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0000320193
20021219
10-K
1,121
The Company includes recognized gains and losses resulting from the sale or from other-than-temporary declines in fair value associated with these investments in other income and expense.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,122
Occasionally, the Company uses short-term equity derivatives to manage potential dispositions of non-current debt and equity investments.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,123
Any gains or losses associated with such derivatives are recognized currently in other income and expense.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,124
Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets The Company reviews property, plant, and equipment and certain identifiable intangibles, excluding goodwill, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,125
Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted cash flows the assets are expected to generate.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,126
If property, plant, and equipment and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair market value.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,127
For the three years ended September 28, 2002, the Company has made no material adjustments to its long-lived assets except those made in connection with the restructuring actions described in Note 5.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,128
The Company adopted SFAS No.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,129
142, Goodwill and Other Intangible Assets, in the first quarter of fiscal 2002.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,130
SFAS No.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,131
142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that they may be impaired.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,132
Prior to fiscal 2002, goodwill was amortized using the straight-line method over its estimated useful life.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,133
The Company completed its transitional and annual goodwill impairment tests as of October 1, 2001, and August 30, 2002, respectively, and found no impairment.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,134
The Company established reporting units based on its current reporting structure.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,135
For purposes of testing goodwill for impairment, goodwill has been allocated to these reporting units to the extent it relates to each reporting unit.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,136
SFAS No.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,137
142 also requires that intangible assets with definite lives be amortized over their estimated useful lives and reviewed for impairment in accordance with SFAS No.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,138
144, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,139
The Company is currently amortizing its acquired intangible assets with definite lives over periods ranging from 3 to 7 years.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,140
Foreign Currency Translation The Company translates the assets and liabilities of its international non-U.S. functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each period.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,141
Revenues and expenses for these subsidiaries are translated using rates that approximate those in effect during the period.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,142
Gains and losses from these translations are credited or charged to "accumulated translation adjustment" included in "accumulated other comprehensive income (loss)" in shareholders' equity.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,143
The Company's foreign manufacturing subsidiaries and certain other international subsidiaries that use the U.S. dollar as their functional currency, remeasure monetary assets and liabilities at year-end exchange rates, and inventories, property, and nonmonetary assets and liabilities at historical rates.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,144
Gains and losses from these translations are included in the Company's results of operations.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,145
Revenue Recognition Net sales consist primarily of revenue from the sale of products (hardware, software, and peripherals), consulting and implementation services, and extended warranty and support contracts.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,146
The Company recognizes revenue pursuant to applicable accounting standards, including Statement of Position (SOP) No.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,147
97-2, Software Revenue Recognition, as amended.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,148
Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectibility is probable.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,149
Product is considered delivered to the customer once it has been shipped, and title and risk of loss have been transferred.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,150
For online sales to individuals, for some sales to education customers in the United States, and for certain other sales, the Company defers revenue until product is received by the customer because the Company legally retains a portion of the risk of loss on these sales during transit.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,151
For other product sales, these criteria are met by the Company at the time product is shipped.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,152
The Company records reductions to revenue for estimated commitments related to price protection and for customer incentive programs, including reseller and end user rebates and other sales programs and volume-based incentives.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,153
Revenue for consulting and implementation services is recognized upon performance and acceptance by the customer.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,154
Revenue from extended warranty and support contracts is recognized ratably over the contract period.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,155
Amounts billed to customers in excess of revenue recognized on extended warranty and support contracts are recognized as deferred revenue until revenue recognition criteria are met.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,156
Revenue on arrangements that include multiple elements such as hardware, software, and services is allocated to each element based on vendor specific objective evidence of the fair value of each element.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,157
Allocated revenue for each element is recognized when revenue recognition criteria have been met for each element.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,158
Vendor specific objective evidence of fair value is generally determined based on the price charged when each element is sold separately.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,159
Shipping Costs The Company's shipping and handling costs are included in cost of sales for all periods presented.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,160
Warranty Expense The Company provides currently for the estimated cost that may be incurred under product warranties at the time related revenue is recognized.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,161
Research and Development Research and development costs are expensed as incurred.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,162
Development costs of computer software to be sold, leased or otherwise marketed are subject to capitalization beginning when a product's technological feasibility has been established and ending when a product is available for general release to customers.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,163
In most instances, the Company's products are released soon after technological feasibility has been established.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,164
Therefore, costs incurred subsequent to achievement of technological feasibility are usually not significant, and generally all software development costs have been expensed.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,165
During the third and fourth quarter of 2002, the Company incurred substantial development costs associated with the development of Mac OS X version 10.2 (code-named "Jaguar") subsequent to achievement of technological feasibility as evidenced by public demonstration and release of a developer beta in May 2002 and prior...
