Financial Instruments (Tables)

3 Months Ended

Dec. 27, 2014

Cash and 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 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- or long-term marketable securities as of December 27, 2014 and September 27, 2014 (in millions):


	December 27, 2014
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities

Cash	$	13,757	$	0	$	0		$	13,757	$	13,757	$	0	$	0

Level 1 ⁽¹⁾:
Money market funds		3,346		0		0			3,346		3,346		0		0
Mutual funds		2,544		0		(159	)		2,385		0		2,385		0

Subtotal		5,890		0		(159	)		5,731		3,346		2,385		0


Level 2 ⁽²⁾:
U.S. Treasury securities		35,107		16		(58	)		35,065		545		692		33,828
U.S. agency securities		6,788		2		(11	)		6,779		582		291		5,906
Non-U.S. government securities		6,498		58		(105	)		6,451		0		177		6,274
Certificates of deposit and time deposits		2,778		0		0			2,778		272		1,168		1,338
Commercial paper		1,159		0		0			1,159		879		280		0
Corporate securities		92,371		159		(720	)		91,810		97		7,932		83,781
Municipal securities		939		4		(1	)		942		0		0		942
Mortgage- and asset-backed securities		13,501		32		(50	)		13,483		0		60		13,423

Subtotal		159,141		271		(945	)		158,467		2,375		10,600		145,492


Total	$	178,788	$	271	$	(1,104	)	$	177,955	$	19,478	$	12,985	$	145,492


	September 27, 2014
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities

Cash	$	10,232	$	0	$	0		$	10,232	$	10,232	$	0	$	0

Level 1 ⁽¹⁾:
Money market funds		1,546		0		0			1,546		1,546		0		0
Mutual funds		2,531		1		(132	)		2,400		0		2,400		0

Subtotal		4,077		1		(132	)		3,946		1,546		2,400		0


Level 2 ⁽²⁾:
U.S. Treasury securities		23,140		15		(9	)		23,146		12		607		22,527
U.S. agency securities		7,373		3		(11	)		7,365		652		157		6,556
Non-U.S. government securities		6,925		69		(69	)		6,925		0		204		6,721
Certificates of deposit and time deposits		3,832		0		0			3,832		1,230		1,233		1,369
Commercial paper		475		0		0			475		166		309		0
Corporate securities		85,431		296		(241	)		85,486		6		6,298		79,182
Municipal securities		940		8		0			948		0		0		948
Mortgage- and asset-backed securities		12,907		26		(49	)		12,884		0		25		12,859

Subtotal		141,023		417		(379	)		141,061		2,066		8,833		130,162


Total	$	155,332	$	418	$	(511	)	$	155,239	$	13,844	$	11,233	$	130,162

⁽¹⁾

The fair value of Level 1 securities is estimated based on quoted prices in active markets for identical assets or liabilities.

⁽²⁾

The fair value of Level 2 securities is estimated 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.


	December 27, 2014
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities

Cash	$	13,757	$	0	$	0		$	13,757	$	13,757	$	0	$	0

Level 1 ⁽¹⁾:
Money market funds		3,346		0		0			3,346		3,346		0		0
Mutual funds		2,544		0		(159	)		2,385		0		2,385		0

Subtotal		5,890		0		(159	)		5,731		3,346		2,385		0


Level 2 ⁽²⁾:
U.S. Treasury securities		35,107		16		(58	)		35,065		545		692		33,828
U.S. agency securities		6,788		2		(11	)		6,779		582		291		5,906
Non-U.S. government securities		6,498		58		(105	)		6,451		0		177		6,274
Certificates of deposit and time deposits		2,778		0		0			2,778		272		1,168		1,338
Commercial paper		1,159		0		0			1,159		879		280		0
Corporate securities		92,371		159		(720	)		91,810		97		7,932		83,781
Municipal securities		939		4		(1	)		942		0		0		942
Mortgage- and asset-backed securities		13,501		32		(50	)		13,483		0		60		13,423

