Make an analysis of the Consolidated Statements of operations focusing specifically on the net income and compare to the cash balances in the Consolidated Statements of Cash Flows). How do you explain to Jill the differences between the numbers? Consider the reasonableness of your answer.
CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Net sales Cost of sales Gross margin September 24, 2016 $ 215,639 131,376 84,263 Years ended September 26, 2015 $ 233,715 140,089 93,626 September 27, 2014 $ 182,795 112,258 70,537 Operating expenses: Research and development Selling, general and administrative Total operating expenses 10,045 14,194 24,239 8,067 14,329 22,396 6,041 11,993 18,034 Operating income Other income/(expense), net Income before provision for income taxes Provision for income taxes Net income 60,024 1,348 61,372 15,685 45,687 71,230 1,285 72,515 19,121 53,394 52,503 980 53,483 13,973 39,510 $ $ $ Earnings per share: Basic Diluted 8.35 $ $ $ $ 9.28 9.22 $ $ 6.49 6.45 8.31 Shares used in computing earnings per share: Basic Diluted 5,470,820 5,500,281 5,753,421 5,793,069 6,085,572 6,122,663 1.98 $ 1.82 Cash dividends declared per share $ 2.18 $ See accompanying Notes to Consolidated Financial Statements. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Years ended September 24, September 26, September 27, 2016 2015 2014 $ 45,687 $ 53,394 $ 39,510 Net income Other comprehensive income/(loss): Change in foreign currency translation, net of tax effects of $8, $201 and $50, respectively 75 (411) (137) 7 2,905 1.390 Change in unrealized gains/losses on derivative instruments: Change in fair value of derivatives, net of tax benefit/(expense) of $(7), $(441) and $(297), respectively Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $131, $630 and $(36), respectively Total change in unrecognized gains/losses on derivative instruments, net of tax (741) (3,497) 149 (734) (592) 1,539 1,582 (483) 285 Change in unrealized gains/losses on marketable securities: Change in fair value of marketable securities, net of tax benefit/ (expense) of $(863), $264 and $(153), respectively Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $(31), $(32) and $71, respectively Total change in unrealized gains/losses on marketable securities, net of tax 56 59 (134) 1,638 (424) 151 Total other comprehensive income/(loss) Total comprehensive income 979 $ 46,666 (1,427) 51,967 1,553 41,063 $ $ See accompanying Notes to Consolidated Financial Statements CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 24, September 26, 2016 2015 ASSETS: Current assets: Cash and cash equivalents $ 20,484 $ 21,120 Short-term marketable securities 46.671 20,481 Accounts receivable, less allowances of $53 and $63, respectively 15,754 16,849 Inventories 2,132 2,349 Vendor non-trade receivables 13,545 13,494 Other current assets 8,283 15,085 Total current assets 106,869 89.378 164,065 22,471 5,116 3,893 5,422 290,345 $ Long-term marketable securities 170,430 Property, plant and equipment, net 27,010 Goodwill 5,414 Acquired intangible assets, net 3,206 Other non-current assets 8,757 Total assets $ 321,686 LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable $ 37,294 Accrued expenses 22,027 Deferred revenue 8,080 Commercial paper 8,105 Current portion of long-term debt 3,500 Total current liabilities 79,006 $ 35,490 25,181 8,940 8,499 2,500 80,610 Deferred revenue, non-current Long-term debt Other non-current liabilities Total liabilities 2,930 75,427 36,074 193,437 3,624 53,329 33,427 170,990 Commitments and contingencies Shareholders' equity: Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,336,166 and 5,578,753 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income/loss) Total shareholders' equity Total liabilities and shareholders' equity 31,251 96,364 634 128.249 321.686 27,416 92,284 (345) 119,355 290,345 See accompanying Notes to Consolidated Financial Statements. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) Accumulated Other Total Retained Comprehensive Shareholders' Earnings Income/(Loss) Equity $ 104,256 $ (471) $ 123,549 39,510 39,510 1,553 1,553 (11,215) (45,000) (11,215) (45,000) 2,863 (399) (448) 1,082 87,152 53,394 735 111,547 53,394 (1,427) (1,427) Common Stock and Additional Paid-In Capital Shares Amount Balances as of September 28, 2013 6,294,494 $ 19.764 Net income Other comprehensive income/loss) Dividends and dividend equivalents declared Repurchase of common stock (488,677) Share-based compensation 2,863 Common stock issued, net of shares withheld for employee taxes 60,344 (49) Tax benefit from equity awards, including transfer pricing adjustments 735 Balances as of September 27, 2014 5,866,161 23,313 Net income Other comprehensive come/(loss) Dividends and dividend equivalents declared Repurchase of common stock (325,032) Share-based compensation 3,586 Common stock issued, net of shares withheld for employee taxes 37.624 (231) Tax benefit from equity awards, including transfer pricing adjustments 748 Balances as of September 26, 2015 5,578,753 27,416 Net income Other comprehensive income/loss) Dividends and dividend equivalents declared Repurchase of common stock (279,609) Share-based compensation 4,262 Common stock issued, net of shares withheld for employee taxes 37,022 (806) Tax benefit from equity awards, including transfer pricing adjustments 379 Balances as of September 24, 2016 5.336,166 31,251 (11,627) (36,026) (11,627) (36,026) 3,586 (609) - (840) (345) 92.284 45,687 748 119,355 45,687 979 979 (12,188) (29,000) (12,188) (29,000) 4,262 (419) (1,225) 96,364 379 128,249 $ 634 $ See accompanying Notes to Consolidated Financial Statements. