["A-4 Appendix A Financial Statement Information BEST BUY Consolidated Balance Sheets $ in millions, except per share amounts March 3, February 25, 2007 2006 Assets $ 748 3,041 Current Assets $ 1,205 449 Cash and cash equivalents 3,338 409 Short-term investments 2,588 7,985 Receivables 548 Merchandise inventories 580 Other current assets 4,028 1,325 712 2,898 Total current assets 9,081 33 4,836 Property and Equipment 705 2,124 Land and buildings 1,540 2,712 2,627 Leasehold improvements 557 32 44 Fixtures and equipment 218 Property under capital lease 348 $11,864 Less accumulated depreciation 4,904 1,966 $ 3,234 469 Net property and equipment 2,938 354 878 Goodwill 919 703 Tradenames 81 \u2014 418 Long-Term Investments 318 Other Assets 6,056 Apago PDF Enhancer 233 373 178 Total Assets $13,570 \u2014 Liabilities and Shareholders\u2019 Equity $ 3,934 \u2014 Current Liabilities 496 332 49 Accounts payable 643 Unredeemed gift card liabilities 4,304 Accrued compensation and related expenses 261 5,257 Accrued liabilities 990 $11,864 Accrued income taxes 489 Short-term debt 41 Current portion of long-term debt 19 Total current liabilities 6,301 Long-Term Liabilities 443 Long-Term Debt 590 Minority Interests 35 Shareholders\u2019 Equity \u2014 Preferred stock, $1.00 par value: Authorized \u2014 400,000 shares; Issued and outstanding \u2014 none Common stock, $.10 par value: Authorized \u2014 1 billion shares; Issued and 48 outstanding \u2014 480,655,000 and 485,098,000 shares, respectively 430 5,507 Additional paid-in capital 216 Retained earnings 6,201 Accumulated other comprehensive income Total shareholders\u2019 equity Total Liabilities and Shareholders\u2019 Equity $13,570","Appendix A Financial Statement Information A-5 Consolidated Statements of Earnings March 3, February 25, February 26, BEST BUY $ in millions, except per share amounts 2007 2006 2005 Fiscal Years Ended $35,934 $30,848 $27,433 Revenue 27,165 23,122 20,938 Cost of goods sold 8,769 7,726 6,495 Gross profit 6,770 6,082 5,053 Selling, general and administrative expenses 1,999 1,644 1,442 Operating income 111 77 1 Net interest income 20 \u2014 \u2014 Gain on investments 2,130 1,721 1,443 Earnings from continuing operations before income tax expense 752 581 509 Income tax expense 1 \u2014 \u2014 Minority interest in earnings 1,377 1,140 934 Earnings from continuing operations \u2014 \u2014 50 Gain on disposal of discontinued operations, net of tax Net earnings $ 1,377 $ 1,140 $ 984 Basic earnings per share: $ 2.86 $ 2.33 $ 1.91 Continuing operations \u2014 0.10 Gain on disposal of discontinued operations \u2014 $ 2.33 $ 2.01 Basic earnings per share $ 2.86 $ 2.27 $ 1.86 \u2014 0.10 Diluted earnings per share: $ 2.27 $ 1.96 Continuing operations Apago PDF Enhance$ r2.79 490.3 488.9 504.8 505.0 Gain on disposal of discontinued operations \u2014 Diluted earnings per share $ 2.79 Basic weighted-average common shares outstanding (in millions) 482.1 Diluted weighted-average common shares outstanding (in millions) 496.2","A-6 Appendix A Financial Statement Information BEST BUY Consolidated Statements of Changes in Shareholders\u2019 Equity $ and shares in millions Balances at February 28, 2004 Common Common Additional Retained Accumulated Total Net earnings Shares Stock Paid-In Earnings Other $3,422 Other comprehensive income, net of tax: 487 $49 Capital $ 2,468 \u2014\u2014 $819 Comprehensive 984 Foreign currency translation adjustments \u2014 984 Income Other \u2014\u2014 59 \u2014\u2014 \u2014 \u2014 $ 86 4 \u2014 \u2014 \u2014 59 4 Total comprehensive income 1,047 Stock options exercised 10 1 219 \u2014 \u2014 220 Tax benefit from stock options exercised \u2014\u2014 60 \u2014 \u2014 60 and employee stock purchase plan Issuance of common stock under employee 2\u2014 36 \u2014 \u2014 36 stock purchase plan \u2014\u2014 1 \u2014 \u2014 1 Vesting of restricted stock awards Common stock dividends, $0.28 per share \u2014 \u2014 \u2014 (137) \u2014 (137) Repurchase of common stock (6) (1) (199) \u2014 \u2014 (200) Balances at February 26, 2005 493 49 936 3,315 149 4,449 \u2014 1,140 Net earnings \u2014\u2014 \u2014 1,140 101 101 Other comprehensive income, net of tax: 11 11 Foreign currency translation adjustments \u2014\u2014 \u2014 \u2014 \u2014 1,252 257 Other Apago\u2014PDF\u2014Enha\u2014ncer \u2014 \u2014 Total comprehensive income 55 \u2014 Stock options exercised 9 1 256 \u2014 \u2014 35 \u2014 132 Tax benefit from stock options exercised \u2014\u2014 55 \u2014 \u2014 (151) and employee stock purchase plan (772) Issuance of common stock under employee stock 1 \u2014 35 \u2014 purchase plan Stock-based compensation \u2014 \u2014 132 \u2014 Common stock dividends, $0.31 per share \u2014\u2014 \u2014 (151) Repurchase of common stock (18) (1) (771) \u2014 Balances at February 25, 2006 485 49 643 4,304 261 5,257 Net earnings \u2014\u2014 \u2014 1,377 \u2014 1,377 Other comprehensive loss, net of tax: \u2014\u2014 \u2014\u2014 (33) (33) Foreign currency translation adjustments \u2014\u2014 \u2014\u2014 (12) (12) Other Total comprehensive income 1,332 Stock options exercised 7 1 167 \u2014 \u2014 168 Tax benefit from stock options exercised and employee stock purchase plan \u2014\u2014 47 \u2014 \u2014 47 Issuance of common stock under employee stock purchase plan 1\u2014 49 \u2014 \u2014 49 Stock-based compensation \u2014 \u2014 121 \u2014 \u2014 121 Common stock dividends, $0.36 per share \u2014 \u2014 \u2014 (174) \u2014 (174) Repurchase of common stock (12) (2) (597) \u2014 \u2014 (599) Balances at March 3, 2007 481 $48 $430 $5,507 $216 $6,201","Appendix A Financial Statement Information A-7 Consolidated Statements of Cash Flows BEST BUY $ in millions Fiscal Years Ended March 3, February 25, February 26, 2007 2006 2005 Operating Activities $1,377 $1,140 $ 984 Net earnings \u2014 \u2014 (50) Gain from disposal of discontinued operations, net of tax 934 Earnings from continuing operations 1,377 1,140 Adjustments to reconcile earnings from continuing operations to total 459 cash provided by operating activities from continuing operations: 509 456 22 Depreciation 32 4 (1) Asset impairment charges (28) Stock-based compensation 121 132 \u2014 Deferred income taxes 82 (151) 24 Excess tax benefits from stock-based compensation (50) Other, net (11) (55) (30) Changes in operating assets and liabilities, net of acquired (3) (240) assets and liabilities: (43) (50) Receivables (70) (457) 347 Merchandise inventories (550) 243 Other assets (11) 301 (47) 385 165 1,981 Accounts payable 320 178 Other liabilities 185 (502) Accrued income taxes (136) 1,740 (8,517) 7,730 Total cash provided by operating activities from (648) (4,319) \u2014 continuing operations Apago PDF Enhancer1,762 4,187 \u2014 (140) Investing Activities \u2014 7 \u2014 (1,422) Additions to property and equipment, net of $75 and $117 noncash (20) capital expenditures in fiscal 2006 and 2005, respectively (733) 46 (200) (754) Purchases of available-for-sale securities (4,541) 256 (772) (137) Sales of available-for-sale securities 4,886 (371) 292 Acquisitions of businesses, net of cash acquired (421) (151) \u2014 \u2014 Proceeds from disposition of investments 24 (69) (7) 36 (459) Change in restricted assets \u2014 55 9 (10) 109 Other, net 5 (619) 245 27 $ 354 Total cash used in investing activities from continuing operations (780) 394 354 Financing Activities (599) $ 748 Repurchase of common stock Issuance of common stock under employee stock purchase 217 plan and for the exercise of stock options Dividends paid (174) Repayments of debt (84) Proceeds from issuance of debt 96 Excess tax benefits from stock-based compensation 50 Other, net (19) Total cash used in financing activities from continuing operations Effect of Exchange Rate Changes on Cash (513) (12) Increase in Cash and Cash Equivalents 457 Cash and Cash Equivalents at Beginning of Year 748 Cash and Cash Equivalents at End of Year $1,205 Supplemental Disclosure of Cash Flow Information $ 804 $ 547 $ 241 Income taxes paid 14 16 35 Interest paid","A-8 Appendix A Financial Statement Information BEST BUY SELECTED Notes to Consolidated Financial Statements $ in millions, except per share amounts 1. Summary of Significant Accounting Policies were $695 and $350, respectively, and the weighted- average interest rates were 4.8% and 3.3%, respectively. Description of Business Outstanding checks in excess of funds on deposit (\u201cbook Best Buy Co., Inc. is a specialty retailer of consumer overdrafts\u201d) totaled $183 and $230 at March 3, 2007, electronics, home-office products, entertainment software, and February 25, 2006, respectively, and are reflected as appliances and related services, with fiscal 2007 revenue current liabilities in our consolidated balance sheets. from continuing operations of $35.9 billion. We operate two reportable segments: Domestic and Merchandise Inventories International. The Domestic segment is comprised of all Merchandise inventories are recorded at the lower of U.S. store and online operations of Best Buy, Geek average cost or market. In-bound freight-related costs Squad, Magnolia Audio Video and Pacific Sales Kitchen from our vendors are included as part of the net cost of and Bath Centers, Inc. (\u201cPacific Sales\u201d). We acquired merchandise inventories. Also included in the cost of Pacific Sales on March 7, 2006. U.S. Best Buy stores inventory are certain vendor allowances that are not a offer a wide variety of consumer electronics, home-office reimbursement of specific, incremental and identifiable products, entertainment software, appliances and related costs to promote a vendor\u2019s products. Other costs services through 822 stores at the end of fiscal 2007. associated with acquiring, storing and transporting Geek Squad provides residential and commercial merchandise inventories to our retail stores are expensed as incurred and included in cost of goods sold. computer repair, support and installation services in all Apago PDF EnhancerU.S. Best Buy stores and at 12 stand-alone stores at the end of fiscal 2007. Magnolia Audio Video stores offer Our inventory loss reserve represents anticipated physical high-end audio and video products and related services inventory losses (e.g., theft) that have occurred since the through 20 stores at the end of fiscal 2007. Pacific Sales last physical inventory date. Independent physical inventory stores offer high-end home-improvement products, counts are taken on a regular basis to ensure that the appliances and related services through 14 stores at the inventory reported in our consolidated financial statements end of fiscal 2007. is properly stated. During the interim period between Fiscal Year physical inventory counts, we reserve for anticipated physical inventory losses on a location-by-location basis. Our fiscal year ends on the Saturday nearest the end of Property and Equipment February. Fiscal 2007 included 53 weeks and fiscal 2006 and 2005 each included 52 weeks. Property and equipment are recorded at cost. We compute depreciation using the straight-line method over Cash and Cash Equivalents the estimated useful lives of the assets. Leasehold improvements are depreciated over the shorter of their Cash primarily consists of cash on hand and bank estimated useful lives or the period from the date the deposits. Cash equivalents primarily consist of money assets are placed in service to the end of the initial lease market accounts and other highly liquid investments with term. Leasehold improvements made significantly after the an original maturity of three months or less when initial lease term are depreciated over the shorter of their purchased. We carry these investments at cost, which estimated useful lives or the remaining lease term, approximates market value. The amounts of cash including renewal periods, if reasonably assured. equivalents at March 3, 2007, and February 25, 2006,","Appendix A Financial Statement Information A-9 $ in millions, except per share amounts BEST BUY Accelerated depreciation methods are generally used for payment of real estate taxes, insurance and common area income tax purposes. maintenance, in addition to rent. The terms of our lease agreements generally range from 10 to 20 years. Most of When property is fully depreciated, retired or otherwise the leases contain renewal options and escalation clauses, disposed of, the cost and accumulated depreciation are and certain store leases require contingent rents based on removed from the accounts and any resulting gain or loss factors such as specified percentages of revenue or the is reflected in the consolidated statement of earnings. consumer price index. Other leases contain covenants related to the maintenance of financial ratios. Repairs and maintenance costs are charged directly to expense as incurred. Major renewals or replacements that Goodwill and Intangible Assets substantially extend the useful life of an asset are capitalized and depreciated. Estimated useful lives by major asset category are as Goodwill follows: Goodwill is the excess of the purchase price over the fair Asset Life value of identifiable net assets acquired in business (in years) combinations accounted for under the purchase method. Buildings 30\u201340 We do not amortize goodwill but test it for impairment Leasehold improvements 3\u201325 annually, or when indications of potential impairment Fixtures and equipment 3\u201320 exist, utilizing a fair value approach at the reporting unit Property under capital lease 3\u201320 level. A reporting unit is the operating segment, or a business unit one level below that operating segment, for Apago PDF EnhancerImpairment of Long-Lived Assets which discrete financial information is prepared and We account for the impairment or disposal of long-lived regularly reviewed by segment management. assets in accordance with SFAS No. 144, Accounting for Tradenames the Impairment or Disposal of Long-Lived Assets, which requires long-lived assets, such as property and equipment, We have an indefinite-lived intangible asset related to our to be evaluated for impairment whenever events or Pacific Sales tradename which is included in the Domestic changes in circumstances indicate the carrying value of an segment. We also have indefinite-lived intangible assets asset may not be recoverable. Factors considered important related to our Future Shop and Five Star tradenames that could result in an impairment review include, but are which are included in the International segment. not limited to, significant underperformance relative to historical or planned operating results, significant changes We determine fair values utilizing widely accepted in the manner of use of the assets or significant changes in valuation techniques, including discounted cash flows and our business strategies. An impairment loss is recognized market multiple analyses. During the fourth quarter of when the estimated undiscounted cash flows expected to fiscal 2007, we completed our annual impairment testing result from the use of the asset plus net proceeds expected of our goodwill and tradenames, using the valuation from disposition of the asset (if any) are less than the techniques as described above, and determined there was no impairment. carrying value of the asset. When an impairment loss is Lease Rights recognized, the carrying amount of the asset is reduced to Lease rights represent costs incurred to acquire the lease of its estimated fair value based on quoted market prices or a specific commercial property. Lease rights are recorded at other valuation techniques. cost and are amortized to rent expense over the remaining Leases lease term, including renewal periods, if reasonably assured. Amortization periods range up to 16 years, We conduct the majority of our retail and distribution beginning with the date we take possession of the property. operations from leased locations. The leases require","A-10 Appendix A Financial Statement Information BEST BUY $ in millions, except per share amounts Investments recognized for the estimated future tax consequences attributable to differences between the financial statement Short-term and long-term investments are comprised of carrying amounts of existing assets and liabilities and municipal and United States government debt securities as their respective tax bases, and operating loss and tax well as auction-rate securities and variable-rate demand credit carryforwards. Deferred tax assets and liabilities notes. In accordance with SFAS No. 115, Accounting for are measured using enacted income tax rates in effect Certain Investments in Debt and Equity Securities, and for the year in which those temporary differences are based on our ability to market and sell these instruments, expected to be recovered or settled. The effect on we classify auction-rate securities, variable-rate demand deferred tax assets and liabilities of a change in income notes and other investments in debt securities as tax rates is recognized in our consolidated statement of available-for-sale and carry them at amortized cost, earnings in the period that includes the enactment date. which approximates fair value. Auction-rate securities and A valuation allowance is recorded to reduce the carrying variable-rate demand notes are similar to short-term debt amounts of deferred tax assets if it is more likely than not instruments because their interest rates are reset that such assets will not be realized. periodically. Investments in these securities can be sold for cash on the auction date. We classify auction-rate Long-Term Liabilities securities and variable-rate demand notes as short-term or long-term investments based on the reset dates. The major components of long-term liabilities at March 3, We also hold investments in marketable equity securities 2007, and February 25, 2006, included long-term and classify them as available-for-sale. Investments in rent-related liabilities, deferred compensation plan liabilities, self-insurance reserves and advances received Apago PDF Enhancermarketable equity securities are included in other assets in our consolidated balance sheets. Investments in under vendor alliance programs. marketable equity securities are reported at fair value, Foreign Currency based on quoted market prices when available. All unrealized holding gains or losses are reflected net of Foreign currency denominated assets and liabilities are tax in accumulated other comprehensive income in translated into U.S. dollars using the exchange rates in shareholders\u2019 equity. effect at our consolidated balance sheet date. Results of We review the key characteristics of our debt and operations and cash flows are translated using the marketable equity securities portfolio and their average exchange rates throughout the period. The effect classification in accordance with GAAP on an annual of exchange rate fluctuations on translation of assets and basis, or when indications of potential impairment exist. If liabilities is included as a component of shareholders\u2019 a decline in the fair value of a security is deemed by equity in accumulated other comprehensive income. Gains management to be other than temporary, the cost basis of and losses from foreign currency transactions, which are the investment is written down to fair value, and the included in SG&A, have not been significant. amount of the write-down is included in the determination of net earnings. Revenue Recognition Income Taxes We recognize revenue when the sales price is fixed or determinable, collectibility is reasonably assured and the We account for income taxes under the liability method. customer takes possession of the merchandise, or in the Under this method, deferred tax assets and liabilities are case of services, at the time the service is provided.","Appendix A Financial Statement Information A-11 $ in millions, except per share amounts BEST BUY Amounts billed to customers for shipping and handling likelihood of a gift card remaining unredeemed can be are included in revenue. Revenue is reported net of determined 24 months after the gift card is issued. At that estimated sales returns and excludes sales taxes. time, we recognize breakage income for those cards for which the likelihood of redemption is deemed remote and We