Apple 2005 Annual Report Download - page 86

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 7—Shareholders’ Equity (Continued)
Comprehensive Income
Comprehensive income consists of two components, net income and other comprehensive income. Other comprehensive income refers to
revenue, expenses, gains and losses that under U.S. generally accepted accounting principles are recorded as an element of shareholders’
equity
but are excluded from net income. The Company’s other comprehensive income consists of foreign currency translation adjustments from
those subsidiaries not using the U.S. dollar as their functional currency, unrealized gains and losses on marketable securities categorized as
available-for-sale, and net deferred gains and losses on certain derivative instruments accounted for as cash flow hedges.
The following table summarizes the components of accumulated other comprehensive income (loss), net of taxes (in millions):
The following table summarizes activity in other comprehensive income related to available-for-sale securities, net of taxes (in millions):
The tax effect related to the change in unrealized gain on available-for-sale securities was $4 million and $6 million for 2004 and 2003,
respectively. The tax effect on the reclassification adjustment for net gains/losses included in net income was $1 million and $(8) million for
2004 and 2003, respectively.
The following table summarizes activity in other comprehensive income related to derivatives, net of taxes, held by the Company (in millions):
The tax effect related to the changes in fair value of derivatives was $(3) million, $10 million, and $11 million for 2005, 2004, and 2003,
respectively. The tax effect related to derivative gains/losses reclassified from other comprehensive income to net income was $(2) million,
$(13) million, and $(7) million for 2005, 2004, and 2003, respectively.
84
2005
2004
2003
Unrealized gains/(losses) on available-for-sale securities
$
(4
)
$
(4
)
$
1
Unrealized gains/(losses) on derivative investments
4
(4
)
(16
)
Cumulative foreign currency translation
—
(
7
)
(20
)
Accumulated other comprehensive income/(loss)
$
—
$
(
15
$
(35
2005
2004
2003
Change in fair value of available-for-sale securities
$
—
$
(
1
)
$
11
Adjustment for net gains realized and included in net income
—
(
4
)
(23
)
Change in unrealized gain/loss on available-for-sale securities
$
—
$
(
5
$
(12
2005
2004
2003
Changes in fair value of derivatives
$
7
$
(21
)
$
(24
)
Adjustment for net gains realized and included in net income
1
33
19
Change in unrealized gain/loss on derivative instruments
$
8
$
12
$
(5
)
)
)
)
)