Apple 1996 Annual Report Download - page 39

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Long-Term Debt
During 1996, the Company issued $661 million aggregate principal amount of 6% unsecured convertible subordinated notes (the "Notes") to
certain qualified parties in a private placement. The Notes were sold at 100% of par. The Notes pay interest semi-annually and mature on June
1, 2001. The Notes are convertible by their holders at any time after September 5, 1996 at a conversion price of $29.205 per share subject to
adjustments as defined in the Note agreement. The Notes are redeemable by the Company at 102.4% of the principal amount, plus accrued
interest, for the twelve-month period beginning June 1, 1999, and at 101.2% of the principal amount, plus accrued interest, for the twelve-
month period beginning June 1, 2000. The Notes are subordinated to all present and future senior indebtedness of the Company as defined in
the Note agreement. In addition, the Company incurred approximately $15 million of costs associated with the issuance of the Notes. These
costs are accounted for as a deduction from the face amount of the Notes and are being amortized over the life of the Notes. In October 1996,
the Company registered with the Securities and Exchange Commission $569 million of the aggregate principal amount of the Notes, including
the related common shares issuable upon conversion of these Notes.
During 1994, the Company issued $300 million aggregate principal amount of 6.5% unsecured notes in a public offering registered with the
Securities and Exchange Commission. The notes were sold at 99.925% of par, for an effective yield to maturity of 6.51%. The notes pay
interest semi-annually and mature on February 15, 2004.
The carrying amounts and estimated fair values of the Company's long- term debt are as follows:
(In millions)
(1) The carrying amount of the convertible subordinated note is prior to consideration of the related issuance costs.
The fair value of the ten-year unsecured notes is based on their listed market value as of September 27, 1996. The fair value of the convertible
subordinated notes is based on estimates from several financial institutions.
Interest and Other Income (Expense), Net
Interest and other income (expense), net, consists of the following:
(In millions)
37
1996 1995
Carrying Fair Carrying Fair
Amount Value Amount Value
Ten-year unsecured
notes $300 $259 $300 $289
Convertible
subordinated notes (1) $661 $656 $ -- $ --
Other $ 3 $ 3 $ 3 $ 3
1996 1995 1994
Interest income $ 60 $100 $ 43
Interest expense (60) (48) (40)
Foreign currency gain (loss) 30 (15) 9
Net premiums and discounts earned (paid) on foreign
exchange instruments (13) (46) (34)
Realized gains on the sale of available-for-sale and
other securities 74 1 --
Other income (expense), net (3) (2) --
$ 88 $(10) $(22)