Apple 2011 Annual Report Download - page 61

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The following table summarizes the pre-tax effect of the Company’
s derivative instruments designated as cash flow and net investment hedges in
the consolidated financial statements for the years ended September 24, 2011 and September 25, 2010 (in millions):
Accounts Receivable
Trade Receivables
The Company has considerable trade receivables outstanding with its third-party cellular network carriers, wholesalers, retailers, value-
added
resellers, small and mid-
sized businesses, and education, enterprise and government customers. The Company generally does not require
collateral from its customers; however, the Company will require collateral in certain instances to limit credit risk. In addition, when possible,
the Company attempts to limit credit risk on trade receivables with credit insurance for certain customers or by requiring third-
party financing,
loans or leases to support credit exposure. 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.
As of September 24, 2011, there were no customers that accounted for 10% or more of the Company’
s total trade receivables. Trade receivables
from two of the Company’s customers accounted for 15% and 12% of total trade receivables as of September 25, 2010. The Company’
s cellular
network carriers accounted for 52% and 64% of trade receivables as of September 24, 2011 and September 25, 2010, respectively. The additions
and write-offs to the Company’s allowance for doubtful accounts during 2011, 2010 and 2009 were not significant.
59
Year Ended
Gains/(Losses) Recognized in
OCI - Effective Portion (c)
Gains/(Losses) Reclassified from AOCI
into Income - Effective Portion (c)
Gains/(Losses) Recognized
–
Ineffective Portion and
Amount Excluded from Effectiveness Testing
September 24,
2011
September 25,
2010
September 24,
2011 (a)
September 25,
2010 (b)
Location
September 24,
2011
September 25,
2010
Cash flow hedges:
Foreign
exchange
contracts
$
153
$
(267)
$
(704)
$
115
Other income and
expense
$
(213)
$
(175)
Net investment
hedges:
Foreign
exchange
contracts
(43
)
(41
)
0
0
Other income and
expense
1
1
Total
$
110
$
(308
)
$
(704
)
$
115
$
(212
)
$
(174
)
(a)
Includes gains/(losses) reclassified from AOCI into income for the effective portion of cash flow hedges, of which $(349) million and
$(355) million were recognized within net sales and cost of sales, respectively, within the Consolidated Statement of Operations for the
year ended September 24, 2011. There were no amounts reclassified from AOCI into income for the effective portion of net investment
hedges for the year ended September 24, 2011.
(b)
Includes gains/(losses) reclassified from AOCI into income for the effective portion of cash flow hedges, of which $158 million and $(43)
million were recognized within net sales and cost of sales, respectively, within the Consolidated Statement of Operations for the year
ended September 25, 2010. There were no amounts reclassified from AOCI into income for the effective portion of net investment hedges
for the year ended September 25, 2010.
(c)
Refer to Note 6,
“
Shareholders
’
Equity and Share
-
based Compensation
”
of this Form 10
-
K, which summarizes the activity in AOCI related
to derivatives.