Apple 2003 Annual Report Download - page 60

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During the third quarter of 2003, the Company sold all of its remaining holdings in ARM stock, consisting of 278,000 shares for net proceeds
of approximately $295,000, and a gain before taxes of $270,000.
During the first quarter of 2002, the Company sold 4.7 million shares of ARM stock for both net proceeds and a gain before taxes of
$21 million. No sales of ARM were made in any of the subsequent quarters of fiscal 2002. As of September 28, 2002, the Company held
278,000 shares of ARM stock valued at $578,000.
During 2001, the Company sold a total of approximately 29.8 million shares of ARM stock for net proceeds of approximately $176 million,
recorded a gain before taxes of approximately $174 million, and recognized related income tax expense of approximately $52 million.
75
Samsung
During the fourth quarter of 1999, the Company invested $100 million in Samsung to assist in the further expansion of Samsung's TFT-LCD
flat-panel display production capacity. The investment was in the form of three year unsecured bonds, which were convertible into
approximately 550,000 shares of Samsung common stock beginning in July 2000. The bonds carried an annual coupon rate of 2% and paid a
total yield to maturity of 5% if redeemed at maturity.
Prior to its sale, the Company had categorized its investment in Samsung as available-for-sale requiring that it be carried at fair value with
unrealized gains and losses, net of taxes, reported in equity as a component of accumulated other comprehensive income. The fair value of the
Company's investment in Samsung was approximately $123 million as of September 30, 2000. With the adoption of SFAS No. 133 on
October 1, 2000, the Company was required to account for the conversion option embedded in the Samsung bonds separately from the related
debt. The conversion feature was carried at fair value with any changes in fair value recognized in earnings in the period in which they occur.
Included in the $17 million gross SFAS No. 133 transition adjustment recorded in earnings during the first quarter of fiscal 2001 was a
$23 million favorable adjustment for the restatement to fair value as of October 1, 2000, of the derivative component of the Company's
investment in Samsung. To adjust the carrying value of the derivative component of its investment in Samsung to fair value as of December 30,
2000, the Company recognized an unrealized loss of approximately $13 million during the first quarter of 2001. During the second quarter of
2001, the Company sold this investment for book value, including accrued interest, and received net proceeds of approximately $117 million.
Other Strategic Investments
The Company has made additional minority debt and equity investments in several privately held technology companies, which were reflected
in the consolidated balance sheets in other assets. These investments were inherently risky because the products and/or markets of these
companies were typically not fully developed. During 2002 and 2001, the Company determined that the decline in fair value of certain of these
investments was other-than-temporary and, accordingly, recognized a charge to earnings of $15 million and $8 million, respectively. These
charges were included in gains (losses) on non-current investments, net. As of September 27, 2003 and September 28, 2002, the Company had
no private debt or equity investments reflected in its consolidated balance sheets.
Note 3—Consolidated Financial Statement Details (in millions)
Inventories
76
Other Current Assets
2003
2002
Purchased parts
$
2
$
9
Work in process
4
—
Finished goods
50
36
Total inventories
$
56
$
45
2003
2002
Vendor non
-
trade receivables
$
184
$
142