Apple 2013 Annual Report Download - page 69

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The floating-rate notes due 2016 and 2018 bear interest at the three-month London InterBank Offered Rate
(“LIBOR”) plus 0.05% and 0.25%, respectively. To manage the risk of fluctuations in interest rates associated
with the floating-rate notes, the Company entered into interest rate swaps with an aggregate notional amount of
$3.0 billion designated as cash flow hedges of its floating-rate notes. These hedges effectively convert the
floating interest rate on the floating-rate notes to a fixed interest rate. The gains and losses related to changes in
the fair value of the interest rate swaps are recorded in OCI with a portion reclassified to interest expense each
period to offset changes in interest rates on the floating-rate notes. The effective rates for the Notes include the
interest on the Notes, amortization of the discount and, if applicable, adjustments related to hedging. The
Company recognized $136 million of interest expense for the year ended September 28, 2013. As of
September 28, 2013, the aggregate unamortized discount for the Company’s Notes was $40 million.
Future principal payments for the Company’s Notes as of September 28, 2013, are as follows (in millions):
2014 .............................................................................. $ 0
2015 .............................................................................. 0
2016 .............................................................................. 2,500
2017 .............................................................................. 0
2018 .............................................................................. 6,000
Thereafter .......................................................................... 8,500
Total .......................................................................... $17,000
As of September 28, 2013, the fair value of the Company’s Notes, based on Level 2 inputs, was $15.9 billion.
Note 7 – Shareholders’ Equity
Preferred Stock
The Company has five million shares of authorized preferred stock, none of which is issued or outstanding.
Under the terms of the Company’s Restated Articles of Incorporation, the Board of Directors is authorized to
determine or alter the rights, preferences, privileges and restrictions of the Company’s authorized but unissued
shares of preferred stock.
Dividend and Stock Repurchase Program
The Company declared and paid cash dividends per common share during the periods presented as follows:
2013
Dividends
Per Share
Amount
(in millions)
First quarter ............................................................. $ 2.65 $ 2,486
Second quarter ........................................................... $ 2.65 2,490
Third quarter ............................................................ $ 3.05 2,789
Fourth quarter ........................................................... $ 3.05 2,763
$10,528
The Company paid cash dividends of $2.65 per share, totaling $2.5 billion, during the fourth quarter of 2012.
Future dividends are subject to declaration by the Board of Directors.
In 2012, the Company’s Board of Directors authorized a program to repurchase up to $10 billion of the
Company’s common stock beginning in 2013. In April 2013, the Company’s Board of Directors increased the
share repurchase program authorization from $10 billion to $60 billion, of which $23.0 billion had been utilized
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