estimate our sales returns reserve based on historical we do not have a legal obligation to remit the value of return rates. We initially established our sales returns such unredeemed gift cards to the relevant jurisdictions. reserve in the fourth quarter of fiscal 2005. Our sales Gift card breakage income is included in revenue in our returns reserve was $104 and $78, at March 3, 2007, consolidated statements of earnings. and February 25, 2006, respectively. We began recognizing gift card breakage income during We sell extended service contracts on behalf of an the third quarter of fiscal 2006. Gift card breakage unrelated third party. In jurisdictions where we are not income was as follows in fiscal 2007, 2006 and 2005: deemed to be the obligor on the contract, commissions are recognized in revenue at the time of sale. In 2007(1) 2006(1) 2005 jurisdictions where we are deemed to be the obligor on the contract, commissions are recognized in revenue Gift card breakage income $46 $43 $ \u2014 ratably over the term of the service contract. Commissions represented 2.2%, 2.5% and 2.6% of revenues in fiscal (1) Due to the resolution of certain legal matters associated with 2007, 2006 and 2005, respectively. gift card liabilities, we recognized $19 and $27 of gift card breakage income in fiscal 2007 and 2006, respectively, that related to prior fiscal years. For revenue transactions that involve multiple deliverables, Sales Incentives we defer the revenue associated with any undelivered EnhancerWe frequently offer sales incentives that entitle our customers to receive a reduction in the price of a product Apago PDFelements. The amount of revenue deferred in connection or service. Sales incentives include discounts, coupons and other offers that entitle a customer to receive a with the undelivered elements is determined using the reduction in the price of a product or service by submitting a claim for a refund or rebate. For sales relative fair value of each element, which is generally incentives issued to a customer in conjunction with a sale based on each element\u2019s relative retail price. See additional information regarding our customer loyalty program in Sales Incentives below. Gift Cards of merchandise or services, for which we are the obligor, the reduction in revenue is recognized at the time of sale, We sell gift cards to our customers in our retail stores, based on the retail value of the incentive expected to be through our Web sites, and through selected third parties. redeemed. We do not charge administrative fees on unused gift cards and our gift cards do not have an expiration date. Customer Loyalty Program We recognize income from gift cards when: (i) the gift card is redeemed by the customer; or (ii) the likelihood of We have a customer loyalty program which allows the gift card being redeemed by the customer is remote members to earn points for each qualifying purchase. (\u201cgift card breakage\u201d) and we determine that we do not Points earned enable members to receive a certificate that have a legal obligation to remit the value of unredeemed may be redeemed on future purchases at U.S. Best Buy stores. gift cards to the relevant jurisdictions. We determine our gift card breakage rate based upon historical redemption patterns. Based on our historical information, the","A-12 Appendix A Financial Statement Information BEST BUY $ in millions, except per share amounts Cost of Goods Sold and Selling, General and Administrative Expenses The following table illustrates the primary costs classified in each major expense category: Cost of Goods Sold SG&A \u2022 Total cost of products sold including: \u2022 Payroll and benefit costs for retail and corporate \u2014Freight expenses associated with moving merchandise employees; inventories from our vendors to our distribution \u2022 Occupancy costs of retail, services and corporate centers; facilities; \u2014Vendor allowances that are not a reimbursement of \u2022 Depreciation related to retail, services and corporate specific, incremental and identifiable costs to promote assets; a vendor\u2019s products; and \u2022 Advertising; \u2014Cash discounts on payments to vendors; \u2022 Vendor allowances that are a reimbursement of \u2022 Cost of services provided including: specific, incremental and identifiable costs to promote \u2014Payroll and benefits costs for services employees; and a vendor\u2019s products; \u2014Cost of replacement parts and related freight expenses; \u2022 Charitable contributions; \u2022 Physical inventory losses; \u2022 Outside service fees; \u2022 Markdowns; \u2022 Long-lived asset impairment charges; and \u2022 Customer shipping and handling expenses; \u2022 Other administrative costs, such as credit card service Apago PDF Enhancer\u2022 Costs associated with operating our distribution fees, supplies, and travel and lodging. network, including payroll and benefit costs, occupancy costs, and depreciation; \u2022 Freight expenses associated with moving merchandise inventories from our distribution centers to our retail stores; and \u2022 Promotional financing costs. Advertising Costs advertising expenses were $692, $644 and $597 in fiscal 2007, 2006 and 2005, respectively. Allowances Advertising costs, which are included in SG&A, are received from vendors for advertising of $140, $123 and expensed the first time the advertisement runs. Advertising $115, in fiscal 2007, 2006 and 2005, respectively, were costs consist primarily of print and television classified as reductions of advertising expenses. advertisements as well as promotional events. Net","Appendix A Financial Statement Information A-13 $ in millions, except per share amounts BEST BUY 4. Investments Short-Term and Long-Term Investments The following table presents the amortized principal amounts, related weighted-average interest rates, maturities and major security types for our investments: March 3, 2007 Feb. 25, 2006 Amortized Weighted- Amortized Weighted- Principal Average Principal Average Amount Interest Rate Amount Interest Rate Short-term investments (less than one year) $2,588 5.68% $3,041 4.76% Long-term investments (one to three years) 318 5.68% 218 4.95% Total $2,906 $3,259 Municipal debt securities $2,840 $3,155 Auction-rate and asset-backed securities 66 97 Debt securities issued by U.S. Treasury and other \u2014 7 U.S. government entities $2,906 $3,259 Total Apago PDF Enhancer The carrying value of our investments approximated fair value at March 3, 2007, and February 25, 2006, due to the rapid turnover of our portfolio and the highly liquid nature of these investments. Therefore, there were no significant realized or unrealized gains or losses. Marketable Equity Securities The carrying values of our investments in marketable equity securities at March 3, 2007, and February 25, 2006, were $4 and $28, respectively. Net unrealized (loss)\/gain, net of tax, included in accumulated other comprehensive income was ($1) and $12 at March 3, 2007, and February 25, 2006, respectively.","A-14 Appendix A Financial Statement Information BEST BUY $ in millions, except per share amounts March 3, Feb. 25, 2007 2006 5. Debt $\u2014 $ 21 \u2014 Short-term debt consisted of the following: 20 $\u2014 \u2014 Notes payable to banks, secured, interest rates ranging from 3.5% to 6.7% $ 41 Revolving credit facility, secured, variable interest rate of 5.6% at March 3, 2007 5.3% Total short-term debt Weighted-average interest rate Long-term debt consisted of the following: Convertible subordinated debentures, unsecured, due 2022, interest rate 2.25% March 3, Feb. 25, Financing lease obligations, due 2009 to 2023, interest rates ranging from 3.0% to 6.5% 2007 2006 Capital lease obligations, due 2008 to 2026, interest rates ranging from 1.8% to 8.0% Other debt, due 2010, interest rate 8.8% $402 $ 402 Total debt 171 157 24 27 Less: current portion(1) 12 10 Total long-term debt 609 596 (19) (418) $590 $ 178 (1) Since holders of our debentures due in 2022 could have required us to purchase all or a portion of their debentures on January Apago PDF Enhancer15, 2007, we classified our debentures in the current portion of long-term debt at February 25, 2006. However, no holders of our debentures exercised this put option on January 15, 2007. The next time the holders of our debentures could require us to purchase all or a portion of their debentures is January 15, 2012. Therefore, we classified our debentures as long-term debt at March 3, 2007. Certain debt is secured by property and equipment with a net book value of $80 and $41 at March 3, 2007, and February 25, 2006, respectively. Convertible Debentures Holders may require us to purchase all or a portion of their debentures on January 15, 2012, and January 15, In January 2002, we sold convertible subordinated 2017, at a purchase price equal to 100% of the principal debentures having an aggregate principal amount of amount of the debentures plus accrued and unpaid $402. The proceeds from the offering, net of $6 in interest up to but not including the date of purchase. We offering expenses, were $396. The debentures mature in have the option to settle the purchase price in cash, stock, 2022 and are callable at par, at our option, for cash on or a combination of cash and stock. or after January 15, 2007.","Appendix A Financial Statement Information A-15 $ in millions, except per share amounts BEST BUY Other The fair value of debt approximated $683 and $693 at shares outstanding. Our diluted earnings per share March 3, 2007, and February 25, 2006, respectively, calculation is computed based on the weighted-average based on the ask prices quoted from external sources, number of common shares outstanding adjusted by the compared with carrying values of $650 and $596, number of additional shares that would have been respectively. outstanding had the potentially dilutive common shares At March 3, 2007, the future maturities of long-term debt, been issued. Potentially dilutive shares of common stock including capitalized leases, consisted of the following: include stock options, nonvested share awards and shares issuable under our ESPP, as well as common shares that Fiscal Year $ 19 would have resulted from the assumed conversion of our 18 convertible debentures. Since the potentially dilutive 2008 27 shares related to the convertible debentures are included 2009 18 in the calculation, the related interest expense, net of tax, 2010 is added back to earnings from continuing operations, as 2011 420 the interest would not have been paid if the convertible 2012 107 debentures had been converted to common stock. Thereafter Nonvested market-based share awards and nonvested $609 performance-based share awards are included in the Earnings per Share average diluted shares outstanding each period if established market or performance criteria have been met at the end of the respective periods. Apago PDF EnhancerOur basic earnings per share calculation is computed based on the weighted-average number of common The following table presents a reconciliation of the numerators and denominators of basic and diluted earnings per share from continuing operations in fiscal 2007, 2006 and 2005: Numerator: 2007 2006 2005 Earnings from continuing operations, basic $1,377 $1,140 $ 934 Adjustment for assumed dilution: Interest on convertible debentures due in 2022, net of tax 7 7 7 $1,384 $1,147 $ 941 Earnings from continuing operations, diluted 482.1 490.3 488.9 Denominator (in millions): 8.8 8.8 8.8 Weighted-average common shares outstanding 5.3 5.7 7.3 Effect of potentially dilutive securities: 496.2 504.8 505.0 $ 2.86 $ 2.33 $ 1.91 Shares from assumed conversion of convertible debentures $ 2.79 $ 2.27 $ 1.86 Stock options and other Weighted-average common shares outstanding, assuming dilution Basic earnings per share \u2014 continuing operations Diluted earnings per share \u2014 continuing operations","A-16 Appendix A Financial Statement Information BEST BUY $ in millions, except per share amounts marketable equity securities. Foreign currency translation adjustments do not include a provision for Comprehensive Income income tax expense when earnings from foreign operations are considered to be indefinitely reinvested Comprehensive income is computed as net earnings outside the United States. Comprehensive income was plus certain other items that are recorded directly to $1,332, $1,252 and $1,047 in fiscal 2007, 2006 and shareholders\u2019 equity. In addition to net earnings, the 2005, respectively. significant components of comprehensive income include foreign currency translation adjustments and unrealized gains and losses, net of tax, on available-for-sale 7. Net Interest Income 2007 2006 2005 $142 $103 $ 45 Net interest income was comprised of the following in fiscal 2007, 2006 and 2005: (31) (30) (44) Interest income \u2014 4 \u2014 Interest expense $111 $1 Dividend income $ 77 Net interest income Apago PDF Enhancer 8. Leases The composition of net rent expense for all operating leases, including leases of property and equipment, was as follows in fiscal 2007, 2006 and 2005: Minimum rentals 2007 2006 2005 Contingent rentals $679 $569 $516 Total rent expense 1 1 1 Less: sublease income 680 570 517 Net rent expense (20) (18) (16) $660 $552 $501","Appendix A Financial Statement Information A-17 $ in millions, except per share amounts BEST BUY The future minimum lease payments under our capital, financing and operating leases by fiscal year (not including contingent rentals) at March 3, 2007, were as follows: Fiscal Year Capital Financing Operating Leases Leases Leases 2008 $ 6 $ 23 $ 741 2009 2010 4 23 715 2011 2012 4 23 672 Thereafter 3 23 632 Subtotal 1 23 592 17 112 3,316 35 227 $6,668 Less: imputed interest (11) (56) Present value of lease obligations $24 $171 Total minimum lease payments have not been reduced by minimum sublease rent income of approximately $119 due under future noncancelable subleases. 10. Income Taxes The following is a reconciliation of the federal statutory Income tax expense was comprised of the following in Apago PDFincome tax rate to income tax expense from continuing Enhancerfiscal 2007, 2006 and 2005: operations in fiscal 2007, 2006 and 2005: 2007 2006 2005 Federal income tax at the 2007 2006 2005 Current: $609 $640 $502 statutory rate $ 747 $ 603 $ 505 Federal 45 78 36 State 16 14 (1) State income taxes, net of 38 34 29 Foreign federal benefit 670 732 537 Benefit from foreign operations (36) (37) (7) Deferred: 51 (131) (4) Non-taxable interest income (34) (28) (22) Federal 19 (14) (20) Other 37 9 4 State 12 (6) Income tax expense $ 752 $ 581 $ 509 Foreign (4) Effective income tax rate 35.3% 33.7% 35.3% 82 (151) Income tax expense (28) $752 $581 $509 Deferred taxes are the result of differences between the bases of assets and liabilities for financial reporting and income tax purposes.","A-18 Appendix A Financial Statement Information BEST BUY $ in millions, except per share amounts 11. Segment and Geographic Information Squad, Magnolia Audio Video and Pacific Sales. The International segment is comprised of all Canada store Segment Information and online operations, including Best Buy, Future Shop and Geek Squad, as well as our Five Star and Best Buy We operate two reportable segments: Domestic and retail and online operations in China. International. The Domestic segment is comprised of U.S. store and online operations, including Best Buy, Geek The following tables present our business segment information for continuing operations in fiscal 2007, 2006 and 2005: Revenue 2007 2006 2005 Domestic International $31,031 $27,380 $24,616 4,903 3,468 2,817 Total revenue $35,934 $30,848 $27,433 Operating Income $ 1,889 $ 1,588 $ 1,393 Domestic 110 56 49 International Total operating income 1,999 1,644 1,442 Net interest income 111 77 1 Gain on investments 20 \u2014 \u2014 Earnings from continuing operations before income tax expense $ 2,130 $ 1,721 $ 1,443 Assets Apago PDF Enhanc$1e0,6r14 $ 9,722 $ 8,372 2,142 1,922 Domestic 2,956 International Total assets $13,570 $11,864 $10,294 12. Contingencies and Commitments Commitments Contingencies We engage Accenture LLP (\u201cAccenture\u201d) to assist us with improving our operational capabilities and reducing our costs On December 8, 2005, a purported class action lawsuit in the information systems, procurement and human captioned, Jasmen Holloway, et cl. v. Best Buy Co., Inc., was filed resources areas. Our future contractual obligations to in the U.S. District Court for the Northern District of California Accenture are expected to range from $76 to $334 per year alleging we discriminate against women and minority individuals through 2012, the end of the contract period. Prior to our on the basis of gender, race, color and\/or national origin with engagement of Accenture, a significant portion of these costs respect to our employment policies and practices. The action were incurred as part of normal operations. seeks an end to discriminatory policies and practices, an award of back and front pay, punitive damages and injunctive relief, We had outstanding letters of credit for purchase obligations including rightful place relief for all class members. As of with a fair value of $85 at March 3, 2007. March 3, 2007, no accrual had been established as it was not possible to estimate the possible loss or range of loss because At March 3, 2007, we had commitments for the purchase this matter had not advanced to a stage where we could make and construction of facilities valued at approximately $69. any such estimate. We believe the allegations are without merit Also, at March 3, 2007, we had entered into lease and intend to defend this action vigorously. commitments for land and buildings for 115 future locations. These lease commitments with real estate developers provide We are involved in various other legal proceedings arising in for minimum rentals ranging from seven to 20 years, which if the normal course of conducting business. We believe the consummated based on current cost estimates, will amounts provided in our consolidated financial statements, as approximate $84 annually over the initial lease terms. These prescribed by GAAP, are adequate in light of the probable minimum rentals have been included in the future minimum and estimable liabilities. The resolution of those other lease payments included in Note 8, Leases. proceedings is not expected to have a material impact on our results of operations or financial condition.","CIRCUIT CITY Apago PDF Enhancer Financial Reports CIRCUIT CITY STORES, INC.","A-20 Appendix A Financial Statement Information Circuit City Stores, Inc. CONSOLIDATED BALANCE SHEETS (Amounts in thousands except share data) 2007 At February 28 2006 ASSETS CIRCUIT CITY CURRENT ASSETS: $ 141,141 $ 315,970 Cash and cash equivalents .................................................................................... 598,341 521,992 Short-term investments......................................................................................... 382,555 220,869 Accounts receivable, net of allowance for doubtful accounts ............................. Merchandise inventory ......................................................................................... 1,636,507 1,698,026 Deferred income taxes.......................................................................................... 34,868 29,598 Income tax receivable........................................................................................... 42,722 5,571 Prepaid expenses and other current assets............................................................ 47,378 41,315 TOTAL CURRENT ASSETS .................................................................... 2,883,512 2,833,341 Property and equipment, net of accumulated depreciation................................... 921,027 839,356 Deferred income taxes.......................................................................................... 31,910 97,889 Goodwill ............................................................................................................... 121,774 223,999 Other intangible assets, net of accumulated amortization .................................... 19,285 30,372 Other assets........................................................................................................... 