a voluntary change in accounting principal unless it is not practicable. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 and is required to be adopted by the Company in the first quarter of fiscal 2007. Although the Company will continue to evaluate the application of SFAS No. 154, management does not currently believe adoption will have a material impact on the Company’s results of operations or financial position. 

Liquidity and Capital Resources 

As of September 24, 2005, the Company had $8.261 billion in cash, cash equivalents, and short-term investments, an increase of $2.797 billion over the same balances at the end of 2004. The principal components of this increase were cash generated by operating activities of $2.535 billion and proceeds of $543 million from the issuance of common stock under stock plans, partially offset by cash used to purchase property, plant, and equipment of $260 million. The Company’s short-term investment portfolio is primarily invested in high credit quality, liquid investments. As of September 24, 2005, approximately $4.3 billion of the Company’s cash, cash equivalents, and short-term investments were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings. Amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S. The Company is currently assessing the impact of the one- time favorable foreign dividend provisions recently enacted as part of the American Jobs Creation Act of 2004, and may decide to repatriate earnings from some of its foreign subsidiaries. 

The Company believes its existing balances of cash, cash equivalents, and short-term investments will be sufficient to satisfy its working capital needs, capital expenditures, stock repurchase activity, outstanding commitments, and other liquidity requirements associated with its existing operations over the next 12 months. 

Capital Expenditures 

The Company’s total capital expenditures were $260 million during 2005, $132 million of which were for retail store facilities and equipment related to the Company’s Retail segment and $128 million of which were primarily for corporate infrastructure, including information systems enhancements and operating facilities enhancements and expansions. The Company currently anticipates it will utilize approximately

$390 million for capital expenditures during 2006, approximately $210 million of which is expected to be utilized for further expansion of the Company’s Retail segment and the remainder utilized to support normal replacement of existing capital assets and enhancements to general information technology infrastructure. 

Stock Repurchase Plan 

In July 1999, the Company’s Board of Directors authorized a plan for the Company to repurchase up to $500 million of its common stock. This repurchase plan does not obligate the Company to acquire any specific number of shares or acquire shares over any specified period of time. Since inception of the stock repurchase plan, the Company had repurchased a total of 13.1 million shares at a cost of $217