Apple 2007 Annual Report Download - page 86
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provide renewal options for terms of 3 to 7 additional years. Leases for retail space are for terms of 5 to 20 years, the majority of which are for
10 years, and often contain multi-year renewal options. As of September 29, 2007, the Company's total future minimum lease payments under
noncancelable operating leases were $1.4 billion, of which $1.1 billion related to leases for retail space.
Rent expense under all operating leases, including both cancelable and noncancelable leases, was $151 million, $138 million, and $140 million
in 2007, 2006, and 2005, respectively. Future minimum lease payments under noncancelable operating leases having remaining terms in excess
of one year as of September 29, 2007, are as follows (in millions):
Accrued Warranty and Indemnifications
The Company offers a basic limited parts and labor warranty on its hardware products. The basic warranty period for hardware products is
typically one year from the date of purchase by the end-user. The Company also offers a 90-
day basic warranty for its service parts used to repair
the Company's hardware products. The Company provides currently for the estimated cost that may be incurred under its basic limited product
warranties at the time related revenue is recognized. Factors considered in determining appropriate accruals for product warranty obligations
include the size of the installed base of products subject to warranty protection, historical and projected warranty claim rates, historical and
projected cost-per-claim, and knowledge of specific product failures that are outside of the Company's typical experience. The Company
assesses the adequacy of its preexisting warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in
future estimates. For products accounted for under subscription accounting pursuant to SOP No. 97-2, the Company recognizes warranty
expense as incurred.
The Company periodically provides updates to its applications and system software to maintain the software's compliance with specifications.
The estimated cost to develop such updates is accounted for as warranty costs that are recognized at the time related software revenue is
recognized. Factors considered in determining appropriate accruals related to such updates include the number of units delivered, the number of
updates expected to occur, and the historical cost and estimated future cost of the resources necessary to develop these updates.
82
Fiscal Years
2008
$
155
2009
172
2010
173
2011
160
2012
148
Thereafter
617
Total minimum lease payments
$
1,425