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0000320193 | 20031219 | 10-K | 752 | On April 10, 2003, the Internal Revenue Service (IRS) proposed adjustments to the Company's federal income tax returns for the years 1998 through 2000, and the Company has made certain prepayments thereon. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 753 | Certain of these adjustments are being contested through the IRS Appeals Office. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 754 | Substantially all IRS audit issues for years prior to 1998 have been resolved. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 755 | Management believes that adequate provision has been made for any adjustments that may result from tax examinations. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 756 | However, the outcome of tax audits cannot be predicted with certainty. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 757 | Should any issues addressed in the Company's tax audits be resolved in a manner not consistent with management's expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 758 | Cumulative Effects of Accounting Changes
Financial Instruments with Characteristics of Both Liabilities and Equity
On May 15, 2003, the Financial Accounting Standards Board (FASB) issued SFAS No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 759 | 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 760 | SFAS No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 761 | 150 requires issuers to classify as liabilities certain freestanding financial instruments that embody obligations for the issuer and have characteristics of both liabilities and equity. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 762 | The Company adopted the provisions of SFAS No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 763 | 150 on June 29, 2003, which resulted in a favorable cumulative effect type adjustment of approximately $3 million. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 764 | This adjustment represented the mark-to-market adjustment to fair value for a forward purchase agreement that allowed the Company to acquire 1.5 million shares of its common stock at a price of $16.64 per share. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 765 | The Company settled this forward purchase agreement in August 2003. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 766 | The settlement resulted in an additional gain of approximately $6 million, which is included in interest and other income, net. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 767 | Accounting for Asset Retirement Obligations
On September 29, 2002, the Company adopted SFAS No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 768 | 143, Accounting for Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 769 | Net of the related income tax effect of approximately $1 million, adoption of SFAS No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 770 | 143 resulted in an unfavorable cumulative-effect type adjustment to net income during 2003 of approximately $2 million. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 771 | This adjustment represents cumulative depreciation and accretion that would have been recognized through the date of adoption of SFAS No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 772 | 143 had the statement been applied to the Company's existing asset retirement obligations at the time they were initially incurred. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 773 | Accounting for Derivatives
The adoption of SFAS 133 during 2001 resulted in a favorable cumulative-effect type adjustment of approximately $12 million, net of a related income tax effect of approximately $5 million. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 774 | Further information related to the adoption of SFAS Nos. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 775 | 133, 143 and 150 and the resulting cumulative accounting effects may be found in Part II, Item 8 of this Form 10-K at Note 1 of Notes to Consolidated Financial Statements. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 776 | Accounting for Stock-Based Compensation
The Company currently measures compensation expense for its employee stock-based compensation plans using the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 777 | 25,
Accounting for Stock Issued to Employees and provides pro forma disclosures of the effect on net income and earnings per share as if the fair value-based method had been applied in measuring compensation expense. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 778 | The Company has elected to follow APB Opinion No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 779 | 25 because, as further discussed in Part II, Item 8 of this Form 10-K at Note 1 of the Notes to Consolidated Financial Statements, the alternative fair value accounting provided for under SFAS No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 780 | 123, Accounting for Stock-Based Compensation, requires use of option valuation models that were not developed for use in valuing employee stock options and employee stock purchase plan shares. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 781 | Under APB Opinion No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 782 | 25, when the exercise price of the Company's employee stock options equals the market price of the underlying stock on the date of the grant, no compensation expense is recognized. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 783 | The FASB decided on April 22, 2003 to require all companies to expense the value of employee stock options. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 784 | Companies will be required to measure the cost of employee stock options according to their fair value. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 785 | The FASB has indicated that it plans to issue in the first quarter of calendar year 2004 an exposure draft of a new accounting standard addressing this matter. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 786 | Prior to issuance of this exposure draft, the FASB has indicated it will be addressing several significant technical issues. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 787 | Among other things, the FASB must determine the extent to which the new accounting standard will permit adjustments to recognized expense for actual option forfeitures and actual performance outcomes. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 788 | This determination will affect the timing and amount of compensation expense recognized. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 789 | Also, a method to determine the fair value of employee stock options must be established. