Apple 2008 Annual Report Download - page 86

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9—Segment Information and Geographic Data (Continued)
expenses are generally included in the geographic segment in which the expenditures are incurred. Operating income for each segment excludes
other income and expense and certain expenses managed outside the operating segments. Costs excluded from segment operating income include
various corporate expenses, such as manufacturing costs and variances not included in standard costs, research and development, corporate
marketing expenses, stock-based compensation expense, income taxes, various nonrecurring charges, and other separately managed general and
administrative costs. The Company does not include intercompany transfers between segments for management reporting purposes. Segment
assets exclude corporate assets, such as cash, short-term and long-term investments, manufacturing and corporate facilities, miscellaneous
corporate infrastructure, goodwill and other acquired intangible assets. Except for the Retail segment, capital asset purchases for long-lived
assets are not reported to management by segment. Cash payments for capital asset purchases by the Retail segment were $389 million, $294
million, and $200 million for 2008, 2007, and 2006 respectively.
The Company has certain retail stores that have been designed and built to serve as high-profile venues to promote brand awareness and serve as
vehicles for corporate sales and marketing activities. Because of their unique design elements, locations and size, these stores require
substantially more investment than the Company’s more typical retail stores. The Company allocates certain operating expenses associated with
its high-profile stores to corporate marketing expense to reflect the estimated Company-wide benefit. The allocation of these operating costs to
corporate expense is based on the amount incurred for a high-profile store in excess of that incurred by a more typical Company retail location.
The Company had opened a total of 11 high-profile stores as of September 27, 2008. Expenses allocated to corporate marketing resulting from
the operations of high-profile stores were $53 million, $39 million, and $33 million for the years ended September 27, 2008, September 29,
2007, and September 30, 2006 respectively.
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