Apple 2011 Annual Report Download - page 67

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
classified as available-for-sale, and net deferred gains and losses on certain derivative instruments accounted for as cash flow hedges.
The following table summarizes the components of AOCI, net of taxes, as of September 24, 2011, September 25, 2010, and September 26, 2009
(in millions):
The change in fair value of available-for-
sale securities included in other comprehensive income was $(41) million, $123 million and $118
million, net of taxes in 2011, 2010 and 2009, respectively. The tax effect related to the change in unrealized gains/losses on available-for-
sale
securities was $24 million, $(72) million and $(78) million for 2011, 2010 and 2009, respectively.
The following table summarizes activity in other comprehensive income related to derivatives, net of taxes, held by the Company during the
three years ended September 24, 2011 (in millions):
The tax effect related to the changes in fair value of derivatives was $(50) million, $97 million and $(135) million for 2011, 2010 and 2009,
respectively. The tax effect related to derivative gains/losses reclassified from other comprehensive income to income was $(250) million, $43
million and $149 million for 2011, 2010 and 2009, respectively.
Employee Benefit Plans
2003 Employee Stock Plan
The 2003 Employee Stock Plan (the “2003 Plan”) is a shareholder approved plan that provides for broad-
based equity grants to employees,
including executive officers. The 2003 Plan permits the granting of incentive stock options, nonstatutory stock options, RSUs, stock appreciation
rights, stock purchase rights and performance-
based awards. Options granted under the 2003 Plan generally expire seven to ten years after the
grant date and generally become exercisable over a period of four years, based on continued employment, with either annual, semi-
annual or
quarterly vesting. In general, RSUs granted under the 2003 Plan vest over two to four years, based on continued employment and are settled
upon vesting in shares of the Company’s common stock on a one-for-
one basis. Each share issued with respect to an award granted under the
2003 Plan (other than a stock option or stock appreciation right) reduces the number of shares available for grant under the plan by two shares,
whereas shares issued in respect of an option or stock appreciation right count against the number of shares available for grant on a one-for-
one
basis. As of September 24, 2011, approximately 50.8 million shares were reserved for future issuance under the 2003 Plan.
65
2011
2010
2009
Net unrealized gains/losses on marketable securities
$
130
$
171
$
48
Net unrecognized gains/losses on derivative instruments
290
(252
)
1
Cumulative foreign currency translation
23
35
28
Accumulated other comprehensive income/(loss)
$
443
$
(46
)
$
77
2011
2010
2009
Changes in fair value of derivatives
$
92
$
(180
)
$
204
Adjustment for net gains/losses realized and included in net income
450
(73
)
(222
)
Change in unrecognized gains/losses on derivative instruments
$
542
$
(253
)
$
(18
)