Apple 2001 Annual Report Download - page 44

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Acquisition-Related Deferred Stock Compensation
The Company allocated $12.8 million of its purchase consideration for PowerSchool to acquisition-related deferred stock compensation within
and related to 445,000 common shares issued contingent on continued employment of certain PowerSchool employee stockholders.
Pro Forma Financial Information
The unaudited pro forma financial information below assumes that PowerSchool and Spruce acquired in 2001 had been acquired at the
beginning of 2000 and includes the effect of amortization of goodwill and other acquired identifiable intangible assets from that date. The
impact of the charge for IPR&D associated with the acquisition of PowerSchool has been excluded. This pro forma financial information is
presented for informational purposes only and is not necessarily indicative of the results of future operations that would have been achieved
had the acquisitions taken place at the beginning of 2000. Pro forma information follows (in millions, except per share amounts):
56
Note 5—Special Charges
Restructuring Actions
2000 Restructuring Actions
During the first quarter of 2000, the Company initiated restructuring actions resulting in recognition of an $8 million restructuring charge. This
charge was comprised of $3 million for the write-off of various operating assets and $5 million for severance payments to approximately 95
employees associated with consolidation of various domestic and international sales and marketing functions. Of the $5 million accrued for
severance, $2.5 million had been spent before the end of 2000, and the remainder was spent in 2001. Of the $3 million accrued for the write-
off
of various assets, substantially all was utilized before the end of 2000.
1999 Restructuring Actions
During the fourth quarter of 1999, the Company initiated restructuring actions resulting in a charge to operations of $21 million. The net
restructuring charge of $18 million recognized during the fourth quarter of 1999 reflects $3 million of excess reserves related to prior
$11 million for contract cancellation charges associated with the closure of the Company's outsourced data center and $10 million for contract
cancellation charges related to supply and development agreements previously discontinued.
During the second quarter of 1999, the Company took certain actions to improve the flexibility and efficiency of its manufacturing operations
by moving final assembly of certain of its products to third-party manufacturers. These restructuring actions resulted in the Company
recognizing a charge to operations of approximately $9 million during the second quarter of 1999. The accrual, substantially all of which was
utilized before the end of 1999, was comprised of $6 million for severance benefits to be paid to employees involuntarily terminated,
$2 million for the write-down of operating assets to be disposed of, and $1 million for payments on canceled contracts. These actions resulted
in the termination of approximately 580 employees.
Executive Bonus
During the first quarter of 2000, the Company's Board of Directors approved a special executive bonus for the Company's Chief Executive
Officer for past services in the form of an aircraft with a total cost to the company of approximately $90 million, the majority of which is not
tax deductible. Approximately half of the total charge is the cost of the aircraft. The other half represents all other costs and taxes associated
with the bonus.
Technology Acquisition
As discussed in Note 4, during 2001 in its acquisition of PowerSchool the Company acquired certain technology that was under development
and had no alternative future use. This resulted in the recognition of $10.8 million of purchased in-process research and development, which
was charged to operations upon acquisition.
57
Note 6—Income Taxes
2001
2000
Net sales
$
5,370
$
7,994
Net income (loss)
$
(44
)
$
767
Basic earnings (loss) per common share
$
(0.13
)
$
2.35
Diluted earnings (loss) per common share
$
(0.13
)
$
2.11