29,775 44,087 TOTAL ASSETS........................................................................................ $4,007,283 $4,069,044 LIABILITIES AND STOCKHOLDERS\u2019 EQUITY CURRENT LIABILITIES: Apago PDF Enhancer Merchandise payable ............................................................................................ $ 922,205 $ 850,359 281,709 202,300 Expenses payable.................................................................................................. 404,444 379,768 98,509 84,743 Accrued expenses and other current liabilities ..................................................... 75,909 \u2013 22,003 Accrued compensation ......................................................................................... \u2013 7,248 7,162 Accrued income taxes........................................................................................... Short-term debt..................................................................................................... Current installments of long-term debt................................................................. TOTAL CURRENT LIABILITIES........................................................... 1,714,029 1,622,330 Long-term debt, excluding current installments................................................... 50,487 51,985 Accrued straight-line rent and deferred rent credits ............................................. 277,636 256,120 Accrued lease termination costs ........................................................................... 76,326 79,091 Other liabilities ..................................................................................................... 97,561 104,885 TOTAL LIABILITIES ..................................................................................... 2,216,039 2,114,411 Commitments and contingent liabilities 85,345 87,395 STOCKHOLDERS\u2019 EQUITY: 344,144 458,211 Common stock, $0.50 par value; 525,000,000 shares authorized; 1,336,317 1,364,740 170,689,406 shares issued and outstanding (174,789,390 in 2006) ..................... 44,287 Additional paid-in capital ..................................................................................... 25,438 Retained earnings ................................................................................................. Accumulated other comprehensive income.......................................................... TOTAL STOCKHOLDERS\u2019 EQUITY..................................................... 1,791,244 1,954,633 TOTAL LIABILITIES AND STOCKHOLDERS\u2019 EQUITY ................... $4,007,283 $4,069,044","Appendix A Financial Statement Information A-21 Circuit City Stores, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended February 28 (Amounts in thousands except per share data) 2007 % 2006 % 2005 % 100.0 NET SALES .............................................................. $12,429,754 100.0 $11,514,151 100.0 $10,413,524 75.5 Cost of sales, buying and warehousing ....................... 9,501,438 76.4 8,703,683 75.6 7,861,364 24.5 23.7 GROSS PROFIT ...................................................... 2,928,316 23.6 2,810,468 24.4 2,552,160 \u2013 Selling, general and administrative expenses .............. 2,841,619 22.9 2,595,706 22.5 2,470,712 0.1 0.8 Impairment of goodwill............................................... 92,000 0.7 \u2013\u2013 \u2013 0.1 Finance income ........................................................... \u2013 \u2013 \u2013 \u2013 5,564 \u2013 CIRCUIT CITY OPERATING (LOSS) INCOME........................... (5,303) \u2013 214,762 1.9 87,012 0.9 0.3 Interest income ............................................................ 27,150 0.2 21,826 0.2 14,404 0.6 Interest expense ........................................................... 1,519 \u2013 3,143 \u2013 4,451 \u2013 Earnings from continuing operations before \u2013 income taxes ........................................................... 20,328 0.2 233,445 2.0 96,965 0.6 0.2 85,996 0.7 36,396 Income tax expense ..................................................... 30,510 NET (LOSS) EARNINGS FROM (10,182) (0.1) 147,449 1.3 60,569 CONTINUING OPERATIONS ...................... 128 \u2013 (5,350) \u2013 1,089 EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX ....................... CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLES, NET OF TAX 1,773 \u2013 (2,353) \u2013\u2013 1.2 $ 61,658 Apago PDF EnhancerNET (LOSS) EARNINGS ................................... $ (8,281) (0.1) $ 139,746 Weighted average common shares: 170,448 177,456 193,466 Basic ...................................................................... 170,448 180,653 196,227 Diluted ................................................................... $ 0.83 $ 0.31 (LOSS) EARNINGS PER SHARE: (0.06) $ (0.03) $ 0.01 Basic: \u2013 $ (0.01) $\u2013 $ 0.79 $ 0.32 Continuing operations............................................. $ 0.01 Discontinued operations\u2026.. ................................... $ (0.05) $ 0.82 $ 0.31 Cumulative effect of change in accounting $ (0.03) $ 0.01 (0.06) $ (0.01) $\u2013 principles ........................................................... $ \u2013 $ 0.77 $ 0.31 Basic (loss) earnings per share ............................... $ 0.01 Diluted: (0.05) Continuing operations............................................. $ Discontinued operations\u2026.. ................................... $ Cumulative effect of change in accounting principles ........................................................... $ Diluted (loss) earnings per share ............................ $","A-22 Appendix A Financial Statement Information Circuit City Stores, Inc. CONSOLIDATED STATEMENTS OF STOCKHOLDERS\u2019 EQUITY AND COMPREHENSIVE INCOME Accumulated Additional Other Common Stock Paid-in Retained Comprehensive (Amounts in thousands except per share data) Shares Amount Capital Earnings Income Total BALANCE AT FEBRUARY 29, 2004........................ 203,899 $101,950 $922,600 $1,191,904 $ \u2013 $ 2,216,454 Comprehensive income: Net earnings ........................................................ \u2013 \u2013 \u2013 61,658 \u2013 61,658 Other comprehensive income, net of taxes: Foreign currency translation adjustment (net of deferred taxes of $13,707)............ \u2013 \u2013 \u2013 \u2013 25,100 25,100 CIRCUIT CITY Comprehensive income ....................................... 86,758 Repurchases of common stock .................................. (19,163) (9,582) (250,250) \u2013 \u2013 (259,832) Compensation for stock awards................................. \u2013 \u2013 18,305 \u2013 \u2013 18,305 Exercise of common stock options............................ 3,489 1,745 26,761 \u2013 \u2013 28,506 Shares issued under stock-based incentive plans, net of cancellations, and other ............................. (75) (38) (1,312) \u2013 \u2013 (1,350) Tax effect from stock issued...................................... \u2013 \u2013 (1,564) \u2013 \u2013 (1,564) Shares issued in acquisition of InterTAN, Inc. .......... \u2013 \u2013 6,498 \u2013 \u2013 6,498 Dividends \u2013 common stock ($0.07 per share) ........... \u2013 \u2013 \u2013 (13,848) \u2013 (13,848) BALANCE AT FEBRUARY 28, 2005........................ 188,150 94,075 721,038 1,239,714 25,100 2,079,927 Comprehensive income: Net earnings .......................................................... \u2013 \u2013 \u2013 139,746 \u2013 139,746 Other comprehensive income (loss), net of taxes: Foreign currency translation adjustment (net of deferred taxes of $11,316).............. \u2013 \u2013 \u2013 \u2013 19,500 19,500 Minimum pension liability adjustment (net of deferred taxes of $182)................... \u2013 \u2013 \u2013\u2013 (313) (313) \u2013 158,933 ApagoComprehensive income ......................................... PDF Enhancer (338,476) Repurchases of common stock .................................... (19,396) (9,698) (328,778) \u2013 Compensation for stock awards................................... \u2013 \u2013 24,386 \u2013 \u2013 24,386 Exercise of common stock options.............................. 3,830 1,915 36,752 \u2013 \u2013 38,667 Shares issued under stock-based incentive plans, net of cancellations, and other ............................... 2,205 1,103 (2,160) \u2013 \u2013 (1,057) Tax effect from stock issued........................................ \u2013 \u2013 6,973 \u2013 \u2013 6,973 Redemption of preferred share purchase rights ........... \u2013 \u2013 \u2013 (1,876) \u2013 (1,876) Dividends \u2013 common stock ($0.07 per share) ............. \u2013 \u2013 \u2013 (12,844) \u2013 (12,844) 174,789 87,395 458,211 1,364,740 44,287 1,954,633 BALANCE AT FEBRUARY 28, 2006 ................................ Comprehensive loss: Net loss.................................................................. \u2013 \u2013 \u2013 (8,281) \u2013 (8,281) Other comprehensive (loss) income, net of taxes: Foreign currency translation adjustment (net of deferred taxes of $3,630)................ \u2013 \u2013 \u2013 \u2013 (7,793) (7,793) Unrealized gain on available-for-sale securities (net of deferred taxes of $219)... \u2013 \u2013 \u2013 \u2013 377 377 Minimum pension liability adjustment (net of deferred taxes of $136)................... \u2013 \u2013 \u2013 \u2013 (229) (229) Comprehensive loss............................................... (15,926) Adjustment to initially apply SFAS No. 158 (net of deferred taxes of $6,628)....................................... \u2013 \u2013 \u2013 \u2013 (11,204) (11,204) Repurchases of common stock .................................... (10,032) (5,016) (232,187) \u2013 \u2013 (237,203) Compensation for stock awards................................... \u2013 \u2013 26,727 \u2013 \u2013 26,727 Adjustment to initially apply SFAS No. 123(R).......... \u2013 \u2013 (2,370) \u2013 \u2013 (2,370) Exercise of common stock options, net ....................... 5,767 2,883 86,228 \u2013 \u2013 89,111 Shares issued under stock-based incentive plans, net of cancellations, and other ............................... 165 83 (1,027) \u2013 \u2013 (944) Tax effect from stock issued........................................ \u2013 \u2013 8,562 \u2013 \u2013 8,562 Dividends \u2013 common stock ($0.115 per share)............ \u2013 \u2013 \u2013 (20,142) \u2013 (20,142) 170,689 $85,345 $344,144 $1,336,317 $25,438 $ 1,791,244 BALANCE AT FEBRUARY 28, 2007 ................................","Appendix A Financial Statement Information A-23 Circuit City Stores, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended February 28 2005(a) (Amounts in thousands) 2007 2006 OPERATING ACTIVITIES: (8,281) $ 139,746 $ 61,658 Net (loss) earnings ........................................................................................................................$ (128) 5,350 (1,089) CIRCUIT CITY Adjustments to reconcile net (loss) earnings to net cash provided by 177,828 160,608 151,597 operating activities of continuing operations: 3,645 2,618 1,851 Net (earnings) loss from discontinued operations ..................................................................... 92,000 \u2013 \u2013 Depreciation expense ................................................................................................................ 26,727 Amortization expense ............................................................................................................... (1,439) 24,386 18,305 Impairment of goodwill ............................................................................................................ 72,717 2,370 (206) Stock-based compensation expense ......................................................................................... (1,773) (14,252) (Gain) loss on dispositions of property and equipment ............................................................. 1,689 2,353 (116,300) Provision for deferred income taxes.......................................................................................... (1,726) \u2013 Cumulative effect of change in accounting principles .............................................................. \u2013 Other ......................................................................................................................................... (133,152) 16,552 Changes in operating assets and liabilities: \u2013 \u2013 (58,738) Accounts receivable, net ........................................................................................................... 32,867 Retained interests in securitized receivables ............................................................................. 49,352 (231,114) 160,037 Merchandise inventory.............................................................................................................. (9,580) (17,341) 7,207 Prepaid expenses and other current assets................................................................................. (3,061) 3,816 Other assets ............................................................................................................................... 535 211,362 28,199 Merchandise payable................................................................................................................. 73,317 40,921 (17,372) Expenses payable ...................................................................................................................... 55,722 43,202 54,021 Accrued expenses and other current liabilities, and accrued income taxes .............................. (81,364) (17,032) 63,494 Other long-term liabilities ......................................................................................................... (1,474) NET CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS.......................... 316,341 364,942 389,347 INVESTING ACTIVITIES: (254,451) (261,461) 55,421 106,369 Apago PDF EnhancerPurchases of property and equipment ....................................................................................... (285,725) (125,325) (1,409,760) Proceeds from sales of property and equipment........................................................................ 38,620 1,014,910 \u2013 \u2013 Purchases of investment securities ............................................................................................ (2,002,123) \u2013 475,857 \u2013 (262,320) Sales and maturities of investment securities ............................................................................ 1,926,086 \u2013 Other investing activities........................................................................................................... (11,567) Proceeds from the sale of the private-label finance operation................................................... \u2013 Acquisitions, net of cash acquired of $30,615 .......................................................................... \u2013 NET CASH USED IN INVESTING ACTIVITIES OF CONTINUING OPERATIONS ............................. (334,709) (593,880) (66,880) FINANCING ACTIVITIES: 35,657 73,954 12,329 (56,912) (53,893) (13,458) Proceeds from short-term borrowings....................................................................................... Principal payments on short-term borrowings .......................................................................... 1,216 1,032 \u2013 Proceeds from long-term debt ................................................................................................... (6,724) (1,829) (28,008) Principal payments on long-term debt....................................................................................... 19,347 (22,540) 36,329 Changes in overdraft balances................................................................................................... (237,203) (338,476) (259,832) Repurchases of common stock.................................................................................................. 89,662 38,038 27,156 Issuances of common stock....................................................................................................... (20,126) (12,844) (13,848) Dividends paid .......................................................................................................................... 15,729 Excess tax benefit from stock-based payments ......................................................................... \u2013 \u2013 Redemption of preferred share purchase rights......................................................................... \u2013 (1,876) \u2013 Other financing activities .......................................................................................................... (1,424) \u2013 \u2013 NET CASH USED IN FINANCING ACTIVITIES OF CONTINUING OPERATIONS.................................... (160,778) (318,434) (239,332) DISCONTINUED OPERATIONS: 3,310 (9,884) (7,193) 2,958 (8,089) (6,615) Operating cash flows................................................................................................................. (592) Investing cash flows.................................................................................................................. \u2013 (724) Financing cash flows................................................................................................................. NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS................................................... 5,676 (17,973) (14,532) EFFECT OF EXCHANGE RATE CHANGES ON CASH............................................................................... (1,359) 1,655 2,016 (Decrease) increase in cash and cash equivalents ............................................................................. (174,829) (563,690) 70,619 Cash and cash equivalents at beginning of year ................................................................................ 