Apple 2013 Annual Report Download - page 63

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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 28, 2013
and September 29, 2012 (in millions):
Gains/(Losses) Recognized in
OCI – Effective Portion
Gains/(Losses) Reclassified from AOCI
into Net Income – Effective Portion
Gains/(Losses) Recognized – Ineffective Portion
and Amount Excluded from Effectiveness Testing
September 28,
2013
September 29,
2012
September 28,
2013 (a)
September 29,
2012 (b) Location
September 28,
2013
September 29,
2012
Cash flow hedges:
Foreign exchange
contracts ....... $ 891 $(175) $676 $607
Other income/
(expense), net $(301) $(658)
Interest rate
contracts ....... 12 0 (6) 0
Other income/
(expense), net 00
Net investment hedges:
Foreign exchange
contracts ....... 143 (5) 0 0
Other income/
(expense), net 13
Total ........ $1,046 $(180) $670 $607 $(300) $(655)
(a) Includes gains/(losses) reclassified from AOCI into net income for the effective portion of cash flow hedges,
of which $44 million, $632 million and $(6) million were recognized within net sales, cost of sales and other
income/(expense), net, respectively, within the Consolidated Statement of Operations for the year ended
September 28, 2013.
(b) Includes gains/(losses) reclassified from AOCI into 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.
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 28, 2013, the Company had two customers that represented 10% or more of total trade
receivables, one of which accounted for 13% and the other 10%. 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%. The Company’s cellular network carriers accounted for 68% and 66% of trade receivables as of
September 28, 2013 and September 29, 2012, respectively. The additions and write-offs to the Company’s
allowance for doubtful accounts during 2013, 2012 and 2011 were not significant.
Vendor Non-Trade Receivables
The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of
components to these manufacturing vendors who manufacture sub-assemblies or assemble final products for the
Company. The Company purchases these components directly from suppliers. Vendor non-trade receivables
from three of the Company’s vendors accounted for 47%, 21% and 15% of total non-trade receivables as of
September 28, 2013 and vendor non-trade receivables from three of the Company’s vendors accounted for 45%,
21% and 12% of total non-trade receivables as of September 29, 2012. The Company does not reflect the sale of
these components in net sales and does not recognize any profits on these sales until the related products are sold
by the Company, at which time any profit is recognized as a reduction of cost of sales.
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