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0000320193
20001214
10-K
688
101, "Revenue Recognition in Financial Statements."
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
689
SAB 101, as amended, summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements and provides guidance on revenue recognition issues in the absence of authoritative literature addressing a specific arrangement or a specific industry.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
690
The Company will adopt SAB 101 in the first quarter of fiscal year 2001.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
691
Adoption of this guidance is not expected to have a material impact on the Company's financial position or results of operations.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
692
WARRANTY EXPENSE The Company provides currently for the estimated cost that may be incurred under product warranties when products are shipped.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
693
ADVERTISING COSTS Advertising costs are charged to expense the first time the advertising takes place.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
694
Advertising expense was $281 million, $208 million, and $152 million for 2000, 1999, and 1998, respectively.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
695
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) RESEARCH AND DEVELOPMENT Research and development costs are expensed as incurred.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
696
Software development costs are subject to capitalization beginning when a product's technological feasibility has been established and ending when a product is available for release to customers.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
697
Generally, the Company's products are released soon after technological feasibility has been established.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
698
As a result, costs subsequent to achieving technological feasibility have not been significant and all software development costs have been expensed.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
699
STOCK-BASED COMPENSATION The Company measures compensation expense for its employee stock-based compensation plans using the intrinsic value method and has provided in Note 8 pro forma disclosures of the effect on net income and earnings per share as if the fair value-based method had been applied in measuring compensa...
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
700
EARNINGS PER COMMON SHARE Basic earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
701
Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the dilutive potential shares ...
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
702
The dilutive effect of outstanding options is reflected in diluted earnings per share by application of the treasury stock method.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
703
The dilutive effect of convertible securities is reflected using the if-converted method.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
704
STOCK SPLIT On June 21, 2000, the Company effected a two-for-one stock split in the form of a Common Stock dividend to shareholders of record as of May 19, 2000.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
705
All per share data and numbers of Common shares have been retroactively adjusted to reflect the stock split.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
706
COMPREHENSIVE INCOME Comprehensive income consists of two components, net income and other comprehensive income.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
707
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.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
708
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 and from unrealized gains and losses on marketable securities categorized as available-for-sale.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
709
See Note 2 for additional information regarding available-for-sale securities.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
710
SEGMENT INFORMATION The Company reports segment information based on the "management" approach.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
711
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.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
712
Information about the Company's products, major customers, and geographic areas on a company-wide basis is also disclosed.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
713
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 2--FINANCIAL INSTRUMENTS INVESTMENTS The following table summarizes the Company's available-for-sale securities at amortized cost, which approximates fair value, recorded as cash and cash equivalents or short-term investments as of September 30, 2000, and Sept...
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
714
The Company's U.S. corporate securities include U.S. Government Agency notes, certificates of deposit, commercial paper and corporate debt securities.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
715
Foreign securities include foreign commercial paper, loan participations, time deposits and certificates of deposit with foreign institutions, most of which are denominated in U.S. dollars.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
716
The Company's cash equivalents and short-term investments are generally held until maturity.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
717
Gross unrealized gains and losses were negligible as of September 30, 2000 and September 25, 1999.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
718
The Company's cash and cash equivalent balances as of September 30, 2000 and September 25, 1999 include $7 million and $4 million, respectively, pledged primarily as collateral against outstanding derivative positions.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
719
TRADE RECEIVABLES The Company distributes its products principally through third-party computer resellers and directly to certain education and consumer customers.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
720
The Company generally does not require collateral from its customers.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
721
However, when possible the Company does attempt to limit credit risk on trade receivables through the use of flooring arrangements for selected customers with third-party financing companies and credit insurance for certain customers in Latin America and Asia.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
722
However, considerable trade receivables which are not covered by collateral or credit insurance are outstanding with the Company's distribution and retail channel partners.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
723
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 2--FINANCIAL INSTRUMENTS (CONTINUED) INTEREST RATE DERIVATIVES AND FOREIGN CURRENCY INSTRUMENTS The following table shows the notional principal, net fair value, and credit risk amounts of the Company's interest rate derivative and foreign currency instruments...
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
724
SEPTEMBER 30, 2000 SEPTEMBER 25, 1999 ----------------------------------- ---------------------------------- NOTIONAL FAIR CREDIT RISK NOTIONAL FAIR CREDIT RISK PRINCIPAL VALUE AMOUNTS PRINCIPAL VALUE AMOUNTS --------- --------- ----------- --------- -------- ----------- Transactions qualifying as accounting hedges: In...