315,970 879,660 809,041 CASH AND CASH EQUIVALENTS AT END OF YEAR................................................................... $ 141,141 $ 315,970 $879,660","RADIOSHACK Alabama Albertville, Alexander City, Andalusia, Arab, Ardmore, Athens, Atmore, Attalla, Bay Minette, Bayou La Batre, Bessemer, Birmingham, Butler, Calera, Camden, Center Point, Centre, Childersburg, Clanton, Cullman, Daphne, Decatur, Demopolis, Dothan, Enterprise, Fairfield, Fairhope, Florence, Foley, Fort Payne, Gadsden, Gardendale, Gulf Shores, Guntersville, Haleyville, Hamilton, Hartselle, Hoover, Huntsville, Jackson, Jasper, Leeds, Linden, Luverne, Madison, Marion, Mobile, Montgomery, Moulton, Northport, Opelika, Opp, Oxford, Pelham, Pell City, Phenix City, Piedmont, Prattville, Robertsdale, Rogersville, Russellville, Saraland, Scottsboro, Selma, Sumiton, 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Evergreen, Flagler, Fort Collins, Fountain, Fraser, Frisco, Glenwood Spring, Golden, Grand Junction, Greeley, Greenwood Village, Gunnison, Highlands Ranch, Holyoke, Idaho Springs, La Junta, Lafayette, Lakewood, Lamar, Limon, Littleton, Longmont, Loveland, Meeker, Monte Vista, Montrose, Monument, Northglenn, Pagosa Springs, Paonia, Parachute, Parker, Pueblo, Rifle, Salida, Springfield, Steamboat Springs, Sterling, Thornton, Westminster, Woodland Park, Wray, Yuma Connecticut Avon, Barkhamsted, Bloomfield, Branford, Bridgeport, Bristol, Canaan, Cheshire, Clinton, Cos Cob, Cromwell, Danbury, Derby, East Haven, Enfield, Fairfield, Farmington, Glastonbury, Groton, Guilford, Hamden, Hartford, Manchester, Meriden, Middletown, Milford, Naugatuck, New Britain, New Canaan, New Haven, New London, New Milford, Newington, Newtown, North Haven, Norwalk, Norwich, Old Saybrook, Orange, Plainfield, Putnam, Ridgefield, Riverside, Southbury, Southington, Stamford, Torrington, Trumbull, Vernon, Wallingford, Waterbury, Waterford, Watertown, West Hartford, Westport, Wethersfield, Willimantic, Wilton, Windsor, D.C. Washington Delaware Bear, Claymont, Dover, Georgetown, Middletown, Milford, New Castle, Newark, Rehoboth Beach, Seaford, Smyrna, Wilmington Florida Alachua, Altamonte, Altamonte Springs, Apopka, Arcadia, Atlantic Beach, Auburndale, Avon Park, Bartow, Bayonet Point, Belle Glade, Belleview, Big Pine Key, Boca Raton, Bonita Springs, Boynton Beach, Bradenton, Brandon, Branford, Brooksville, Callaway, Cape Coral, Casselberry, Century, Chiefland, Chipley, Clearwater, Clermont, Clewiston, Cocoa, Cocoa Beach, Cooper City, Coral Gables, Coral Springs, Crawfordville, Crestview, Crystal River, Davie, Daytona Beach, Deerfield, Deerfield Beach, Defuniak Springs, Deland, Delray Beach, Deltona, Destin, Dunnellon, Englewood, Fernandina Beach, Florida City, Fort Lauderdale, Fort Myers, Fort Pierce, Fort Walton Beach, Gainesville, Greenacres, Gulf Breeze, Haines City, Hialeah, Hilliard, Holiday, Hollywood, Homestead, Homosassa, Immokalee, Indiantown, Inverness, Jacksonville, Jensen Beach, Jupiter, Key Largo, Key West, Keystone Heights, Kissimmee, Lady Lake, Lake City, Lake Mary, Lake Placid, Lake Wales, Lake Worth, Lakeland, Lantana, Largo, Lauderdale Lakes, Lauderhill, Leesburg, Lehigh Acres, Live Oak, Longwood, Lutz, Macclenny, Madison, Marathon, Marco Island, Margate, Marianna, Mary Esther, Melbourne, Merritt Island, Miami, Miami Beach, Milton, Miramar, Monticello, Mount Dora, North Fort Myers, North Miami Beach, Naples, Navarre, New Port Richey, New Smyrna Beach, Niceville, Oakland Park, Ocala, Ocoee, Okeechobee, Orange City, Orange Park, Orlando, Ormond Beach, Oviedo, Palatka, Palm Bay, Palm Beach Garden, Palm Coast, Palm Harbor, Panama City, Pembroke Pines, Pensacola, Perry, Plant City, Plantation, Pompano Beach, Port Charlotte, Port Orange, Port Richey, Port St. Joe, Port St. Lucie, Punta Gorda, Riverview, Royal Palm Beach, Ruskin, Sanford, Santa Rosa Beach, Sarasota, Satellite Beach, Sebastian, Sebring, Seffner, Seminole, South Daytona, Spring Hill, St. Augustine, St. Cloud, St. Petersburg, Starke, Stuart, Sunrise, Tallahassee, Tampa, Tarpon Springs, Temple Terrace, Tequesta, Titusville, Venice, Vero Beach, Wauchula, Wellington, West Palm Beach, Weston, Wildwood, Wilton Manors, Winter Haven, Winter Park, Winter Springs, Zephyrhills Georgia Adel, Albany, Alpharetta, Americus, Athens, Atlanta, Augusta, Austell, Bainbridge, Barnesville, Baxley, Blairsville, Blakely, Blue Ridge, Brunswick, Buford, Cairo, Calhoun, Canton, Carrollton, Cartersville, Cedartown, Centerville, Chamblee, Chatsworth, Clayton, Cleveland, Columbus, Commerce, Conyers, Cordele, Cornelia, Covington, Cumming, Cuthbert, Dahlonega, Dalton, Dawson, Dawsonville, Decatur, Donalsonville, Douglas, Douglasville, Dublin, Duluth, East Ellijay, Elberton, Fayetteville, Fitzgerald, Folkston, Forest Park, Forsyth, Fort Gaines, Fort Oglethorpe, Fort Valley, Gainesville, Griffin, Hampton, Hartwell, Hazlehurst, Hiawassee, Hinesville, Hiram, Homerville, Jackson, Jasper, Jesup, Kennesaw, Lafayette, Lagrange, Lawrenceville, Lilburn, Lincolnton, Lithonia, Macon, Madison, Marietta, Martinez, Mc Rae, McDonough, Metter, Milledgeville, Monroe, Monticello, Morrow, Moultrie, Nashville, Newnan, Norcross, Oakwood, Peachtree City, Perry, Quitman, Richmond Hill, Riverdale, Rockmart, Rome, Roswell, Royston, Savannah, Smyrna, Snellville, St. Marys, St. Simons Island, Statesboro, Stockbridge, Stone Mountain, Summerville, Suwanee, Sylvania, Sylvester, Thomaston, Thomasville, Thomson, Tifton, Toccoa, Trenton, Union City, Valdosta, Vidalia, Villa Rica, Warner Robins, Washington, Waycross, Winder, Woodbury, Woodstock Hawaii Aiea, Ewa Beach, Haleiwa, Hilo, Honolulu, Kahului, Kailua, Kailua-Kona, Kamuela, Kaneohe, Kapolei, Kihei, Lahaina, Lihue, Mililani, Wahiawa, Waianae, Waipahu Idaho American Falls, Blackfoot, Boise, Bonners Ferry, Buhl, Burley, Caldwell, Chubbuck, Coeur d\u2019Alene, Cottonwood, Driggs, Emmett, Grangeville, Hailey, Idaho Falls, Lewiston, McCall, Meridian, Montpelier, Moscow, Mountain Home, Nampa, Orofino, Pocatello, Post Falls, Rexburg, Rigby, Salmon, Sandpoint, Twin Falls, Wendell Illinois Aledo, Alton, Anna, Antioch, Arcola, Arlington Heights, Arthur, Aurora, Bartlett, Batavia, Belleville, Belvidere, Bensenville, Benton, Berwyn, Bloomingdale, Bloomington, Blue Island, Bolingbrook, Bourbonnais, Burbank, Calumet City, Canton, Carbondale, Carlinville, Carmi, Centralia, Champaign, Channahon, Chester, Chicago, Chicago Heights, Cicero, Collinsville, Crystal Lake, Danville, Decatur, Des Plaines, Dixon, Dolton, Downers Grove, Du Quoin, Dwight, East Peoria, East St Louis, Effingham, El Paso, Elgin, Elk Grove Village, Eureka, Evanston, Fairbury, Fairfield, Fairview Heights, Flora, Fox Lake, Frankfort, Freeport, Galesburg, Geneseo, Gibson City, Glen Carbon, Glen Ellyn, Glencoe, Glenview, Granite City, Greenville, Gurnee, Harrisburg, Havana, Highland, Highland Park, Hoffman Estates, Homer Glen, Homewood, Hoopeston, Jacksonville, Jerseyville, Joliet, Kankakee, Kewanee, La Grange, 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Brownsburg, Brownstown, Cannelton, Carmel, Clarksville, Columbia City, Columbus, Corydon, Covington, Crawfordsville, Crown Point, Decatur, Demotte, Elkhart, Elwood, Evansville, Fishers, Fort Wayne, Fowler, Frankfort, Franklin, Gary, Goshen, Greencastle, Greenfield, Greensburg, Greenwood, Griffith, Hammond, Hobart, Huntington, Indianapolis, Jasper, Kendallville, Knox, Kokomo, La Porte, Lafayette, Lagrange, Lebanon, Ligonier, Linton, Madison, Marion, Martinsville, Merrillville, Michigan City, Mishawaka, Monticello, Mooresville, Muncie, Munster, Nappanee, New Albany, New Carlisle, New Castle, New Haven, Noblesville, North Manchester, North Vernon, Paoli, Peru, Petersburg, Plainfield, Plymouth, Portage, Portland, Princeton, Rensselaer, Richmond, Rising Sun, Rochester, Rockport, Rockville, Rushville, Schererville, Seymour, Shelbyville, South Bend, Syracuse, Terre Haute, Tipton, Valparaiso, Vincennes, W Lafayette, Wabash, Warsaw, Washington, Winamac, Winchester Iowa Adel, Altoona, Ames, Ankeny, Atlantic, Belle Plaine, Boone, Carroll, Cedar Falls, Cedar Rapids, Chariton, Charles City, Cherokee, Clarinda, Clinton, Coralville, Council Bluffs, Cresco, Creston, Davenport, Decorah, Denison, Des Moines, Dubuque, Dyersville, Eagle Grove, Estherville, Fairfield, Fort Dodge, Fort Madison, Garner, Glenwood, Greenfield, Grinnell, Hampton, Harlan, Humboldt, Independence, Iowa City, Iowa Falls, Jefferson, Keokuk, Knoxville, Le Mars, Logan, Manchester, Maquoketa, Marengo, Marshalltown, Mason City, Mount Pleasant, Muscatine, New Hampton, Newton, Orange City, Osage, Osceola, Ottumwa, Pella, Perry, Pocahontas, Red Apago PDF EnhancerOak, Rock Valley, Sac City, Sheldon, Sioux Center, Sioux City, Spencer, Spirit Lake, Stuart, Vinton, Washington, Waterloo, Webster City, West Burlington, West Des Moines, West Union, Winterset Kansas Abilene, Anthony, Arkansas City, Atchison, Atwood, Bonner Springs, Burlington, Chanute, Clay Center, Colby, Columbus, Concordia, Derby, Dodge City, El Dorado, Ellsworth, Emporia, Fort Scott, Garden City, Garnett, Girard, Goodland, Great Bend, Hays, Hillsboro, Horton, Hutchinson, Independence, Iola, Junction City, Kansas City, Lawrence, Leavenworth, Lenexa, Liberal, Manhattan, McPherson, Mission, Newton, Oakley, Olathe, Osage City, Osawatomie, Ottawa, Overland Park, Parsons, Pittsburg, Pratt, Salina, Scott City, Seneca, Shawnee Mission, Syracuse, Topeka, Ulysses, Wellington, Wichita, Winfield Kentucky Alexandria, Ashland, Barbourville, Bardstown, Bardwell, Beaver Dam, Berea, Bowling Green, Brandenburg, Cadiz, Campbellsville, Campton, Carrollton, Central City, Columbia, Cynthiana, Danville, Dry Ridge, Elizabethtown, Erlanger, Falmouth, Flemingsburg, Florence, Frankfort, Franklin, Georgetown, Glasgow, Grayson, Hazard, Henderson, Hopkinsville, Jackson, La Center, La Grange, Latonia, Lebanon, Lexington, London, Louisville, Madisonville, Mayfield, Maysville, Middlesboro, Monticello, Morehead, Morgantown, Mount Sterling, Mount Vernon, Murray, Newport, Nicholasville, Owensboro, Paducah, Paris, Pikeville, Pineville, Prestonsburg, Princeton, Radcliff, Richmond, Russell Springs, Russellville, Salyersville, Scottsville, Shelbyville, Somerset, South Williamson, Stanton, Taylorsville, Warsaw, West Liberty, Whitley City, Williamsburg, Winchester Louisiana Abbeville, Alexandria, Bastrop, Baton Rouge, Bogalusa, Bossier City, Boutte, Crowley, Cut Off, Denham Springs, Deridder, Eunice, Franklinton, Gonzales, Hammond, Harahan, Harvey, Houma, Jeanerette, Jena, Jennings, Kenner, Kentwood, La Place, Lafayette, Lake Charles, Leesville, Mandeville, Mansfield, Many, Metairie, Minden, Monroe, Morgan City, Natchitoches, New Iberia, New Orleans, New Roads, Oakdale, Opelousas, Pineville, Plaquemine, Rayne, Ruston, Shreveport, Slidell, Springhill, St. Francisville, Sulphur, Thibodaux, Ville Platte, West Monroe, Westwego, Winfield, Winnsboro, Zachary Maine Auburn, Augusta, Bangor, Bar Harbor, Belfast, Biddeford, Boothbay Harbor, Brunswick, 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Silver Spring, Stevensville, Takoma Park, Towson, Waldorf, Westminster, Wheaton Massachusetts Acton, Andover, Ashland, Athol, Auburn, Bedford, Beverly, Billerica, Boston, Braintree, Bridgewater, Brockton, Brookline, Burlington, Cambridge, Chelmsford, Chicopee, Danvers, Dedham, Dorchester, East Boston, East Walpole, East Wareham, Fairhaven, Fall River, Falmouth, Fitchburg, Foxboro, Franklin, Gardner, Gloucester, Greenfield, Great Barrington, Hadley, Hanover, Haverhill, Holyoke, Hyannis, Kingston, Lanesborough, Lenox, Leominster, Lowell, Lynn, Malden, Marlborough, Marshfield, Medford, Milford, Nantucket, Natick, New Bedford, Newburyport, Newton, North Adams, North Attleboro, North Dartmouth, Northampton, Orleans, Peabody, Pittsfield, Plymouth, Quincy, Raynham, Revere, Roslindale, Saugus, South Attleboro, South Boston, South Dennis, South Easton, South Lawrence, South Yarmouth, Southbridge, Springfield, Stoneham, Stoughton, Sudbury, Swampscott, Swansea, Taunton, Vineyard Haven, Waltham, Watertown, Webster, West Springfield, Westborough, Westfield, Westford, Whitinsville, Wilmington, Woburn, Worcester Michigan Adrian, Albion, Allegan, Alpena, Ann Arbor, Auburn Hills, Bad Axe, Battle Creek, Bay City, Bellaire, Belleville, Benton Harbor, Benzonia, Big Rapids, Birmingham, Bloomfield, Boyne City, Brighton, Brooklyn, Brown City, Burton, Byron Center, Cadillac, Canton, Caro, Carson City, Cass City, Center Line, Charlevoix, Cheboygan, Chesaning, Chesterfield, Clare, Clinton Township, Clio, Coldwater, Commerce, Davison, Dearborn, Dearborn Heights, Detroit, Dowagiac, Eastpointe, Eaton Rapids, Escanaba, Evart, Farmington Hills, Farmington, Fenton, Ferndale, Flint, Fort Gratiot, Frankenmuth, Fremont, Gaylord, Grand Blanc, Grand Haven, Grand Rapids, Grayling, Greenville, Grosse Pointe, Hastings, Hemlock, Highland Park, Holland, Houghton Lake, Howell, Imlay City, Ionia, Iron Mountain, Ironwood, Ishpeming, Jackson, Jenison, Jonesville, Kalamazoo, Kalkaska, Kentwood, Lake Orion, L\u2019Anse, Lansing, Lapeer, Lincoln Park, Livonia, Ludington, Madison Heights, Manistee, Manistique, Marine City, Marquette, Marshall, Midland, Milford, Monroe, Mount Pleasant, Munising, Muskegon, Newberry, Niles, Novi, Oak Park, Okemos, Oscoda, Owosso, Petoskey, Pinconning, Plainwell, Pontiac, Port Huron, Portage, Redford, Reed City, Richmond, Rochester Hills, Rogers City, Roseville, Royal Oak, Saginaw, Sandusky, Sault St. Marie, Shelby, South Haven, Southfield, Southgate, St. Ignace, St. Johns, Standish, Stanton, Sturgis, Suttons Bay, Tawas City, Taylor, Three Oaks, Three Rivers, Traverse City, Troy, Utica, Vassar, Washington Township, Waterford, Wayne, Westland, White Cloud, White Pigeon, Whitehall, Woodhaven, Wyoming, Ypsilanti Minnesota Ada, Aitkin, Albany, Albert Lea, Alexandria, Apple Valley, Austin, Baudette, Baxter, Bemidji, Benson, Blaine, Bloomington, Brooklyn Center, Burnsville, Cambridge, Chanhassen, Coon Rapids, Cottage Grove, Crystal, Detroit Lakes, Duluth, Dundas, Eagan, Eden Prairie, Edina, Elk River, Erskine, Fairmont, Faribault, Fergus Falls, Forest Lake, Golden Valley, Grand Marais, Grand Rapids, Hibbing, Hilltop, Hutchinson, International Falls, Jackson, Lake City, Le Sueur, Litchfield, Little Falls, Long Prairie, Mankato, Maple Grove, Marshall, Minneapolis, Minnetonka, Montevideo, Monticello, Moorhead, Moose Lake, Mora, Morris, New Ulm, North Branch, Ortonville, Owatonna, Park Rapids, Pelican Rapids, Pine City, Princeton, Red Wing, Redwood Falls, Richfield, Rochester, Roseau, Roseville, Saint Cloud, Saint Paul, Savage, Shakopee, Sleepy Eye, St. Cloud, St. James, St. Louis Park, St. Paul, St. Peter, Stillwater, Thief River Falls, Vadnais Heights, Virginia, Walker, Warroad, Waseca, Wayzata, Willmar, Windom, Winona, Woodbury, Worthington, Young America Mississippi Amory, Batesville, Biloxi, Booneville, Brookhaven, Canton, Carthage, Clarksdale, Cleveland, Clinton, Columbia, Columbus, Corinth, Crystal Springs, D\u2019Iberville, Flora, Greenville, Greenwood, Grenada, Gulfport, Hattiesburg, Houston, Jackson, Laurel, Lucedale, Magee, McComb, Mendenhall, Meridian, Monticello, Morton, Natchez, New Albany, Ocean Springs, Olive Branch, Oxford, Pascagoula, Pearl, PPhhiillaaddeellpphhiiaa,, PPiiccaayyuunnee,, PPoonnttoottoocc,, PPooppllaarrvviillllee,, PPrreennttiissss,, PPuurrvviiss,, QQuuiittmmaann,, RRiiddggeellaanndd,, SSeennaattoobbiiaa,, SSoouutthhaavveenn,, SSttaarrkkvviillllee,, TTuuppeelloo,, TTyylleerrttoowwnn,, VViicckkssbbuurrgg,, WWaayynneessbboorroo,, WWeesstt PPooiinntt,, WWiiggggiinnss,, YYaazzoooo CCiittyy MMiissssoouurrii AAllttoonn,, AArrnnoolldd,, Greenwood, Grenada, Gulfport, Hattiesburg, Houston, Jackson, Laurel, Lucedale, Magee, McComb, Mendenhall, Meridian, Monticello, Morton, Natchez, New Albany, Ocean Springs, Olive Branch, Oxford, Pascagoula, Pearl, Worthington, Young America Mississippi Amory, Batesville, Biloxi, Booneville, Brookhaven, Canton, Carthage, Clarksdale, Cleveland, Clinton, Columbia, Columbus, Corinth, Crystal Springs, D\u2019Iberville, Flora, Greenville, Savage, Shakopee, Sleepy Eye, St. Cloud, St. James, St. Louis Park, St. Paul, St. Peter, Stillwater, Thief River Falls, Vadnais Heights, Virginia, Walker, Warroad, Waseca, Wayzata, Willmar, Windom, Winona, Woodbury, Moose Lake, Mora, Morris, New Ulm, North Branch, Ortonville, Owatonna, Park Rapids, Pelican Rapids, Pine City, Princeton, Red Wing, Redwood Falls, Richfield, Rochester, Roseau, Roseville, Saint Cloud, Saint Paul, Rapids, Hibbing, Hilltop, Hutchinson, International Falls, Jackson, Lake City, Le Sueur, Litchfield, Little Falls, Long Prairie, Mankato, Maple Grove, Marshall, Minneapolis, Minnetonka, Montevideo, Monticello, Moorhead, Cambridge, Chanhassen, Coon Rapids, Cottage Grove, Crystal, Detroit Lakes, Duluth, Dundas, Eagan, Eden Prairie, Edina, Elk River, Erskine, Fairmont, Faribault, Fergus Falls, Forest Lake, Golden Valley, Grand Marais, Grand White Pigeon, Whitehall, Woodhaven, Wyoming, Ypsilanti Minnesota Ada, Aitkin, Albany, Albert Lea, Alexandria, Apple Valley, Austin, Baudette, Baxter, Bemidji, Benson, Blaine, Bloomington, Brooklyn Center, Burnsville, Southgate, St. Ignace, St. Johns, Standish, Stanton, Sturgis, Suttons Bay, Tawas City, Taylor, Three Oaks, Three Rivers, Traverse City, Troy, Utica, Vassar, Washington Township, Waterford, Wayne, Westland, White Cloud, Owosso, Petoskey, Pinconning, Plainwell, Pontiac, Port Huron, Portage, Redford, Reed City, Richmond, Rochester Hills, Rogers City, Roseville, Royal Oak, Saginaw, Sandusky, Sault St. Marie, Shelby, South Haven, Southfield, Park, Livonia, Ludington, Madison Heights, Manistee, Manistique, Marine City, Marquette, Marshall, Midland, Milford, Monroe, Mount Pleasant, Munising, Muskegon, Newberry, Niles, Novi, Oak Park, Okemos, Oscoda, Hemlock, Highland Park, Holland, Houghton Lake, Howell, Imlay City, Ionia, Iron Mountain, Ironwood, Ishpeming, Jackson, Jenison, Jonesville, Kalamazoo, Kalkaska, Kentwood, Lake Orion, L\u2019Anse, Lansing, Lapeer, Lincoln Eaton Rapids, Escanaba, Evart, Farmington Hills, Farmington, Fenton, Ferndale, Flint, Fort Gratiot, Frankenmuth, Fremont, Gaylord, Grand Blanc, Grand Haven, Grand Rapids, Grayling, Greenville, Grosse Pointe, Hastings, Canton, Caro, Carson City, Cass City, Center Line, Charlevoix, Cheboygan, Chesaning, Chesterfield, Clare, Clinton Township, Clio, Coldwater, Commerce, Davison, Dearborn, Dearborn Heights, Detroit, Dowagiac, Eastpointe, Alpena, Ann Arbor, Auburn Hills, Bad Axe, Battle Creek, Bay City, Bellaire, Belleville, Benton Harbor, Benzonia, Big Rapids, Birmingham, Bloomfield, Boyne City, Brighton, Brooklyn, Brown City, Burton, Byron Center, Cadillac, Swampscott, Swansea, Taunton, Vineyard Haven, Waltham, Watertown, Webster, West Springfield, Westborough, Westfield, Westford, Whitinsville, Wilmington, Woburn, Worcester Michigan Adrian, Albion, Allegan, Plymouth, Quincy, Raynham, Revere, Roslindale, Saugus, South Attleboro, South Boston, South Dennis, South Easton, South Lawrence, South Yarmouth, Southbridge, Springfield, Stoneham, Stoughton, Sudbury, Lowell, Lynn, Malden, Marlborough, Marshfield, Medford, Milford, Nantucket, Natick, New Bedford, Newburyport, Newton, North Adams, North Attleboro, North Dartmouth, Northampton, Orleans, Peabody, Pittsfield, East Wareham, Fairhaven, Fall River, Falmouth, Fitchburg, Foxboro, Franklin, Gardner, Gloucester, Greenfield, Great Barrington, Hadley, Hanover, Haverhill, Holyoke, Hyannis, Kingston, Lanesborough, Lenox, Leominster, Andover, Ashland, Athol, Auburn, Bedford, Beverly, Billerica, Boston, Braintree, Bridgewater, Brockton, Brookline, Burlington, Cambridge, Chelmsford, Chicopee, Danvers, Dedham, Dorchester, East Boston, East Walpole, City, Potomac, Prince Fredrick, Randallstown, Reisterstown, Rockville, Salisbury, Seat Pleasant, Severna Park, Silver Spring, Stevensville, Takoma Park, Towson, Waldorf, Westminster, Wheaton Massachusetts Acton, Hyattsville, Kensington, La Plata, La Vale, Largo, Laurel, Leonardtown, Lexington Park, Marlow Heights, Mc Henry, Mount Airy, Oakland, Ocean City, Odenton, Olney, Owings Mills, Oxon Hill, Oxon Hill, Pasadena, Pocomoke Denton, Derwood, Dunkirk, Easton, Edgewood, Eldersburg, Elkton, Ellicott City, Forestville, Fort Washington, Frederick, Gaithersburg, Gambrills, Germantown, Glen Burnie, Greenbelt, Hagerstown, Hampstead, Hanover, Waterville, Wells, Windham Maryland Aberdeen, Annapolis, Baltimore, Bel Air, Beltsville, Bethesda, Bowie, Burtonsville, Cambridge, Catonsville, Charlotte Hall, Chestertown, Clinton, Cockeysville, College Park, Columbia, Dover-Foxcroft, Ellsworth, Falmouth, Farmington, Fort Kent, Lewiston, Machias, Madawaska, Mexico, Millinocket, Oxford, Portland, Presque Isle, Rockland, Sanford, Skowhegan, South Portland, Standish, Topsham, Francisville, Sulphur, Thibodaux, Ville Platte, West Monroe, Westwego, Winfield, Winnsboro, Zachary Maine Auburn, Augusta, Bangor, Bar Harbor, Belfast, Biddeford, Boothbay Harbor, Brunswick, Bucksport, Damariscotta, Mandeville, Mansfield, Many, Metairie, Minden, Monroe, Morgan City, Natchitoches, New Iberia, New Orleans, New Roads, Oakdale, Opelousas, Pineville, Plaquemine, Rayne, Ruston, Shreveport, Slidell, Springhill, St. City, Boutte, Crowley, Cut Off, Denham Springs, Deridder, Eunice, Franklinton, Gonzales, Hammond, Harahan, Harvey, Houma, Jeanerette, Jena, Jennings, Kenner, Kentwood, La Place, Lafayette, Lake Charles, Leesville, Salyersville, Scottsville, Shelbyville, Somerset, South Williamson, Stanton, Taylorsville, Warsaw, West Liberty, Whitley City, Williamsburg, Winchester Louisiana Abbeville, Alexandria, Bastrop, Baton Rouge, Bogalusa, Bossier RadioShack Corporation Financial Reports","Appendix A Financial Statement Information A-25 CONSOLIDATED BALANCE SHEETS RadioShack Corporation and Subsidiaries December 31, (In millions, except for share amounts) 2006 2005 Assets $ 472.0 $ 224.0 247.9 309.4 Current assets: 752.1 964.9 Cash and cash equivalents 127.6 129.0 Accounts and notes receivable, net Inventories Other current assets Total current assets 1,599.6 1,627.3 Property, plant and equipment, net 386.3 476.2 Other assets, net 84.1 101.6 Total assets $ 2,205.1 $ 2,070.0 Liabilities and Stockholders\u2019 Equity $ 194.9 $ 40.9 Current liabilities: 254.5 490.9 442.2 379.5 Short-term debt, including current maturities of long-term debt 75.0 Accounts payable 92.6 Accrued expenses and other current liabilities 986.3 Income taxes payable 984.2 494.9 ApagoTotal current liabilities PDF Enhancer 345.8 135.1 RADIOSHACK 86.2 Long-term debt, excluding current maturities Other non-current liabilities Total liabilities 1,416.2 1,616.3 Commitments and contingent liabilities \u2014 \u2014 Stockholders\u2019 equity: 191.0 191.0 Preferred stock, no par value, 1,000,000 shares