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0000320193
20031219
10-K
1,552
Deferred stock compensation associated with restricted stock and options is being amortized over the required future vesting period of 3 years.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,553
In the fourth quarter of 2001, an adjustment was made to increase goodwill associated with the acquisition of PowerSchool by $5.9 million due to the identification of previously unidentified loss contingencies that were in existence prior to consummation of the acquisition.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,554
The Company allocated $12.8 million of its purchase consideration for PowerSchool to deferred stock compensation within shareholders' equity.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,555
This amount represented the intrinsic value of stock options assumed that vest as future services are provided by employees and related to 445,000 common shares issued contingent on continued employment of certain PowerSchool employee stockholders.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,556
Certain PowerSchool employee stockholders were terminated in the first quarter of 2003 resulting in the $5 million recognition of previously deferred stock compensation as part of the Company's first quarter restructuring action.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,557
Unamortized PowerSchool related deferred stock compensation of approximately $294,000 remains as of September 27, 2003.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,558
Pro Forma Financial Information The unaudited pro forma financial information below presents the condensed consolidated financial results of the Company assuming that PowerSchool and Spruce, acquired in 2001, had been acquired at the beginning of 2001 and includes the effect of amortization of goodwill and other acquir...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,559
The impact of the charge for IPR&D associated with the acquisition of PowerSchool has been excluded.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,560
This pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of future operations that would have been achieved had the acquisitions taken place at the beginning of 2001.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,561
Pro forma information follows (in millions, except per share amounts): Note 5-Restructuring Charges Fiscal 2003 Restructuring Actions The Company recorded total restructuring charges of approximately $26.8 million during the year ended September 27, 2003, including approximately $7.4 million in severance costs, a $5.0 ...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,562
Of the $26.8 million, nearly all had been spent by the end of 2003, except for approximately $400,000 of severance costs and approximately $4.5 million related to operating lease costs on abandoned facilities.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,563
During the third quarter of 2003, approximately $500,000 of the amount originally accrued for lease cancellations was determined to be in excess due to the sublease of a property sooner than originally estimated and an approximately $500,000 shortfall was identified in the severance accrual due to higher than expected ...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,564
These adjustments had no net effect on reported operating expense.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,565
During the second quarter of 2003, the Company's management approved and initiated restructuring actions that resulted in recognition of a total restructuring charge of $2.8 million, including $2.4 million in severance costs and $400,000 for asset write-offs and lease payments on an abandoned facility.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,566
Actions taken in the second quarter were for the most part supplemental to actions initiated in the prior two quarters and focused on further headcount reductions in various sales and marketing functions in the Company's Americas and Europe operating segments and further reductions associated with PowerSchool-related a...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,567
The second quarter actions resulted in the termination of 93 employees, 92 were terminated prior to the end of 2003.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,568
During the first quarter of 2003, the Company's management approved and initiated restructuring actions with a total cost of $24 million that resulted in the termination of manufacturing operations at the Company-owned facility in Singapore, further reductions in headcount resulting from the shift in PowerSchool produc...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,569
These restructuring actions will ultimately result in the elimination of 260 positions worldwide, all but one of which were eliminated by the end of 2003.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,570
Closure of the Company's Singapore manufacturing operations resulted in severance costs of $1.8 million and costs of $6.7 million to write-off manufacturing related fixed assets, whose use ceased during the first quarter.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,571
PowerSchool related costs included severance of approximately $550,000 and recognition of $5 million of previously deferred stock compensation that arose when PowerSchool was acquired by the Company in 2001 related to certain PowerSchool employee stockholders who were terminated in the first quarter of 2003.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,572
Termination of sales and marketing activities and employees, principally in the United States and Europe, resulted in severance costs of $2.8 million and accrual of costs associated with operating leases on closed facilities of $6.7 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,573
The total net restructuring charge of $23 million recognized during the first quarter of 2003 also reflects the reversal of $600,000 of unused restructuring accrual originally made during the first quarter of 2002.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,574
Except for certain costs associated with operating leases on closed facilities, the Company currently anticipates that all of the remaining accrual for severance costs of approximately $400,000 will be spent by the end of the first quarter of fiscal 2004.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,575
The following table summarizes activity associated with restructuring actions initiated during fiscal 2003 (in millions): Fiscal 2002 Restructuring Actions During fiscal 2002, the Company recorded total restructuring charges of approximately $30 million related to actions intended to eliminate certain activities and be...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,576
