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0000320193
20031219
10-K
1,352
Dilutive potential shares of common stock related to stock options were excluded from the calculation of diluted loss per common share for fiscal 2001 because their effect would have been antidilutive.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,353
The following table sets forth the computation of basic and diluted earnings per share: Options to purchase 50.8 million and 58.0 million shares of common stock were outstanding at the end of 2003 and 2002, respectively, that were not included in the computation of diluted earnings per share for that year because the o...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,354
At September 29, 2001, the Company had options to purchase 97.2 million shares of its common stock outstanding, all of which were excluded from the computation of diluted loss per share for 2001 because the effect would have been antidilutive.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,355
Comprehensive Income Comprehensive income consists of two components, net income and other comprehensive income.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,356
Other comprehensive income refers to revenue, expenses, gains and losses that under generally accepted accounting principles are recorded as an element of shareholders' equity but are excluded from net income.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,357
The Company's other comprehensive income is comprised of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency, unrealized gains and losses on marketable securities categorized as available-for-sale, and net deferred gains and losses on certain derivativ...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,358
Segment Information The Company reports segment information based on the "management" approach.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,359
The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company's reportable segments.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,360
Information about the Company's products, major customers, and geographic areas on a company-wide basis is also disclosed.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,361
Note 2-Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair value due to the short maturities of those instruments.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,362
Cash, Cash Equivalents and Short-Term Investments The following table summarizes the fair value of the Company's cash and available-for-sale securities held in its short-term investment portfolio, recorded as cash and cash equivalents or short-term investments as of September 27, 2003, and September 28, 2002 (in millio...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,363
The Company's U.S. corporate securities consist primarily of commercial paper, certificates of deposit, time deposits and corporate debt securities.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,364
Foreign securities consist primarily of foreign commercial paper, certificates of deposit and time deposits with foreign institutions, most of which are denominated in U.S. dollars.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,365
The Company had net unrealized losses totaling $1 million on its investment portfolio, primarily related to investments with stated maturities greater than 1 year as of September 27, 2003 and net unrealized gains of $20 million on its investment portfolio, primarily related to investments with stated maturities greater...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,366
The Company occasionally sells short-term investments prior to their stated maturities.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,367
As a result of such sales, the Company recognized net gains of $21 million in 2003 and $7 million in 2002.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,368
These net gains were included in interest and other income, net.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,369
As of September 27, 2003, approximately $629 million of the Company's short-term investments had underlying maturities ranging from 1 to 5 years.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,370
The remaining short-term investments as of September 27, 2003 had maturities of 3 to 12 months.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,371
As of September 28, 2002, approximately $1.087 billion of the Company's short-term investments had underlying maturities ranging from 1 to 5 years.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,372
The remaining short-term investments as of September 28, 2002 had maturities of 3 to 12 months.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,373
Accounts Receivable Trade Receivables The Company distributes its products through third-party resellers and directly to certain education, consumer, and commercial customers.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,374
The Company generally does not require collateral from its customers.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,375
However, when possible the Company does attempt to limit credit risk on trade receivables with credit insurance for certain customers in Latin America, Europe and Asia and by arranging with third- party financing companies to provide flooring arrangements and other loan and lease programs to the Company's direct custom...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,376
These credit financing arrangements are directly between the third-party financing company and the end customer.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,377
As such, the Company does not assume any recourse or credit risk sharing related to any of these arrangements.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,378
However, considerable trade receivables that are not covered by collateral, third-party flooring arrangements, or credit insurance are outstanding with the Company's distribution and retail channel partners.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,379
Trade receivables from a single customer, Ingram Micro, Inc., accounted for approximately 10.3% and 10.8% of net accounts receivable as of September 27, 2003, and September 28, 2002, respectively.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,380
The following table summarizes the activity in the allowance for doubtful accounts (in millions): (a)Represents amounts written off against the allowance, net of recoveries.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,381
Non-Trade Receivables The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of raw material components to these manufacturing vendors who manufacture sub-assemblies or assemble final products for the Company.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,382
The Company purchases these raw material components directly from suppliers.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,383
These non-trade receivables, which are included in the consolidated balance sheets in other current assets, totaled $184 million and $142 million as of September 27, 2003, and September 28, 2002, respectively.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,384
The Company does not recognize any profits on these sales or reflect the sale of these components in its net sales.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,385
Inventory Prepayment In April 2002, the Company made a $100 million prepayment to an Asian supplier for the purchase of components over the following nine months.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,386
