Apple 2002 Annual Report Download - page 67

Options to purchase 101.8 million shares of common stock were outstanding at the end of 2002 that were not included in the computation of
diluted earnings per share for that year because the options' exercise price was greater than the average market price of the Company's common
shares for that year and, therefore, the effect would be antidilutive. At September 29, 2001, the Company had options to purchase 97.2 million
shares of its common stock outstanding, all of which were excluded from the computation of diluted loss per share for 2001 because the effect
would have been antidilutive. Options to purchase 2.5 million shares of common stock were outstanding at the end of 2000 that were not
included in the computation of diluted earnings per share for that year because the options' exercise price was greater than the average market
price of the Company's common shares for that year and, therefore, the effect would be antidilutive.
Note 13—Related Party Transactions
Mr. Jerome York, a member of the Board of the Directors of the Company, is a member of an investment group that purchased
MicroWarehouse, Inc. (" MicroWarehouse ") in January 2000. He also serves as its Chairman, President and Chief Executive Officer.
MicroWarehouse is a multi-billion dollar specialty catalog and online retailer and direct marketer of computer products, including products
made by the
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Company, through its MacWarehouse catalog. MicroWarehouse accounted for 3.3% and 2.89% of the Company's net sales in 2002 and 2001,
respectively. Trade receivables from MicroWarehouse were $20.9 million and $7.6 million as of September 28, 2002, and September 29, 2001,
respectively. These receivables are subject to the same credit risk as the Company's other trade receivables. In addition, the Company purchases
miscellaneous equipment and supplies from MicroWarehouse. Total purchases amounted to approximately $2.9 million in 2002 and
$3.4 million in 2001.
In March 2002, the Company entered into a Reimbursement Agreement with its Chief Executive Officer, Mr. Steven P. Jobs, for the
reimbursement of expenses incurred by Mr. Jobs in the operation of his private plane when used for Apple business. The Reimbursement
Agreement is effective for expenses incurred by Mr. Jobs for Apple business purposes since he took delivery of the plane in May 2001. During
2002, the Company recognized a total of $1,168,000 in expenses pursuant to this reimbursement agreement related to expenses incurred by
Mr. Jobs during 2001 and 2002.
In connection with a relocation assistance package, the Company loaned Mr. Ronald B. Johnson, Senior Vice President, Retail, $1.5 million for
the purchase of his principal residence. The loan is secured by a deed of trust and is due and payable in May 2004. Under the terms of the loan,
Mr. Johnson agreed that should he exercise any of his stock options prior to the due date of the loan, that he would pay the Company an amount
equal to the lesser of (1) an amount equal to 50% of the total net gain realized from the exercise of the options; or (2) $375,000 multiplied by
the number of years between the exercise date and the date of the loan.
Weighted
-
average shares outstanding
355,022
345,613
324,568
Effect of dilutive securities:
Convertible preferred stock
—
—
17,914
Dilutive options
6,763
—
17,842
Dilutive potential common shares
6,763
—
35,756
Denominator for diluted earnings (loss) per share
361,785
345,613
360,324
Basic earnings (loss) per share before accounting
change
$
0.18
$
(0.11
)
$
2.42
Cumulative effect of accounting change, net of tax
—
$
0.04
—
Basic earnings (loss) per share after accounting
change
$
0.18
$
(0.07
)
$
2.42
Diluted earnings (loss) per share before accounting
change
$
0.18
$
(0.11
)
$
2.18
Cumulative effect of accounting change, net of tax
—
$
0.04
—
Diluted earnings (loss) per share after accounting
change
$
0.18
$
(0.07
)
$
2.18