Apple 2006 Annual Report Download - page 114

Download and view the complete annual report

Please find page 114 of the 2006 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 143

  • 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
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 11—Segment Information and Geographic Data (Continued)
Information regarding net sales by product is as follows (in millions):
(a)
Includes iMac, eMac, Mac mini, Power Mac, Mac Pro, and Xserve product lines.
(b)
Includes MacBook, iBook, MacBook Pro, and PowerBook product lines.
(c)
Consists of iTunes Store sales and iPod services, and Apple-branded and third-party iPod accessories.
(d)
Includes sales of Apple-branded and third-party displays, wireless connectivity and networking solutions, and other hardware
accessories.
(e)
Includes sales of Apple-branded operating system and application software, third-party software, AppleCare, and Internet services.
Note 12—Related Party Transactions and Certain Other Transactions
In March 2002, the Company entered into a Reimbursement Agreement with its CEO, Steve Jobs, for the reimbursement of expenses incurred
by Mr. Jobs in the operation of his private plane when used for Company business. The Reimbursement Agreement became effective for
expenses incurred by Mr. Jobs for Company business purposes since he took delivery of the plane in May 2001. The Company recognized a
total of $202,000, $1,100,000, and $483,000 in expenses pursuant to the Reimbursement Agreement during 2006, 2005, and 2004, respectively.
All expenses recognized pursuant to the Reimbursement Agreement have been included in selling, general, and administrative expenses in the
consolidated statements of operations.
In 2006, the Company entered into an agreement with Pixar to sell certain of Pixar’s short films on the iTunes Store. Mr. Jobs was the CEO,
Chairman, and a large shareholder of Pixar. On May 5, 2006, The Walt Disney Company (“Disney”) acquired Pixar, which resulted in Pixar
becoming a wholly-owned subsidiary of Disney. Upon Disney’s acquisition of Pixar, Mr. Jobs’ shares of Pixar common stock were exchanged
for Disney’s common stock and he was elected to the Disney Board of Directors. Royalty expense recognized by the Company under the
arrangement with Pixar from September 25, 2005 through May 5, 2006 was less than $1 million.
113
2006
2005
2004
Net sales:
Desktops (a)
$
3,319
$
3,436
$
2,373
Portables (b)
4,056
2,839
2,550
Total Macintosh net sales
7,375
6,275
4,923
iPod
7,676
4,540
1,306
Other music related products and services (c)
1,885
899
278
Peripherals and other hardware (d)
1,100
1,126
951
Software, service, and other net sales (e)
1,279
1,091
821
Total net sales
$
19,315
$
13,931
$
8,279