Apple 2002 Annual Report Download - page 29

Download and view the complete annual report

Please find page 29 of the 2002 Apple annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 90

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90

34
Capital Expenditures
Of total capital expenditures in 2002 of $174 million, $106 million was for retail store facilities and equipment related to the Company's Retail
segment and $68 million was for corporate infrastructure including information systems enhancements and operating facilities enhancements
and expansions. The Company currently anticipates it will utilize approximately $160 million for capital expenditures during 2003,
approximately $77 million of which is expected to be utilized for further expansion of the Company's Retail segment and the remainder utilized
to support normal replacement of existing capital assets and enhancements to general information technology infrastructure.
Stock Repurchase Plan
In July 1999, the Company's Board of Directors authorized a plan for the Company to repurchase up to $500 million of its common stock. This
repurchase plan does not obligate the Company to acquire any specific number of shares or acquire shares over any specified period of time.
During 2002 and 2001, the Company repurchased no common shares. However, during the fourth quarter of 2001, the Company entered into a
forward purchase agreement to acquire 1.5 million shares of its common stock in September of 2003 at an average price of $16.64 per share for
a total cost of $25.5 million. Since inception of the repurchase plan, the Company has repurchased or committed to repurchase a total of
6.55 million shares of its common stock at a cost of $217 million.
Non
-Current Debt and Equity Investments
The Company has held significant investments in ARM, Samsung Electronics Co., Ltd, Akamai, and EarthLink. These investments are
reflected in the consolidated balance sheets as non-current debt and equity investments and have been categorized as available-for-sale
requiring that they be carried at fair value with unrealized gains and losses, net of taxes, reported in equity as a component of accumulated
other comprehensive income. All realized gains on the sale of these investments have been included in other income. The combined fair value
of these investments was $39 million, $128 million, and $786 million as of the end of fiscal 2002, 2001, and 2000, respectively. The Company
believes it is likely there will continue to be significant fluctuations in the fair value of these investments in the future.
Further information related to the Company's non-current debt and equity investments may be found in Part II, Item 8 of this Form 10-K at
Note 2 of Notes to Consolidated Financial Statements.
Factors That May Affect Future Results and Financial Condition
Because of the following factors, as well as other factors affecting the Company's operating results and financial condition, past financial
performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to
anticipate results or trends in future periods.
General economic conditions and current economic and political uncertainty could adversely affect the Company.
The Company's operating performance depends significantly on general economic conditions. For much of the past 3 years, demand for the
Company's products has been negatively impacted by worsening global economic conditions. Continued uncertainty about future economic
conditions continues to make it difficult to forecast future operating results. Should global and regional economic conditions fail to improve or
continue to deteriorate, demand for the Company's products could continue to be adversely affected, as could the financial health of its
suppliers, distributors, and resellers.
The terrorist attacks that took place on September 11, 2001, disrupted commerce throughout the world and created many economic and
political uncertainties that have had a strong negative impact on the global economy. The long-term effects of the September 11, 2001 attacks
on the Company's future operating results and financial condition remain unknown. The national and international responses to terrorist attacks,
the potential for future terrorist attacks and other acts of hostility, and the potential for
35
war in the Middle East have created economic and political uncertainties that could adversely affect the Company's future operating results and
financial condition.
The market for personal computers is highly competitive.
The personal computer industry is highly competitive and is characterized by aggressive pricing practices, downward pressure on gross