In return for this deposit, the supplier agreed to supply the Company with a specified level of components during the three consecutive fiscal quarters ended December 28, 2002.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,387
Approximately $53 million of this deposit remained unused as of September 28, 2002 and was reflected in the consolidated balance sheets in other current assets.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,388
During the first six months of 2003, the remainder of the deposit balance was fully utilized for the purchase of components.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,389
The deposit was unsecured and had no stated interest component.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,390
The Company imputed an amount to cost of sales and interest income during each period the deposit was outstanding at a 3.25% interest rate to reflect the economics of this transaction.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,391
Derivative Financial Instruments The Company uses derivatives to partially offset its business exposure to foreign exchange and interest rate risk.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,392
Foreign currency forward and option contracts are used to offset the foreign exchange risk on certain existing assets and liabilities and to hedge the foreign exchange risk on expected future cash flows on certain forecasted revenues and cost of sales.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,393
From time to time, the Company enters into interest rate swap agreements to modify the interest rate profile of certain investments and debt.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,394
The Company's accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,395
The Company records all derivatives on the balance sheet at fair value.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,396
The following table shows the notional principal, net fair value, and credit risk amounts of the Company's foreign currency instruments as of September 27, 2003 and September 28, 2002 (in millions): The notional principal amounts for derivative instruments provide one measure of the transaction volume outstanding as of...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,397
The credit risk amount shown in the table above represents the Company's gross exposure to potential accounting loss on these transactions if all counterparties failed to perform according to the terms of the contract, based on then-current currency exchange rates at each respective date.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,398
The Company's exposure to credit loss and market risk will vary over time as a function of currency exchange rates.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,399
The estimates of fair value are based on applicable and commonly used pricing models using prevailing financial market information as of September 27, 2003 and September 28, 2002.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,400
In certain instances where judgment is required in estimating fair value, price quotes were obtained from several of the Company's counterparty financial institutions.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,401
Although the table above reflects the notional principal, fair value, and credit risk amounts of the Company's foreign exchange instruments, it does not reflect the gains or losses associated with the exposures and transactions that the foreign exchange instruments are intended to hedge.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,402
The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,403
Foreign Exchange Risk Management The Company enters into foreign currency forward and option contracts with financial institutions primarily to protect against foreign exchange risk associated with existing assets and liabilities, certain firmly committed transactions and certain probable but not firmly committed trans...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,404
Generally, the Company's practice is to hedge a majority of its existing material foreign exchange transaction exposures.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,405
However, the Company may not hedge certain foreign exchange transaction exposures due to immateriality, prohibitive economic cost of hedging particular exposures, or limited availability of appropriate hedging instruments.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,406
In accordance with SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,407
133, hedges related to probable but not firmly committed transactions of an anticipatory nature are designated and documented at hedge inception as cash flow hedges and evaluated for hedge effectiveness quarterly.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,408
For currency forward contracts, hedge effectiveness is measured based on changes in the total fair value of the contract attributable to changes in the forward exchange rate.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,409
Changes in the expected future cash flows on the forecasted hedged transaction and changes in the fair value of the forward hedge are both measured from the contract rate to the forward exchange rate associated with the forward contract's maturity date.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,410
For currency option contracts, hedge effectiveness is measured based on changes in the total fair value of the option contract.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,411
Hedge effectiveness is assessed by comparing the present value of the cumulative change in expected future cash flows on the hedged transaction to changes in expected cash flow of the option hedge at maturity.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,412
The net gains or losses on derivative instruments qualifying as cash flow hedges are reported as components of other comprehensive income in shareholders' equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,413
Any hedge ineffectiveness is recognized in current earnings in other income and expense.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,414
To protect gross margins from fluctuations in foreign currency exchange rates, the Company's U.S. dollar functional subsidiaries hedge a portion of forecasted foreign currency revenues, and the Company's non-U.S. dollar functional subsidiaries selling in local currencies hedge a portion of forecasted inventory purchase...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,415
Other comprehensive income associated with hedges of foreign currency revenues is recognized as a component of net sales in the same period as the related sales are recognized, and other comprehensive income related to inventory purchases is recognized as a component of cost of sales in the same period as the related c...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,416
Typically, the Company hedges portions of its forecasted foreign currency exposure associated with revenues and inventory purchases over a time horizon of 3 to 9 months.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,417
The Company also enters into foreign currency forward and option contracts to offset the foreign exchange gains and losses generated by the re-measurement of certain recorded assets and liabilities in non-functional currencies.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,418