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Years ended September 24, September 26, 2016 2015 Cash and cash equivalents, beginning of the year $ 21,120 $ 13,844 September 27, 2014 $ 14,259 45,687 53,394 39,510 10,505 4,210 4,938 11.257 3,586 1.382 7.946 2,863 2,347 Operating activities: Net income Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization Share-based compensation expense Deferred income tax expense Changes in operating assets and liabilities: Accounts receivable, net Inventories Vendor non-trade receivables Other current and non-current assets Accounts payable Deferred revenue Other current and non-current liabilities Cash generated by operating activities 1,095 217 (51) 1,090 1,791 (1,554) (2,104) 65,824 611 (238) (3,735) (179) 5,400 1,042 8,746 81,266 (4,232) (76) (2,220) 167 5.938 1,460 6,010 59,713 (142,428) 21,258 90,536 (166,402) 14,538 107,447 (217.128) 18,810 189,301 (297) (343) Investing activities: Purchases of marketable securities Proceeds from maturities of marketable securities Proceeds from sales of marketable securities Payments made in connection with business acquisitions, net Payments for acquisition of property, plant and equipment Payments for acquisition of intangible assets Payments for strategic investments Other Cash used in investing activities (3,765) (11,247) (241) (12,734) (814) (1,388) (110) (45,977) (9,571) (242) (10) 26 (22,579) (26) (56.274) 495 407 543 749 730 739 Financing activities: Proceeds from issuance of common stock Excess tax benefits from equity awards Payments for taxes related to net share settlement of equity awards Payments for dividends and dividend equivalents Repurchases of common stock Proceeds from issuance of term debt, net Repayments of term debt Change in commercial paper, net Cash used in financing activities (1.570) (12,150) (29,722) 24,954 (2,500) (397) (20,483) (1,499) (11,561) (35,253) 27,114 (1.158) (11,126) (45,000) 11,960 2,191 (17,716) 6,306 (37,549) Increase/(Decrease) in cash and cash equivalents Cash and cash equivalents, end of the year (636) 20,484 7,276 21,120 (415) 13,844 $ $ See accompanying Notes to Consolidated Financial Statements. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Net sales Cost of sales Gross margin September 24, 2016 $ 215,639 131,376 84,263 Years ended September 26, 2015 $ 233,715 140,089 93,626 September 27, 2014 $ 182,795 112,258 70,537 Operating expenses: Research and development Selling, general and administrative Total operating expenses 10,045 14,194 24,239 8,067 14,329 22,396 6,041 11,993 18,034 Operating income Other income/(expense), net Income before provision for income taxes Provision for income taxes Net income 60,024 1,348 61,372 15,685 45,687 71,230 1,285 72,515 19,121 53,394 52,503 980 53,483 13,973 39,510 $ $ $ Earnings per share: Basic Diluted 8.35 $ $ $ $ 9.28 9.22 $ $ 6.49 6.45 8.31 Shares used in computing earnings per share: Basic Diluted 5,470,820 5,500,281 5,753,421 5,793,069 6,085,572 6,122,663 1.98 $ 1.82 Cash dividends declared per share $ 2.18 $ See accompanying Notes to Consolidated Financial Statements. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Years ended September 24, September 26, September 27, 2016 2015 2014 $ 45,687 $ 53,394 $ 39,510 Net income Other comprehensive income/(loss): Change in foreign currency translation, net of tax effects of $8, $201 and $50, respectively 75 (411) (137) 7 2,905 1.390 Change in unrealized gains/losses on derivative instruments: Change in fair value of derivatives, net of tax benefit/(expense) of $(7), $(441) and $(297), respectively Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $131, $630 and $(36), respectively Total change in unrecognized gains/losses on derivative instruments, net of tax (741) (3,497) 149 (734) (592) 1,539 1,582 (483) 285 Change in unrealized gains/losses on marketable securities: Change in fair value of marketable securities, net of tax benefit/ (expense) of $(863), $264 and $(153), respectively Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $(31), $(32) and $71, respectively Total change in unrealized gains/losses on marketable securities, net of tax 56 59 (134) 1,638 (424) 151 Total other comprehensive income/(loss) Total comprehensive income 979 $ 46,666 (1,427) 51,967 1,553 41,063 $ $ See accompanying Notes to Consolidated Financial Statements CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 24, September 26, 2016 2015 ASSETS: Current assets: Cash and cash equivalents $ 20,484 $ 21,120 Short-term marketable securities 46.671 20,481 Accounts receivable, less