Apple 2004 Annual Report Download - page 78

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investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position
as of September 25, 2004 (in millions):
Market values were determined for each individual security in the investment portfolio. The declines in value of these investments is primarily
related to changes in interest rates and are considered to be temporary in nature. Investments are reviewed periodically to identify possible
impairment. When evaluating the investments, the Company reviews factors such as the length of time and extent to which fair value has been
below cost basis, the financial condition of the investee, and the Company's ability and intent to hold the investment for a period of time which
may be sufficient for anticipated recovery in market value.
Accounts Receivable
Trade Receivables
The Company distributes its products through third-party resellers and directly to certain education, consumer, and commercial 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 with credit insurance for certain customers in Latin America, Europe and Asia and by arranging with third-party financing
companies to provide flooring arrangements and other loan and lease programs to the Company's direct customers. These credit financing
arrangements are directly between the third-party financing company and the end customer. As such, the Company generally does not assume
any recourse or credit risk sharing related to any of these arrangements. However, considerable trade receivables that are not covered by
collateral, third-party flooring arrangements, or credit insurance are outstanding with the Company's distribution and retail channel partners. No
customer accounted for more than 10% of trade receivables as of September 25, 2004. Trade receivables from a single customer, Ingram
Micro, Inc., accounted for approximately 10.3% of net accounts receivable as of September 27, 2003.
The following table summarizes the activity in the allowance for doubtful accounts (in millions):
(a)
Less than 12 Months
12 Months or Greater
Total
Security Description
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
U.S. Treasury and Agencies
$
1,126
$
(4
)
$
—
$
—
$
1,126
$
(4
)
Corporate bonds
134
—
144
(1
)
278
(1
)
Certificate of deposits
420
(1
)
—
—
420
(1
)
Asset backed securities
426
—
—
—
426
—
Commercial paper
2,407
(1
)
—
—
2,407
(1
)
Total
$
4,513
$
(6
)
$
144
$
(1
)
$
4,657
$
(7
)
2004
2003
2002
Beginning allowance balance
$
49
$
51
$
51
Charged to costs and expenses
3
4
10
Deductions (a)
(5
)
(6
)
(10
)
Ending allowance balance
$
47
$
49
$
51
Represents amounts written off against the allowance, net of recoveries.
74