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
725
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 and interest rates at each respective date.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
726
The Company's exposure to credit loss and market risk will vary over time as a function of interest rates and currency exchange rates.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
727
The estimates of fair value are based on applicable and commonly used pricing models using prevailing financial market information as of September 30, 2000 and September 25, 1999.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
728
In certain instances where judgment is required in estimating fair value, price quotes were obtained from several of the Company's counterparty financial institutions.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
729
Although the table above reflects the notional principal, fair value, and credit risk amounts of the Company's interest rate and foreign exchange instruments, it does not reflect the gains or losses associated with the exposures and transactions that the interest rate and foreign exchange instruments are intended to he...
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
730
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.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
731
The interest rate swaps, which qualify as accounting hedges, generally require 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.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
732
These swaps effectively convert the Company's fixed-rate 10 year debt to floating-rate debt and convert the floating rate investments to fixed rate.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
733
The maturity date of the asset swaps is September 2001 and the debt swaps mature in February of 2004.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
734
As of September 30, 2000 and September 25, 1999, interest rate debt swaps had a weighted-average receive rate of 7.21% and 6.04%, respectively.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
735
The weighted-average pay rate on the debt swaps was 6.68% and 5.45% as of September 30, 2000, and September 25, 1999, respectively.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
736
As of September 30, 2000 and September 25, 1999, interest rate asset swaps had a weighted-average receive rate of 5.50% and 5.53% respectively; and a weighted-average pay rate of 6.66% and 5.24%, respectively.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
737
The unrealized gains and NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 2--FINANCIAL INSTRUMENTS (CONTINUED) losses on these swaps are deferred and recognized in income as a component of interest and other income (expense), net in the same period as the hedged transaction.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
738
Deferred losses on such contracts totaled approximately $1 million as of September 30, 2000 and $5 million as of September 25, 1999.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
739
The foreign exchange forward contracts not accounted for as hedges are carried at fair value in other current liabilities with the gains and losses recorded currently in income as a component of interest and other income (expense), net.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
740
The foreign exchange forward contracts that are designated and effective as hedges are also carried at fair value in other current assets and liabilities with gains and losses recorded currently in income as a component of interest and other income (expense), net, against the losses and gains on the hedged transactions...
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
741
As of September 30, 2000, maturity dates for foreign exchange forward contracts held by the Company ranged from one to five months.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
742
If the option contract is designated and effective as a hedge of a firmly committed transaction, or a probable but not firmly committed transaction, then any gain or loss is deferred until the occurrence of the hedged transaction.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
743
Deferred gains and losses on such contracts were not significant as of September 30, 2000, and September 25, 1999.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
744
If the option contract is used to hedge an asset or liability, then the option is carried at fair value in other current liabilities with the gains and losses recorded currently in income as a component of interest and other income (expense), net, against the losses and gains on the hedged transaction.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
745
As of September 30, 2000, maturity dates for purchased foreign exchange option contracts and sold option contracts ranged from one to five months.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
746
The counterparties to the agreements relating to the Company's investments and foreign exchange and interest rate instruments consist of a number of major international financial institutions.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
747
To date, no such counterparty has failed to meet its financial obligations to the Company.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
748
The Company does not believe there is significant risk of nonperformance by these counterparties because the Company continually monitors its positions and the credit ratings of such counterparties, and limits the financial exposure and the number of agreements and contracts it enters into with any one party.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
749
The Company generally does not require collateral from counterparties, except for margin agreements associated with the ten-year interest rate swaps on the Company's ten-year unsecured notes.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
750
To mitigate the credit risk associated with these ten-year swap transactions, which mature in 2004, the Company entered into margining agreements with its third-party bank counterparties.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
751
These agreements require the Company or the counterparty to post margin only if certain credit risk thresholds are exceeded.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
752
The amounts held in margin accounts were not significant as of September 30, 2000.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
753
LONG-TERM DEBT UNSECURED NOTES During 1994, the Company issued $300 million aggregate principal amount of 6.5% unsecured notes in a public offering registered with the SEC.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
754
The notes were sold at 99.925% of par, for an effective yield to maturity of 6.51%.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
755
The notes pay interest semiannually and mature on February 15, 2004.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
756
