Apple 2000 Annual Report Download - page 31

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been held until maturity. Gross unrealized gains and losses were negligible as of September 30, 2000 and September 25, 1999.
In millions, except weighted-average interest rates
During the last two years, the Company has entered into interest rate swaps with financial institutions in order to better match the Company's
floating-rate interest income on its cash equivalents and short-term investments with its fixed-rate interest expense on its long-
term debt, and/or
to diversify a portion of the Company's exposure away from fluctuations in short-term U.S. interest rates. The Company may also enter into
interest rate contracts that are intended to reduce the cost of the interest rate risk management program. The Company does not hold or transact
in such financial instruments for purposes other than risk management.
The interest rate swaps, which qualify as accounting hedges, generally require the Company to pay a floating interest rate based on the three-
or
six-month U.S. dollar LIBOR and receive a fixed rate of interest without exchanges of the underlying notional amounts. These swaps
effectively convert the Company's fixed-rate 10 year debt to floating-rate debt and convert a portion of the floating rate investments to fixed
2000 and September 25, 1999, interest rate debt swaps had a weighted-average receive rate of 7.21% and 6.04%, respectively. The weighted-
2000 and September 25, 1999, interest rate asset swaps had a weighted-average receive rate of 5.50% and 5.53%, respectively; and a weighted-
component of interest and other income (expense), net in the same period as the hedged transaction. Deferred losses on such contracts totaled
approximately $1 million as of September 30, 2000 and $5 million as of September 25, 1999.
28
SEPTEMBER 30, 2000 SEPTEMBER 25, 1999
-------------------- --------------------
WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
CARRYING INTEREST CARRYING INTEREST
AMOUNT RATE AMOUNT RATE
-------- --------- -------- ---------
Assets:
Cash equivalents:
U.S. Treasury and Agency securities................ $ -- --% $ 3 5.00%
U.S. corporate securities.......................... 921 6.46% 517 5.16%
Foreign securities................................. 222 6.05% 636 4.84%
------ ------
Total cash equivalents........................... 1,143 6.38% 1,156 4.98%
------ ------
Short-term investments:
U.S. Treasury and Agency securities................ $ 293 6.11% $ 298 5.56%
U.S. corporate securities.......................... 2,059 6.63% 780 5.89%
Foreign securities................................. 484 6.86% 822 5.40%
------ ------
Total short-term investments..................... 2,836 6.62% 1,900 5.63%
------ ------
Total investment securities.......................... $3,979 6.55% $3,056 5.38%
====== ======
Debt:
Fixed rate........................................... $ 300 5.97% $ 300 5.98%
====== ======