authorized: 92.6 87.7 Series A junior participating, 300,000 shares designated and none issued 1,780.9 1,741.4 Common stock, $1 par value, 650,000,000 shares authorized; 191,033,000 shares issued (1,409.1) (1,431.6) Additional paid-in capital (1.6) 0.3 Retained earnings Treasury stock, at cost; 55,196,000 and 56,071,000 653.8 588.8 shares, respectively $ 2,070.0 $ 2,205.1 Accumulated other comprehensive (loss) income Total stockholders\u2019 equity Total liabilities and stockholders\u2019 equity","A-26 Appendix A Financial Statement Information CONSOLIDATED STATEMENTS OF INCOME RadioShack Corporation and Subsidiaries Year Ended December 31, 2006 2005 2004 % of % of % of (In millions, except per share amounts) Dollars Revenues Dollars Revenues Dollars Revenues Net sales and operating revenues Cost of products sold $ 4,777.5 100.0% $ 5,081.7 100.0% $ 4,841.2 100.0% Gross profit 2,544.4 53.3 2,706.3 53.3 2,406.7 49.7 2,233.1 46.7 2,375.4 46.7 2,434.5 50.3 Operating expenses: 1,903.7 39.8 1,901.7 37.4 1,774.8 36.7 Selling, general and administrative 128.2 2.7 123.8 2.4 101.4 2.1 Depreciation and amortization Impairment of long-lived assets and other 44.3 0.9 \u2014 \u2014 \u2014 \u2014 charges 2,076.2 43.4 2,025.5 39.8 1,876.2 38.8 Total operating expenses 558.3 11.5 Operating income 156.9 3.3 349.9 6.9 11.4 0.2 (29.6) (0.5) Interest income 7.4 0.1 5.9 0.1 \u2014 Interest expense (44.3) (0.9) (44.5) (0.8) 2.0 Other (loss) income (0.2) 10.2 0.2 11.2 (8.6) 542.1 4.2 Income before income taxes 111.4 2.3 321.5 6.4 204.9 7.0 Income tax provision 38.0 0.8 51.6 1.0 337.2 Income before cumulative effect of 73.4 1.5 269.9 5.4 change in accounting principle RADIOSHACK Cumulative effect of change in accounting Apago PDF Enhancer \u2014 \u2014 principle, net of $1.8 million tax benefit in \u2014\u2014 (2.9) (0.1) $ 337.2 7.0% 2005 Net income $ 73.4 1.5% $ 267.0 5.3% Net income per share $ 0.54 $ 1.82 $ 2.09 $ \u2014 (0.02) \u2014 Basic: 0.54 Income before cumulative effect of $ $ 1.80 $ 2.09 $ 0.54 change in accounting principle \u2014 $ 1.81 $ 2.08 Cumulative effect of change in accounting 0.54 (0.02) \u2014 principle, net of taxes $ 1.79 $ 2.08 Basic income per share Assuming dilution: Income before cumulative effect of change in accounting principle Cumulative effect of change in accounting principle, net of taxes Diluted income per share Shares used in computing income per 136.2 148.1 161.0 share: 136.2 148.8 162.5 Basic Diluted","Appendix A Financial Statement Information A-27 CONSOLIDATED STATEMENTS OF STOCKHOLDERS\u2019 EQUITY AND COMPREHENSIVE INCOME RadioShack Corporation and Subsidiaries Shares at December 31, Dollars at December 31, (In millions) 2006 2005 2004 2006 2005 2004 Common stock 191.0 191.0 191.0 $ 191.0 $ 191.0 $ 191.0 Beginning and end of year Treasury stock (56.0) (32.8) (28.5) $ (1,431.6) $ (859.4) $ (707.2) Beginning of year \u2014 (25.3) (8.0) \u2014 (625.8) (246.9) 0.6 1.3 31.8 33.8 Purchase of treasury stock 1.2 18.6 Issuance of common stock 0.2 2.4 21.8 60.9 Exercise of stock options and grant of stock (55.2) 0.9 (32.8) 3.9 $ (1,431.6) $ (859.4) (56.0) $ (1,409.1) awards End of year Additional paid-in capital $ 87.7 $ 82.7 $ 75.2 Beginning of year (5.7) 3.5 5.7 Issuance of common stock (1.7) (5.0) (9.5) Exercise of stock options and grant of stock 12.0 \u2014 \u2014 6.5 awards 0.3 11.3 Stock option compensation $ 92.6 $ 87.7 $ 82.7 Stock option income tax benefits End of year Retained earnings Beginning of year $ 1,741.4 $ 1,508.1 $ 1,210.6 73.4 267.0 337.2 Net income (33.9) (33.7) (39.7) Common stock cash dividends declared Enhancer $ 1,780.9 $ 1,741.4 $ 1,508.1 End of year Apago PDF $ 0.3 $ (0.3) $ (0.3) RADIOSHACK (1.0) \u2014 \u2014 Accumulated other comprehensive (0.9) 0.6 \u2014 (loss) income $ (1.6) $ 0.3 $ (0.3) Beginning of year Pension adjustments, net of tax Other comprehensive (loss) income End of year Total stockholders' equity $ 653.8 $ 588.8 $ 922.1 Comprehensive income $ 73.4 $ 267.0 $ 337.2 Net income 0.3 (0.4) 0.1 Other comprehensive income, net of tax: (0.1) (0.1) (0.1) Foreign currency translation adjustments (1.1) 1.1 \u2014 Amortization of gain on cash flow hedge (0.9) 0.6 \u2014 Unrealized (loss) gain on securities $ 72.5 $ 267.6 $ 337.2 Other comprehensive (loss) income Comprehensive income","A-28 Appendix A Financial Statement Information CONSOLIDATED STATEMENTS OF CASH FLOWS RadioShack Corporation and Subsidiaries Year Ended December 31, (In millions) 2006 2005 2004 Cash flows from operating activities: $ 73.4 $ 267.0 $ 337.2 Net income Adjustments to reconcile net income to net cash 128.2 123.8 101.4 provided by operating activities: \u2014 4.7 \u2014 Depreciation and amortization 44.3 \u2014 \u2014 Cumulative effect of change in accounting principle 12.0 \u2014 \u2014 Impairment of long-lived assets and other charges 50.2 Stock option compensation (27.6) (76.9) (0.3) Deferred income taxes and other items 0.4 0.1 Provision for credit losses and bad debts Changes in operating assets and liabilities, excluding 61.8 (68.2) (53.0) acquisitions: 212.8 38.8 (234.2) Accounts and notes receivable 28.5 Inventories 2.5 (7.5) Other current assets 45.1 Accounts payable, accrued expenses, income taxes (193.0) 362.9 158.7 payable and other 314.8 352.5 Net cash provided by operating activities RADIOSHACK Cash flows from investing activities: Enhan(19c11..e10) r (170.7) (229.4) Additions to property, plant and equipment 226.0 2.5 \u2014 Apago PDFProceeds from sale of property, plant and equipment 0.6 \u2014 (59.1) (79.3) (16.0) (4.2) Purchase of kiosk business 39.3 Other investing activities (290.2) Net cash (used in) provided by investing activities Cash flows from financing activities: \u2014 (625.8) (251.1) Purchases of treasury stock 10.5 30.1 35.4 Sale of treasury stock to employee benefit plans 17.4 50.4 Proceeds from exercise of stock options 1.7 (33.7) (39.7) Payments of dividends (33.9) Changes in short-term borrowings and outstanding checks in (4.0) (14.0) excess of cash balances, net 42.2 (0.1) (40.1) Reductions of long-term borrowings (8.0) (616.1) (259.1) 12.5 Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents 248.0 (213.9) (196.8) Cash and cash equivalents, beginning of period 224.0 437.9 634.7 Cash and cash equivalents, end of period $ 472.0 $ 224.0 $ 437.9 Supplemental cash flow information: $ 44.0 $ 43.4 $ 29.3 Interest paid 52.9 158.5 182.7 Income taxes paid","Apple Financial Report Apago PDF Enhancer APPLE","A-30 Appendix A Financial Statement Information CONSOLIDATED BALANCE SHEETS (In millions, except share amounts) ASSETS ASSETS: September 30, 2006 September 24, 2005 As Restated(1) Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,392 $ 3,491 3,718 4,770 Short-term investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,252 895 270 165 Accounts receivable, less allowances of $52 and $46, respectively . 607 331 2,270 648 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,509 1,281 10,300 Deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 817 139 69 Other current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,238 27 303 Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,205 $ 11,516 Property, plant, and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquired intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIABILITIES AND SHAREHOLDERS\u2019 EQUITY: Current liabilities: Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,390 $ 1,779 1,708 Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,081 3,487 601 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,471 4,088 Apago PDF EnhancerNoncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750 3,564 (61) Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,221 3,925 Commitments and contingencies \u2014 Shareholders\u2019 equity: 4,355 7,428 Common stock, no par value; 1,800,000,000 shares authorized; \u2014 $ 11,516 855,262,568 and 835,019,364 shares issued and outstanding, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,607 Deferred stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . 9,984 Total shareholders\u2019 equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,205 Total liabilities and shareholders\u2019 equity . . . . . . . . . . . . . . . . . . . . . APPLE","Appendix A Financial Statement Information A-31 CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except share and per share amounts) Three fiscal years ended September 30, 2006 2006 2005 2004 Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,315 $ 13,931 $ 8,279 Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,717 9,889 6,022 5,598 4,042 2,257 Gross margin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating expenses: 712 535 491 2,433 1,864 1,430 Research and development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selling, general, and administrative . . . . . . . . . . . . . . . . . . . . . . . \u2014 \u2014 23 Restructuring costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,145 2,399 1,944 2,453 1,643 Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . 313 Operating income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365 165 57 Other income and expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,818 1,808 370 Income before provision for income taxes. . . . . . . . . . . . . . . . . . . 104 Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 829 480 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,989 $ 1,328 $ 266 Earnings per common share: $ 1.64 $ 0.36 Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.36 $ 1.55 $ 0.34 Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.27 808,439 743,180 Shares used in computing earnings per share (in thousands): 856,878 774,776 Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844,058 Apago PDF EnhancerDiluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 877,526 APPLE","A-32 Appendix A Financial Statement Information CONSOLIDATED STATEMENTS OF SHAREHOLDERS\u2019 EQUITY (In millions, except share amounts which are in thousands) Common Stock Deferred Stock Retained Accumulated Total Shares Amount Compensation Earnings Other Shareholders\u2019 Comprehensive Equity Income (Loss) Balances as of September 27, 2003 as previously reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 733,454 $ 1,926 $ (62) $ 2,394 $ (35) $ 4,223 85 (22) (63) \u2014 \u2014 Adjustments to opening shareholders\u2019 equity . . . . . . . \u2014 $ 2,011 $ (84) $ 2,331 $ (35) $ 4,223 Balance as of September 27, 2003 as restated . . . . . . . 733,454 \u2014 \u2014 266 Components of comprehensive income: \u2014 13 13 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . \u2014 \u2014 \u2014 266 (5) (5) \u2014\u2014 Change in foreign currency translation . . . . . . . . \u2014 \u2014 12 12 286 Change in unrealized gain on available-for-sale 63 \u2014 \u2014 securities, net of tax . . . . . . . . . . . . . . . . . . . . \u2014 (2) \u2014\u2014 \u2014 (2) \u2014 \u2014 46 Change in unrealized loss on derivative 427 \u2014 427 83 \u2014 83 investments, net of tax. . . . . . . . . . . . . . . . . . . \u2014 $ 2,582 \u2014\u2014 $ (15) $ 5,063 Total comprehensive income. . . . . . . . . . . . . . \u2014 \u2014 1,328 \u2014 7 7 Issuance of stock-based compensation awards . . . . . \u2014 (63) \u2014 PD\u2014F 8 8 Adjustment to common stock related to a prior year 1,343 7 \u2014 acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (159) \u2014 \u2014 \u2014 \u2014 \u2014 547 46 \u2014 \u2014 47 Stock-based compensation . . . . . . . . . . . . . . . . . . . \u2014 428 \u2014 \u2014 \u2014 547 $ 3,564 \u2014 \u2014 $\u2014 428 Common stock issued under stock plans . . . . . . . . . 49,592 $ 7,428 \u2014 $ (101) $ 2,597 \u2014 Tax benefit related to stock options . . . . . . . . . . . . \u2014 \u2014 19 1,989 19 Balances as of September 25, 2004 . . . . . . . . . . . . . . . 782,887 \u2014 4 4 Components of comprehensive income: \u2014 (1) (1) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . \u2014 (48) \u2014 1,328 \u2014 2,011 163 \u2014\u2014 \u2014 (355) Change in foreign currency translation . . . . . . . . \u2014 (61) \u2014 318 \u2014 163 Change in unrealized gain on derivative 419 \u2014 \u2014 $ 4,355 $ 22 Apagoinvestments, net of tax. . . . . . . . . . . . . . . . . . . \u2014 Enh\u2014 ance\u2014r 318 419 Total comprehensive income. . . . . . . . . . . . . . $ 9,984 Issuance of stock-based compensation awards. . . . . . . \u2014 (7) \u2014 47 \u2014 Stock-based compensation. . . . . . . . . . . . . . . . . . . . . \u2014 \u2014 \u2014 \u2014 \u2014 Common stock issued under stock plans . . . . . . . . . . . 52,132 $ (61) $ 3,925 Tax benefit related to stock options . . . . . . . . . . . . . . \u2014 Balances as of September 24, 2005 . . . . . . . . . . . . . . . 835,019 Components of comprehensive income: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . \u2014 \u2014 1,989 \u2014\u2014 Change in foreign currency translation . . . . . . . . \u2014 Change in unrealized gain on available-for-sale securities, net of tax . . . . . . . . . . . . . . . . . . . . \u2014 \u2014\u2014 Change in unrealized loss on derivative investments, net of tax. . . . . . . . . . . . . . . . . . . \u2014 \u2014\u2014 Total comprehensive income. . . . . . . . . . . . . . Common stock repurchased. . . . . . . . . . . . . . . . . . . . (4,574) \u2014 (307) \u2014 \u2014 Stock-based compensation. . . . . . . . . . . . . . . . . . . . . \u2014 61 \u2014 \u2014 \u2014 Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . \u2014 \u2014 \u2014 $\u2014 Common stock issued under stock plans . . . . . . . . . . . 24,818 $ 5,607 Tax benefit related to stock-based compensation . . . . \u2014 Balances as of September 30, 2006 . . . . . . . . . . . . . . . 855,263 APPLE","Appendix A Financial Statement Information A-33 CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Three fiscal years ended September 30, 2006 2006 2005 2004 Cash and cash equivalents, beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,491 $ 2,969 $ 3,396 Operating Activities: 1,328 266 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,989 179 150 49 46 Adjustments to reconcile net income to cash generated by operating activities: 50 19 83 Depreciation, amortization and accretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 428 \u2014 \u2014 7 Stock-based compensation expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 9 (5) \u2014 Provision for deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 (8) (121) (45) Excess tax benefits from stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \u2014 (64) (176) (150) (25) Gain on sale of PowerSchool net assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) (35) 297 328 325 Loss on disposition of property, plant, and equipment . . . . . . . . . . . . . . . . . . . . 15 534 934 2,535 Gains on sales of investments, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \u2014 (3,270) (11,470) 1,141 Changes in operating assets and liabilities: 8,609 586 806 Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (357) \u2014 \u2014 \u2014 \u2014 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (105) (260) (176) (21) 11 Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,626) (2,556) (1,488) Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,040) \u2014 (300) 543 427 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,611 \u2014 \u2014 \u2014 \u2014 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,296 543 127 522 (427) Cash generated by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,220 $ 3,491 $ 2,969 Investing Activities: $\u2014 $ 10 $ 17 $ (7) Purchases of short-term investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,255) Proceeds from maturities of short-term investments . . . . . . . . . . . . . . . . . . . . . . . 7,226 Proceeds from sales of investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,086 Purchases of long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25) 40 Apago PDF EnhancerProceeds from sale of PowerSchool net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchases of property, plant, and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (657) Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (58) Cash generated by (used for) investing activities . . . . . . . . . . . . . . . . . . . . . . . 357 Financing Activities: Payment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \u2014 Proceeds from issuance of common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318 Excess tax benefits from stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . 361 Repurchases of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (355) Cash generated by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324 Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . 2,901 Cash and cash equivalents, end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,392 Supplemental cash flow disclosures: $\u2014 Cash paid during the year for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 194 Cash paid (received) for income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . APPLE","Appendix B Time Value of Money Learning Objectives CAP Conceptual Procedural C1 Describe the earning of interest and P1Apago PDF Enhancer Apply present value concepts to a the concepts of present and future single amount by using interest tables. values. (p. B-1) (p. B-3) P2 Apply future value concepts to a single amount by using interest tables. (p. B-4) P3 Apply present value concepts to an annuity by using interest tables. (p. B-5) P4 Apply future value concepts to an annuity by using interest tables. (p. B-6) B","Appendix Preview Appendix B Time Value of Money B-1 The concepts of present and future values are important to illustrate, and compute present and future values. This appendix modern business, including the preparation and analysis of applies these concepts with reference to both business and financial statements. The purpose of this appendix is to explain, everyday activities. Time Value of Money Present and Future Value of a Value of an Value Concepts Single Amount Annuity \u2022 Time is money \u2022 Present value of a \u2022 Present value of an \u2022 Concept of interest single amount annuity \u2022 Future value of a \u2022 Future value of an single amount annuity Present and Future Value Concepts The old saying \u201cTime is money\u201d reflects the notion that as time passes, the values of our assets Describe the earning of interest and the C1and liabilities change. This change is due to interest, which is a borrower\u2019s payment to the owner of an asset for its use. The most common example of interest is a savings account as- concepts of present set. As we keep a balance of cash in the account, it earns interest that the financial institution and future values. pays us. An example of a liability is a car loan. As we carry the balance of the loan, we Apago PDF Enhanceraccumulate interest costs on it. We must ultimately repay this loan with interest. Present and future value computations enable us to measure or estimate the interest com- ponent of holding assets or liabilities over time. The present value computation is important when we want to know the value of future-day assets today. The future value computation is important when we want to know the value of present-day assets at a future date. The first sec- tion focuses on the present value of a single amount. The second section focuses on the future value of a single amount. Then both the present and future values of a series of amounts (called an annuity) are defined and explained. Decision Insight Keep That Job Lottery winners often never work again. Kenny Dukes, a recent Georgia lottery winner, doesn\u2019t have that option. He is serving parole for burglary charges, and Georgia requires its parolees to be employed (or in school). For his lottery winnings, Dukes had to choose between $31 million in 30 annual payments or $16 million in one lump sum ($10.6 million after-tax); he chose the latter. Present Value of a Single Amount We graphically express the present value, called p, of a single future amount, called f, that is received or paid at a future date in Exhibit B.1. p f EXHIBIT B.1 \u2191 \u23af\u2192 Time Today Present Value of a Single \u2191 Amount Diagram Future","B-2 Appendix B Time Value of Money EXHIBIT B.2 The formula to compute the present value of a single amount is shown in Exhibit B.2, where p \u03ed present value; f \u03ed future value; i \u03ed rate of interest per period; and n \u03ed number of peri- Present Value of a Single ods. (Interest is also called the discount, and an interest rate is also called the discount rate.) Amount Formula f p \u202b( \u060d\u202c1 \u0609 i)n To illustrate present value concepts, assume that we need $220 one period from today. We want to know how much we must invest now, for one period, at an interest rate of 10% to provide for this $220. For this illustration, the p, or present value, is the unknown amount\u2014the specifics are shown graphically as follows: (i \u03ed 0.10) f \u03ed $220 \u23af\u2192 p\u202b?