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0000320193
20041203
10-K
1,311
This amount represents the present value of expected future cash flows associated with returning certain of the Company's leased properties to original condition.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,312
The difference between the gross expected future cash flow of $9.5 million and its present value of $6 million at September 29, 2002, is being accreted over the life of the related leases as an operating expense.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,313
Net of the related income tax effect of approximately $1 million, adoption of SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,314
143 resulted in an unfavorable cumulative-effect type adjustment to net income during the first quarter of 2003 of approximately $2 million.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,315
This adjustment represents cumulative depreciation and accretion that would have been recognized through the date of adoption of SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,316
143 had the statement been applied to the Company's existing asset retirement obligations at the time they were initially incurred.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,317
The following table reconciles changes in the Company's asset retirement liabilities for fiscal 2003 and 2004 (in millions): Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets The Company reviews property, plant, and equipment and certain identifiable intangibles, excluding goodwill, for impairme...
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,318
Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted cash flows the assets are expected to generate.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,319
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.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,320
For the three years ended September 25, 2004, September 27, 2003, and September 28, 2002 the Company had no material impairment of its long-lived assets, except for the impairment of certain assets in connection with the restructuring actions described in Note 5.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,321
The Company adopted SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,322
142, Goodwill and Other Intangible Assets, in the first quarter of fiscal 2002.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,323
SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,324
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.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,325
Prior to fiscal 2002, goodwill was amortized using the straight-line method over its estimated useful life.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,326
The Company completed its transitional goodwill impairment test as of October 1, 2001, and its annual goodwill impairment tests on August 30 of each year thereafter and found no impairment.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,327
The Company established reporting units based on its current reporting structure.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,328
For purposes of testing goodwill for impairment, goodwill has been allocated to these reporting units to the extent it relates to each reporting unit.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,329
SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,330
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.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,331
144, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,332
The Company is currently amortizing its acquired intangible assets with definite lives over periods ranging from 3 to 10 years.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,333
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.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,334
Revenue and expenses for these subsidiaries are translated using rates that approximate those in effect during the period.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,335
Gains and losses from these translations are credited or charged to foreign currency translation included in "accumulated other comprehensive income (loss)" in shareholders' equity.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,336
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 exchange rates in effect at the end of each period, and inventories, property, and nonmonetary assets and liabilities at histor...
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,337
Gains and losses from these translations were insignificant and have been included in the Company's results of operations.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,338
Revenue Recognition Net sales consist primarily of revenue from the sale of products (hardware, software, and peripherals), and extended warranty and support contracts.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,339
The Company recognizes revenue pursuant to applicable accounting standards, including Statement of Position (SOP) No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,340
97-2, Software Revenue Recognition, as amended, and Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,341
104, Revenue Recognition.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,342
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,343
Product is considered delivered to the customer once it has been shipped and title and risk of loss have been transferred.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,344
For most of the Company's product sales, these criteria are met at the time the product is shipped.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,345
For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company legally retains a portion of the risk of loss on these sales during transit.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,346
If at the outset of an arrangement the Company determines the arrangement fee is not, or is presumed to not be, fixed or determinable, revenue is deferred and subsequently recognized as amounts become due and payable.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,347
Revenue from extended warranty and support contracts is deferred and recognized ratably over the warranty and support periods.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,348
These contracts typically include extended phone support, certain repairs, web-based support resources, diagnostic tools, and extend the Company's one-year basic limited parts and labor warranty.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,349
The Company sells software and peripheral products obtained from other companies.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,350
The Company establishes its own pricing and retains related inventory risk, is the primary obligor in sales transactions with its customers, and assumes the credit risk for amounts billed to its customers.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,351
Accordingly, the Company recognizes revenue for the sale of products obtained from other companies at the gross amount billed.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,352
Revenue on arrangements that include multiple elements such as hardware, software, and services is allocated to each element based on the relative fair value of each element, which is generally determined by vendor specific objective evidence (VSOE).
