Apple 2011 Annual Report Download - page 39

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35% due primarily to certain undistributed foreign earnings for which no U.S. taxes are provided because such earnings are intended to be
indefinitely reinvested outside the U.S.
As of September 24, 2011, the Company had deferred tax assets arising from deductible temporary differences, tax losses, and tax credits of $3.2
billion, and deferred tax liabilities of $9.2 billion. Management believes it is more likely than not that forecasted income, including income that
may be generated as a result of certain tax planning strategies, together with future reversals of existing taxable temporary differences, will be
sufficient to fully recover the deferred tax assets. The Company will continue to evaluate the realizability of deferred tax assets quarterly by
assessing the need for and amount of a valuation allowance.
The Internal Revenue Service (the “IRS”) has completed its field audit of the Company’
s federal income tax returns for the years 2004 through
2006 and proposed certain adjustments. The Company has contested certain of these adjustments through the IRS Appeals Office. The IRS is
currently examining the years 2007 through 2009. All IRS audit issues for years prior to 2004 have been resolved. In addition, the Company is
subject to audits by state, local, and foreign tax authorities. Management believes that adequate provisions have been made for any adjustments
that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the
Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be
required to adjust its
provision for income taxes in the period such resolution occurs.
Liquidity and Capital Resources
The following table presents selected financial information and statistics as of and for the three years ended September 24, 2011 (in millions):
Cash, cash equivalents and marketable securities increased $30.6 billion or 60% during 2011. The principal components of this net increase was
the cash generated by operating activities of $37.5 billion, which was partially offset by payments for acquisition of property, plant and
equipment of $4.3 billion, payments for acquisition of intangible assets of $3.2 billion and payments made in connection with business
acquisitions, net of cash acquired, of $244 million. The Company believes its existing balances of cash, cash equivalents and marketable
securities will be sufficient to satisfy its working capital needs, capital asset purchases, outstanding commitments and other liquidity
requirements associated with its existing operations over the next 12 months.
The Company’
s marketable securities investment portfolio is invested primarily in highly rated securities and its policy generally limits the
amount of credit exposure to any one issuer. The Company’
s investment policy requires investments to generally be investment grade with the
objective of minimizing the potential risk of principal loss. As of September 24, 2011 and September 25, 2010, $54.3 billion and $30.8 billion,
respectively, of the Company’
s cash, cash equivalents and marketable securities 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.
Capital Assets
The Company’
s capital expenditures were $4.6 billion during 2011, consisting of approximately $614 million for retail store facilities and $4.0
billion for other capital expenditures, including product tooling and manufacturing
37
2011
2010
2009
Cash, cash equivalents and marketable securities
$
81,570
$
51,011
$
33,992
Accounts receivable, net
$
5,369
$
5,510
$
3,361
Inventories
$
776
$
1,051
$
455
Working capital
$
17,018
$
20,956
$
20,049
Annual operating cash flow
$
37,529
$
18,595
$
10,159