Apple 2014 Annual Report Download - page 62

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The following tables show the Company’s derivative instruments at gross fair value as reflected in the Consolidated Balance
Sheets as of September 27, 2014 and September 28, 2013 (in millions):
2014
Fair Value of Derivatives
Designated as Hedge Instruments Fair Value of Derivatives Not
Designated as Hedge Instruments Total
Fair Value
Derivative assets (1):
Foreign exchange contracts $1,332 $222 $1,554
Interest rate contracts $ 81 $ 0 $ 81
Derivative liabilities (2):
Foreign exchange contracts $ 41 $ 40 $ 81
2013
Fair Value of Derivatives
Designated as Hedge Instruments Fair Value of Derivatives Not
Designated as Hedge Instruments Total
Fair Value
Derivative assets (1):
Foreign exchange contracts $145 $25 $170
Interest rate contracts $ 44 $ 0 $ 44
Derivative liabilities (2):
Foreign exchange contracts $389 $46 $435
(1) 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.
(2) 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.
The following tables show the pre-tax effect of the Company’s derivative instruments designated as cash flow, net investment
and fair value hedges on OCI and the Consolidated Statements of Operations for 2014, 2013 and 2012 (in millions):
Gains/(Losses) Recognized in
OCI-Effective Portion Gains/(Losses) Reclassified from AOCI
into Net Income-Effective Portion
2014 2013 2012 2014 2013 2012
Cash flow hedges:
Foreign exchange contracts $1,750 $ 891 $ (175) $ (154) $676 $ 607
Interest rate contracts (15) 12 0 (16) (6) 0
Total $1,735 $ 903 $ (175) $ (170) $670 $ 607
Net investment hedges:
Foreign exchange contracts $ 53 $ 143 $ (5) $ 0 $ 0 $ 0
Gains/(Losses) On Derivative
Instruments Gains/(Losses) Related to
Hedged Items
2014 2013 2012 2014 2013 2012
Fair value hedges:
Interest rate contracts $ 39 $ 0 $ 0 $ (39) $ 0 $ 0
The Company recognized a charge of $120 million, $301 million and $658 million in other income and expense during 2014,
2013 and 2012, respectively, for the ineffective portions of and amounts excluded from the effectiveness testing of cash flow
hedges. The ineffective portions of and amounts excluded from the effectiveness testing of net investment and fair value
hedges recognized in other income and expense were not significant during 2014, 2013 and 2012.
Apple Inc. | 2014 Form 10-K | 60