Quarterly report pursuant to Section 13 or 15(d)

Marketable Securities

v2.4.0.8
Marketable Securities
 3 Months Ended
Dec. 29, 2013
Notes to Financial Statements [Abstract]  
Note 10 - Marketable Securities
Note 10 — Marketable Securities
Marketable securities were comprised as follows (in millions):
 
Current
 
Noncurrent
 
December 29,
2013
 
September 29,
2013
 
December 29,
2013
 
September 29,
2013
Trading:
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
$
289

 
$
241

 
$
21

 
$
49

Corporate bonds and notes
220

 
269

 
260

 
256

Mortgage- and asset-backed securities
—

 
—

 
121

 
104

Total trading
509

 
510

 
402

 
409

Available-for-sale:
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
968

 
721

 
73

 
71

Corporate bonds and notes
4,858

 
4,533

 
6,889

 
6,812

Mortgage- and asset-backed securities
719

 
745

 
327

 
328

Auction rate securities
—

 
—

 
83

 
83

Common and preferred stock
49

 
8

 
2,480

 
2,351

Equity funds
153

 
—

 
639

 
960

Debt funds
1,732

 
2,307

 
2,894

 
2,889

Total available-for-sale
8,479

 
8,314

 
13,385

 
13,494

Fair value option:
 
 
 
 
 
 
 
Debt fund
—

 
—

 
543

 
537

Total marketable securities
$
8,988

 
$
8,824

 
$
14,330

 
$
14,440


The Company holds an investment in a debt fund for which the Company elected the fair value option because the Company is able to redeem its shares at net asset value, which is determined daily. The investment would have otherwise been recorded using the equity method. The debt fund has no single maturity date. At December 29, 2013, the Company had an effective ownership interest in the debt fund of 20%. Net increases in fair value associated with this investment of $13 million and $10 million were recognized in net investment income during the three months ended December 29, 2013 and December 30, 2012, respectively.
The Company classifies certain portfolios of debt securities that utilize derivative instruments to acquire or reduce foreign exchange, interest rate and/or equity, prepayment and credit risks as trading. Net losses and net gains recognized on debt securities classified as trading still held at December 29, 2013 and December 30, 2012, respectively, were negligible for the three months ended December 29, 2013 and December 30, 2012, respectively.
At December 29, 2013, the contractual maturities of available-for-sale debt securities were as follows (in millions):
Years to Maturity
 
 
 
 
Less Than
One Year
 
One to
Five Years
 
Five to
Ten Years
 
Greater Than
Ten Years
 
No Single
Maturity
Date
 
Total
$
2,086

 
$
7,100

 
$
2,300

 
$
1,302

 
$
5,755

 
$
18,543


Debt securities with no single maturity date included debt funds, mortgage- and asset-backed securities and auction rate securities.
The Company recorded realized gains and losses on sales of available-for-sale securities as follows (in millions):
 
Gross Realized Gains
 
Gross Realized Losses
 
Net Realized Gains
For the three months ended
 
 
 
 
 
December 29, 2013
$
116

 
$
(3
)
 
$
113

December 30, 2012
84

 
(5
)
 
79


Available-for-sale securities were comprised as follows (in millions):
 
Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
December 29, 2013
 
 
 
 
 
 
 
Equity securities
$
2,564

 
$
809

 
$
(52
)
 
$
3,321

Debt securities (including debt funds)
18,280

 
420

 
(157
)
 
18,543

 
$
20,844

 
$
1,229

 
$
(209
)
 
$
21,864

September 29, 2013
 
 
 
 
 
 
 
Equity securities
$
2,570

 
$
793

 
$
(44
)
 
$
3,319

Debt securities (including debt funds)
18,255

 
396

 
(162
)
 
18,489

 
$
20,825

 
$
1,189

 
$
(206
)
 
$
21,808


The following table shows the gross unrealized losses and fair values of the Company’s investments in individual securities that are classified as available-for-sale and have been in a continuous unrealized loss position deemed to be temporary for less than 12 months and for more than 12 months, aggregated by investment category (in millions):
 
December 29, 2013
 
Less than 12 months
 
More than 12 months
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
U.S. Treasury securities and government-related securities
$
155

 
$
(2
)
 
$
—

 
$
—

Corporate bonds and notes
2,335

 
(24
)
 
17

 
—

Mortgage- and asset-backed securities
374

 
(3
)
 
26

 
(1
)
Auction rate securities
—

 
—

 
83

 
(1
)
Common and preferred stock
347

 
(49
)
 
1

 
—

Debt funds
1,288

 
(125
)
 
336

 
(1
)
Equity funds
40

 
(3
)
 
—

 
—

 
$
4,539

 
$
(206
)
 
$
463

 
$
(3
)
 
September 29, 2013
 
Less than 12 months
 
More than 12 months
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
U.S. Treasury securities and government-related securities
$
42

 
$
(1
)
 
$
—

 
$
—

Corporate bonds and notes
2,084

 
(31
)
 
24

 
(1
)
Mortgage- and asset-backed securities
367

 
(5
)
 
24

 
—

Auction rate securities
—

 
—

 
83

 
(1
)
Common and preferred stock
291

 
(41
)
 
—

 
—

Debt funds
2,776

 
(123
)
 
4

 
—

Equity funds
82

 
(3
)
 
—

 
—

 
$
5,642

 
$
(204
)
 
$
135

 
$
(2
)

At December 29, 2013, the Company concluded that the unrealized losses on its available-for-sale securities were temporary. Further, for common and preferred stock and for equity and debt funds with unrealized losses, the Company has the ability and the intent to hold such securities until they recover, which is expected to be within a reasonable period of time. For debt securities with unrealized losses, the Company does not have the intent to sell, nor is it more likely than not that the Company will be required to sell, such securities before recovery or maturity.
The following table shows the activity for the credit loss portion of other-than-temporary impairments on debt securities held by the Company (in millions):
 
Three Months Ended
 
December 29,
2013
 
December 30,
2012
Beginning balance of credit losses
$
4

 
$
31

Credit losses recognized on securities not previously impaired
2

 
—

Reductions in credit losses related to securities sold
—

 
(12
)
Ending balance of credit losses
$
6

 
$
19