Changes in the fair value of these derivatives are recognized in current earnings in other income and expense as offsets to the changes in the fair value of the related assets or liabilities.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,419
The Company may enter into foreign currency forward contracts to offset the translation and economic exposure of a net investment position in a foreign subsidiary.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,420
Hedge effectiveness on forwards designated as net investment hedges is measured based on changes in the fair value of the contract attributable to changes in the spot exchange rate.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,421
The effective portion of the net gain or loss on a derivative instrument designated as a hedge of the net investment position in a foreign subsidiary is reported in the same manner as a foreign currency translation adjustment.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,422
Any residual changes in fair value of the forward contract, including changes in fair value based on the differential between the spot and forward exchange rates, are recognized in current earnings in other income and expense.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,423
As discussed above, the Company enters into foreign currency option contracts as items that provide an offset to the re-measurement of certain recorded assets and liabilities denominated in non-functional currencies.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,424
All changes in the fair value of these derivative contracts based on changes in option time value are recorded in current earnings in other income and expense.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,425
Due to market movements, changes in option time value can lead to increased volatility in other income and expense.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,426
Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable that the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent 2 month time period.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,427
Deferred gains and losses in other comprehensive income associated with such derivative instruments are immediately reclassified into earnings in other income and expense.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,428
Any subsequent changes in fair value of such derivative instruments are also reflected in current earnings unless they are re-designated as hedges of other transactions.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,429
During 2002, the Company recorded net gains of $2.5 million in other income and expense related to the loss of hedge designation on discontinued cash flow hedges due to changes in the Company's forecast of future net sales and cost of sales and due to prevailing market conditions.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,430
During 2001, the Company recorded a net gain of $5.1 million in other income and expense related to the loss of hedge designation on discontinued cash flow hedges due to changes in the Company's forecast of future net sales and cost of sales.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,431
No net gains, or losses, of a similar nature were recorded in 2003.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,432
Interest Rate Risk Management The Company sometimes enters into interest rate derivative transactions, including interest rate swaps, collars, and floors, with financial institutions in order to better match the Company's floating-rate interest income on its cash equivalents and short-term investments with its fixed-ra...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,433
As of September 30, 2000, the Company had entered into interest rate swaps with financial institutions in order to better match the Company's floating-rate interest income on its cash equivalents and short-term investments with its fixed-rate interest expense on its long-term debt, and to diversify a portion of the Com...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,434
The interest rate swaps generally required the Company to pay a floating interest rate based on the three- or six-month U.S. dollar LIBOR and receive a fixed rate of interest without exchanges of the underlying notional amounts.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,435
These swaps effectively converted the Company's fixed-rate 10-year debt to floating-rate debt and converted a portion of the floating rate investments to fixed rate.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,436
The Company assumed no ineffectiveness with regard to the debt interest swaps as each debt interest rate swap met the criteria for accounting under the short-cut method defined in SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,437
133 for fair value hedges of debt instruments.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,438
Accordingly, no net gains or losses were recorded in income relative to the Company's underlying debt interest rate swaps.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,439
During fiscal 2001, the Company closed out all of its existing debt interest rate swap positions due to prevailing market interest rates realizing a gain of $17 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,440
This gain was deferred, recognized in long-term debt and is being amortized to other income and expense over the remaining life of the debt.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,441
The unrealized loss on the asset swaps as of September 30, 2000, of $5.7 million was deferred and then recognized in income in 2001 as part of the SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,442
133 transition adjustment effective on October 1, 2000.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,443
The Company closed out all of its existing interest rate asset swaps during 2001 realizing a gain of $1.1 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,444
As of September 27, 2003 and September 28, 2002, the Company had no interest rate derivatives outstanding.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,445
Due to perceived market risk, the Company entered into interest rate swaps in early 2002.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,446
The interest rate swaps required the Company to pay a floating interest rate based on six-month U.S. dollar LIBOR and receive a fixed rate of interest without exchanges of the underlying notional amounts.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,447
These swaps effectively converted the Company's fixed-rate 10-year debt to floating-rate debt.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,448
The Company assumed no ineffectiveness with regard to the debt interest swaps as each debt interest rate swap met the criteria for accounting under the short-cut method defined in SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,449
133 for fair value hedges of debt instruments.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,450
Accordingly, no net gains or losses were recorded in income relative to the Company's underlying debt interest rate swaps during fiscal 2002 until the Company closed out the positions in late 2002 due to prevailing market interest rates.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,451
Closing the debt interest rate swaps resulted in a realized gain of $6 million.
0001047469-03-041604/full-submission.txt