Apple 2012 Annual Report Download - page 65

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In 2012, the Company’s Board of Directors authorized a program to repurchase up to $10 billion of the
Company’s common stock beginning in 2013. The repurchase program is expected to be executed over a three-
year period with the primary objective of neutralizing the impact of dilution from future employee equity grants
and employee stock purchase programs. The repurchase program does not obligate the Company to acquire any
specific number of shares. In August 2012, the Company entered into a Rule 10b5-1 compliant accelerated share
repurchase (“ASR”) program with a financial institution to purchase up to $2 billion of the Company’s common
stock during 2013. The total number of shares to be purchased under the ASR program will be based on the
volume-weighted average price of the Company’s common stock during the purchase period and will be reflected
as a reduction of shares outstanding on the date of purchase. The Company may also purchase its common stock
in open market transactions, in compliance with all applicable securities laws.
Comprehensive Income
Comprehensive income consists of two components, net income and other comprehensive income. Other
comprehensive income refers to revenue, expenses, and gains and losses that under GAAP 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 classified as available-for-sale, and net
deferred gains and losses on certain derivative instruments accounted for as cash flow hedges.
The following table shows the components of AOCI, net of taxes, as of September 29, 2012 and September 24,
2011 (in millions):
2012 2011
Net unrealized gains/losses on marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 731 $130
Net unrecognized gains/losses on derivative instruments ................................ (240) 290
Cumulativeforeigncurrencytranslation ............................................. 8 23
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 499 $443
The change in fair value of available-for-sale securities included in other comprehensive income was
$601 million, $(41) million and $123 million, net of taxes in 2012, 2011 and 2010, respectively. The tax effect
related to the change in unrealized gains/losses on available-for-sale securities was $(353) million, $24 million
and $(72) million for 2012, 2011 and 2010, respectively.
The following table shows activity in other comprehensive income related to derivatives, net of taxes, held by the
Company during 2012, 2011, and 2010 (in millions):
2012 2011 2010
Change in fair value of derivatives ........................................... $(131) $ 92 $(180)
Adjustment for net gains/losses realized and included in net income ................ (399) 450 (73)
Change in unrecognized gains/losses on derivative instruments ................ $(530) $542 $(253)
The tax effect related to the changes in fair value of derivatives was $73 million, $(50) million and $97 million
for 2012, 2011 and 2010, respectively. The tax effect related to derivative gains/losses reclassified from other
comprehensive income to income was $220 million, $(250) million and $43 million for 2012, 2011 and 2010,
respectively.
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