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 790 | Current accounting standards require use of an option-pricing model, such as the Black-Scholes formula, to determine fair value and provide guidance on adjusting some of the input factors used in the model. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 791 | This valuation approach has received significant criticism and may be subject to changes that could have a significant impact on the calculated fair value of employee stock options under the new standard. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 792 | At the Company's annual shareholder's meeting on April 24, 2003, shareholders approved a proposal requesting that the Company's Board of Directors (the Board) establish a policy of expensing the value of all future employee stock options issued by the Company. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 793 | The Board and management appreciate and take seriously the views expressed by the Company's shareholders. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 794 | As discussed in the Company's Form 10-Q for the period ended March 29, 2003, the Company had decided not to expense the value of employee stock options until the FASB finalizes its new accounting standard on the matter. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 795 | The Company based this decision on the FASB's announced intention to soon require all companies to expense the value of employee stock options and the FASB's near-term review of technical issues that will play a significant role in determining the fair value of and accounting for employee stock options. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 796 | The Company monitors progress at the FASB and other developments with respect to the general issue of employee stock compensation. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 797 | In the future, should the Company expense the value of employee stock options, either out of choice or due to new requirements issued by the FASB, the Company may have to recognize substantially more compensation expense in future periods that could have a material adverse impact on the Company's future results of oper... | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 798 | Recent Accounting Pronouncements
In January 2003, the FASB issued Interpretation No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 799 | 46 (FIN 46), Consolidation of Variable Interest Entities. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 800 | FIN 46 clarifies the application of Accounting Research Bulletin No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 801 | 51 and applied immediately to any variable interest entities created after January 31, 2003 and to variable interest entities in which an interest is obtained after that date. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 802 | For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after December 15, 2003. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 803 | The adoption of the provision of FIN 46 related to variable interests created after January 31, 2003 did not have a material impact on the Company's results of operations or financial position. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 804 | The Company continues to evaluate the provisions of FIN 46, and does not believe that the adoption of the remaining provisions will have a material impact on its results of operations or financial position. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 805 | In May 2003, the FASB's Emerging Issues Task Force (EITF) reached consensus on EITF Issue No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 806 | 00-21, Revenue Arrangements with Multiple Deliverables. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 807 | EITF Issue No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 808 | 00-21 provides guidance on how to account for certain arrangements that involve the delivery or performance of multiple products, services, and/or rights to use assets. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 809 | The provisions of EITF Issue No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 810 | 00-21 apply to revenue transactions entered into in fiscal periods beginning after June 15, 2003. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 811 | Additionally, in August 2003, the EITF reached consensus on EITF Issue No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 812 | 03-5, Applicability of AICPA Statement of Position 97-2, "Software Revenue Recognition," to Non-Software Deliverables in an Arrangement Containing More-than-Incidental Software. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 813 | EITF Issue No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 814 | 03-5 provides guidance on determining whether non-software deliverables are included within the scope of SOP 97-2, and accordingly, whether multiple element arrangements are to be accounted for in accordance with EITF Issue No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 815 | 00-21 or SOP 97-2. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 816 | The Company currently applies the requirements of SOP No. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 817 | 97-2 when accounting for all multiple element transactions. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 818 | The Company does not anticipate the application of either EITF Issue Nos. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 819 | 00-21 or 03-5 will have a significant impact on its results of operations or financial position. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 820 | Liquidity and Capital Resources
The following table presents selected financial information and statistics for each of the last three fiscal years (dollars in millions):
(a)DSO is based on ending net trade receivables and most recent quarterly net sales for each period. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 821 | (b)Days supply of inventory is based on ending inventory and most recent quarterly cost of sales for each period. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 822 | (c)DPO is based on ending accounts payable and most recent quarterly cost of sales adjusted for the change in inventory. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 823 | As of September 27, 2003, the Company's cash, cash equivalents, and short-term investments portfolio totaled $4.566 billion, an increase of $229 million from the end of fiscal 2002. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 824 | The Company's short-term investment portfolio consists primarily of investments in U.S. Treasury and Agency securities, U.S. corporate securities, and foreign securities. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 825 | Foreign securities consist primarily of foreign commercial paper, certificates of deposit and time deposits with foreign institutions, most of which are denominated in U.S. dollars. