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No. of Recommendations: 8
No cash was used to repurchase shares during the quarter, even though the stock hit $13.36 on 10/8/02.

The company disclosed quarterly pro-forma options expense for the first time, and expanded on their excuse for not expensing option:

"The Company has elected to follow APB No. 25 because, as discussed below, the alternative fair value accounting provided for under SFAS No. 123, Accounting for Stock-Based Compensation, requires use of option valuation models that were not developed for use in valuing employee stock options and employee stock purchase plan shares."

The "fair value" of options, according to Apple's use of the Black-Sholes formula, granted during Q1 2003 were $53 million, vs $57 million in Q1 2002. The 2002 figure included Steve's 7.5 million options granted at $18.30 on 10/19/01. Based on the similar dollar values, it looks like Fred and the other top VPs may have gotten their big grants late in calendar 2002, vs. January of 2001 and March in 2002.

Apple is correct to suggest that the Black-Sholes model is not especially good at predicting the true value of an options grant. The model, which requires Apple to input certain volatility and duration variables, appears to predict that Steve's latest grant is worth something less than $57 million. If Apple stock appreciates just 5% per year over the life of his options, they'll eventually be worth over $86 million. If the stock appreciates 10% per year on average, they'll be worth over $218 million. Apple is essentially arguing that it is better to say that the options are worth nothing than it would be to underestimate their value.

Rodg.
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No. of Recommendations: 2
Corrections:

The VPS got big grants in March of 1999, not 2002.

3/1999, 1/2001, 10, 11 or 12/2002. Steve said the plan was for grants every two years, but it looks like they can't resist pulling the trigger a little bit earlier every year.

Steve's 20,000,000 came in 1/2000 and the 7,500,000 were in 10/2001.

Rodg.
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No. of Recommendations: 5
Apple is essentially arguing that it is better to say that the options are worth nothing than it would be to underestimate their value.

Alan Greenspan, Warren Buffett, Arthur Levitt, and the ISAB need to sit down with Fred and give him a good talking too.....

a person should know they need to revaluate their opinion when these type of people all are in agreement in their disagree with a person's opinion......
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No. of Recommendations: 4
The 2002 figure included Steve's 7.5 million options granted at $18.30 on 10/19/01
So the potential dilutive effect of these options could have been not only covered but "made money" for the other share holders, no? If they purchased at an average price of price of $15 (would these not be Treasury shares) and the stock goes to $25 so Steve exercises his options, the company gets $18.30 per share from Steve when their basis is $15.
It must be terribly complex and beyond my comprehension. ...Lee
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No. of Recommendations: 1
No cash was used to repurchase shares during the quarter, even though the stock hit $13.36 on 10/8/02.

[what ARE they tHINKing! my goodness, it's Apple computer not apple
buy your own stock because wee think it's low and therefore
even though we're not buying any right now (economy and all)
we want you to buy buy buy cuz that'll make the stock go up up up
and then we can sell sell sell and buy a new computer, inc.]

The company disclosed quarterly pro-forma options expense for the first time, and expanded on their excuse for not expensing option:

[excuse or reason mr hearst]

"The Company has elected to follow APB No. 25 because, as discussed below, the alternative fair value accounting provided for under SFAS No. 123, Accounting for Stock-Based Compensation, requires use of option valuation models that were not developed for use in valuing employee stock options and employee stock purchase plan shares."

[mm-hum]

The "fair value" of options, according to Apple's use of the Black-Sholes formula, granted during Q1 2003 were $53 million, vs $57 million in Q1 2002. The 2002 figure included Steve's 7.5 million options granted at $18.30 on 10/19/01.

[LOOKY LOOKY LOOKY they BOUGHT LOW and gave them to steve. they
let me spell this out b..auuughhhh...tah low. the retire shares up in the
stratosphere but when it comes to low near-cash prices they buy
and give to employees. that's the reward for MAKING THE STUFF THAT APPLE MAKES
see, apple like leads the computer industry and stuff
as far as innovation goes. there is no other company with so much sweet
diversity. so for all that brain power and perserverance they GET PAID
and they do it by buying low and distributing the shares internally.
some people say this is long term motivation for performance of the company
and, you heard it here folks, da stock. one difference between buffet and jobs
is the part where innovation in the computer technology industry occurs]

Based on the similar dollar values, it looks like Fred and the other top VPs may have gotten their big grants late in calendar 2002, vs. January of 2001 and March in 2002.

[i love it when you base things on similar may-haves]

Apple is correct to suggest that the Black-Sholes model is not especially good at predicting the true value of an options grant.

[suggest, not especially good, predicting? don't bend too far...]

The model, which requires Apple to input certain volatility and duration variables, appears to predict that Steve's latest grant is worth something less than $57 million.

[uh-huh... right now it's worth something less than $1.00 but ok]

If Apple stock appreciates just 5% per year over the life of his options, they'll eventually be worth over $86 million.

[just? that's all... if/just/they'll if apple stock appreciates just 5% per year over the life of job's options I'll appreciate it quite a bit. >rrrrrrrg<>rrrrrrrrg< hello? ahh clue phone, it's for you... i see the key to the argument is that an equity 'just' appreciate in the 'future' and we expense it ... today? when it's worth... nothing? i see... of course... yes... yes, i do see spots...ahh... of course..]

If the stock appreciates 10% per year on average, they'll be worth over $218 million.

[if the stock appreciates 0% per year on average, they'll be worth $0 million.]

Apple is essentially arguing that it is better to say that the options are worth nothing than it would be to underestimate their value.

[are they?]

Rodg.
][err Ing
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No. of Recommendations: 1
Teddy Roosevelt:
It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, and comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows the great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who know neither victory nor defeat.

Hey blue. How's the view from the cheap seats?
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No. of Recommendations: 2
Teddy Roosevelt:
It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, and comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows the great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who know neither victory nor defeat.


Yes FoolishApple, I will always beholden to Teddy (who once posted here) for those words directed to me.

gammil
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