Financial Instruments (Tables)

3 Months Ended

Dec. 31, 2011

Available-for-sale Securities' Adjusted Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value by Significant Investment Category

The following tables summarize the Company’s cash and 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 December 31, 2011 and September 24, 2011 (in millions):

		September 30,		September 30,		September 30,			September 30,		September 30,		September 30,		September 30,
	December 31, 2011
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	3,956	$	0	$	0		$	3,956	$	3,956	$	0	$	0
Level 1:
Money market funds		3,495		0		0			3,495		3,495		0		0
Mutual funds		1,238		0		(35	)		1,203		0		1,203		0
Subtotal		4,733		0		(35	)		4,698		3,495		1,203		0
Level 2:
U.S. Treasury securities		14,685		27		(3	)		14,709		0		2,789		11,920
U.S. agency securities		20,000		18		(11	)		20,007		363		4,279		15,365
Non-U.S. government securities		5,251		35		(5	)		5,281		127		1,642		3,512
Certificates of deposit and time deposits		3,837		1		0			3,838		1,462		629		1,747
Commercial paper		1,518		0		0			1,518		863		655		0
Corporate securities		38,914		149		(147	)		38,916		44		8,127		30,745
Municipal securities		4,078		53		(1	)		4,130		0		522		3,608
Asset-backed securities		549		0		(1	)		548		0		0		548
Subtotal		88,832		283		(168	)		88,947		2,859		18,643		67,445
Total	$	97,521	$	283	$	(203	)	$	97,601	$	10,310	$	19,846	$	67,445

		September 30,		September 30,		September 30,			September 30,		September 30,		September 30,		September 30,
	September 24, 2011
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	2,903	$	0	$	0		$	2,903	$	2,903	$	0	$	0
Level 1:
Money market funds		1,911		0		0			1,911		1,911		0		0
Mutual funds		1,227		0		(34	)		1,193		0		1,193		0
Subtotal		3,138		0		(34	)		3,104		1,911		1,193		0
Level 2:
U.S. Treasury securities		10,717		39		(3	)		10,753		1,250		2,149		7,354
U.S. agency securities		13,467		24		(3	)		13,488		225		1,818		11,445
Non-U.S. government securities		5,559		11		(2	)		5,568		551		1,548		3,469
Certificates of deposit and time deposits		4,175		2		(2	)		4,175		728		977		2,470
Commercial paper		2,853		0		0			2,853		2,237		616		0
Corporate securities		35,241		132		(114	)		35,259		10		7,241		28,008
Municipal securities		3,411		56		0			3,467		0		595		2,872
Subtotal		75,423		264		(124	)		75,563		5,001		14,944		55,618
Total	$	81,464	$	264	$	(158	)	$	81,570	$	9,815	$	16,137	$	55,618

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

The following table shows the notional principal amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of December 31, 2011 and September 24, 2011 (in millions):

		September 30,		September 30,		September 30,		September 30,
	December 31, 2011				September 24, 2011
	Notional Principal		Credit Risk Amounts		Notional Principal		Credit Risk Amounts
Instruments qualifying as accounting hedges:
Foreign exchange contracts	$	12,323	$	415	$	13,705	$	537
Instruments other than accounting hedges:
Foreign exchange contracts	$	15,988	$	85	$	9,891	$	56

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

The following tables show the Company’s derivative instruments measured at gross fair value as reflected in the Condensed Consolidated Balance Sheets as of December 31, 2011 and September 24, 2011 (in millions):

		September 30,		September 30,		September 30,
	December 31, 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	$	358	$	85	$	443
Derivative liabilities (b):
Foreign exchange contracts	$	42	$	45	$	87

		September 30,		September 30,		September 30,
	September 24, 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	$	460	$	56	$	516
Derivative liabilities (b):
Foreign exchange contracts	$	72	$	37	$	109

(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 shows 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 months ended December 31, 2011 and December 25, 2010 (in millions):

		September 30,		September 30,			September 30,		September 30,		September 30,		September 30,			September 30,
	Gains/(Losses) Recognized in OCI - Effective Portion (c)					Gains/(Losses) Reclassified from AOCI into Income - Effective Portion (c)					Gains/(Losses) Recognized – Ineffective Portion and Amount Excluded from Effectiveness Testing
	December 31, 2011		December 25, 2010			December 31, 2011 (a)		December 25, 2010 (b)			Location	December 31, 2011			December 25, 2010
Cash flow hedges:
Foreign exchange contracts	$	135	$	(66	)	$	238	$	(449	)	Other income and expense	$	(69	)	$	21
Net investment hedges:
Foreign exchange contracts		7		(3	)		0		0		Other income and expense		1			0
Total	$	142	$	(69	)	$	238	$	(449	)		$	(68	)	$	21

(a) Includes gains/(losses) reclassified from AOCI into net income for the effective portion of cash flow hedges, of which $187 million and $51 million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the three months ended December 31, 2011. There were no amounts reclassified from AOCI into net income for the effective portion of net investment hedges for the three months ended December 31, 2011.

(b) Includes gains/(losses) reclassified from AOCI into net income for the effective portion of cash flow hedges, of which $(257) million and $(192) million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the three months ended December 25, 2010. There were no amounts reclassified from AOCI into net income for the effective portion of net investment hedges for the three months ended December 25, 2010.

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