Broadening Your Perspective 9-1 The financial statements of Apple, Inc. are presented below. CONSOLIDATED STATEMENTS OF OPERATIONS In millions, except number of shares which are reflected in thousands and per share amounts) Three years ended September 24, 2011 Net sales 2011 2010 2009 $108,249 64,431 43.818 S 42 905 S 65 225 25.683 Cost of sales 39,541 17.222 Gross margin Operating expenses: Research and development Selling, general and administrative Total operating expenses 5 684 1333 4,149 5,482 2,429 7,599 10,028 33,790 415 1.782 5,517 7.299 18.385 155 18.540 11.740 326 Operating income Other income and expense Income before provision for income taxes Provision for income taxes 34.205 12,066 3,831 S 8.235 8.283 4.527 $ 25,922 S 14,013 Net income Earnings per common share: S 15.41 S 15.15 $ 28.05 $ 27.68 922 Diluted 9.08 Shares used in computing earnings per share Basic Diluted 924,258 936,645 909.461 924,712 893,016 907,005 CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands) September 25, 2010 September 24, 2011 ASSETS: Cum ent as ash equivalents 9.815 S 11,261 14,359 5,510 Short-term marketable securities 16,137 5,369 776 2,014 6348 4,529 Accounts receivable, less allowances of $53 and $55, respectively Inventories Deferred tax assets Vendor non-trade receivables 1,051 1.636 4414 Other current assets 3,447 Total current assets 44.988 41,678 Long-term marketable securities Property, plant and equipment, net Goodwill Acquired intangible assets, net Other assets 55,618 7,777 896 3,536 3,556 25,391 4.768 741 342 2.263 2,263 Other assets 3556 116,371 75,183 Total assets LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities Accounts payable S 14,632 9,247 12,015 5,723 2,984 Accrued expenses Deferred revenue 4.091 27,970 Total current liabilities 20.722 Deferred revenue - non-current Other non-curent liabilities 1686 10,100 1,139 5531 39,756 27.392 Total liabilities Commitments and contingencies Shareholders' equity Common stock, no par value; 1,800,000 shares authorized; 929,277 and 915.970 shares issued and outstanding, respectively Ro Accumulated other comprehensive income/(loss) 13,331 10,668 37. (46) 62 443 47,791 Total shareholders' equity Total liabilities and shareholders' equity 76,615 75.183 116.371 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) ulated Other Common Stock hensive Share holders Retained Income Shares Amount Earnings Loss) S Equity $22.297 $ 7,177 Balances as of September 27, 2008 Components of comprehensive income: Net income $ 15,129 888.326 (9 8,235 8,235 0 translation Chgein toteg e en marketable securities, net of tax 118 118 o Change in unrecognized gains/losses on derivative instruments, net of (18) (18) 8,321 tax Total comprehensive income Share-based compensation 707 707 Common stock issued under stock plans, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 26, 2009 11.480 404 (78 (11) 0 393 0 0 (78) 899 806 8.210 23.353 77 31.640 Components of comprehensive income: Net income 0 0 14.013 14,013 Change in foreign currency translation Chang n unrealized gains/losses on marketable securities. net of tax 123 123 Net income 14,013 C 14.013 ney translation Change in umrealized eains/losses on marketable securities, net of tax. 123 123 Change in unrecognized gains/losses on derivative instruments, net of (253) 0 0 (253) tax Total comprehensive income 13,890 Share-based compensation Common stock issued under stock plans, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 25, 2010 Components of comprehensive income: Net income 876 0 C 876 16,164 703 (197) 0 C 506 879 879 915970 10.668 37,169 (46) 47,791 25,922 25.922 0 hange in foreign currency translation Cha arketable securities, net of tax 0 C (41) Change in unrecognized gains/losses on derivative instruments, net of 0 0 542 542 26,411 1.168 tax Total comprehensive income Share-based compensation Common stock issued under stock plans, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments 1,168 0 0 13,307 561 (250) 311 934 934 0 S 62,841 $13.331 443 $76,615 Balances as of September 24, 2011 929 277 CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Three years ended September 24, 2011 Cash and cash equivalents, beginning of the year Operating activities: Net income Adjustments to reconcile net income Depreciation, amortization and accretion Share-based compens ation expense Deferred income tax expense C Accounts receivable, net 2011 2010 1009 11,261 $ 11.875 5.263 25,922 14,013 8,235 cash generated by operating activities: 1,814 1,168 2,868 1,027 879 1,440 734 710 1,040 and liabilities: 143 (2,142) (596) (2,718) (1,610) 6.307 1,217 (939) Inventories Vendor non-trade receivables Other current and non-current assets Accounts payable Deferred revenue 275 54 (1,934) (1.391) 2,515 586 (713) 92 1.654 521 Other current and non-current liabilities 4,495 778 (161) Cash generated by operating activities 37,529 18,595 10.159 Investing activities: Purchases of marketable securities (102,317) (57,793) (46,724) etable urities 49416 21 788 Proceeds from s 20.437 Proceeds from maturities of marketable securities Proceeds from sales of marketable securities 24,930 21,788 19,790 10,888 49,416 Payments made in connection with business acquisitions, net of cash acquired Payments for acquisition of property, plant and equipment Payments for acquisition of intangible assets Other (244) (4,260) (3,192) (259) (638) (2,005) (116) (20) 0 (1,144) (69) (175) Cash used in investing activities (40,419) (13,854) (17,434) Financing activities: stock 831 912 751 475 270 FHocee s t common s 1133 (520) (406) (821 Taxes paid related to net share settle ment of equity awards Cash generated by financing activities 1,444 1,257 663 (Decrease)/increase in cash and cash equivalents (1,446) 5,998 (6,612) S 11,261 S 5,263 S 9,815 Cash and cash equivalents, end of the year Supplemental cash flow disclosure: Cash paid for income taxes, net 3,338 S 2,697 S 2,997 Notes to the financial statements: Property, Plant and Equipment 2011 2010 Land and buildings Machinery, equipment and internal-use software Office furniture and equipment Leasehold improvements S 2,059 1,471 6,926 3,589 184 144 2,599 2,030 Gross property, plant and equipment Accumulated depreciation and amortization 11,768 7,234 (3,991) (2,466) $ 4,768 Net property, plant and equipment 7,777 Goodwill and Other Intangible Assets 2011 2010 Gruss Carrying Net Gross Carrying Net Carrying Amount Accumulated Carrying Amount Accumulated Amortization Amount Amortization Amount Definite lived and amortizable acquired intangible as sets .... . . . $(245 $3,436 $3,873 $(437) $$242 $487 Indefinite lived and non-amortizable trademarks 00 0 100 100 0 100 NCT property, piam and cquiphient 4,700 Goodwill and Other Intangible Assets 2010 2011 ros arrving C Amount Gross Ca el arrving Carrying Accumulated Amortization Accumulated C Amount Amount Amount Amortization Definite lived and amortizable acquired intangible as sels. $3,873 $(437) $3,436 $487 $(245) $242 Indefinite lived and non-amortizable trademarks.. 100 100 100 100 Total acquired intangible assets $(437 $3,536 $587 $(245) $342 $3.973 Refer to Apple's financial statements and answer the following questions. What was the total cost and book value of property, plant, and equipment at September 24, 2011? Total Cost Book Value What was the amount of depreciation and amortization expense for each of the three years 2009-2011? Depreciation and Amortization Expense 2011 2010 2009 Using the statement of cash flows, what is the amount of capital spending in 2011 and 2010? 2011 2010