Subtotal		159,141		271		(945	)		158,467		2,375		10,600		145,492


Total	$	178,788	$	271	$	(1,104	)	$	177,955	$	19,478	$	12,985	$	145,492


	September 27, 2014
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities

Cash	$	10,232	$	0	$	0		$	10,232	$	10,232	$	0	$	0

Level 1 ⁽¹⁾:
Money market funds		1,546		0		0			1,546		1,546		0		0
Mutual funds		2,531		1		(132	)		2,400		0		2,400		0

Subtotal		4,077		1		(132	)		3,946		1,546		2,400		0


Level 2 ⁽²⁾:
U.S. Treasury securities		23,140		15		(9	)		23,146		12		607		22,527
U.S. agency securities		7,373		3		(11	)		7,365		652		157		6,556
Non-U.S. government securities		6,925		69		(69	)		6,925		0		204		6,721
Certificates of deposit and time deposits		3,832		0		0			3,832		1,230		1,233		1,369
Commercial paper		475		0		0			475		166		309		0
Corporate securities		85,431		296		(241	)		85,486		6		6,298		79,182
Municipal securities		940		8		0			948		0		0		948
Mortgage- and asset-backed securities		12,907		26		(49	)		12,884		0		25		12,859

Subtotal		141,023		417		(379	)		141,061		2,066		8,833		130,162


Total	$	155,332	$	418	$	(511	)	$	155,239	$	13,844	$	11,233	$	130,162

⁽¹⁾

The fair value of Level 1 securities is estimated based on quoted prices in active markets for identical assets or liabilities.

⁽²⁾

Derivative Instruments at Gross Fair Value

The following tables show the Company’s derivative instruments at gross fair value as of December 27, 2014 and September 27, 2014 (in millions):


	December 27, 2014
	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	$	3,561	$	501	$	4,062
Interest rate contracts	$	201	$	0	$	201

Derivative liabilities ⁽²⁾:
Foreign exchange contracts	$	51	$	119	$	170
Interest rate contracts	$	87	$	0	$	87

	September 27, 2014
	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	$	1,332	$	222	$	1,554
Interest rate contracts	$	81	$	0	$	81

Derivative liabilities ⁽²⁾:
Foreign exchange contracts	$	41	$	40	$	81

⁽¹⁾

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.

⁽²⁾

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, Net Investment and Fair Value Hedges

The following tables show the pre-tax effect of the Company’s derivative instruments designated as cash flow, net investment and fair value hedges on OCI and the Condensed Consolidated Statements of Operations for the three months ended December 27, 2014 and December 28, 2013 (in millions):


	Gains/(Losses) Recognized in OCI – Effective Portion					Gains/(Losses) Reclassified from AOCI into Net Income – Effective Portion
	Three Months Ended					Three Months Ended
	December 27, 2014			December 28, 2013		December 27, 2014			December 28, 2013
Cash flow hedges:
Foreign exchange contracts	$	2,585		$	264	$	762		$	(74	)
Interest rate contracts		(88	)		21		(99	)		(4	)

Total	$	2,497		$	285	$	663		$	(78	)


Net investment hedges:
Foreign exchange contracts	$	118		$	24	$	0		$	0


	Gains/(Losses) on Derivative Instruments					Gains/(Losses) Related to Hedged Items
	Three Months Ended					Three Months Ended
	December 27, 2014			December 28, 2013		December 27, 2014			December 28, 2013
Fair value hedges:
Interest rate contracts	$	117		$	0	$	(117	)	$	0

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 December 27, 2014 and September 27, 2014 (in millions):


	December 27, 2014				September 27, 2014
	Notional Amount		Credit Risk Amounts		Notional Amount		Credit Risk Amounts
Instruments designated as accounting hedges:
Foreign exchange contracts	$	55,761	$	3,561	$	42,945	$	1,333
Interest rate contracts	$	15,513	$	201	$	12,000	$	89

Instruments not designated as accounting hedges:
Foreign exchange contracts	$	39,872	$	501	$	38,510	$	222

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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