\u060d\u202c Conceptually, we know p must be less than $220. This is obvious from the answer to this ques- tion: Would we rather have $220 today or $220 at some future date? If we had $220 today, we could invest it and see it grow to something more than $220 in the future. Therefore, we would prefer the $220 today. This means that if we were promised $220 in the future, we would take less than $220 today. But how much less? To answer that question, we compute an estimate of the present value of the $220 to be received one period from now using the formula in Exhibit B.2 as follows: f $220 p\u03ed \u03e9Ein)n h\u03ed a(1n\u03e9c0.e10r)1 \u03ed $200 Apago PDF(1 We interpret this result to say that given an interest rate of 10%, we are indifferent between $200 today or $220 at the end of one period. We can also use this formula to compute the present value for any number of periods. To illustrate, consider a payment of $242 at the end of two periods at 10% interest. The present value of this $242 to be received two periods from now is computed as follows: f $242 p \u03ed (1 \u03e9 i)n \u03ed (1 \u03e9 0.10)2 \u03ed $200 I will pay your Together, these results tell us we are indifferent between $200 today, or $220 one period from allowance at the end of the month. Do you want today, or $242 two periods from today given a 10% interest rate per period. to wait or receive its The number of periods (n) in the present value formula does not have to be expressed in present value today? years. Any period of time such as a day, a month, a quarter, or a year can be used. Whatever EXHIBIT B.3 period is used, the interest rate (i) must be compounded for the same period. This means that if a situation expresses n in months and i equals 12% per year, then i is transformed into in- Present Value of 1 Formula terest earned per month (or 1%). In this case, interest is said to be compounded monthly. A present value table helps us with present value computations. It gives us present values (factors) for a variety of both interest rates (i) and periods (n). Each present value in a present value table assumes that the future value ( f ) equals 1. When the future value ( f ) is different from 1, we simply multiply the present value (p) from the table by that future value to give us the estimate. The formula used to construct a table of present values for a single future amount of 1 is shown in Exhibit B.3. p \u202b\u060d\u202c (1 1 i)n \u0609","Appendix B Time Value of Money B-3 This formula is identical to that in Exhibit B.2 except that f equals 1. Table B.1 at the end of Apply present value concepts to a single P1this appendix is such a present value table. It is often called a present value of 1 table. A present value table involves three factors: p, i, and n. Knowing two of these three factors al- amount by using interest lows us to compute the third. (A fourth is f, but as already explained, we need only multiply tables. the 1 used in the formula by f.) To illustrate the use of a present value table, consider three cases. Case 1 (solve for p when knowing i and n). To show how we use a present value table, let\u2019s look again at how we estimate the present value of $220 (the f value) at the end of one pe- riod (n \u03ed 1) where the interest rate (i) is 10%. To solve this case, we go to the present value table (Table B.1) and look in the row for 1 period and in the column for 10% interest. Here we find a present value (p) of 0.9091 based on a future value of 1. This means, for instance, that $1 to be received one period from today at 10% interest is worth $0.9091 today. Since the future value in this case is not $1 but $220, we multiply the 0.9091 by $220 to get an answer of $200. Case 2 (solve for n when knowing p and i). To illustrate, assume a $100,000 future value ( f ) that is worth $13,000 today (p) using an interest rate of 12% (i) but where n is unknown. In par- ticular, we want to know how many periods (n) there are between the present value and the fu- ture value. To put this in context, it would fit a situation in which we want to retire with $100,000 but currently have only $13,000 that is earning a 12% return and we will be unable to save any additional money. How long will it be before we can retire? To answer this, we go to Table B.1 and look in the 12% interest column. Here we find a column of present values (p) based on a future value of 1. To use the present value table for this solution, we must divide $13,000 (p) by $100,000 ( f ), which equals 0.1300. This is necessary because a present value table def ines f equal to 1, and p as a fraction of 1. We look for a value nearest to 0.1300 (p), which we find in the row for 18 periods (n). This means that the present value of $100,000 at the end of 18 peri- ods at 12% interest is $13,000; alternatively stated, we must work 18 more years. Apago PDF EnhancerCase 3 (solve for i when knowing p and n). In this case, we have, say, a $120,000 future value ( f ) worth $60,000 today (p) when there are nine periods (n) between the present and future values, but the interest rate is unknown. As an example, suppose we want to retire with $120,000, but we have only $60,000 and we will be unable to save any additional money, yet we hope to retire in nine years. What interest rate must we earn to retire with $120,000 in nine years? To answer this, we go to the present value table (Table B.1) and look in the row for nine periods. To use the present value table, we must divide $60,000 (p) by $120,000 ( f ), which equals 0.5000. Recall that this step is necessary because a present value table de- fines f equal to 1 and p as a fraction of 1. We look for a value in the row for nine periods that is nearest to 0.5000 (p), which we find in the column for 8% interest (i). This means that the present value of $120,000 at the end of nine periods at 8% interest is $60,000 or, in our example, we must earn 8% annual interest to retire in nine years. Quick Check Answer\u2014p. B-7 1. A company is considering an investment expected to yield $70,000 after six years. If this company demands an 8% return, how much is it willing to pay for this investment? Future Value of a Single Amount We must modify the formula for the present value of a single amount to obtain the formula for EXHIBIT B.4 the future value of a single amount. In particular, we multiply both sides of the equation in Exhibit B.2 by (1 \u03e9 i)n to get the result shown in Exhibit B.4. Future Value of a Single Amount Formula f \u202b \u060d\u202cp \u060b (1 \u0609 i)n The future value ( f ) is defined in terms of p, i, and n. We can use this formula to determine that $200 (p) invested for 1 (n) period at an interest rate of 10% (i) yields a future value of","B-4 Appendix B Time Value of Money $220 as follows: f \u03ed p \u03eb (1 \u03e9 i)n \u03ed $200 \u03eb (1 \u03e9 0.10)1 \u03ed $220 P2 Apply future value This formula can also be used to compute the future value of an amount for any number of concepts to a single periods into the future. To illustrate, assume that $200 is invested for three periods at 10%. amount by using interest The future value of this $200 is $266.20, computed as follows: tables. f \u03ed p \u03eb (1 \u03e9 i)n \u03ed $200 \u03eb (1 \u03e9 0.10)3 \u03ed $266.20 EXHIBIT B.5 A future value table makes it easier for us to compute future values ( f ) for many different combinations of interest rates (i) and time periods (n). Each future value in a future value table Future Value of 1 Formula assumes the present value (p) is 1. As with a present value table, if the future amount is some- thing other than 1, we simply multiply our answer by that amount. The formula used to con- struct a table of future values (factors) for a single amount of 1 is in Exhibit B.5. f \u202b( \u060d\u202c1 \u0609 i)n Table B.2 at the end of this appendix shows a table of future values for a current amount of 1. This type of table is called a future value of 1 table. There are some important relations between Tables B.1 and B.2. In Table B.2, for the row where n \u03ed 0, the future value is 1 for each interest rate. This is so because no interest is earned when Apago PDF Enhancertime does not pass. We also see that Tables B.1 and B.2 report the same information but in a dif- ferent manner. In particular, one table is simply the inverse of the other. To illustrate this inverse relation, let\u2019s say we invest $100 for a period of five years at 12% per year. How much do we ex- pect to have after five years? We can answer this question using Table B.2 by finding the future value ( f ) of 1, for five periods from now, compounded at 12%. From that table we find f \u03ed 1.7623. If we start with $100, the amount it accumulates to after five years is $176.23 ($100 \u03eb 1.7623). We can alternatively use Table B.1. Here we find that the present value (p) of 1, discounted five periods at 12%, is 0.5674. Recall the inverse relation between present value and future value. This means that p \u03ed 1\u035ef (or equivalently, f \u03ed 1\u035ep). We can compute the future value of $100 invested for five periods at 12% as follows: f \u03ed $100 \u03eb (1\u035e0.5674) \u03ed $176.24 (which equals the $176.23 just computed, except for a 1 cent rounding difference). A future value table involves three factors: f, i, and n. Knowing two of these three factors allows us to compute the third. To illustrate, consider these three possible cases. Case 1 (solve for f when knowing i and n). Our preceding example fits this case. We found that $100 invested for five periods at 12% interest accumulates to $176.24. Case 2 (solve for n when knowing f and i). In this case, we have, say, $2,000 ( p) and we want to know how many periods (n) it will take to accumulate to $3,000 ( f ) at 7% (i) inter- est. To answer this, we go to the future value table (Table B.2) and look in the 7% interest col- umn. Here we find a column of future values ( f ) based on a present value of 1. To use a future value table, we must divide $3,000 ( f ) by $2,000 (p), which equals 1.500. This is necessary because a future value table defines p equal to 1, and f as a multiple of 1. We look for a value nearest to 1.50 ( f ), which we find in the row for six periods (n). This means that $2,000 in- vested for six periods at 7% interest accumulates to $3,000. Case 3 (solve for i when knowing f and n). In this case, we have, say, $2,001 (p), and in nine years (n) we want to have $4,000 ( f ). What rate of interest must we earn to accomplish this? To answer that, we go to Table B.2 and search in the row for nine periods. To use a future value table, we must divide $4,000 ( f ) by $2,001 (p), which equals 1.9990. Recall that this is neces- sary because a future value table defines p equal to 1 and f as a multiple of 1. We look for a value nearest to 1.9990 ( f ), which we find in the column for 8% interest (i). This means that $2,001 invested for nine periods at 8% interest accumulates to $4,000.","Appendix B Time Value of Money B-5 Quick Check Answer\u2014p. B-7 2. Assume that you win a $150,000 cash sweepstakes.You decide to deposit this cash in an account earning 8% annual interest, and you plan to quit your job when the account equals $555,000. How many years will it be before you can quit working? Present Value of an Annuity An annuity is a series of equal payments occurring at equal intervals. One example is a series Apply present value concepts to an annuity P3of three annual payments of $100 each. An ordinary annuity is defined as equal end-of-period payments at equal intervals. An ordinary annuity of $100 for three periods and its present value by using interest tables. (p) are illustrated in Exhibit B.6. \u2022 $100 $100 $100 EXHIBIT B.6 p \u2022 \u2022 \u2022\u23af\u2192 Time Present Value of an Ordinary \u2191 Annuity Diagram Today \u2191\u2191\u2191 Future (n \u03ed 1) Future (n \u03ed 2) Future (n \u03ed 3) One way to compute the present value of an ordinary annuity is to find the present value of each payment using our present value formula from Exhibit B.3. We then add each of the three present values. To illustrate, let\u2019s look at three $100 payments at the end of each of the next three periods with an interest rate of 15%. Our present value computations are p \u03ed (1 $100 \u03e9A(1p\u03e9$a100g.015o)2 \u03e9P(1D\u03e9$F100.01E5)3n\u03edh$a22n8.3c2 er \u03e9 0.15)1 This computation is identical to computing the present value of each payment (from Table B.1) and taking their sum or, alternatively, adding the values from Table B.1 for each of the three payments and multiplying their sum by the $100 annuity payment. A more direct way is to use a present value of annuity table. Table B.3 at the end of this appendix is one such table. This table is called a present value of an annuity of 1 table. If we look at Table B.3 where n \u03ed 3 and i \u03ed 15%, we see the present value is 2.2832. This means that the present value of an annuity of 1 for three periods, with a 15% interest rate, equals 2.2832. A present value of an annuity formula is used to construct Table B.3. It can also be con- structed by adding the amounts in a present value of 1 table. To illustrate, we use Tables B.1 and B.3 to confirm this relation for the prior example: From Table B.1 From Table B.3 i \u03ed 15%, n \u03ed 1 . . . . . . . 0.8696 i \u03ed 15%, n \u03ed 3 . . . . . . . 2.2832 i \u03ed 15%, n \u03ed 2 . . . . . . . 0.7561 i \u03ed 15%, n \u03ed 3 . . . . . . . 0.6575 Total . . . . . . . . . . . . . . 2.2832 We can also use business calculators or spreadsheet programs to find the present value of an annuity. Decision Insight Better Lucky Than Good \u201cI don\u2019t have good luck\u2014I\u2019m blessed,\u201d proclaimed Andrew \u201cJack\u201d Whittaker, 55, a sewage treatment contractor, after winning the largest ever undivided jackpot in a U.S. lottery. Whittaker had to choose between $315 million in 30 annual installments or $170 million in one lump sum ($112 million after-tax).","B-6 Appendix B Time Value of Money Quick Check Answer\u2014p. B-7 3. A company is considering an investment paying $10,000 every six months for three years. The first payment would be received in six months. If this company requires an 8% annual return, what is the maximum amount it is willing to pay for this investment? Future Value of an Annuity P4 Apply future value con- The future value of an ordinary annuity is the accumulated value of each annuity payment with cepts to an annuity by interest as of the date of the final payment. To illustrate, let\u2019s consider the earlier annuity of using interest tables. three annual payments of $100. Exhibit B.7 shows the point in time for the future value ( f ). The first payment is made two periods prior to the point when future value is determined, and the final payment occurs on the future value date. EXHIBIT B.7 \u2022 $100 $100 $100 Future Value of an Ordinary \u2191 \u2022 \u2022 \u2022\u23af\u2192 Time Annuity Diagram Today \u2191 \u2191 f Future (n \u03ed 1) Future (n \u03ed 2) \u2191 Future (n \u03ed 3) One way to compute the future value of an annuity is to use the formula to find the fu- ture value of each payment and add them. If we assume an interest rate of 15%, our calcula- tion is Apago PDF Enhancer f \u03ed $100 \u03eb (1 \u03e9 0.15)2 \u03e9 $100 \u03eb (1 \u03e9 0.15)1 \u03e9 $100 \u03eb (1 \u03e9 0.15)0 \u03ed $347.25 This is identical to using Table B.2 and summing the future values of each payment, or adding the future values of the three payments of 1 and multiplying the sum by $100. A more direct way is to use a table showing future values of annuities. Such a table is called a future value of an annuity of 1 table. Table B.4 at the end of this appendix is one such table. Note that in Table B.4 when n \u03ed 1, the future values equal 1 ( f \u03ed 1) for all rates of in- terest. This is so because such an annuity consists of only one payment and the future value is determined on the date of that payment\u2014no time passes between the payment and its fu- ture value. The future value of an annuity formula is used to construct Table B.4. We can also construct it by adding the amounts from a future value of 1 table. To illustrate, we use Tables B.2 and B.4 to confirm this relation for the prior example: From Table B.2 From Table B.4 i \u03ed 15%, n \u03ed 0 . . . . . . . 1.0000 i \u03ed 15%, n \u03ed 3 . . . . . . . 3.4725 i \u03ed 15%, n \u03ed 1 . . . . . . . 1.1500 i \u03ed 15%, n \u03ed 2 . . . . . . . 1.3225 Total . . . . . . . . . . . . . . 3.4725 Note that the future value in Table B.2 is 1.0000 when n \u03ed 0, but the future value in Table B.4 is 1.0000 when n \u03ed 1. Is this a contradiction? No. When n \u03ed 0 in Table B.2, the future value is determined on the date when a single payment occurs. This means that no interest is earned because no time has passed, and the future value equals the payment. Table B.4 describes an- nuities with equal payments occurring at the end of each period. When n \u03ed 1, the annuity has","Appendix B Time Value of Money B-7 one payment, and its future value equals 1 on the date of its final and only payment. Again, no time passes between the payment and its future value date. Quick Check Answer\u2014p. B-7 4. A company invests $45,000 per year for five years at 12% annual interest. Compute the value of this annuity investment at the end of five years. Summary C1 Describe the earning of interest and the concepts of pres- invested at a specified rate of interest is the amount that would ac- ent and future values. Interest is payment by a borrower to cumulate by the future date. the owner of an asset for its use. Present and future value computa- tions are a way for us to estimate the interest component of hold- P3 Apply present value concepts to an annuity by using ing assets or liabilities over a period of time. interest tables. The present value of an annuity is the amount that can be invested now at the specified interest rate to yield that P1 Apply present value concepts to a single amount by using series of equal periodic payments. interest tables. The present value of a single amount received at a future date is the amount that can be invested now at P4 Apply future value concepts to an annuity by using the specified interest rate to yield that future value. interest tables. The future value of an annuity invested at a specific rate of interest is the amount that would accumulate P2 Apply future value concepts to a single amount by by the date of the final payment. using interest tables. The future value of a single amount Guidance Answers to Quick Checks Apago PDF Enhancer1. $70,000 \u03eb 0.6302 \u03ed $44,114 (use Table B.1, i \u03ed 8%, n \u03ed 6). 3. $10,000 \u03eb 5.2421 \u03ed $52,421 (use Table B.3, i \u03ed 4%, n \u03ed 6). 2. $555,000\u035e$150,000 \u03ed 3.7000; Table B.2 shows this value is not 4. $45,000 \u03eb 6.3528 \u03ed $285,876 (use Table B.4, i \u03ed 12%, achieved until after 17 years at 8% interest. n \u03ed 5). Most materials in this section are available in McGraw-Hill\u2019s Connect QUICK STUDY Assume that you must make future value estimates using the future value of 1 table (Table B.2). Which interest rate column do you use when working with the following rates? QS B-1 1. 8% compounded quarterly Identifying interest 2. 12% compounded annually rates in tables 3. 6% compounded semiannually C1 4. 