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,166
As such, the Company capitalized approximately $13.3 million of development costs associated with development of Jaguar.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,167
Amortization of this asset began in the fourth quarter when Jaguar was shipped and is being recognized on a straight-line basis over 3 years.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,168
In addition, during 2002, the Company also began capitalizing certain costs related to development of its new PowerSchool enterprise student information system.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,169
Capitalization, which began upon achievement of technological feasibility in the first quarter, amounted to approximately $6 million during the first nine months of fiscal 2002.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,170
The final version of the enterprise student information system was released in July.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,171
During 2001 the Company incurred substantial development costs associated with the development of the original version of Mac OS X, subsequent to release of a public beta version of the product and prior to release of the final product version.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,172
As a result, the Company capitalized approximately $5.4 million of development costs during 2001 associated with development of Mac OS X.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,173
Related amortization is computed by use of the straight-line method over the estimated useful life of the asset of 8 years.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,174
Total amortization related to capitalized software development costs was $1.2 million and $350,000 in 2002 and 2001, respectively.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,175
Advertising Costs Advertising costs are expensed as incurred.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,176
Advertising expense was $209 million, $261 million, and $281 million for 2002, 2001, and 2000, respectively.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,177
Stock-Based Compensation The Company measures compensation expense for its employee stock-based compensation plans using the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion 25, Accounting for Stock Issued to Employees and has provided pro forma disclosures of the effect on net income and ...
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,178
The Company has elected to follow APB No.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,179
25 because, as discussed below, the alternative fair value accounting provided for under SFAS No.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,180
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.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,181
Under APB Opinion No.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,182
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.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,183
Pro forma information regarding net income (loss) per share is required by SFAS No.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,184
123 and has been determined as if the Company had accounted for its employee stock options granted and employee stock purchase plan purchases subsequent to September 29, 1995, under the fair value method of that statement.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,185
The fair values for these options and stock purchases were estimated at the date of grant and beginning of the period, respectively, using a Black-Scholes option pricing model.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,186
For purposes of pro forma disclosures, the estimated fair value of the options and shares are amortized to pro forma net income over the options' vesting period and the shares' plan period.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,187
The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,188
In addition, option valuation models require the input of highly subjective assumptions including the expected life of options and the Company's expected stock price volatility.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,189
Because the Company's employee stock options and employee stock purchase plan shares have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not provi...
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,190
For purposes of the pro forma disclosures pursuant to SFAS No.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,191
123 provided in the Company's annual reports through 2002, the expected volatility assumptions used by the Company have been based solely on historical volatility rates of the Company's common stock.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,192
The Company has made no adjustments to its expected volatility assumptions based on current market conditions, current market trends, or expected volatility implicit in market traded options on the Company's stock.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,193
The Company will continue to monitor the propriety of this approach to developing its expected volatility assumption and could determine for future periods that adjustments to historical volatility and/or use of a methodology that is based on the expected volatility implicit in market traded options on the Company's co...
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,194
Earnings Per Common Share Basic earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,195
Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares ...
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,196
The dilutive effect of outstanding options is reflected in diluted earnings per share by application of the treasury stock method.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,197
The dilutive effect of convertible securities is reflected using the if-converted method.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,198
Dilutive potential shares of common stock related to stock options were excluded from the calculation of diluted loss per common share for fiscal 2001 because their effect would have been antidilutive.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,199
Stock Split On June 21, 2000, the Company affected a two-for-one stock split in the form of a Common Stock dividend to shareholders of record as of May 19, 2000.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,200
All per share data and numbers of Common shares have been retroactively adjusted to reflect the stock split.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,201
Comprehensive Income Comprehensive income consists of two components, net income and other comprehensive income.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,202
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.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,203
The Company's other comprehensive income is comprised of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency, from unrealized gains and losses on marketable securities categorized as available-for-sale, and from net deferred gains and losses on certain...
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,204
Segment Information The Company reports segment information based on the "management" approach.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,205
The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company's reportable segments.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,206
Information about the Company's products, major customers, and geographic areas on a company-wide basis is also disclosed.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,207
Note 2-Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair value due to the short maturities of those instruments.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,208
Cash, Cash Equivalents and Short-Term Investments The following table summarizes the fair value of the Company's cash and available-for-sale securities held in its short-term investment portfolio, recorded as cash and cash equivalents or short-term investments as of September 28, 2002, and September 29, 2001 (in millio...
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,209
Foreign securities include foreign commercial paper, loan participation, certificates of deposit and time deposits with foreign institutions, most of which are denominated in U.S. dollars.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,210
Net unrealized gains on the Company's investment portfolio, primarily related to investments with stated maturities greater than 1 year, were $20 million as of September 28, 2002 and $11 million as of September 29, 2001.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,211
The Company occasionally sells short-term investments prior to their stated maturities.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,212
As a result of such sales, the Company recognized net gains of $7 million in 2002 and $1 million in 2001.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,213
These net gains were included in interest and other income, net.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,214
As of September 28, 2002, approximately $1.087 billion of the Company's short-term investments had underlying maturities of between 1 and 5 years.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,215
The remaining short-term investments as of September 28, 2002 all had maturities of between 3 and 12 months.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,216
As of September 29, 2001, approximately $313 million of the Company's short-term investments in U.S. agency securities had underlying maturities of between 1 and 4 years.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,217
The remaining short-term investments as of September 29, 2001, all had maturities of between 3 and 12 months.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,218
Accounts Receivable Trade Receivables The Company distributes its products through third-party computer resellers and directly to certain education and consumer customers.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,219
The Company generally does not require collateral from its customers.
0001047469-02-007674/full-submission.txt
0000320193
20021219
10-K
1,220
However, when possible the Company does attempt to limit credit risk on trade receivables through the use of flooring arrangements for selected customers with third-party financing companies and credit insurance for certain customers in Latin America and Asia.
0001047469-02-007674/full-submission.txt