Apple 2011 Annual Report Download - page 60

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exchange instruments are intended to hedge. The amounts ultimately realized upon settlement of these financial instruments, together with the
gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments.
The Company generally enters into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the
same counterparty. To further limit credit risk, the Company generally enters into collateral security arrangements that provide for collateral to
be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds. The Company
presents its derivative assets and derivative liabilities at their gross fair values. As of September 24, 2011, the Company received cash collateral
related to the derivative instruments under its collateral security arrangements of $288 million, which it recorded as accrued expenses in the
Consolidated Balance Sheet. As of September 25, 2010, the Company posted cash collateral related to the derivative instruments under its
collateral security arrangements of $445 million, which it recorded as other current assets in the Consolidated Balance Sheet. The Company did
not have any derivative instruments with credit-
risk related contingent features that would require it to post additional collateral as of
September 24, 2011 or September 25, 2010.
The following tables summarize the gross fair value of the Company’
s derivative instruments as reflected in the Consolidated Balance Sheets as
of September 24, 2011 and September 25, 2010 (in millions):
58
September 24, 2011
Fair Value of
Derivatives
Designated as
Hedge Instruments
Fair Value of
Derivatives Not
Designated as
Hedge Instruments
Total
Fair Value
Derivative assets (a):
Foreign exchange contracts
$
460
$
56
$
516
Derivative liabilities (b):
Foreign exchange contracts
$
72
$
37
$
109
September 25, 2010
Fair Value of
Derivatives
Designated as
Hedge Instruments
Fair Value of
Derivatives Not
Designated as
Hedge Instruments
Total
Fair Value
Derivative assets (a):
Foreign exchange contracts
$
62
$
45
$
107
Derivative liabilities (b):
Foreign exchange contracts
$
488
$
118
$
606
(a)
The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets in the Consolidated
Balance Sheets.
(b)
The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued expenses in the Consolidated
Balance Sheets.