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 826 | The Company's investments are generally liquid and investment grade. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 827 | As a result of declining investment yields on the Company's cash equivalents and short-term investments resulting from substantially lower market interest rates during 2003, the Company has elected to reduce the average maturity of its portfolio to maintain liquidity for future investment opportunities when market inte... | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 828 | Accordingly, during 2003 the Company increased its holdings in short-term investment grade instruments, both in U.S. corporate and foreign securities, that are classified as cash equivalents and has reduced its holdings in longer-term U.S. corporate securities classified as short-term investments. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 829 | Although the Company's cash, cash equivalents, and short-term investments increased in 2003, the Company's working capital at September 27, 2003 decreased by $200 million as compared to the end of
fiscal 2002 due primarily to the current year reclassification of the Company's long-term debt as a current obligation resu... | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 830 | The primary sources of total cash and cash equivalents in fiscal 2003 were $289 million in cash generated by operating activities and $53 million in proceeds from the issuance of common stock, partially offset by $164 million utilized for capital expenditures and $26 million for the repurchase of common stock. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 831 | The Company believes its existing balances of cash, cash equivalents, and short-term investments will be sufficient to satisfy its working capital needs, capital expenditures, debt obligations, stock repurchase activity, outstanding commitments, and other liquidity requirements associated with its existing operations o... | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 832 | Debt
The Company currently has debt outstanding in the form of $300 million of aggregate principal amount 6.5% unsecured notes that were originally issued in 1994. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 833 | The notes, which pay interest semiannually, were sold at 99.925% of par, for an effective yield to maturity of 6.51%. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 834 | The notes, along with approximately $4 million of unamortized deferred gains on closed interest rate swaps, are due in February 2004 and therefore have been classified as current debt as of September 27, 2003. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 835 | The Company currently anticipates utilizing its existing cash balances to settle these notes when due. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 836 | Capital Expenditures
The Company's total capital expenditures were $164 million during fiscal 2003, $92 million of which were for retail store facilities and equipment related to the Company's Retail segment and $72 million of which were primarily for corporate infrastructure, including information systems enhancements... | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 837 | The Company currently anticipates it will utilize approximately $160 million for capital expenditures during 2004, approximately $85 million of which is expected to be utilized for further expansion of the Company's Retail segment and the remainder utilized to support normal replacement of existing capital assets and e... | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 838 | Stock Repurchase Plan
In July 1999, the Company's Board of Directors authorized a plan for the Company to repurchase up to $500 million of its common stock. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 839 | This repurchase plan does not obligate the Company to acquire any specific number of shares or acquire shares over any specified period of time. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 840 | During the fourth quarter of 2001, the Company entered into a forward purchase agreement to acquire 1.5 million shares of its common stock in September of 2003 at an average price of $16.64 per share for a total cost of $25.5 million. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 841 | In August 2003, the Company settled this agreement prior to its maturity, at which time the Company's common stock had a fair value of $22.81. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 842 | Other than this forward purchase transaction, the Company has not engaged in any transactions to repurchase its common stock since fiscal 2000. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 843 | Since inception of the stock repurchase plan, the Company had repurchased a total of 6.55 million shares at a cost of $217 million. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 844 | The Company was still authorized to repurchase up to an additional $283 million of its common stock as of September 27, 2003. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 845 | Off-Balance Sheet Arrangements
The Company has not entered into any transactions with unconsolidated entities whereby the Company has financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose the Company to material continuing risks, contingent liabilitie... | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 846 | Lease Commitments
As of September 27, 2003, the Company had total outstanding commitments on noncancelable operating leases of approximately $600 million, $354 million of which related to the lease of retail space and related facilities. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 847 | Remaining terms on the Company's existing operating leases range from 1 to 12 years. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 848 | Subsequent to September 27, 2003, the Company entered into additional operating lease commitments for retail space with future lease commitments totaling $64 million for periods ranging from 10 to 12 years. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 849 | Purchase Commitments with Contract Manufacturers and Component Suppliers
The Company utilizes several contract manufacturers to manufacture sub-assemblies for the Company's products and to perform final assembly and test of finished products. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 850 | These contract manufacturers acquire components and build product based on demand information supplied by the Company, which typically covers periods ranging from 1 to 3 months. | 0001047469-03-041604/full-submission.txt |
0000320193 | 20031219 | 10-K | 851 | The Company also obtains individual components for its products from a wide variety of individual suppliers. | 0001047469-03-041604/full-submission.txt |
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