Apple 2006 Annual Report Download - page 103

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 8—Shareholders’ Equity (Continued)
Upon vesting during 2006, the restricted stock award was net-share settled such that the Company withheld shares with value equivalent to the
CEO’s minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing
authorities. The total shares withheld of 4.6 million was based on the value of the restricted stock award on the vesting date as determined by
the Company’s closing stock price of $64.66. The remaining shares net of those withheld were delivered to the Company’s CEO. Total
payments for the CEO’s tax obligations to the taxing authorities were approximately $296 million. The net-share settlement had the effect of
share repurchases by the Company as it reduced and retired the number of shares outstanding and did not represent an expense to the Company.
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.
The Company has repurchased a total of 13.1 million shares at a cost of $217 million under this plan and was authorized to repurchase up to an
additional $283 million of its common stock as of September 30, 2006.
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/loss on available-for-sale securities was $(2) million, zero, and $4 million for 2006,
2005, and 2004, respectively. The tax effect on the reclassification adjustment for net gains/losses realized and included in net income was $1
million for 2004.
102
2006
2005
2004
Unrealized losses on available-for-sale securities
$
—
$
(
4
)
$
(4
)
Unrealized gains/(losses) on derivative investments
3
4
(4
)
Cumulative foreign currency translation
19
—
(
7
)
Accumulated other comprehensive income/(loss)
$
22
$
—
$
(
15
)
2006
2005
2004
Change in fair value of available-for-sale securities
$
4
$
—
$
(
1
)
Adjustment for net gains/losses realized and included in net income
—
—
(
4
)
Change in unrealized gain/loss on available-for-sale securities
$
4
$
—
$
(
5
)