During the fourth quarter of 2002, the Company's management approved and initiated restructuring actions with a total cost of approximately $6 million designed to reduce headcount costs in corporate operations and sales and to adjust its PowerSchool product strategy.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,577
These restructuring actions resulted in the elimination of approximately 180 positions worldwide at a cost of $1.8 million, all of which were eliminated by September 27, 2003.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,578
Eliminated positions were primarily in corporate operations, sales, and PowerSchool related research and development in the Americas operating segment.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,579
The shift in product strategy at PowerSchool included discontinuing development and marketing of PowerSchool's PSE product.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,580
This shift resulted in the impairment of previously capitalized development costs associated with the PSE product in the amount of $4.5 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,581
During the first quarter of 2002, the Company's management approved and initiated restructuring actions with a total cost of approximately $24 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,582
These restructuring actions resulted in the elimination of approximately 425 positions worldwide at a cost of $8 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,583
Positions were eliminated primarily in the Company's operations, information systems, and administrative functions.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,584
In addition, these restructuring actions also included significant changes in the Company's information systems strategy resulting in termination of equipment leases and cancellation of existing projects and activities.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,585
The Company ceased using the assets associated with first quarter 2002 restructuring actions during that same quarter.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,586
Related lease and contract cancellation charges totaled $12 million, and charges for asset impairments totaled $4 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,587
The first quarter 2002 restructuring actions were primarily related to corporate activity not allocated to operating segments.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,588
During the first quarter of 2003, the Company reversed the remaining unused accrual of $600,000.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,589
The following table summarizes activity associated with restructuring actions initiated during fiscal 2002 (in millions): Note 6-Income Taxes The provision for income taxes consisted of the following (in millions): The foreign provision for income taxes is based on foreign pretax earnings of approximately $250 million,...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,590
As of September 27, 2003, approximately $2.5 billion of the Company's cash, cash equivalents, and short-term investments are held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,591
Amounts held by foreign subsidiaries would be subject to U.S. income taxation on repatriation to the United States.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,592
The Company's consolidated financial statements fully provide for any related tax liability on amounts that may be repatriated, aside from undistributed earnings of certain of the Company's foreign subsidiaries that are intended to be indefinitely reinvested in operations outside the United States.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,593
U.S. income taxes have not been provided on a cumulative total of $822 million of such earnings.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,594
It is not practicable to determine the income tax liability that might be incurred if these earnings were to be distributed.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,595
Deferred tax assets and liabilities reflect the effects of tax losses, credits, and the future income tax effects of temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply t...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,596
As of September 27, 2003 and September 28, 2002, the significant components of the Company's deferred tax assets and liabilities were (in millions): As of September 27, 2003, the Company had operating loss carryforwards for federal tax purposes of approximately $189 million, which expire from 2011 through 2023.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,597
A portion of these carryforwards was acquired from NeXT and other acquisitions, the utilization of which is subject to certain limitations imposed by the Internal Revenue Code.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,598
The Company also has Federal credit carryforwards and various state and foreign tax loss and credit carryforwards, the tax effect of which is approximately $117 million and which expire between 2004 and 2023.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,599
The remaining benefits from tax losses and credits do not expire.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,600
As of September 27, 2003, a valuation allowance of $30 million was recorded against the deferred tax asset for the benefits of tax losses that may not be realized.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,601
The valuation allowance relates primarily to the operating loss carryforwards acquired from NeXT and other acquisitions.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,602
Management believes it is more likely than not that forecasted income, including income that may be generated as a result of certain tax planning strategies, together with the tax effects of the deferred tax liabilities, will be sufficient to fully recover the remaining deferred tax assets.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,603
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate (35% in 2003, 2002, and 2001) to income (loss) before provision for (benefit from) income taxes, is as follows (in millions): On April 10, 2003, the Internal Revenue Service (IRS) completed its...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,604
Certain of these adjustments are being contested through the IRS Appeals Office.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,605
Substantially all IRS audit issues for years prior to 1998 have been resolved.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,606
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
1,607
However, the outcome of tax audits cannot be predicted with certainty.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,608
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
1,609
Note 7-Shareholders' Equity CEO Restricted Stock Award On March 19, 2003, the Company entered into an Option Cancellation and Restricted Stock Award Agreement (the Agreement) with Steven P. Jobs, its Chief Executive Officer (CEO).
