Apple 1997 Annual Report Download - page 47

schedules and levels, the Company's operating results could be adversely affected if its outsourcing partners were unable to meet their
production obligations.
SIGNIFICANT CUSTOMERS
No customer accounted for more than 10% of the Company's net sales in 1997, 1996, or 1995.
ADVERTISING COSTS
Advertising expense was $143 million, $183 million, and $205 million for 1997, 1996, and 1995, respectively.
SPECIAL CHARGES
NEXT ACQUISITION
On February 4, 1997, the Company acquired all of the outstanding shares of NeXT Software, Inc. ("NeXT"). NeXT, headquartered in Redwood
City, California, had developed, marketed and supported software that enables customers to implement business applications on the
Internet/World Wide Web, intranets and enterprise-wide client/server networks. The total purchase price was $427 million and was comprised
of cash payments of $319 million and the issuance of 1.5 million shares of the Company's common stock to the NeXT shareholders valued at
approximately $25 million according to the terms of the purchase agreement; the issuance of approximately 1.9 million options to purchase the
Company's common stock to the NeXT optionholders valued at approximately $16 million; cash payments of $56 million to the NeXT
debtholders; cash payments of $9 million for closing and related costs, and $2 million of net liabilities assumed. The acquisition was accounted
for as a purchase and, accordingly, the operating results pertaining to NeXT subsequent to the date of acquisition have been included in the
Company's consolidated operating results. The total purchase price was allocated to purchased in-process research and development ($375
million) and to goodwill and other intangible assets ($52 million). The purchased in-process research and development was charged to
operations upon acquisition, and the goodwill and other intangible assets are being amortized on a straight-line basis over 2 to 3 years.
The following unaudited proforma summary combines the consolidated results of operations of the Company and NeXT as if the acquisition
had occurred at the beginning of the years ended September 26, 1997 and September 27, 1996, after giving effect to certain adjustments,
including in-process research and development, amortization of intangible assets, lower interest income as a result of lower cash investment
balances, and lower interest expense as a result of the settlement of the NeXT debt, as well as related income tax effects in 1996 only. The
proforma summary does not necessarily reflect the results of operations as they would have been had the Company and NeXT been combined
as of the beginning of those years.
PROFORMA RESULTS OF OPERATIONS
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FOR THE YEARS ENDED
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SEPTEMBER 26, 1997 SEPTEMBER 27, 1996
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(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
Net sales....................................................... $ 7,098 $ 9,879
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Net loss........................................................ $ (1,061) $ (1,234)
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Loss per common share........................................... $ (8.38) $ (9.85)
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