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,353
Allocated revenue for each element is recognized when revenue recognition criteria have been met for each element.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,354
VSOE is determined based on the price charged when each element is sold separately.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,355
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.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,356
The estimated cost of these programs is accrued as a reduction to revenue in the period the Company has sold the product and committed to a plan.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,357
The Company also records reductions to revenue for expected future product returns based on the Company's historical experience.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,358
Generally, the Company does not offer specified or unspecified upgrade rights to its customers in connection with software sales or the sale of extended warranty and support contracts.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,359
However, a limited number of the Company's software products are available with maintenance agreements that grant customers rights to unspecified future upgrades over the maintenance term on a when and if available basis.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,360
Revenue associated with such maintenance is recognized ratably over the maintenance term.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,361
Shipping Costs The Company's shipping and handling costs are included in cost of sales for all periods presented.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,362
Warranty Expense The Company provides currently for the estimated cost for product warranties at the time the related revenue is recognized.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,363
Research and Development Research and development costs are expensed as incurred.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,364
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 pursuant to SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,365
86, Computer Software to be Sold, Leased, or Otherwise Marketed.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,366
In most instances, the Company's products are released soon after technological feasibility has been established.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,367
Therefore, costs incurred subsequent to achievement of technological feasibility are usually not significant, and generally all software development costs have been expensed.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,368
During the fourth quarter of 2004, the Company incurred substantial development costs associated with the development of Mac OS X version 10.4 (code-named "Tiger"), which enhances the features and functionality of the previous version of Mac OS X, subsequent to achievement of technological feasibility as evidenced by p...
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,369
Therefore, during the fourth quarter of 2004, the Company capitalized approximately $4.5 million of costs associated with development of Tiger.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,370
Amortization of this asset will begin when Tiger begins shipping and will be recognized straight-line over a 3 year estimated useful life.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,371
During the second quarter of 2004, the Company incurred substantial development costs associated with FileMaker Pro 7 subsequent to achievement of technological feasibility as evidenced by public demonstration and release of a developer beta version, and prior to the release of the final version of the product in March...
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,372
Therefore, during the second quarter of 2004, the Company capitalized approximately $2.3 million of costs associated with the development of FileMaker Pro 7.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,373
In accordance with SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,374
86, amortization of this asset began in March 2004 when FileMaker Pro 7 was shipped and is being recognized on a straight-line basis over a 3 year estimated useful life.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,375
During the third and fourth quarters of 2003, the Company incurred substantial development costs associated with the development of Mac OS X version 10.3 (code-named "Panther"), subsequent to achievement of technological feasibility as evidenced by public demonstration and release of a developer beta in June 2003, and ...
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,376
Therefore, during 2003 the Company capitalized approximately $14.7 million of development costs associated with the development of Panther.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,377
Amortization of this asset began in the first quarter of 2004 when Panther was shipped and is being recognized on a straight-line basis in accordance with SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,378
86 over a 3 year estimated useful life.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,379
During the third and fourth quarters 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 pri...
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,380
As such, the Company capitalized approximately $13.3 million of development costs associated with development of Jaguar.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,381
Amortization of this asset began in the fourth quarter of 2002 when Jaguar was shipped and is being recognized on a straight-line basis in accordance with SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,382
86 over a 3 year estimated useful life.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,383
In addition, during 2002, the Company also began capitalizing certain costs related to development of its new PowerSchool enterprise student information system.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,384
Capitalization of approximately $6 million began upon achievement of technological feasibility in the first quarter of 2002.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,385
The final version of the enterprise student information system was released in July 2002.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,386
Total amortization related to capitalized software development costs was $10.7 million, $5.8 million, and $1.2 million in 2004, 2003 and 2002, respectively.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,387
Advertising Costs Advertising costs are expensed as incurred.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,388
Advertising expense was $206 million, $193 million, and $209 million for 2004, 2003, and 2002, respectively.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,389
Restructuring Charges In June 2002, the FASB issued SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,390
146, Accounting for Costs Associated with Exit or Disposal Activities.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,391
SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,392
146 supersedes Emerging Issues Task Force (EITF) Issue No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,393
94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs To Exit an Activity (Including Certain Costs Associated with a Restructuring) and requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, as opposed to when manag...
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,394
SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,395
146 also establishes that the liability should initially be measured and recorded at fair value.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,396
This Statement was effective for exit or disposal activities initiated after December 31, 2002.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,397
The provisions of SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,398
146 were required to be applied prospectively after the adoption date to newly initiated exit activities.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,399
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 No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,400
25, Accounting for Stock Issued to Employees.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,401
The Company applies the disclosure provisions of SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,402
123, Accounting for Stock-based Compensation, as amended by SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,403
148, Accounting for Stock-based Compensation-Transition and Disclosure as if the fair value-based method had been applied in measuring compensation expense.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,404
The Company has elected to follow APB Opinion No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,405
25 because, as discussed below, the alternative fair value accounting provided for under SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,406
123 requires use of option valuation models that were not developed for use in valuing employee stock options and employee stock purchase plan shares.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,407
Under APB Opinion No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,408
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.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,409
As required under SFAS No.
0001047469-04-035975/full-submission.txt
0000320193
20041203
10-K
1,410
123, the pro forma effects of stock-based compensation on net income and earnings per common share for employee stock options granted and employee stock purchase plan share purchases have been estimated at the date of grant and beginning of the period, respectively, using a Black-Scholes option pricing model.
0001047469-04-035975/full-submission.txt