areas...

  • Page 38
    ... began declaring quarterly cash dividends on its common stock in April 1987. The dividend policy is determined quarterly by the Board of Directors and is dependent on the Company's earnings, capital requirements, financial condition, and other factors. The price range per common share represents the...

  • Page 39
    ... transactions is set forth in the Proxy Statement under the heading "Information About Apple Computer, Inc. - Director Compensation ", "Information About Apple Computer, Inc. - Arrangements with Executive Officers", and "Report of the Compensation Committee of the Board of Directors on Executive...

  • Page 40
    ... Financial Statements under Part II, Item 8 of this Form 10-K are hereby incorporated by reference. 3. Exhibits The exhibits listed under Item 14(c) are filed as part of this Form 10-K. (b) Reports on Form 8-K No Current Reports on Form 8-K were filed by Apple with the Securities and Exchange...

  • Page 41
    ... of Apple Computer, Inc. Savings Investment Plan dated March 1, 1992. Form of Director Warrant 1990 Stock Option Plan, as amended through January 26, 1994. Apple Computer, Inc. Employee Stock Purchase as amended. 1995 Senior / Executive Incentive Bonus Plan. Form of Indemnification Agreement between...

  • Page 42
    ... Statement on Form 8-A filed with the Securities and Exchange Commission on May 26, 1989. Incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 30, 1990. Incorporated by reference to the exhibit of that number in the Company's Annual...

  • Page 43
    ...Executive Restricted Stock Plan, and the Form of Director Warrant of Apple Computer, Inc. and Form S-3 No. 33-62310 and in the related Prospectuses of our report dated October 16, 1995 with respect to the consolidated financial statements and schedules of Apple Computer, Inc. included in this Annual...

  • Page 44
    ... Crisp PETER O. CRISP Director December 19, 1995 /s/ Jurgen Hintz B. JURGEN HINTZ Director December 19, 1995 /s/ Gilbert F. Amelio DR. GILBERT F. AMELIO Director December 19, 1995 /s/ Jeanne Seeley JEANNE SEELEY Vice President, Finance, and Corporate Controller (Principal Financial Officer) December...

  • Page 45
    SCHEDULE II APPLE COMPUTER, INC. VALUATION AND QUALIFYING ACCOUNTS (In millions) Charged to Costs and Expenses Allowance for Doubtful Accounts: Year Ended September 29, 1995 Year Ended September 30, 1994 Year Ended September 24, 1993 Beginning Balance Deductions (1) Ending Balance $ 91 $ 17 $...

  • Page 46
    ...Savings and Investment Plan dated March 1, 1992. Form of Director Warrant 1990 Stock Option Plan, as amended through January 26, 1994. Apple Computer, Inc. Employee Stock Purchase Plan, as amended. 1995 Senior / Executive Incentive Bonus Plan. Form of Indemnification Agreement between the Registrant...

  • Page 47
    44

  • Page 48
    ... Design Center by the Registrant dated as of September 30, 1991 between IBM and the Registrant. Agreement for Purchase of IBM Products (Original Equipment Manufacturer) dated as of September 30, 1991 between IBM and the Registrant. Agreement dated October 9, 1991 between Apple Corps Limited and...

  • Page 49
    ... and common equivalent shares used for primary earnings per share Primary earnings per common share Fully Diluted Earnings Per Share Earnings Net income applicable to common stock Shares Weighted average number of common shares outstanding Adjustment for dilutive effect of outstanding stock options...

  • Page 50
    ... Computer France S.A.R.L. Computer, Ltd., Cork Computer, Inc. Limited Computer Limited Computer (UK) Ltd. Japan, Inc. Sweden Netherlands France Ireland Ireland Ireland United Kingdom Japan Name Apple Apple Apple Apple Apple Apple Apple Apple *Pursuant to Item 601(b)(21)(ii) of Regulation S-K, the...

  • Page 51
    ... 1995 CASH: 756 SECURITIES: 196 RECEIVABLES: 2,018 ALLOWANCES: 87 INVENTORY: 1,775 CURRENT ASSETS: 5,224 PP&E: 1,492 DEPRECIATION: 781 TOTAL ASSETS: 6,231 CURRENT LIABILITIES: 2,325 BONDS: 303 COMMON: 398 PREFERRED MANDATORY: 0 PREFERRED: 0 OTHER SE: 2,503 TOTAL LIABILITY AND EQUITY: 6,231 SALES: 11...

  • Page 52
    ... - Directors Full year participants in the Senior/Executive Incentive Bonus Plan may not participate in other bonus plans without the approval of the Chief Executive Officer. However, nominal gift certificates and awards are acceptable (less than $500). INCENTIVE BONUS GUIDELINES: Bonus targets for...

  • Page 53
    ... as shown in the table below. The financial results used in determining financial performance are based on the participant's position and will be either a Corporate or Divisional measurement. Functional Staff (e.g. Finance, Human Resources, Information Systems and Legal.) within a Division will be...

  • Page 54
    ... Return On Capital Employed achieved to Plan. The minimum threshold percent against plan is 90%. When the minimum threshold is reached, a bonus is paid equal to 50% of the ROCE bonus target. When 100% of the target is reached, a bonus equal to 100% of the ROCE portion of the target bonus is payable...

  • Page 55
    ...the minimum threshold is reached, a bonus is paid equal to 50% of the Net Inventory Turns bonus target. When 100% of the target is reached, a bonus equal to 100% of the Net Inventory Turns portion of the target bonus is payable. At 123% of the Net Inventory Turns target, the bonus equals 175% of the...

  • Page 56
    ... plan is 90%. When the minimum threshold is reached, a bonus is paid equal to 50% of the Operating Margin bonus target. When 100% of the target is reached, a bonus equal to 95% of the Operating Margin portion of the target bonus is payable. At 130% of the Operating Margin target, the bonus equals...

  • Page 57
    ...the minimum threshold is reached, a bonus is paid equal to 50% of the Net Inventory Turns bonus target. When 100% of the target is reached, a bonus equal to 100% of the Net Inventory Turns portion of the target bonus is payable. At 123% of the Net Inventory Turns target, the bonus equals 175% of the...

  • Page 58
    ... Days Sales Outstanding bonus target. When 100% of the target is reached, a bonus equal to 100% of the Days Sales Outstanding portion of the target bonus is payable. At 115% of the Days Sales Outstanding target, the bonus equals 175% of the Days Sales Outstanding portion of the target bonus. Actual...

  • Page 59
    ... by the Division President or Sr. Vice President and the Division Human Resources Manager. (Note: Also see the Corrective Action/Disciplinary Situations section on page 11.) Bonus Payout: Senior/Executive Incentive Bonus Plan payouts (less deductions and withholdings) will be paid biannually. The...

  • Page 60
    ... of whether a new target award and new objectives should be set; and b) prorated awards based on the number of months of service in each position during the plan year if the new target is different. Employees who transfer from one eligible position into another eligible position may receive...

  • Page 61
    ...and Apple's Senior Vice President of Human Resources. Any determination of performance, payment or other matters under this plan by management and/or the Board of Directors is binding on all interested persons. Apple Computer Inc.'s obligation to pay out a Senior/Executive Incentive Bonus Plan award...

  • Page 62
    ... sale before receiving payment Number of times average inventory would be converted into Cost Of Goods Sold Gross Margin less Operating Expenses Return On Capital Employed - After tax operating profit divided by capital employed (total assets excluding cash, less current liabilities plus capitalized...