Quarterly report pursuant to Section 13 or 15(d)

Marketable Securities

v2.4.0.8
Marketable Securities
 6 Months Ended
Mar. 30, 2014
Notes to Financial Statements [Abstract]  
Note 10 - Marketable Securities
Note 10 — Marketable Securities
Marketable securities were comprised as follows (in millions):
 
Current
 
Noncurrent
 
March 30,
2014
 
September 29,
2013
 
March 30,
2014
 
September 29,
2013
Trading:
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
$
319

 
$
241

 
$
13

 
$
49

Corporate bonds and notes
189

 
269

 
263

 
256

Mortgage- and asset-backed securities
—

 
—

 
134

 
104

Total trading
508

 
510

 
410

 
409

Available-for-sale:
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
945

 
721

 
431

 
71

Corporate bonds and notes
5,737

 
4,533

 
7,981

 
6,812

Mortgage- and asset-backed securities
896

 
745

 
421

 
328

Auction rate securities
—

 
—

 
83

 
83

Common and preferred stock
40

 
8

 
2,398

 
2,351

Equity funds
—

 
—

 
633

 
960

Debt funds
2,165

 
2,307

 
2,513

 
2,889

Total available-for-sale
9,783

 
8,314

 
14,460

 
13,494

Fair value option:
 
 
 
 
 
 
 
Debt fund
—

 
—

 
555

 
537

Total marketable securities
$
10,291

 
$
8,824

 
$
15,425

 
$
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 March 30, 2014, the Company had an effective ownership interest in the debt fund of 20%. Net increases in fair value associated with this investment recognized in net investment income were $12 million and $18 million during the three and six months ended March 30, 2014, respectively, and $8 million and $18 million during the three and six months ended March 31, 2013, 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 gains recognized on debt securities classified as trading held at March 30, 2014 were negligible for both the three and six months ended March 30, 2014. Net losses recognized on debt securities classified as trading held at March 31, 2013 were $15 million and $16 million for the three and six months ended March 31, 2013, respectively.
At March 30, 2014, 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
$
1,975

 
$
10,327

 
$
1,815

 
$
977

 
$
6,078

 
$
21,172


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
 
 
 
 
 
March 30, 2014
$
227

 
$
(5
)
 
$
222

March 31, 2013
69

 
(4
)
 
65

 
 
 
 
 
 
For the six months ended
 
 
 
 
 
March 30, 2014
$
343

 
$
(8
)
 
$
335

March 31, 2013
153

 
(9
)
 
144


Available-for-sale securities were comprised as follows (in millions):
 
Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
March 30, 2014
 
 
 
 
 
 
 
Equity securities
$
2,340

 
$
743

 
$
(12
)
 
$
3,071

Debt securities (including debt funds)
20,849

 
386

 
(63
)
 
21,172

 
$
23,189

 
$
1,129

 
$
(75
)
 
$
24,243

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):
 
March 30, 2014
 
Less than 12 months
 
More than 12 months
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
U.S. Treasury securities and government-related securities
$
236

 
$
(3
)
 
$
5

 
$
—

Corporate bonds and notes
3,724

 
(21
)
 
26

 
(1
)
Mortgage- and asset-backed securities
313

 
(2
)
 
41

 
(1
)
Auction rate securities
—

 
—

 
83

 
(1
)
Debt funds
672

 
(34
)
 
88

 
—

Equity funds
202

 
(12
)
 
5

 
—

 
$
5,147

 
$
(72
)
 
$
248

 
$
(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 March 30, 2014, 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
 
Six Months Ended
 
March 30,
2014
 
March 31,
2013
 
March 30,
2014
 
March 31,
2013
Beginning balance of credit losses
$
6

 
$
19

 
$
4

 
$
31

Reduction in credit losses related to securities the Company intends to sell
—

 
(6
)
 
—

 
(6
)
Credit losses recognized on securities not previously impaired
2

 
—

 
5

 
—

Reductions in credit losses related to securities sold
—

 
(5
)
 
(1
)
 
(17
)
Ending balance of credit losses
$
8

 
$
8

 
$
8

 
$
8