Financial Instruments (Tables)

9 Months Ended

Jun. 27, 2020

Investments, All Other Investments [Abstract]

Cash and Available-for-Sale Securities by Significant Investment Category

The following tables show the Company’s cash and marketable securities by significant investment category as of June 27, 2020 and September 28, 2019 (in millions):

	June 27, 2020
	Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Non-Current Marketable Securities
Cash	$	20,253	$	—	$	—	$	20,253	$	20,253	$	—	$	—
Level 1 (1):
Money market funds	7,013		—		—		7,013		7,013		—		—
Subtotal	7,013		—		—		7,013		7,013		—		—
Level 2 (2):
U.S. Treasury securities	23,207		394		—		23,601		1,767		11,346		10,488
U.S. agency securities	7,129		9		(2)		7,136		59		2,737		4,340
Non-U.S. government securities	19,324		255		(272)		19,307		1		4,062		15,244
Certificates of deposit and time deposits	10,247		—		—		10,247		3,324		6,787		136
Commercial paper	12,105		—		—		12,105		936		11,169		—
Corporate debt securities	78,747		1,672		(280)		80,139		30		22,581		57,528
Municipal securities	964		20		—		984		—		43		941
Mortgage- and asset-backed securities	12,530		322		(20)		12,832		—		917		11,915
Subtotal	164,253		2,672		(574)		166,351		6,117		59,642		100,592
Total (3)	$	191,519	$	2,672	$	(574)	$	193,617	$	33,383	$	59,642	$	100,592

	September 28, 2019
	Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Marketable Securities		Non-Current Marketable Securities
Cash	$	12,204	$	—	$	—	$	12,204	$	12,204	$	—	$	—
Level 1 (1):
Money market funds	15,897		—		—		15,897		15,897		—		—
Subtotal	15,897		—		—		15,897		15,897		—		—
Level 2 (2):
U.S. Treasury securities	30,293		33		(62)		30,264		6,165		9,817		14,282
U.S. agency securities	9,767		1		(3)		9,765		6,489		2,249		1,027
Non-U.S. government securities	19,821		337		(50)		20,108		749		3,168		16,191
Certificates of deposit and time deposits	4,041		—		—		4,041		2,024		1,922		95
Commercial paper	12,433		—		—		12,433		5,193		7,240		—
Corporate debt securities	85,383		756		(92)		86,047		123		26,127		59,797
Municipal securities	958		8		(1)		965		—		68		897
Mortgage- and asset-backed securities	14,180		67		(73)		14,174		—		1,122		13,052
Subtotal	176,876		1,202		(281)		177,797		20,743		51,713		105,341
Total (3)	$	204,977	$	1,202	$	(281)	$	205,898	$	48,844	$	51,713	$	105,341

(1)Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities.

(2)Level 2 fair value estimates are based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

(3)As of June 27, 2020 and September 28, 2019, total marketable securities included $18.3 billion and $18.9 billion, respectively, that was restricted from general use, related to the State Aid Decision (refer to Note 5, “Income Taxes”) and other agreements. Additionally, as of June 27, 2020, $5.3 billion of marketable securities were pledged as collateral under repurchase agreements (refer to Note 6, “Debt”).

Cash, Cash Equivalents and Restricted Cash Reconciliation

A reconciliation of the Company’s cash and cash equivalents in the Condensed Consolidated Balance Sheets to cash, cash equivalents and restricted cash in the Condensed Consolidated Statements of Cash Flows as of June 27, 2020 and September 28, 2019 is as follows (in millions):

	June 27, 2020		September 28, 2019
Cash and cash equivalents	$	33,383	$	48,844
Restricted cash included in other current assets	29		23
Restricted cash included in other non-current assets	1,627		1,357
Cash, cash equivalents and restricted cash	$	35,039	$	50,224

Derivative Instruments at Gross Fair Value

The following tables show the Company’s derivative instruments at gross fair value as of June 27, 2020 and September 28, 2019 (in millions):

	June 27, 2020
	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	$	1,247	$	172	$	1,419
Interest rate contracts	$	1,612	$	—	$	1,612
Derivative liabilities (2):
Foreign exchange contracts	$	1,757	$	277	$	2,034

	September 28, 2019
	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	$	1,798	$	323	$	2,121
Interest rate contracts	$	685	$	—	$	685
Derivative liabilities (2):
Foreign exchange contracts	$	1,341	$	160	$	1,501
Interest rate contracts	$	105	$	—	$	105

(1)The fair value of derivative assets is measured using Level 2 fair value inputs and is included in other current assets and other non-current assets in the Condensed Consolidated Balance Sheets.

