Apple 2005 Annual Report Download - page 41

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merit increases. SG&A as a percentage of total net sales in 2005 was 13%, down from 17% in 2004, which is due to the increase in total net
sales of 68% for the Company during 2005.
Expenditures for SG&A increased $209 million or 17% during 2004 compared to 2003. These increases were due primarily to the Company’s
continued expansion of its Retail segment in both domestic and international markets, an increase in discretionary spending on marketing and
advertising, an increase in amortization costs associated with restricted stock compensation, and higher direct and channel selling expenses
resulting from the increase in net sales and employee salary merit increases. SG&A as a percentage of total net sales in 2004 was 17%, down
from 20% in 2003 due to the increase in total net sales for the Company of 33% during 2004.
Fiscal 2004 Restructuring Actions
The Company recorded total restructuring charges of approximately $23 million during 2004, including approximately $14 million in
severance costs, $5.5 million in asset impairments, and a $3.5 million charge for lease cancellations in conjunction with the vacating of a leased
sales facility in Europe during the fourth quarter of 2004 related to a European workforce reduction. Of the $23 million charge, $19.7 million
had been utilized by the end of 2005, with the remaining $3.3 million consisting of $0.7 million for employee severance benefits and $2.6
million for lease cancellations. These actions will result in the termination of 461 employees, 448 of which had been terminated prior to the end
of 2005.
Fiscal 2003 Restructuring Actions
The Company recorded total restructuring charges of approximately $26.8 million during 2003, including approximately $7.4 million in
severance costs, a $5.0 million charge to write-off deferred compensation, $7.1 million in asset impairments, and a $7.3 million charge for
lease cancellations primarily related to the closure of the Company’s Singapore manufacturing operations during the first quarter of 2003. Of
the $26.8 million charge, all had been utilized by the end of 2005, except for approximately $1.7 million related to operating lease costs on
abandoned facilities. These actions resulted in the termination of 353 employees.
Other Income and Expense
Other income and expense for each of the last three fiscal years are as follows (in millions):
Gains and Losses on Non-current Investments
The Company previously held significant investments in ARM Holdings plc (ARM), Akamai Technologies, Inc. (Akamai), and EarthLink
Network, Inc. (EarthLink). T
he Company sold all of the remaining holdings in these non-current investments in 2004 and 2003. Pretax gains
recorded upon the sale of these non-current investments were $4 million and $10 million in 2004 and 2003, respectively.
39
September 24,
September 25,
September 27,
2005
2004
2003
Gains on non-current investments, net
$
—
$
4
$
10
Interest income
$
183
$
64
$
69
Interest expense
—
(
3
)
(8
)
Gains on sales of short term investments, net
—
1
21
Other income (expense), net
(18
)
(9
)
1
Interest and Other Income, net
$
165
$
53
$
83
Total other income and expense
$
165
$
57
$
93