Apple 2001 Annual Report Download - page 37

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Cash Equivalents and Short-Term Investments
The following table summarizes the fair value of the Company's available-for-sale securities held in its short-term investment portfolio,
recorded as cash and cash equivalents or short-term investments as of September 29, 2001, and September 30, 2000 (in millions):
securities. Foreign securities include foreign commercial paper, loan participation, certificates of deposit and time deposits with foreign
institutions, most of which are denominated in U.S. dollars. Net unrealized gains on the Company's investment portfolio, primarily related to
U.S. agency securities, were $11 million as of September 29, 2001 and were negligible as of September 30, 2000. As of September 29, 2001,
approximately $313 million of the Company's short-term investments in U.S. agency securities had underlying maturities of between one and
four years. The remaining short-term investments as of September 29, 2001, all had maturities of between 3 and 12 months. Substantially all of
the Company's short-term investments as of September 30, 2000, had underlying maturities less than 12 months. The Company's cash and cash
equivalent balances as of September 30, 2000 include $7 million pledged primarily as collateral against outstanding derivative positions. No
cash was pledged as collateral against outstanding derivative positions as of September 29, 2001.
Trade Receivables
The Company distributes its products through third-party computer resellers and directly to certain education and consumer customers. The
Company generally does not require collateral from its customers. However, when possible the Company does attempt to limit credit risk on
trade receivables through the use of flooring arrangements for selected customers with third-
party financing companies and credit insurance for
certain customers in Latin America and Asia. However, considerable trade receivables that are not covered by collateral or credit insurance are
outstanding with the Company's distribution and retail channel partners. Trade receivables from a single customer, Ingram Micro, Inc.,
accounted for approximately 9.4% and 17.2% of net accounts receivable as of September 29, 2001, and September 30, 2000, respectively.
47
The following table summarizes the activity in the allowance for doubtful accounts (in millions).
(a) Represents amounts written off against the allowance, net of recoveries.
Derivative Financial Instruments
The Company uses derivatives to partially offset its business exposure to foreign exchange and interest rate risk. Foreign currency forward and
option contracts are used to offset the foreign exchange risk on certain existing assets and liabilities and to hedge the foreign exchange risk on
expected future cash flows on certain forecasted revenues and cost of sales. From time to time, the Company enters into interest rate swap
September 29, 2001
Fair Value
September 30, 2000
Fair Value
U.S. corporate securities
$
1,998
$
921
Foreign securities
174
222
Total included in cash and cash equivalents
2,172
1,143
U.S. Treasury and Agency securities
1,042
293
U.S. corporate securities
692
2,059
Foreign securities
292
484
Total included in short-term investments
2,026
2,836
Total $
4,198
$
3,979
2001
2000
1999
Beginning allowance balance
$
64
$
68
$
81
Charged to costs and expenses
7
5
2
Deductions (a)
(20
)
(9
)
(15
)
Ending allowance balance
$
51
$
64
$
68