(2)The fair value of derivative liabilities is measured using Level 2 fair value inputs and is included in other current liabilities and other non-current liabilities in the Condensed Consolidated Balance Sheets.

Pre-Tax Gains and Losses of Derivative and Non-Derivative Instruments Designated as Cash Flow and Net Investment Hedges

The following table shows the pre-tax gains and losses of the Company’s derivative and non-derivative instruments designated as cash flow and net investment hedges in OCI and the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended June 27, 2020 and June 29, 2019 (in millions):

	Three Months Ended				Nine Months Ended
	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Gains/(Losses) recognized in OCI – included in effectiveness assessment:
Cash flow hedges:
Foreign exchange contracts	$	366	$	(147)	$	175	$	(689)
Interest rate contracts	(6)		—		(72)		—
Total	$	360	$	(147)	$	103	$	(689)
Net investment hedges:
Foreign currency debt	$	(20)	$	(32)	$	15	$	(55)
Gains/(Losses) reclassified from AOCI into net income – included in effectiveness assessment:
Cash flow hedges:
Foreign exchange contracts	$	1,389	$	53	$	1,063	$	69
Interest rate contracts	(3)		(2)		(6)		(5)
Total	$	1,386	$	51	$	1,057	$	64

Derivative Instruments Designated as Fair Value Hedges and the Related Hedged Items

The following tables show information about the Company’s derivative instruments designated as fair value hedges and the related hedged items for the three- and nine-month periods ended June 27, 2020 and June 29, 2019 and as of June 27, 2020 (in millions):

	Three Months Ended				Nine Months Ended
	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Gains/(Losses) on derivative instruments (1):
Foreign exchange contracts	$	(675)	$	(136)	$	(422)	$	509
Interest rate contracts	57		671		1,185		1,793
Total	$	(618)	$	535	$	763	$	2,302
Gains/(Losses) related to hedged items (1):
Marketable securities	$	675	$	136	$	422	$	(508)
Fixed-rate debt	(57)		(671)		(1,185)		(1,793)
Total	$	618	$	(535)	$	(763)	$	(2,301)

	June 27, 2020
Carrying amounts of hedged assets/(liabilities):
Marketable securities (2)	$	15,736
Fixed-rate debt (3)	$	(21,104)
Cumulative hedging adjustments included in the carrying amounts of hedged items:
Marketable securities carrying amount increases/(decreases)	$	(146)
Fixed-rate debt carrying amount (increases)/decreases	$	(1,612)

(1)Gains and losses related to fair value hedges are included in OI&E in the Condensed Consolidated Statements of Operations.

(2)The carrying amounts of marketable securities that are designated as hedged items in fair value hedges are included in current marketable securities and non-current marketable securities in the Condensed Consolidated Balance Sheet.

(3)The carrying amounts of fixed-rate debt instruments that are designated as hedged items in fair value hedges are included in current term debt and non-current term debt in the Condensed Consolidated Balance Sheet.

Notional Amounts of Outstanding Derivative Instruments and Credit Risk Amounts Associated with Outstanding or Unsettled Derivative Instruments

The following table shows the notional amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of June 27, 2020 and September 28, 2019 (in millions):

	June 27, 2020				September 28, 2019
	Notional Amount		Credit Risk Amount		Notional Amount		Credit Risk Amount
Instruments designated as accounting hedges:
Foreign exchange contracts	$	52,845	$	1,247	$	61,795	$	1,798
Interest rate contracts	$	19,500	$	1,612	$	31,250	$	685
Instruments not designated as accounting hedges:
Foreign exchange contracts	$	50,208	$	172	$	76,868	$	323