12% compounded monthly Ken Francis is offered the possibility of investing $2,745 today and in return to receive $10,000 after QS B-2 15 years. What is the annual rate of interest for this investment? (Use Table B.1.) Interest rate on an investment P1 Megan Brink is offered the possibility of investing $6,651 today at 6% interest per year in a desire to QS B-3 accumulate $10,000. How many years must Brink wait to accumulate $10,000? (Use Table B.1.) Number of periods of an investment P1 Flaherty is considering an investment that, if paid for immediately, is expected to return $140,000 five QS B-4 years from now. If Flaherty demands a 9% return, how much is she willing to pay for this investment? Present value of an amount P1 CII, Inc., invests $630,000 in a project expected to earn a 12% annual rate of return. The earnings will QS B-5 be reinvested in the project each year until the entire investment is liquidated 10 years later. What will Future value the cash proceeds be when the project is liquidated? of an amount P2","B-8 Appendix B Time Value of Money QS B-6 Beene Distributing is considering a project that will return $150,000 annually at the end of each year for Present value six years. If Beene demands an annual return of 7% and pays for the project immediately, how much is of an annuity P3 it willing to pay for the project? QS B-7 Claire Fitch is planning to begin an individual retirement program in which she will invest $1,500 at the Future value end of each year. Fitch plans to retire after making 30 annual investments in the program earning a return of an annuity P4 of 10%. What is the value of the program on the date of the last payment? EXERCISES Most materials in this section are available in McGraw-Hill\u2019s Connect Exercise B-1 Bill Thompson expects to invest $10,000 at 12% and, at the end of a certain period, receive $96,463. Number of periods How many years will it be before Thompson receives the payment? (Use Table B.2.) of an investment P2 Ed Summers expects to invest $10,000 for 25 years, after which he wants to receive $108,347. What rate Exercise B-2 of interest must Summers earn? (Use Table B.2.) Interest rate on an investment P2 Jones expects an immediate investment of $57,466 to return $10,000 annually for eight years, with the first payment to be received one year from now. What rate of interest must Jones earn? (Use Table B.3.) Exercise B-3 Interest rate on Keith Riggins expects an investment of $82,014 to return $10,000 annually for several years. If Riggins an investment P3 earns a return of 10%, how many annual payments will he receive? (Use Table B.3.) Exercise B-4 Apago PDF Enhancer Number of periods of an investment P3 Algoe expects to invest $1,000 annually for 40 years to yield an accumulated value of $154,762 on the date of the last investment. For this to occur, what rate of interest must Algoe earn? (Use Table B.4.) Exercise B-5 Interest rate on Kate Beckwith expects to invest $10,000 annually that will earn 8%. How many annual investments must an investment P4 Beckwith make to accumulate $303,243 on the date of the last investment? (Use Table B.4.) Exercise B-6 Sam Weber finances a new automobile by paying $6,500 cash and agreeing to make 40 monthly pay- Number of periods ments of $500 each, the first payment to be made one month after the purchase. The loan bears interest of an investment P4 at an annual rate of 12%. What is the cost of the automobile? Exercise B-7 Spiller Corp. plans to issue 10%, 15-year, $500,000 par value bonds payable that pay interest semian- Present value nually on June 30 and December 31. The bonds are dated December 31, 2008, and are issued on that of an annuity P3 date. If the market rate of interest for the bonds is 8% on the date of issue, what will be the total cash proceeds from the bond issue? Exercise B-8 Present value of bonds McAdams Company expects to earn 10% per year on an investment that will pay $606,773 six years P1 P3 from now. Use Table B.1 to compute the present value of this investment. (Round the amount to the nearest dollar.) Exercise B-9 Present value Compute the amount that can be borrowed under each of the following circumstances: of an amount P1 1. A promise to repay $90,000 seven years from now at an interest rate of 6%. 2. An agreement made on February 1, 2008, to make three separate payments of $20,000 on February Exercise B-10 Present value of 1 of 2009, 2010, and 2011. The annual interest rate is 10%. an amount and of an annuity P1 P3 On January 1, 2008, a company agrees to pay $20,000 in three years. If the annual interest rate is 10%, determine how much cash the company can borrow with this agreement. Exercise B-11 Present value of an amount P1","Appendix B Time Value of Money B-9 Find the amount of money that can be borrowed today with each of the following separate debt agree- Exercise B-12 ments a through f. (Round amounts to the nearest dollar.) Present value of an amount P1 Single Future Number Interest Case Payment of Periods Rate a. . . . . . . . . $40,000 3 4% b. . . . . . . . . 75,000 78 c. . . . . . . . . 52,000 9 10 d. . . . . . . . . 18,000 24 e. . . . . . . . . 63,000 86 f. . . . . . . . . 89,000 52 C&H Ski Club recently borrowed money and agrees to pay it back with a series of six annual payments Exercise B-13 of $5,000 each. C&H subsequently borrows more money and agrees to pay it back with a series of four Present values of annuities annual payments of $7,500 each. The annual interest rate for both loans is 6%. P3 1. Use Table B.1 to find the present value of these two separate annuities. (Round amounts to the near- est dollar.) 2. Use Table B.3 to find the present value of these two separate annuities. (Round amounts to the nearest dollar.) Otto Co. borrows money on April 30, 2008, by promising to make four payments of $13,000 each on Exercise B-14 November 1, 2008; May 1, 2009; November 1, 2009; and May 1, 2010. Present value with semiannual 1. How much money is Otto able to borrow if the interest rate is 8%, compounded semiannually? compounding 2. How much money is Otto able to borrow if the interest rate is 12%, compounded semiannually? 3. How much money is Otto able to borrow if the interest rate is 16%, compounded semiannually? C1 P3 Apago PDF EnhancerMark Welsch deposits $7,200 in an account that earns interest at an annual rate of 8%, compounded Exercise B-15 quarterly. The $7,200 plus earned interest must remain in the account 10 years before it can be with- Future value drawn. How much money will be in the account at the end of 10 years? of an amount P2 Kelly Malone plans to have $50 withheld from her monthly paycheck and deposited in a savings account Exercise B-16 that earns 12% annually, compounded monthly. If Malone continues with her plan for two and one-half Future value years, how much will be accumulated in the account on the date of the last deposit? of an annuity P4 Starr Company decides to establish a fund that it will use 10 years from now to replace an aging pro- Exercise B-17 duction facility. The company will make a $100,000 initial contribution to the fund and plans to make Future value of quarterly contributions of $50,000 beginning in three months. The fund earns 12%, compounded quar- an amount plus terly. What will be the value of the fund 10 years from now? an annuity P2 P4 Catten, Inc., invests $163,170 today earning 7% per year for nine years. Use Table B.2 to compute the Exercise B-18 future value of the investment nine years from now. (Round the amount to the nearest dollar.) Future value of an amount P2 For each of the following situations, identify (1) the case as either (a) a present or a future value and Exercise B-19 (b) a single amount or an annuity, (2) the table you would use in your computations (but do not solve Using present and future the problem), and (3) the interest rate and time periods you would use. value tables a. You need to accumulate $10,000 for a trip you wish to take in four years. You are able to earn 8% C1 P1 P2 P3 P4 compounded semiannually on your savings. You plan to make only one deposit and let the money accumulate for four years. How would you determine the amount of the one-time deposit? b. Assume the same facts as in part (a) except that you will make semiannual deposits to your savings account. c. You want to retire after working 40 years with savings in excess of $1,000,000. You expect to save $4,000 a year for 40 years and earn an annual rate of interest of 8%. Will you be able to retire with more than $1,000,000 in 40 years? Explain. d. A sweepstakes agency names you a grand prize winner. You can take $225,000 immediately or elect to receive annual installments of $30,000 for 20 years. You can earn 10% annually on any invest- ments you make. Which prize do you choose to receive?","B-10 Appendix B Time Value of Money TABLE B.1 p \u202b \u060d\u202c1\u0580(1 \u0609 i)n Present Value of 1 Periods 1% 2% 3% Rate 10% 12% 15% 4% 5% 6% 7% 8% 9% 1 0.9901 0.9804 0.9709 0.9091 0.8929 0.8696 2 0.9803 0.9612 0.9426 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.8264 0.7972 0.7561 3 0.9706 0.9423 0.9151 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.7513 0.7118 0.6575 4 0.9610 0.9238 0.8885 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.6830 0.6355 0.5718 5 0.9515 0.9057 0.8626 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6209 0.5674 0.4972 6 0.9420 0.8880 0.8375 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.5645 0.5066 0.4323 7 0.9327 0.8706 0.8131 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5132 0.4523 0.3759 8 0.9235 0.8535 0.7894 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.4665 0.4039 0.3269 9 0.9143 0.8368 0.7664 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4241 0.3606 0.2843 10 0.9053 0.8203 0.7441 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.3855 0.3220 0.2472 11 0.8963 0.8043 0.7224 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3505 0.2875 0.2149 12 0.8874 0.7885 0.7014 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3186 0.2567 0.1869 13 0.8787 0.7730 0.6810 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.2897 0.2292 0.1625 14 0.8700 0.7579 0.6611 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2633 0.2046 0.1413 15 0.8613 0.7430 0.6419 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2394 0.1827 0.1229 16 0.8528 0.7284 0.6232 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2176 0.1631 0.1069 17 0.8444 0.7142 0.6050 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.1978 0.1456 0.0929 18 0.8360 0.7002 0.5874 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1799 0.1300 0.0808 19 0.8277 0.6864 0.5703 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1635 0.1161 0.0703 20 0.8195 0.6730 0.5537 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1486 0.1037 0.0611 25 0.7798 0.6095 0.4776 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.0923 0.0588 0.0304 30 0.7419 0.5521 0.4120 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0573 0.0334 0.0151 35 0.7059 0.5000 0.3554 0.3083 0.2314 0.1741 0.1314 0.0994 0.0754 0.0356 0.0189 0.0075 40 0.6717 0.4529 0.3066 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0221 0.0107 0.0037 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 Apago PDF Enhancer TABLE B.2 f \u202b( \u060d\u202c1 \u0609 i)n Future Value of 1 Periods 1% 2% 3% 4% 5% Rate 8% 9% 10% 12% 15% 6% 7% 0 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1 1.0100 1.0200 1.0300 1.0400 1.0500 1.0000 1.0000 1.0800 1.0900 1.1000 1.1200 1.1500 2 1.0201 1.0404 1.0609 1.0816 1.1025 1.0600 1.0700 1.1664 1.1881 1.2100 1.2544 1.3225 3 1.0303 1.0612 1.0927 1.1249 1.1576 1.1236 1.1449 1.2597 1.2950 1.3310 1.4049 1.5209 4 1.0406 1.0824 1.1255 1.1699 1.2155 1.1910 1.2250 1.3605 1.4116 1.4641 1.5735 1.7490 5 1.0510 1.1041 1.1593 1.2167 1.2763 1.2625 1.3108 1.4693 1.5386 1.6105 1.7623 2.0114 6 1.0615 1.1262 1.1941 1.2653 1.3401 1.3382 1.4026 1.5869 1.6771 1.7716 1.9738 2.3131 7 1.0721 1.1487 1.2299 1.3159 1.4071 1.4185 1.5007 1.7138 1.8280 1.9487 2.2107 2.6600 8 1.0829 1.1717 1.2668 1.3686 1.4775 1.5036 1.6058 1.8509 1.9926 2.1436 2.4760 3.0590 9 1.0937 1.1951 1.3048 1.4233 1.5513 1.5938 1.7182 1.9990 2.1719 2.3579 2.7731 3.5179 10 1.1046 1.2190 1.3439 1.4802 1.6289 1.6895 1.8385 2.1589 2.3674 2.5937 3.1058 4.0456 11 1.1157 1.2434 1.3842 1.5395 1.7103 1.7908 1.9672 2.3316 2.5804 2.8531 3.4785 4.6524 12 1.1268 1.2682 1.4258 1.6010 1.7959 1.8983 2.1049 2.5182 2.8127 3.1384 3.8960 5.3503 13 1.1381 1.2936 1.4685 1.6651 1.8856 2.0122 2.2522 2.7196 3.0658 3.4523 4.3635 6.1528 14 1.1495 1.3195 1.5126 1.7317 1.9799 2.1329 2.4098 2.9372 3.3417 3.7975 4.8871 7.0757 15 1.1610 1.3459 1.5580 1.8009 2.0789 2.2609 2.5785 3.1722 3.6425 4.1772 5.4736 8.1371 16 1.1726 1.3728 1.6047 1.8730 2.1829 2.3966 2.7590 3.4259 3.9703 4.5950 6.1304 9.3576 17 1.1843 1.4002 1.6528 1.9479 2.2920 2.5404 2.9522 3.7000 4.3276 5.0545 6.8660 10.7613 18 1.1961 1.4282 1.7024 2.0258 2.4066 2.6928 3.1588 3.9960 4.7171 5.5599 7.6900 12.3755 19 1.2081 1.4568 1.7535 2.1068 2.5270 2.8543 3.3799 4.3157 5.1417 6.1159 8.6128 14.2318 20 1.2202 1.4859 1.8061 2.1911 2.6533 3.0256 3.6165 4.6610 5.6044 6.7275 9.6463 16.3665 25 1.2824 1.6406 2.0938 2.6658 3.3864 3.2071 3.8697 6.8485 8.6231 10.8347 17.0001 32.9190 30 1.3478 1.8114 2.4273 3.2434 4.3219 4.2919 5.4274 10.0627 13.2677 17.4494 29.9599 66.2118 35 1.4166 1.9999 2.8139 3.9461 5.5160 5.7435 7.6123 14.7853 20.4140 28.1024 52.7996 133.1755 40 1.4889 2.2080 3.2620 4.8010 7.0400 7.6861 10.6766 21.7245 31.4094 45.2593 93.0510 267.8635 10.2857 14.9745","Appendix B Time Value of Money B-11 p \u202b\u060d\u202c c1 \u060a (1 1 i)n d \u0580i TABLE B.3 \u0609 Present Value of an Annuity of 1 Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 2 1.9704 1.9416 1.9135 1.8861 1.8594 1.8334 1.8080 1.7833 1.7591 1.7355 1.6901 1.6257 3 2.9410 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 2.2832 4 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 2.8550 5 4.8534 4.7135 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048 3.3522 6 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 3.7845 7 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638 4.1604 8 7.6517 7.3255 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 4.4873 9 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.3282 4.7716 10 9.4713 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502 5.0188 11 10.3676 9.7868 9.2526 8.7605 8.3064 7.8869 7.4987 7.1390 6.8052 6.4951 5.9377 5.2337 12 11.2551 10.5753 9.9540 9.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.1944 5.4206 13 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 14 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.6282 5.7245 15 13.8651 12.8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 6.8109 5.8474 16 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 6.9740 5.9542 17 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 18 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.2497 6.1280 19 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.3658 6.1982 20 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.4694 6.2593 25 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.0770 7.8431 6.4641 30 25.8077 22.3965 19.6004 17.2920 15.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.0552 6.5660 35 29.4086 24.9986 21.4872 18.6646 16.3742 14.4982 12.9477 11.6546 10.5668 9.6442 8.1755 6.6166 40 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.2438 6.6418 Apago PDF Enhancer f \u202b([ \u060d\u202c1 \u0609 i)n \u060a 1]\u035ei TABLE B.4 Future Value of an Annuity of 1 Rate Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 2 2.0100 2.0200 2.0300 2.0400 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2.1200 2.1500 3 3.0301 3.0604 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744 3.4725 4 4.0604 4.1216 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793 4.9934 5 5.1010 5.2040 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528 6.7424 6 6.1520 6.3081 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152 8.7537 7 7.2135 7.4343 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890 11.0668 8 8.2857 8.5830 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997 13.7268 9 9.3685 9.7546 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757 16.7858 10 10.4622 10.9497 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487 20.3037 11 11.5668 12.1687 12.8078 13.4864 14.2068 14.9716 15.7836 16.6455 17.5603 18.5312 20.6546 24.3493 12 12.6825 13.4121 14.1920 15.0258 15.9171 16.8699 17.8885 18.9771 20.1407 21.3843 24.1331 29.0017 13 13.8093 14.6803 15.6178 16.6268 17.7130 18.8821 20.1406 21.4953 22.9534 24.5227 28.0291 34.3519 14 14.9474 15.9739 17.0863 18.2919 19.5986 21.0151 22.5505 24.2149 26.0192 27.9750 32.3926 40.5047 15 16.0969 17.2934 18.5989 20.0236 21.5786 23.2760 25.1290 27.1521 29.3609 31.7725 37.2797 47.5804 16 17.2579 18.6393 20.1569 21.8245 23.6575 25.6725 27.8881 30.3243 33.0034 35.9497 42.7533 55.7175 17 18.4304 20.0121 21.7616 23.6975 25.8404 28.2129 30.8402 33.7502 36.9737 40.5447 48.8837 65.0751 18 19.6147 21.4123 23.4144 25.6454 28.1324 30.9057 33.9990 37.4502 41.3013 45.5992 55.7497 75.8364 19 20.8109 22.8406 25.1169 27.6712 30.5390 33.7600 37.3790 41.4463 46.0185 51.1591 63.4397 88.2118 20 22.0190 24.2974 26.8704 29.7781 33.0660 36.7856 40.9955 45.7620 51.1601 57.2750 72.0524 102.4436 25 28.2432 32.0303 36.4593 41.6459 47.7271 54.8645 63.2490 73.1059 84.7009 98.3471 133.3339 212.7930 30 34.7849 40.5681 47.5754 56.0849 66.4388 79.0582 94.4608 113.2832 136.3075 164.4940 241.3327 434.7451 35 41.6603 49.9945 60.4621 73.6522 90.3203 111.4348 138.2369 172.3168 215.7108 271.0244 431.6635 881.1702 40 48.8864 60.4020 75.4013 95.0255 120.7998 154.7620 199.6351 259.0565 337.8824 442.5926 767.0914 1,779.0903","Apago PDF Enhancer","Appendix A Look at This Appendix This appendix focuses on the accounting process. We describe transactions and source documents, and we explain the analysis and recording of trans- actions. The accounting equation, T-account, general ledger, trial balance, and debits and credits are key tools in the accounting process. C Basic Accounting for Transactions Learning Objectives Apago PDF Enhancer CAP Conceptual Analytical Procedural C1 Explain the steps in processing A1 Analyze the impact of transactions on P1 Record transactions in a journal and transactions. (p. C-2) accounts and financial statements. (p. C-11) post entries to a ledger. (p. C-8) C2 Describe source documents and their A2 Compute the debt ratio and describe P2 Prepare and explain the use of a trial purpose. (p. C-2) its use in analyzing financial balance. (p. C-17) condition. (p. C-20) C3 Describe an account and its use in P3 Prepare financial statements from recording transactions. (p. C-3) business transactions. (p. C-18) C4 Describe a ledger and a chart of LPC accounts. (p. C-6) C5 Define debits and credits and explain double-entry accounting. (p. C-7) C","Decision Feature Apago PDF Enhancer The Bottom Line \u201cIt has been a dream come true\u201d \u2014 Sara Blakely ATLANTA\u2014\u201cWorking as a sales trainer by day and Sara expanded sales and struggled to stay profitable. \u201cI had no performing stand-up comedy at night, I didn't know the money to advertise, so I hit the road,\u201d laughs Sara. \u201cFor the entire first thing about the pantyhose industry,\u201d admits Sara first year, I did in-store rallies . . . staying all day introducing customers Blakely. \u201cExcept, I dreaded wearing most pantyhose.\u201d One night Sara cut to Spanx.\u201d the feet out of her pantyhose to wear with white pants and open-toed shoes, and at that moment, Sara knew she had a unique idea. Sara took In her first three months, Sara sold over 50,000 pairs of footless $5,000 in savings and launched SPANX (Spanx.com), a manufacturer pantyhose. Today, just seven short years from her launch, Sara reports of footless pantyhose, slimming intimates, hosiery, and other women\u2019s over $150 million in retail sales. \u201cWe are still a small company of apparel. women,\u201d claims Sara, \u201cobsessed with inventing and improving comfort- To pursue her business ambitions, Sara studied business activities able undergarments.