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,610
The Agreement cancelled stock option awards for the purchase of 27.5 million shares of the Company's common stock previously granted to Mr. Jobs in 2000 and 2001.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,611
Mr. Jobs retained options to purchase 60,000 shares of the Company's common stock granted in August of 1997 in his capacity as a member of the Company's Board of Directors, prior to becoming the Company's CEO.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,612
The Agreement replaced the cancelled options with a restricted stock award of 5 million shares of the Company's common stock.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,613
The restricted stock award generally vests three years from date of grant.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,614
Vesting of some or all of the restricted shares will be accelerated in the event Mr. Jobs is terminated without cause, dies, or has his management role reduced following a change in control of the Company.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,615
The Company has recorded the value of the restricted stock award of $74.75 million as a component of shareholders' equity and is amortizing that amount on a straight-line basis over the 3-year service/vesting period.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,616
The value of the restricted stock award was based on the closing market price of the Company's common stock on the date of the award.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,617
Total amortization of approximately $13 million has been included in selling, general, and administrative expense in 2003 and will continue to be included at approximately $6.2 million per quarter through March 2006.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,618
The 5 million restricted shares have been included in the calculation of diluted earnings per share utilizing the treasury stock method.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,619
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
1,620
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
1,621
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
1,622
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
1,623
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
1,624
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
1,625
The Company was 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
1,626
Preferred Stock In August 1997, the Company and Microsoft Corporation (Microsoft) entered into patent cross license and technology agreements.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,627
In addition, Microsoft purchased 150,000 shares of Apple Series A nonvoting convertible preferred stock ("preferred stock") for $150 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,628
These shares were convertible by Microsoft after August 5, 2000, into shares of the Company's common stock at a conversion price of $8.25 per share.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,629
During 2000, 74,250 shares of preferred stock were converted to 9 million shares of the Company's common stock.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,630
During 2001, the remaining 75,750 preferred shares were converted into 9.2 million shares of the Company's common stock.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,631
Comprehensive Income Comprehensive income consists of two components, net income and other comprehensive income.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,632
Other comprehensive income refers to revenue, expenses, gains and losses that under generally accepted accounting principles are recorded as an element of shareholders' equity but are excluded from net income.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,633
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 categorized as available-for-sale, and net deferred gains and losses on certain derivative in...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,634
The following table summarizes the components of accumulated other comprehensive income (loss), net of taxes (in millions): The following table summarizes activity in other comprehensive income related to available-for-sale securities, net of taxes (in millions): The tax effect related to the change in unrealized gain ...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,635
The tax effect on the reclassification adjustment for net gains (losses) included in net income (loss) was $(8) million, $10 million and $35 million for fiscal 2003, 2002, and 2001, respectively.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,636
The following table summarizes activity in other comprehensive income related to derivatives, net of taxes, held by the Company (in millions): The tax effect related to the cumulative effect of adopting SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,637
133 was $(5) as of September 29, 2001.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,638
The tax effect related to the changes in fair value of derivatives was $11 million, $(2) million and $(19) million for fiscal 2003, 2002, and 2001, respectively.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,639
The tax effect related to derivative gains (losses) reclassified from other comprehensive income was $(7) million, $8 million and $23 million for fiscal 2003, 2002, and 2001, respectively.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,640
Note 8-Employee Benefit Plans 2003 Employee Stock Option Plan At the Annual Meeting of Shareholders held on April 24, 2003, the shareholders approved an amendment to the 1998 Executive Officer Stock Plan to change the name of the plan to the 2003 Employee Stock Option Plan (the 2003 Plan), to provide for broad-based gr...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,641
Based on the terms of individual option grants, options granted under the 2003 Plan generally expire 7 to 10 years after the grant date and generally become exercisable over a period of 4 years, based on continued employment, with either annual or quarterly vesting.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,642
The 2003 Plan permits the granting of incentive stock options, nonstatutory stock options, restricted stock, stock appreciation rights, and stock purchase rights.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,643
1997 Employee Stock Option Plan In August 1997, the Company's Board of Directors approved the 1997 Employee Stock Option Plan (the 1997 Plan), a non-shareholder approved plan for grants of stock options to employees who are not officers of the Company.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,644
Options may be granted under the 1997 Plan to employees at not less than the fair market value on the date of grant.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,645
Based on the terms of individual option grants, options granted under the 1997 Plan generally expire 7 to 10 years after the grant date and generally become exercisable over a period of 4 years, based on continued employment, with either annual or quarterly vesting.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,646
As a result of shareholder approval of amendments to the 1998 Executive Officer Stock Plan in April 2003, the Company terminated the 1997 Employee Stock Option Plan and cancelled all remaining unissued shares, following the completion of an employee stock option exchange program in October 2003.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,647
Employee Stock Option Exchange Program On March 20, 2003, the Company announced a voluntary employee stock option exchange program (the Exchange Program) whereby eligible employees, other than executive officers and members of the Board of Directors, had an opportunity to exchange outstanding options with exercise pric...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,648
On April 17, 2003, in accordance with the Exchange Program, the Company accepted and cancelled options to purchase 16,569,193 shares of its common stock.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,649
On October 22, 2003, new stock options totaling 6,697,368 shares were issued to employees at an exercise price of $22.76 per share, which is equivalent to the closing price of the Company's stock on that date.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,650
No financial or accounting impact to the Company's financial position, results of operations or cash flow was associated with this transaction.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,651
1997 Director Stock Option Plan In August 1997, the Company's Board of Directors adopted a shareholder approved Director Stock Option Plan (DSOP) for non-employee directors of the Company.
0001047469-03-041604/full-submission.txt