Accounting Policies
Stock Split
Accounting Changes
Unearned Revenue
Cash and Short-Term Investments
Inventories
Property and Equipment
Equity and Other Investments
Goodwill
Intangible Assets
Derivatives
Investment Income/(Loss)
Income Taxes
Stockholders' Equity
Other Comprehensive Income
Employee Stock and Savings Plans
Earnings Per Share
Acquisitions
Commitments and Guarantees
Contingencies
Segment Information
Note 11-Derivatives
For fiscal 2001, investment income
included a net unrealized loss of $592 million, comprised of a $214 million
gain for changes in the time value of options for fair value hedges, $211
million loss for changes in the time value of options for cash flow hedges, and
$595 million loss for changes in the fair value of derivative instruments not
designated as hedging instruments. For fiscal 2002, investment income included
a net unrealized loss of $480 million, comprised of a $30 million gain for
changes in the time value of options for fair value hedges, a $331 million loss
for changes in the time value of options for cash flow hedges, and a $179
million net loss for changes in the fair value of derivative instruments not
designated as hedging instruments. For fiscal 2003, investment income included
a net unrealized loss of $141 million, comprised of a $74 million loss for
changes in the time value of options for fair value hedges, a $229 million loss
for changes in the time value of options for cash flow hedges, and a $162
million gain for changes in the fair value of derivative instruments not
designated as hedging instruments.
Derivative gains and losses included
in OCI are reclassified into earnings at the time forecasted revenue or the
sale of an equity investment is recognized. During fiscal 2001, $214 million of
derivative gains were reclassified to revenue and $416 million of derivative
losses were reclassified to investment income/(loss). During fiscal 2002, $234
million of derivative gains were reclassified to revenue and $10 million of
derivative losses were reclassified to investment income/(loss). During fiscal
2003, $40 million of derivative gains were reclassified to revenue and $2
million of derivative gains were reclassified to investment income/(loss). We
estimate that $22 million of net derivative gains included in other
comprehensive income will be reclassified into earnings within the next twelve
months.
For
instruments designated as hedges, hedge ineffectiveness, determined in
accordance with SFAS 133, had no significant impact on earnings for the fiscal
years 2001, 2002, and 2003. No significant fair value hedges or cash flow
hedges were derecognized or discontinued for fiscal years 2001, 2002, and 2003.
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