Apple 2006 Annual Report Download - page 69

components of this increase were cash generated by operating activities of $2.22 billion, proceeds of $318 million from the issuance of
common stock under stock plans, and excess tax benefits from stock-based compensation of $361 million, partially offset by cash used to
purchase property, plant, and equipment of $657 million and repurchases of common stock of $355 million in conjunction with net-share
settlements on vested restricted stock and restricted stock units. Cash generated from operating activities includes the impact of the $1.25
billion prepayment for NAND flash memory components. The Company’s short-term investment portfolio is primarily invested in high credit
quality, liquid investments. As of September 30, 2006, approximately $4.1 billion of the Company’s cash, cash equivalents, and short-term
investments were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings. Amounts held by foreign
subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S.
The Company believes its existing balances of cash, cash equivalents, and short-term investments will be sufficient to satisfy its working
capital needs, capital expenditures, stock repurchase activity, outstanding commitments, and other liquidity requirements associated with its
existing operations over the next 12 months.
Capital Expenditures
The Company’s total capital expenditures were $657 million during 2006, consisting of $200 million for retail store facilities and equipment
related to the Company’s Retail segment, $263 million for real estate acquisitions for the Company’s second corporate campus and for a new
data center , and $194 million for corporate infrastructure, including information systems enhancements. The Company currently anticipates it
will utilize approximately $675 million for capital expenditures during 2007, including approximately $360 million for expansion of the
Company’s Retail segment, approximately $50 million for real estate acquisitions including the Company’s second corporate campus and its
new data center, and approximately $265 million to support normal replacement of existing capital assets and enhancements to general
information technology infrastructure.
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.
Off-Balance Sheet Arrangements and Contractual Obligations
The Company has not entered into any transactions with unconsolidated entities whereby the Company has financial guarantees, subordinated
retained interests, derivative instruments, or other contingent arrangements that expose the Company to material continuing risks, contingent
liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit
risk support to the Company.
The following table presents certain payments due by the Company under contractual obligations with minimum firm commitments as of
September 30, 2006 and excludes amounts already recorded on the Company’s balance sheet as current liabilities (in millions):
68
Total
Payments Due
in Less
Than 1 Year
Payments
Due in
1
-
3 Years
Payments Due
in
4
-
5 Years
Payments Due
in More
Than 5 Years
Operating Leases
$
1,154
$
134
$
268
$
254
$
498
Purchase Obligations
2,306
2,306
—
—
—
Asset Retirement Obligations
19
3
3
7
6
Other Obligations
39
29
10
—
—
Total
$
3,518
$
2,472
$
281
$
261
$
504