Apple 2006 Annual Report Download - page 67

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(1)
See the “Explanatory Note” immediately preceding Part I, Item 1 and Note 2, “Restatement of Consolidated Financial Statements,” in
Notes to Consolidated Financial Statements of this Form 10-K.
(2)
Includes stock-based compensation expense, which was allocated as follows:
Recent Accounting Pronouncements
In September 2006, the SEC issued SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements. SAB No. 108 provides guidance on how prior year misstatements should be considered when quantifying
misstatements in current year financial statements for purposes of determining whether the current year’s financial statements are materially
misstated. SAB No. 108 is effective for fiscal years ending after November 15, 2006. Although the Company will continue to evaluate the
application of SAB No. 108, management does not currently believe adoption will have a material impact on the Company’s results of
operations or financial position.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value, provides a framework for measuring
fair value, and expands the disclosures required for fair value measurements. SFAS No. 157 applies to other accounting pronouncements that
require fair value measurements; it does not require any new fair value measurements. SFAS No. 157 is effective for fiscal years beginning
after November 15, 2007 and is required to be adopted by the Company beginning in the
66
Three Months Ended March 26, 2005
Three Months Ended December 25, 2004
As
Reported
Adjustments
(1)
As
Restated
As
Reported
Adjustments (1)
As
Restated
Net sales
$
3,243
$
—
$
3,243
$
3,490
$
—
$
3,490
Cost of sales (2)
2,275
—
2,275
2,494
1
2,495
Gross margin
968
—
968
996
(1
)
995
Operating expenses:
Research and development (2)
119
1
120
123
—
123
Selling, general, and administrative
(2)
447
1
448
470
2
472
Total operating expenses
566
2
568
593
2
595
Operating income
402
(2
)
400
403
(3
)
400
Other income and expense
33
—
33
26
—
26
Income before provision for income
taxes
435
(2
)
433
429
(3
)
426
Provision for income taxes
145
—
145
134
(1
)
133
Net income
$
290
$
(2
)
$
288
$
295
$
(2
)
$
293
Earnings per common share:
Basic
$
0.36
$
—
$
0.36
$
0.37
$
—
$
0.37
Diluted
$
0.34
$
—
$
0.34
$
0.35
$
—
$
0.35
Shares used in computing earnings per
share (in thousands):
Basic
808,172
—
808,172
789,032
—
789,032
Diluted
857,011
557
857,568
838,174
631
838,805
Cost of sales
$
1
$
—
$
1
$
—
$
1
$
1
Research and development
$
1
$
1
$
2
$
2
$
—
$
2
Selling, general, and
administrative
$
8
$
1
$
9
$
8
$
2
$
10