Apple 2013 Annual Report Download - page 62

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The Company generally enters into master netting arrangements, which are designed to 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 28, 2013 and
September 29, 2012, the Company posted $164 million and $278 million, respectively, of cash collateral related
to the derivative instruments under its collateral security arrangements, which were 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 28, 2013 or
September 29, 2012.
The following tables show the Company’s derivative instruments at gross fair value as reflected in the
Consolidated Balance Sheets as of September 28, 2013 and September 29, 2012 (in millions):
2013
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 ......................... $145 $25 $170
Interest rate contracts .............................. $ 44 $ 0 $ 44
Derivative liabilities (b):
Foreign exchange contracts ......................... $389 $46 $435
2012
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 ......................... $138 $12 $150
Derivative liabilities (b):
Foreign exchange contracts ......................... $516 $41 $557
(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.
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