\u201d Sara continues to track and account for all and learned the value of accounting information. She established revenues and expenses. She maintains that success requires proper ac- recordkeeping processes, transaction analysis, inventory accounting, counting for and analysis of the financial side. and financial statement reporting. I had to get a handle on my financial situation, says Sara, as I wanted to remain self-funded. To this day, The bigger message of Spanx, says Sara, is promoting comfort and Sara remains self-funded and has a reliable accounting system to help confidence for women. Insists Sara, \u201cWe believe all women deserve her make good business decisions. the opportunity to make the most of their assets!\u201d I had to account for product costs, office expenses, supplier pay- ments, patent fees, and other expenses, says Sara. At the same time, [Sources: SPANX Website, January 2009; Entrepreneur, May 2007; Smart Money, September 2002; TV Guide, July 2007; Financial Times, 2006; ABC Television, 2007]","Appendix Preview Financial statements report on the financial performance and they are reflected in financial statements, and how they condition of an organization. Knowledge of their preparation, impact analysis of financial statements. Debits and credits are organization, and analysis is important. A main goal of this introduced and identified as a tool in helping analyze and appendix is to illustrate how transactions are recorded, how process transactions. Basic Accounting for Transactions Analyzing and Analyzing and Trial Balance Recording Process Processing Transactions \u2022 Trial balance preparation \u2022 Source documents \u2022 General ledger \u2022 Search for and correction \u2022 The account and its \u2022 Double-entry accounting \u2022 Journalizing and posting of errors analysis \u2022 An Illustration \u2022 Trial balance use \u2022 Types of accounts Analyzing and Recording Process C1 Explain the steps in The accounting process identifies business transactions and events, analyzes and records their processing transactions. effects, and summarizes and presents information in reports and financial statements. These re- ports and statements are used for making investing, lending, and other business decisions. The EXHIBIT C.1 steps in the accounting process that focus on analyzing and recording transactions and events are shown in Exhibit C.1. The Analyzing and Recording Process Apago PDF Enhancer Services Contract Journal Client Billing Dec. 1 Cash 30,000 Note Payable Purchase Ticket Common Stock 30,000 Bank Statement Dec. 2 Supplies 2,500 Cash 2,500 TOTAL 30,00 Analyze each Record relevant Post journal Prepare and transaction transactions information analyze the and event from and events trial balance source documents in a journal to ledger accounts Business transactions and events are the starting points. Relying on source documents, the transactions and events are analyzed using the accounting equation to understand how they affect company performance and financial position. These effects are recorded in accounting records, informally referred to as the accounting books, or simply the books. Additional steps such as posting and then preparing a trial balance help summarize and classify the effects of transactions and events. Ultimately, the accounting process provides information in useful reports or financial statements to decision makers. Source Documents C2 Describe source doc- Source documents identify and describe transactions and events entering the accounting uments and their purpose. process. They are the sources of accounting information and can be in either hard copy or electronic form. Examples are sales tickets, checks, purchase orders, bills from suppliers,","Appendix C Basic Accounting for Transactions C-3 employee earnings records, and bank statements. To illustrate, when an item is purchased on Point: To ensure that all sales are rung credit, the seller usually prepares at least two copies of a sales invoice. One copy is given to up on the register, most sellers require the buyer. Another copy, often sent electronically, results in an entry in the seller\u2019s informa- customers to have their receipts to tion system to record the sale. Sellers use invoices for recording sales and for control; buy- exchange or return purchased items. ers use them for recording purchases and for monitoring purchasing activity. Many cash registers record information for each sale on a tape or electronic file locked inside the regis- ter. This record can be used as a source document for recording sales in the accounting records. Source documents, especially if obtained from outside the organization, provide objective and reliable evidence about transactions and events and their amounts. Decision Ethics Cashier Your manager requires that you, as cashier, immediately enter each sale. Recently, lunch hour traffic has increased and the assistant manager asks you to avoid delays by taking customers\u2019 cash and making change without entering sales. The assistant manager says she will add up cash and enter sales after lunch. She says that, in this way, the register will always match the cash amount when the manager arrives at three o\u2019clock. What do you do? [Answer\u2014p. C-25] The Account and Its Analysis An account is a record of increases and decreases in a specific asset, liability, equity, revenue, C3 Describe an account or expense item. Information from an account is analyzed, summarized, and presented in re- and its use in recording ports and financial statements. The general ledger, or simply ledger, is a record containing all transactions. accounts used by a company. The ledger is often in electronic form. While most companies\u2019 ledgers contain similar accounts, a company often uses one or more unique accounts because EXHIBIT C.2 of its type of operations. Accounts are arranged into three general categories (based on the ac- counting equation), as shown in Exhibit C.2. Accounts Organized by the Accounting Equation Apago PDF Enhancer Cash Accounts Receivable Inventory Supplies \u202b\u060d\u202c Accounts Payable Unearned Revenues Wages Payable \u0609 Common Stock Dividends Paid-In Capital Asset Accounts Liability Accounts Equity Accounts Asset Accounts Assets are resources owned or controlled by a company and that have Point: Customers and others who owe a company are called its debtors. expected future benefits. Most accounting systems include (at a minimum) separate accounts Point: A college parking fee is a for the assets described here. prepaid account from the student\u2019s A Cash account reflects a company\u2019s cash balance. All increases and decreases in cash are standpoint. At the beginning of the term, it represents an asset that entitles recorded in the Cash account. It includes money and any medium of exchange that a bank ac- a student to park on or near campus. The benefits of the parking fee expire cepts for deposit (coins, checks, money orders, and checking account balances). as the term progresses. At term-end, Accounts receivable are held by a seller and refer to promises of payment from customers to prepaid parking (asset) equals zero as it has been entirely recorded as parking sellers. These transactions are often called credit sales or sales on account(or on credit). Accounts expense. receivable are increased by credit sales and are decreased by customer payments. A company needs a separate record for each customer, but for now, we use the simpler practice of record- ing all increases and decreases in receivables in a single account called Accounts Receivable. A note receivable, or promissory note, is a written promise of another entity to pay a definite sum of money on a specified future date to the holder of the note. A company holding a prom- issory note signed by another entity has an asset that is recorded in a Note (or Notes) Receivable account. Prepaid accounts (also called prepaid e xpenses) are assets that represent prepayments of future expenses (not current expenses). When the expenses are later incurred, the amounts in prepaid accounts are transferred to expense accounts. Common examples of prepaid accounts include prepaid insurance, prepaid rent, and prepaid services (such as club memberships). Prepaid accounts expire with the passage of time (such as with rent) or through use (such as with prepaid meal tickets). When financial statements are prepared, prepaid accounts are adjusted so that (1) all expired and used prepaid accounts are recorded as regular expenses and (2) all unexpired and unused prepaid accounts are recorded as assets (reflecting future use in","C-4 Appendix C Basic Accounting for Transactions Point: Prepaid accounts that apply to future periods). To illustrate, when an insurance fee, called a premium, is paid in advance, the current and future periods are assets. cost is typically recorded in the asset account Prepaid Insurance. Over time, the expiring por- These assets are adjusted at the end of each period to reflect only those tion of the insurance cost is removed from this asset account and reported in expenses on the amounts that have not yet expired, and to record as expenses those amounts income statement. Any unexpired portion remains in Prepaid Insurance and is reported on the that have expired. balance sheet as an asset. (An exception exists for prepaid accounts that will expire or be used Point: Some assets are described as intangible because they do not have before the end of the current accounting period when financial statements are prepared. In this physical existence or their benefits are case, the prepayments can be recorded immediately as expenses.) highly uncertain. A recent balance sheet for Coca-Cola Company shows Supplies are assets until they are used. When they are used up, their costs are reported as nearly $1 billion in intangible assets. expenses. The costs of unused supplies are recorded in a Supplies asset account. Supplies are often grouped by purpose\u2014for example office supplies and store supplies. Office supplies in- clude stationery, paper, toner, and pens. Store supplies include packaging materials, plastic and paper bags, gift boxes and cartons, and cleaning materials. The costs of these unused supplies can be recorded in an Office Supplies or a Store Supplies asset account. When supplies are used, their costs are transferred from the asset accounts to expense accounts. Equipment is an asset. When equipment is used and gets worn down, its cost is gradually reported as an expense (called depreciation). Equipment is often grouped by its purpose\u2014for example, office equipment and store equipment. Office equipment includes computers, print- ers, desks, chairs, and shelves. Costs incurred for these items are recorded in an Office Equip- ment asset account. The Store Equipment account includes the costs of assets used in a store such as counters, showcases, ladders, hoists, and cash registers. Buildings such as stores, offices, warehouses, and factories are assets because they provide expected future benefits to those who control or own them. Their costs are recorded in a Buildings asset account. When several buildings are owned, separate accounts are sometimes kept for each of them. The cost of land owned by a business is recorded in a Land account. The cost of buildings located on the land is separately recorded in one or more building accounts. DecisionAIpnasigghot PDF Enhancer Women Entrepreneurs The Center for Women\u2019s Business Research reports that women-owned businesses, such as SPANX, are growing and that they: \u2022 Total approximately 11 million and employ nearly 20 million workers. \u2022 Generate $2.5 trillion in annual sales and tend to embrace technology. \u2022 Are philanthropic\u201470% of owners volunteer at least once per month. \u2022 Are more likely funded by individual investors (73%) than venture firms (15%). Point: Accounts Payable are also Liability Accounts Liabilities are claims (by creditors) against assets, which means they called Trade Payables. are obligations to transfer assets or provide products or services to other entities. Creditors are individuals and organizations that own the right to receive payments from a company. If a company fails to pay its obligations, the law gives creditors a right to force the sale of that company\u2019s assets to obtain the money to meet creditors\u2019 claims. When assets are sold under these conditions, creditors are paid first, but only up to the amount of their claims. Any re- maining money, the residual, goes to the owners of the company. Creditors often use a balance sheet to help decide whether to loan money to a company. A loan is less risky if the borrower\u2019s liabilities are small in comparison to assets because this means there are more resources than claims on resources. Common liability accounts are described here. Accounts payable refer to oral or implied promises to pay later, which usually arise from purchases of merchandise. Payables can also arise from purchases of supplies, equipment, and services. Accounting systems keep separate records about each creditor. A note payable refers to a formal promise, usually denoted by the signing of a promissory note, to pay a future amount. It is recorded in either a short-term Note Payable account or a long-term Note Payable account, depending on when it must be repaid. Unearned Revenue refers to a liability that is settled in the future when a company delivers its products or services. When customers pay in advance for products or services (before revenue","Appendix C Basic Accounting for Transactions C-5 is earned), the revenue recognition principle requires that the seller consider this payment as Point: If a subscription is canceled, the unearned revenue. Examples of unearned revenue include magazine subscriptions collected in publisher is expected to refund the advance by a publisher, sales of gift certificates by stores, and season ticket sales by sports unused portion to the subscriber. teams. The seller would record these in liability accounts such as Unearned Subscriptions, Unearned Store Sales, and Unearned Ticket Revenue. When products and services are later de- livered, the earned portion of the unearned revenue is transferred to revenue accounts such as Subscription Fees, Store Sales, and Ticket Sales.1 Accrued liabilities are amounts owed that are not yet paid. Examples are wages payable, taxes payable, and interest payable. These are often recorded in separate liability accounts by the same title. If they are not large in amount, one or more ledger accounts can be added and reported as a single amount on the balance sheet. (Financial statements often have amounts reported that are a summation of several ledger accounts.) Decision Insight Revenue Spread The Chicago Bears have Unearned Revenues of about $60 million in advance ticket sales. When the team plays its home games, it settles this liability to its ticket holders and then transfers the amount earned to Ticket Revenues. Equity Accounts The owner\u2019s claim on a corporation\u2019s assets is called equity, stockhold- Point: Equity is also called net assets. ers\u2019 equity, or shareholders\u2019 equity. Equity is the owners\u2019 residual interest in the assets of a busi- ness after deducting liabilities. Equity is impacted by four types of accounts: common stock, EXHIBIT C.3 dividends, revenues, and expenses. We show this visually in Exhibit C.3 by expanding the ac- Expanded Accounting Equation counting equation. Apago PDF Enhancer Cash Accounts Receivable Inventory Supplies Account Payable Unearned Revenues Wages Payable Common Stock Dividends Paid-In Capital Asset \u202b\u060d\u202c Liability \u0609 Equity Accounts Accounts Accounts \u0609 Common Stock \u060a Dividends \u0609 Revenues \u060a Expenses Common Dividends Revenues Expenses Stock When an owner invests in a company in exchange for common stock, the invested amount Point: The Dividends account is sometimes referred to as a contra equity is recorded in an account titled Common Stock. Any further owner investments are recorded account because it reduces the normal balance of equity. in this account. When the company pays any cash dividends it decreases both the company\u2019s Point: The withdrawal of assets by assets and its total equity. Dividends are not expenses of the business. They are simply the the owners of a corporation is called a dividend. opposite of owner investments. A Dividends account is used in recording asset distribu- tions to stockholders (owners). Revenues and expenses also impact equity. Examples of revenue accounts are Sales, Commissions Earned, Professional Fees Earned, Rent Earned, and Interest Revenue. Revenues increase equity and result from products and services provided to customers. Examples of ex- pense accounts are Advertising Expense, Store Supplies Expense, Office Salaries Expense, Office Supplies Expense, Rent Expense, Utilities Expense, and Insurance Expense. Expenses decrease equity and result from assets and services used in a company\u2019s operations. The variety of revenues and expenses can be seen by looking at the chart of accounts that follows the index 1 In practice, account titles vary. As one example, Subscription Fees is sometimes called Subscription Fees Revenue, Subscription Fees Earned, or Earned Subscription Fees. As another example, Rent Earned is sometimes called Rent Revenue, Rental Revenue, or Earned Rent Revenue. We must use good judgment when reading financial statements because titles can differ even within the same industry. For example, product sales are called revenue at Best Buy, but net sales and operating revenues at Circuit City. Generally, the term revenues or fees is more com- monly used with service businesses, and net sales or sales with product businesses.","C-6 Appendix C Basic Accounting for Transactions at the back of this book. (Different companies sometimes use different account titles than those in this book\u2019s chart of accounts. For example, some might use Interest Revenue instead of Interest Earned, or Rental Expense instead of Rent Expense. It is important only that an ac- count title describe the item it represents.) Decision Insight Sporting Accounts The San Antonio Spurs have the following major revenue and expense accounts: Revenues Expenses Basketball ticket sales Team salaries TV & radio broadcast fees Game costs Advertising revenues NBA franchise costs Basketball playoff receipts Promotional costs Analyzing and Processing Transactions This section explains several tools and processes that comprise an accounting system. These in- clude a ledger, T-account, debits and credits, double-entry accounting, journalizing, and posting. C4 Describe a ledger and a Ledger and Chart of Accounts chart of accounts. The collection of all accounts for an information system is called a ledger (or general ledger). If accounts are in files on a hard drive, the sum of those files is the ledger. If the accounts are pages in a file, that file is the ledger. A company\u2019s size and diversity of operations affect the number of accounts needed. A small company can get by with as few as 20 or 30 accounts; a Apago PDF Enhancerlarge company can require several thousand. The chart of accounts is a list of all accounts a company uses and includes an identification number assigned to each account. A small busi- ness might use the following numbering system for its accounts: 101\u2013199 Asset accounts 201\u2013299 Liability accounts 301\u2013399 Equity accounts 401\u2013499 Revenue accounts 501\u2013699 Expense accounts These numbers provide a three-digit code that is useful in recordkeeping. In this case, the first digit assigned to asset accounts is a 1, the first digit assigned to liability accounts is a 2, and so on. The second and third digits relate to the accounts\u2019 subcategories. Exhibit C.4 shows a partial chart of accounts for FastForward, a startup consulting company that assesses the per- formance of athletic footwear and accessories. EXHIBIT C.4 Account Number Account Name Account Number Account Name Partial Chart of Accounts 101 Cash 318 Retained earnings for FastForward 106 Accounts receivable 319 Dividends 126 Supplies 403 Consulting revenue 128 Prepaid insurance 406 Rental revenue 167 Equipment 622 Salaries expense 201 Accounts payable 637 Insurance expense 236 Unearned consulting 640 Rent expense 652 Supplies expense 307 revenue 690 Utilities expense Common stock"]
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