Apple 2012 Annual Report Download - page 38

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 29, 2012, the Company had deferred tax assets arising from deductible temporary differences,
tax losses, and tax credits of $4.0 billion, and deferred tax liabilities of $14.9 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 years ended
September 29, 2012, September 24, 2011, and September 25, 2010 (in millions):
2012 2011 2010
Cash, cash equivalents and marketable securities ......................... $121,251 $81,570 $51,011
Accounts receivable, net ............................................ $ 10,930 $ 5,369 $ 5,510
Inventories ....................................................... $ 791 $ 776 $ 1,051
Working capital ................................................... $ 19,111 $17,018 $20,956
Annual operating cash flow .......................................... $ 50,856 $37,529 $18,595
As of September 29, 2012, the Company had $121.3 billion in cash, cash equivalents and marketable securities,
an increase of $39.7 billion or 49% from September 24, 2011. The principal components of this net increase was
the cash generated by operating activities of $50.9 billion, which was partially offset by payments for acquisition
of property, plant and equipment of $8.3 billion, payments for acquisition of intangible assets of $1.1 billion and
payments of dividends and dividend equivalent rights of $2.5 billion.
The Company’s marketable securities investment portfolio is invested primarily in highly-rated securities and its
investment policy generally limits the amount of credit exposure to any one issuer. The policy requires
investments generally to be investment grade with the objective of minimizing the potential risk of principal loss.
As of September 29, 2012 and September 24, 2011, $82.6 billion and $54.3 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. 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, common stock repurchases, dividends on its common stock, and other liquidity
requirements associated with its existing operations over the next 12 months.
Capital Assets
The Company’s capital expenditures were $10.3 billion during 2012, consisting of $865 million for retail store
facilities and $9.5 billion for other capital expenditures, including product tooling and manufacturing process
37