Financial Instruments (Tables)

9 Months Ended

Jun. 25, 2011

Available-for-Sale securities' Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value Recorded as Cash and Cash Equivalents or Short-Term or Long-Term Marketable Securities

The following tables summarize the Company’s available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short-term or long-term marketable securities as of June 25, 2011 and September 25, 2010 (in millions):

		September 30,		September 30,		September 30,			September 30,		September 30,		September 30,		September 30,
	June 25, 2011
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	2,769	$	0	$	0		$	2,769	$	2,769	$	0	$	0
Level 1:
Money market funds		1,414		0		0			1,414		1,414		0		0
Mutual funds		150		0		0			150		0		150		0
Subtotal		1,564		0		0			1,564		1,414		150		0
Level 2:
U.S. Treasury securities		10,736		51		0			10,787		1,139		1,876		7,772
U.S. agency securities		9,986		17		(1	)		10,002		391		1,980		7,631
Non-U.S. government securities		6,127		18		(1	)		6,144		427		1,952		3,765
Certificates of deposit and time deposits		4,538		4		0			4,542		893		1,231		2,418
Commercial paper		6,326		0		0			6,326		4,977		1,349		0
Corporate securities		30,441		167		(9	)		30,599		81		7,242		23,276
Municipal securities		3,389		35		(1	)		3,423		0		524		2,899
Subtotal		71,543		292		(12	)		71,823		7,908		16,154		47,761
Total	$	75,876	$	292	$	(12	)	$	76,156	$	12,091	$	16,304	$	47,761

		September 30,		September 30,		September 30,			September 30,		September 30,		September 30,		September 30,
	September 25, 2010
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	1,690	$	0	$	0		$	1,690	$	1,690	$	0	$	0
Level 1:
Money market funds		2,753		0		0			2,753		2,753		0		0
Level 2:
U.S. Treasury securities		9,872		42		0			9,914		2,571		2,130		5,213
U.S. agency securities		8,717		10		0			8,727		1,916		4,339		2,472
Non-U.S. government securities		2,648		13		0			2,661		10		865		1,786
Certificates of deposit and time deposits		2,735		5		(1	)		2,739		374		850		1,515
Commercial paper		3,168		0		0			3,168		1,889		1,279		0
Corporate securities		17,349		102		(9	)		17,442		58		4,522		12,862
Municipal securities		1,899		19		(1	)		1,917		0		374		1,543
Subtotal		46,388		191		(11	)		46,568		6,818		14,359		25,391
Total	$	50,831	$	191	$	(11	)	$	51,011	$	11,261	$	14,359	$	25,391

Notional Principal and Credit Risk Amounts of Derivative Instruments Outstanding

The following table summarizes the notional principal amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of June 25, 2011 and September 25, 2010 (in millions):

		September 30,		September 30,		September 30,		September 30,
	June 25, 2011				September 25, 2010
	Notional Principal		Credit Risk Amounts		Notional Principal		Credit Risk Amounts
Instruments qualifying as accounting hedges:
Foreign exchange contracts	$	12,282	$	128	$	13,957	$	62
Instruments other than accounting hedges:
Foreign exchange contracts	$	6,415	$	14	$	10,727	$	45

Derivative Instruments Measured at Gross Fair Value as Reflected in the Consolidated Balance Sheets

The following tables summarize the gross fair value of the Company’s derivative instruments as reflected in the Condensed Consolidated Balance Sheets as of June 25, 2011 and September 25, 2010 (in millions):

		September 30,		September 30,		September 30,
	June 25, 2011
	Fair Value of Derivatives Designated as Hedge Instruments		Fair Value of Derivatives Not Designated as Hedge Instruments		Total Fair Value
Derivative assets (a):
Foreign exchange contracts	$	125	$	14	$	139
Derivative liabilities (b):
Foreign exchange contracts	$	64	$	6	$	70

		September 30,		September 30,		September 30,
	September 25, 2010
	Fair Value of Derivatives Designated as Hedge Instruments		Fair Value of Derivatives Not Designated as Hedge Instruments		Total Fair Value
Derivative assets (a):
Foreign exchange contracts	$	62	$	45	$	107
Derivative liabilities (b):
Foreign exchange contracts	$	488	$	118	$	606

(a) The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets in the Condensed Consolidated Balance Sheets.

(b) The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued expenses in the Condensed Consolidated Balance Sheets.

Pre-Tax Effect of Derivative Instruments Designated as Cash Flow and Net Investment Hedges

The following table summarizes the pre-tax effect of the Company’s derivative instruments designated as cash flow and net investment hedges in the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended June 25, 2011 and June 26, 2010 (in millions):

		September 30,			September 30,			September 30,			September 30,	September 30,		September 30,		September 30,
	Three Month Periods
	Gains/(Losses) Recognized in OCI - Effective Portion (e)						Gains/(Losses) Reclassified from AOCI into Income - Effective Portion (e)					Gains/(Losses) Recognized – Ineffective Portion and Amount Excluded from Effectiveness Testing
	June 25, 2011			June 26, 2010			June 25, 2011 (a)			June 26, 2010 (b)		Location	June 25, 2011		June 26, 2010
Cash flow hedges:
Foreign exchange contracts	$	12		$	83		$	(162	)	$	67	Other income and expense	$	15	$	(50	)
Net investment hedges:
Foreign exchange contracts		(7	)		(18	)		0			0	Other income and expense		1		0
Total	$	5		$	65		$	(162	)	$	67		$	16	$	(50	)

		September 30,			September 30,			September 30,			September 30,	September 30,		September 30,			September 30,
	Nine Month Periods
	Gains/(Losses) Recognized in OCI - Effective Portion (e)						Gains/(Losses) Reclassified from AOCI into Income - Effective Portion (e)					Gains/(Losses) Recognized – Ineffective Portion and Amount Excluded from Effectiveness Testing
	June 25, 2011			June 26, 2010			June 25, 2011 (c)			June 26, 2010 (d)		Location	June 25, 2011			June 26, 2010
Cash flow hedges:
Foreign exchange contracts	$	(270	)	$	145		$	(701	)	$	80	Other income and expense	$	(104	)	$	(88	)
Net investment hedges:
Foreign exchange contracts		(21	)		(16	)		0			0	Other income and expense		1			0
Total	$	(291	)	$	129		$	(701	)	$	80		$	(103	)	$	(88	)

(a) Includes gains/(losses) reclassified from AOCI into income for the effective portion of cash flow hedges, of which $(101) million and $(61) million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the three months ended June 25, 2011. There were no amounts reclassified from AOCI into income for the effective portion of net investment hedges for the three months ended June 25, 2011.

(b) Includes gains/(losses) reclassified from AOCI into income for the effective portion of cash flow hedges, of which $78 million and $(11) million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the three months ended June 26, 2010. There were no amounts reclassified from AOCI into income for the effective portion of net investment hedges for the three months ended June 26, 2010.

(c) Includes gains/(losses) reclassified from AOCI into income for the effective portion of cash flow hedges, of which $(382) million and $(319) million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the nine months ended June 25, 2011. There were no amounts reclassified from AOCI into income for the effective portion of net investment hedges for the nine months ended June 25, 2011.

(d) Includes gains/(losses) reclassified from AOCI into income for the effective portion of cash flow hedges, of which $109 million and $(29) million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the nine months ended June 26, 2010. There were no amounts reclassified from AOCI into income for the effective portion of net investment hedges for the nine months ended June 26, 2010.

(e) Refer to Note 5, “Shareholders’ Equity and Stock-Based Compensation” of this Form 10-Q, which summarizes the activity in AOCI related to derivatives.