Apple 2013 Annual Report Download - page 70

Download and view the complete annual report

Please find page 70 of the 2013 Apple annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 96

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96

as of September 28, 2013. The Company’s share repurchase program does not obligate it to acquire any specific
number of shares. Under the program, shares may be repurchased in privately negotiated and/or open market
transactions, including under plans complying with Rule 10b5-1 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”).
In August 2012, the Company entered into an accelerated share repurchase arrangement (“ASR”) with a financial
institution to purchase up to $1.95 billion of the Company’s common stock in 2013. In the first quarter of 2013,
2.6 million shares were initially delivered to the Company. In April 2013, the purchase period for the ASR ended
and an additional 1.5 million shares were delivered to the Company. In total, 4.1 million shares were delivered
under the ASR at an average repurchase price of $478.20 per share. The shares were retired in the quarters they
were delivered, and the up-front payment of $1.95 billion was accounted for as a reduction to shareholders’
equity in the Company’s Consolidated Balance Sheet in the first quarter of 2013.
In April 2013, the Company entered into a new ASR program with two financial institutions to purchase up to
$12 billion of the Company’s common stock. In exchange for up-front payments totaling $12 billion, the
financial institutions committed to deliver shares during the ASR’s purchase periods, which will end during
2014. The total number of shares ultimately delivered, and therefore the average price paid per share, will be
determined at the end of the applicable purchase period based on the volume weighted average price of the
Company’s stock during that period. During the third quarter of 2013, 23.5 million shares were initially delivered
to the Company and retired. This does not represent the final number of shares to be delivered under the ASR.
The up-front payments of $12 billion were accounted for as a reduction to shareholders’ equity in the Company’s
Consolidated Balance Sheet.
The Company reflected the ASRs as a repurchase of common stock for purposes of calculating earnings per share
and as forward contracts indexed to its own common stock. The forward contracts met all of the applicable
criteria for equity classification, and, therefore, were not accounted for as derivative instruments.
During 2013, the Company repurchased 19.4 million shares of its common stock in the open market at an
average price of $464.11 per share for a total of $9.0 billion. These shares were retired upon repurchase.
Note 8 – 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, net deferred gains and losses on certain derivative instruments accounted for as cash flow
hedges, and unrealized gains and losses on marketable securities classified as available-for-sale.
The following table shows the components of AOCI, net of taxes, as of September 28, 2013 and September 29,
2012 (in millions):
2013 2012
Cumulative foreign currency translation ............................................. $(105) $ 8
Net unrecognized gains/losses on derivative instruments ................................ (175) (240)
Net unrealized gains/losses on marketable securities .................................... (191) 731
Accumulated other comprehensive income/(loss) .................................. $(471) $ 499
68