allowances of $53 and $63, respectively 15,754 16,849 Inventories 2,132 2,349 Vendor non-trade receivables 13,545 13,494 Other current assets 8,283 15,085 Total current assets 106,869 89.378 164,065 22,471 5,116 3,893 5,422 290,345 $ Long-term marketable securities 170,430 Property, plant and equipment, net 27,010 Goodwill 5,414 Acquired intangible assets, net 3,206 Other non-current assets 8,757 Total assets $ 321,686 LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable $ 37,294 Accrued expenses 22,027 Deferred revenue 8,080 Commercial paper 8,105 Current portion of long-term debt 3,500 Total current liabilities 79,006 $ 35,490 25,181 8,940 8,499 2,500 80,610 Deferred revenue, non-current Long-term debt Other non-current liabilities Total liabilities 2,930 75,427 36,074 193,437 3,624 53,329 33,427 170,990 Commitments and contingencies Shareholders' equity: Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,336,166 and 5,578,753 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income/loss) Total shareholders' equity Total liabilities and shareholders' equity 31,251 96,364 634 128.249 321.686 27,416 92,284 (345) 119,355 290,345 See accompanying Notes to Consolidated Financial Statements. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) Accumulated Other Total Retained Comprehensive Shareholders' Earnings Income/(Loss) Equity $ 104,256 $ (471) $ 123,549 39,510 39,510 1,553 1,553 (11,215) (45,000) (11,215) (45,000) 2,863 (399) (448) 1,082 87,152 53,394 735 111,547 53,394 (1,427) (1,427) Common Stock and Additional Paid-In Capital Shares Amount Balances as of September 28, 2013 6,294,494 $ 19.764 Net income Other comprehensive income/loss) Dividends and dividend equivalents declared Repurchase of common stock (488,677) Share-based compensation 2,863 Common stock issued, net of shares withheld for employee taxes 60,344 (49) Tax benefit from equity awards, including transfer pricing adjustments 735 Balances as of September 27, 2014 5,866,161 23,313 Net income Other comprehensive come/(loss) Dividends and dividend equivalents declared Repurchase of common stock (325,032) Share-based compensation 3,586 Common stock issued, net of shares withheld for employee taxes 37.624 (231) Tax benefit from equity awards, including transfer pricing adjustments 748 Balances as of September 26, 2015 5,578,753 27,416 Net income Other comprehensive income/loss) Dividends and dividend equivalents declared Repurchase of common stock (279,609) Share-based compensation 4,262 Common stock issued, net of shares withheld for employee taxes 37,022 (806) Tax benefit from equity awards, including transfer pricing adjustments 379 Balances as of September 24, 2016 5.336,166 31,251 (11,627) (36,026) (11,627) (36,026) 3,586 (609) - (840) (345) 92.284 45,687 748 119,355 45,687 979 979 (12,188) (29,000) (12,188) (29,000) 4,262 (419) (1,225) 96,364 379 128,249 $ 634 $ See accompanying Notes to Consolidated Financial Statements. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Years ended September 24, September 26, 2016 2015 Cash and cash equivalents, beginning of the year $ 21,120 $ 13,844 September 27, 2014 $ 14,259 45,687 53,394 39,510 10,505 4,210 4,938 11.257 3,586 1.382 7.946 2,863 2,347 Operating activities: Net income Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization Share-based compensation expense Deferred income tax expense Changes in operating assets and liabilities: Accounts receivable, net Inventories Vendor non-trade receivables Other current and non-current assets Accounts payable Deferred revenue Other current and non-current liabilities Cash generated by operating activities 1,095 217 (51) 1,090 1,791 (1,554) (2,104) 65,824 611 (238) (3,735) (179) 5,400 1,042 8,746 81,266 (4,232) (76) (2,220) 167 5.938 1,460 6,010 59,713 (142,428) 21,258 90,536 (166,402) 14,538 107,447 (217.128) 18,810 189,301 (297) (343) Investing activities: Purchases of marketable securities Proceeds from maturities of marketable securities Proceeds from sales of marketable securities Payments made in connection with business acquisitions, net Payments for acquisition of property, plant and equipment Payments for acquisition of intangible assets Payments for strategic investments Other Cash used in investing activities (3,765) (11,247) (241) (12,734) (814) (1,388) (110) (45,977) (9,571) (242) (10) 26 (22,579) (26) (56.274) 495 407 543 749 730 739 Financing activities: Proceeds from issuance of common stock Excess tax benefits from equity awards Payments for taxes related to net share settlement of equity awards Payments for dividends and dividend equivalents Repurchases of common stock Proceeds from issuance of term debt, net Repayments of term debt Change in commercial paper, net Cash used in financing activities (1.570) (12,150) (29,722) 24,954 (2,500) (397) (20,483) (1,499) (11,561) (35,253) 27,114 (1.158) (11,126) (45,000) 11,960 2,191 (17,716) 6,306 (37,549) Increase/(Decrease) in cash and cash equivalents Cash and cash equivalents, end of the year (636) 20,484 7,276 21,120 (415) 13,844 $ $ See accompanying Notes to Consolidated Financial Statements
