Financial Instruments (Tables)

6 Months Ended

Mar. 31, 2012

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

The following tables show 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 March 31, 2012 and September 24, 2011 (in millions):

		September 30,		September 30,		September 30,			September 30,		September 30,		September 30,		September 30,
	March 31, 2012
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities
Cash	$	2,911	$	0	$	0		$	2,911	$	2,911	$	0	$	0
Level 1:
Money market funds		1,513		0		0			1,513		1,513		0		0
Mutual funds		1,255		8		(5	)		1,258		0		1,258		0
Subtotal		2,768		8		(5	)		2,771		1,513		1,258		0
Level 2:
U.S. Treasury securities		18,469		10		(17	)		18,462		1,278		3,831		13,353
U.S. agency securities		21,130		35		(8	)		21,157		1,827		2,781		16,549
Non-U.S. government securities		5,326		78		(4	)		5,400		0		1,661		3,739
Certificates of deposit and time deposits		2,885		2		0			2,887		986		339		1,562
Commercial paper		2,545		0		0			2,545		1,497		1,048		0
Corporate securities		43,391		307		(32	)		43,666		85		6,856		36,725
Municipal securities		4,792		53		(5	)		4,840		24		640		4,176
Mortgage and asset-backed securities		5,535		7		(5	)		5,537		0		3		5,534
Subtotal		104,073		492		(71	)		104,494		5,697		17,159		81,638
Total	$	109,752	$	500	$	(76	)	$	110,176	$	10,121	$	18,417	$	81,638

		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 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 March 31, 2012 and September 24, 2011 (in millions):

		September 30,		September 30,		September 30,		September 30,
	March 31, 2012				September 24, 2011
	Notional Principal		Credit Risk Amounts		Notional Principal		Credit Risk Amounts
Instruments qualifying as accounting hedges:
Foreign exchange contracts	$	20,505	$	336	$	13,705	$	537
Instruments other than accounting hedges:
Foreign exchange contracts	$	13,585	$	43	$	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 March 31, 2012 and September 24, 2011 (in millions):

		September 30,		September 30,		September 30,
	March 31, 2012
	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	$	308	$	43	$	351
Derivative liabilities (b):
Foreign exchange contracts	$	129	$	27	$	156

		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- and six-month periods ended March 31, 2012 and March 26, 2011 (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
	March 31, 2012			March 26, 2011			March 31, 2012 (a)		March 26, 2011 (b)			Location	March 31, 2012			March 26, 2011
Cash flow hedges:
Foreign exchange contracts	$	(32	)	$	(216	)	$	146	$	(90	)	Other income and expense	$	(140	)	$	(140	)
Net investment hedges:
Foreign exchange contracts		0			(11	)		0		0		Other income and expense		0			0
Total	$	(32	)	$	(227	)	$	146	$	(90	)		$	(140	)	$	(140	)

		September 30,		September 30,			September 30,		September 30,		September 30,		September 30,			September 30,
	Six 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
	March 31, 2012		March 26, 2011			March 31, 2012 (c)		March 26, 2011 (d)			Location	March 31, 2012			March 26, 2011
Cash flow hedges:
Foreign exchange contracts	$	103	$	(282	)	$	384	$	(539	)	Other income and expense	$	(209	)	$	(119	)
Net investment hedges:
Foreign exchange contracts		7		(14	)		0		0		Other income and expense		1			0
Total	$	110	$	(296	)	$	384	$	(539	)		$	(208	)	$	(119	)

(a) Includes gains/(losses) reclassified from AOCI into net income for the effective portion of cash flow hedges, of which $154 million and $(8) million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the three months ended March 31, 2012. There were no amounts reclassified from AOCI into net income for the effective portion of net investment hedges for the three months ended March 31, 2012.

(b) Includes gains/(losses) reclassified from AOCI into net income for the effective portion of cash flow hedges, of which $(24) million and $(66) million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the three months ended March 26, 2011. There were no amounts reclassified from AOCI into net income for the effective portion of net investment hedges for the three months ended March 26, 2011.

(c) Includes gains/(losses) reclassified from AOCI into net income for the effective portion of cash flow hedges, of which $341 million and $43 million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the six months ended March 31, 2012. There were no amounts reclassified from AOCI into net income for the effective portion of net investment hedges for the six months ended March 31, 2012.

(d) Includes gains/(losses) reclassified from AOCI into net income for the effective portion of cash flow hedges, of which $(281) million and $(258) million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the six months ended March 26, 2011. There were no amounts reclassified from AOCI into net income for the effective portion of net investment hedges for the six months ended March 26, 2011.

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