Apple 2012 Annual Report Download - page 59

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The following table shows the pre-tax effect of the Company’s derivative instruments designated as cash flow
and net investment hedges in the Consolidated Statements of Operations for the years ended September 29, 2012
and September 24, 2011 (in millions):
Years Ended
Gains/(Losses) Recognized in
OCI - Effective Portion (c)
Gains/(Losses) Reclassified from AOCI
into Net Income - Effective Portion (c)
Gains/(Losses) Recognized – Ineffective Portion and
Amount Excluded from Effectiveness Testing
September 29,
2012
September 24,
2011
September 29,
2012 (a)
September 24,
2011 (b) Location
September 29,
2012
September 24,
2011
Cash flow hedges:
Foreign exchange
contracts ..... $(175) $153 $607 $(704)
Other income
and expense $(658) $(213)
Net investment hedges:
Foreign exchange
contracts . . . . . (5) (43) 0 0
Other income
and expense 3 1
Total .......... $(180) $110 $607 $(704) $(655) $(212)
(a) Includes gains/(losses) reclassified from AOCI into net income for the effective portion of cash flow hedges,
of which $537 million and $70 million were recognized within net sales and cost of sales, respectively,
within the Consolidated Statement of Operations for the year ended September 29, 2012. There were no
amounts reclassified from AOCI into income for the effective portion of net investment hedges for the year
ended September 29, 2012.
(b) 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.
(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.
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 29, 2012, the Company had two customers that represented 10% or more of total trade
receivables, one of which accounted for 14% and the other 10%. As of September 24, 2011, there were no
customers that accounted for 10% or more of the Company’s total trade receivables. The Company’s cellular
network carriers accounted for 66% and 52% of trade receivables as of September 29, 2012 and September 24,
2011, respectively. The additions and write-offs to the Company’s allowance for doubtful accounts during 2012,
2011 and 2010 were not significant.
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