As of September 30, 2000 and September 25, 1999, the carrying amount of these notes was $300 million, while the fair value was $279 million and $280 million, respectively.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
757
The fair value of the notes is based on their listed market values as of September 30, 2000 and September 25, 1999.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
758
CONVERTIBLE NOTES During 1996, the Company issued $661 million aggregate principal amount of 6% unsecured convertible subordinated notes (the Notes) to certain qualified parties in a private placement.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
759
The Notes were sold at 100% of par, paid interest semiannually, and matured on June 1, 2001 if not converted earlier.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
760
The Notes NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 2--FINANCIAL INSTRUMENTS (CONTINUED) were convertible by their holders at any time after September 5, 1996, at a conversion price of $29.205 per share subject to adjustments as defined in the Note agreement.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
761
No Notes had been converted as of September 25, 1998.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
762
The Notes were redeemable by the Company at 102.4% of the principal amount, plus accrued interest, for the twelve month period beginning June 1, 1999, and at 101.2% of the principal amount, plus accrued interest, for the twelve month period beginning June 1, 2000.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
763
On April 14, 1999, the Company called for redemption of the Notes.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
764
Not including approximately $7 million of unamortized debt issuance costs, debentures in an aggregate principal amount outstanding totaled approximately $661 million as of March 27, 1999.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
765
During the third quarter of 1999, debenture holders chose to convert virtually all of the outstanding debentures to common stock at a rate of $29.205 per share resulting in the issuance of approximately 22.6 million shares of the Company's common stock.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
766
NON-CURRENT DEBT AND EQUITY INVESTMENTS AND RELATED GAINS The Company holds significant investments in ARM Holdings plc (ARM), Samsung Electronics Co., Ltd (Samsung), Akamai Technologies, Inc. (Akamai) and EarthLink Network, Inc. (EarthLink).
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
767
These investments are reflected in the consolidated balance sheets as non-current debt and equity investments and have been categorized as available-for-sale requiring that they be carried at fair value with unrealized gains and losses, net of taxes, reported in equity as a component of accumulated other comprehensive ...
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
768
All realized gains on the sale of these investments have been included in other income.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
769
The combined fair value of these investments was $786 million and $339 million as of September 30, 2000, and September 25, 1999, respectively.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
770
The Company believes it is likely there will continue to be significant fluctuations in the fair value of these investments in the future.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
771
ARM HOLDINGS ARM is a publicly held company in the United Kingdom involved in the design and licensing of high performance microprocessors and related technology.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
772
As of September 25, 1999, the Company held approximately 80 million shares of ARM stock with a fair value of $226 million.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
773
Share data for ARM presented in this Form 10-K has been adjusted to reflect ARM's four-for-one stock split in April of 1999 and its five-for-one stock split in April of 2000.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
774
During 2000, the Company sold a total of approximately 45.2 million shares of ARM stock for net proceeds of approximately $372 million, recorded a gain before taxes of approximately $367 million, and recognized related income tax of approximately $94 million.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
775
As of September 30, 2000, the Company holds 34.8 million shares of ARM stock valued at $383 million.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
776
During 1999, the Company sold a total of approximately 163 million shares of ARM stock for net proceeds of approximately $245 million, recorded a gain before taxes of approximately $230 million, and recognized related income tax of approximately $25 million.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
777
As of September 25, 1999, the Company held 80 million shares of ARM stock valued at $226 million.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
778
As of September 26, 1997, the Company owned 42.3% of the outstanding stock of ARM.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
779
The Company had accounted for this investment using the equity method through September 25, 1998.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
780
On April 17, 1998, ARM completed an initial public offering of its stock on the London Stock Exchange and the NASDAQ National Market.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
781
The Company sold 18.9% of its shares in the offering for a gain before foreign taxes of approximately $24 million.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
782
Foreign tax recognized on this gain was approximately $7 million.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
783
At the time an equity method investee sells existing or newly issued common stock to unrelated parties in excess of its book value, the equity method requires the net book value of the investment be adjusted to reflect the investor's share of the change in the investee's shareholders' equity resulting from the sale.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
784
It is the Company's policy to record an adjustment reflecting its share of the change in the investee's shareholders' equity resulting from such a sale as a gain or loss in other income.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
785
Consequently, the Company also NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 2--FINANCIAL INSTRUMENTS (CONTINUED) recognized in the third quarter of 1998 other income of approximately $16 million to reflect its remaining 25.9% ownership interest in the increased net book value of ARM following its initial...
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
786
As of September 25, 1998, the carrying value of the Company's investment in ARM carried in other assets in the consolidated balance sheet was approximately $22 million.
0000912057-00-053623/full-submission.txt
0000320193
20001214
10-K
787
On October 14, 1998, the Company sold 58 million shares (split adjusted) of ARM stock.
0000912057-00-053623/full-submission.txt