Apple 2008 Annual Report Download - page 67

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 1—Summary of Significant Accounting Policies (Continued)
The following table sets forth the computation of basic and diluted earnings per share for the three fiscal years ended September 27, 2008 (in
thousands, except net income in millions and per share amounts):
Potentially dilutive securities representing 10.3 million, 13.7 million, and 3.9 million shares of common stock for the years ended September 27,
2008, September 29, 2007, and September 30, 2006, respectively, were excluded from the computation of diluted earnings per share for these
periods because their effect would have been antidilutive.
Comprehensive Income
Comprehensive income consists of two components, net income and other comprehensive income. Other comprehensive income refers to
revenue, expenses, gains, and losses that under U.S. generally accepted accounting principles are recorded as an element of shareholders’ equity
but are excluded from net income. The Company’s other comprehensive income consists of foreign currency translation adjustments from those
subsidiaries not using the U.S. dollar as their functional currency, unrealized gains and losses on marketable securities categorized as available-
for-sale, and net deferred gains and losses on certain derivative instruments accounted for as cash flow hedges.
Segment Information
The Company reports segment information based on the “management” approach. The management approach designates the internal reporting
used by management for making decisions and assessing performance as the source of the Company’s reportable segments. Information about
the Company’s products, major customers, and geographic areas on a company-wide basis is also disclosed.
64
2008
2007
2006
Numerator:
Net income
$
4,834
$
3,496
$
1,989
Denominator:
Weighted
-
average shares outstanding
881,592
864,595
844,058
Effect of dilutive securities
20,547
24,697
33,468
Denominator for diluted earnings per share
902,139
889,292
877,526
Basic earnings per share
$
5.48
$
4.04
$
2.36
Diluted earnings per share
$
5.36
$
3.93
$
2.27