Apple 2006 Annual Report Download - page 134

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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.
Item 14. Principal Accountant Fees and Services
The following table sets forth the fees accrued or paid to the Company’s independent registered public accounting firm, KPMG LLP, during
fiscal years 2006 and 2005.
Audit and Non-Audit Fees
(1)
Audit fees relate to professional services rendered in connection with the audit of the Company’s annual financial statements and internal
control over financial reporting, quarterly review of financial statements included in the Company’s Forms 10-Q, and audit services
provided in connection with other statutory and regulatory filings. Fiscal year 2006 also includes fees incurred in connection with the
Special Committee of the Company’s Board of Directors’ investigation into stock option practices, no such fees were incurred during
2005.
(2)
Audit-related fees primarily relate to professional services for the audits of employee benefit plans.
(3)
2006 tax fees include $728,600 for professional services rendered in connection with tax compliance and preparation relating to the
Company’s expatriate program, tax audits and international tax compliance; and $91,900 for international tax consulting and planning
services. The Company does not engage KPMG to perform personal tax services for its executive officers.
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services Performed by the Independent Auditors
Prior to the enactment of the Sarbanes-Oxley Act of 2002 (the “ Act ”), the Company adopted an auditor independence policy that banned its
auditors from performing non-financial consulting services, such as information technology consulting and internal audit services. This auditor
independence policy also mandates that the audit and non-audit services and related budget be approved by the Audit Committee in advance,
and that the Audit Committee be provided with quarterly reporting on actual spending. In accordance with this policy, all services to be
performed by KPMG were pre-approved by the Audit Committee.
Subsequent to the enactment of the Act, the Audit Committee met with KPMG to further understand the provisions of that Act as it relates to
auditor independence. KPMG previously rotated the lead audit partner in fiscal year 2005, rotated other partners in 2006, and will rotate
additional partners as appropriate in compliance with the Act. The Audit Committee will continue to monitor the activities undertaken by
KPMG to comply with the Act.
133
2006
2005
Audit Fees
$
7,912,700
(1)
$
6,948,800
Audit
-
Related Fees
28,000
(2)
46,700
Tax Fees
820,500
(3)
923,000
All Other Fees
—
—
Total
$
8,761,200
$
7,918,500