Annual report pursuant to Section 13 and 15(d)

Marketable Securities

v3.3.0.814
Marketable Securities
 12 Months Ended
Sep. 27, 2015
Marketable Securities [Abstract]  
Marketable Securities
Note 13. Marketable Securities
Marketable securities were comprised as follows (in millions):
 
Current
 
Noncurrent
 
September 27,
2015
 
September 28,
2014
 
September 27,
2015
 
September 28,
2014
Trading:
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
$
—

 
$
320

 
$
12

 
$
38

Corporate bonds and notes
—

 
191

 
364

 
367

Mortgage- and asset-backed and auction rate securities
—

 
—

 
242

 
237

Total trading
—

 
511

 
618

 
642

Available-for-sale:
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
156

 
805

 
691

 
392

Corporate bonds and notes
7,926

 
6,274

 
7,112

 
7,649

Mortgage- and asset-backed and auction rate securities
1,302

 
1,063

 
263

 
278

Equity and preferred securities and equity funds
377

 
192

 
1,253

 
2,146

Debt funds
—

 
813

 
2,909

 
2,560

Total available-for-sale
9,761

 
9,147

 
12,228

 
13,025

Fair value option:
 
 
 
 
 
 
 
Debt fund
—

 
—

 
780

 
790

Total marketable securities
$
9,761

 
$
9,658

 
$
13,626

 
$
14,457


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 September 27, 2015, the Company had an effective ownership interest in the debt fund of 25%. Changes in fair value associated with this investment are recognized in net investment income. During fiscal 2015, the net decrease in fair value associated with this investment was $10 million. During fiscal 2014 and 2013, net increases in fair value associated with this investment were $33 million and $17 million, 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 recognized on debt securities classified as trading held at September 27, 2015 and September 28, 2014, respectively, were negligible. Net losses recognized on debt securities classified as trading held at September 29, 2013 were $20 million.
At September 27, 2015, 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
$
3,124

 
$
11,271

 
$
980

 
$
510

 
$
4,474

 
$
20,359


Debt securities with no single maturity date included debt funds, mortgage- and asset-backed securities, auction rate securities and corporate bonds and notes.
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
2015
$
540

 
$
(52
)
 
$
488

2014
732

 
(18
)
 
714

2013
430

 
(142
)
 
288


Available-for-sale securities were comprised as follows (in millions):
 
Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
September 27, 2015
 
 
 
 
 
 
 
Equity securities
$
1,394

 
$
264

 
$
(28
)
 
$
1,630

Debt securities (including debt funds)
20,459

 
185

 
(285
)
 
20,359

 
$
21,853

 
$
449

 
$
(313
)
 
$
21,989

September 28, 2014
 
 
 
 
 
 
 
Equity securities
$
1,769

 
$
575

 
$
(6
)
 
$
2,338

Debt securities (including debt funds)
19,582

 
312

 
(60
)
 
19,834

 
$
21,351

 
$
887

 
$
(66
)
 
$
22,172


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):
 
September 27, 2015
 
Less than 12 months
 
More than 12 months
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
U.S. Treasury securities and government-related securities
$
304

 
$
(4
)
 
$
—

 
$
—

Corporate bonds and notes
7,656

 
(93
)
 
368

 
(62
)
Mortgage- and asset-backed and auction rate securities
862

 
(3
)
 
108

 
(1
)
Equity and preferred securities and equity funds
392

 
(28
)
 
17

 
—

Debt funds
1,792

 
(117
)
 
124

 
(5
)
 
$
11,006

 
$
(245
)
 
$
617

 
$
(68
)
 
September 28, 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
$
279

 
$
(2
)
 
$
—

 
$
—

Corporate bonds and notes
4,924

 
(31
)
 
104

 
(4
)
Mortgage- and asset-backed and auction rate securities
484

 
(1
)
 
135

 
(2
)
Equity and preferred securities and equity funds
86

 
(3
)
 
52

 
(3
)
Debt funds
133

 
(1
)
 
384

 
(19
)
 
$
5,906

 
$
(38
)
 
$
675

 
$
(28
)

At September 27, 2015, the Company concluded that the unrealized losses on its available-for-sale securities were temporary. Further, for common 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 and preferred stock 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 ending balance of the credit loss portion of other-than-temporary impairments on debt securities held by the Company was $12 million at September 27, 2015. The ending balance of the credit loss portion of other-than-temporary impairments on debt securities held by the Company was negligible at September 28, 2014 and September 29, 2013.