Quarterly report pursuant to Section 13 or 15(d)

Marketable Securities (Notes)

v3.3.1.900
Marketable Securities (Notes)
 3 Months Ended
Dec. 27, 2015
Marketable Securities [Abstract]  
Marketable Securities
Note 11. Marketable Securities
Marketable securities were comprised as follows (in millions):
 
Current
 
Noncurrent
 
December 27,
2015
 
September 27,
2015
 
December 27,
2015
 
September 27,
2015
Trading:
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
$
—

 
$
—

 
$
61

 
$
12

Corporate bonds and notes
—

 
—

 
300

 
364

Mortgage- and asset-backed and auction rate securities
—

 
—

 
279

 
242

Total trading
—

 
—

 
640

 
618

Available-for-sale:
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
160

 
156

 
782

 
691

Corporate bonds and notes
7,942

 
7,926

 
7,568

 
7,112

Mortgage- and asset-backed and auction rate securities
1,339

 
1,302

 
299

 
263

Equity and preferred securities and equity funds
174

 
377

 
1,321

 
1,253

Debt funds
—

 
—

 
2,870

 
2,909

Total available-for-sale
9,615

 
9,761

 
12,840

 
12,228

Fair value option:
 
 
 
 
 
 
 
Debt fund
—

 
—

 
583

 
780

Total marketable securities
$
9,615

 
$
9,761

 
$
14,063

 
$
13,626


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 27, 2015, the Company had an effective ownership interest in the debt fund of 22%. Changes in fair value associated with this investment are recognized in net investment income. During the three months ended December 27, 2015 and December 28, 2014, the changes in fair value associated with this investment were negligible.
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 December 27, 2015 and December 28, 2014 were negligible and $12 million during the three months ended December 27, 2015 and December 28, 2014, respectively.
At December 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
$
3,142

 
$
10,947

 
$
1,721

 
$
643

 
$
4,507

 
$
20,960


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 27, 2015
$
50

 
$
(12
)
 
$
38

December 28, 2014
180

 
(8
)
 
172


Available-for-sale securities were comprised as follows (in millions):
 
Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
December 27, 2015
 
 
 
 
 
 
 
Equity securities
$
1,266

 
$
251

 
$
(22
)
 
$
1,495

Debt securities (including debt funds)
21,234

 
132

 
(406
)
 
20,960

 
$
22,500

 
$
383

 
$
(428
)
 
$
22,455

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


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 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
$
808

 
$
(12
)
 
$
20

 
$
(2
)
Corporate bonds and notes
10,466

 
(132
)
 
956

 
(108
)
Mortgage- and asset-backed and auction rate securities
1,220

 
(7
)
 
164

 
(1
)
Equity and preferred securities and equity funds
360

 
(22
)
 
2

 
—

Debt funds
1,923

 
(138
)
 
79

 
(6
)
 
$
14,777

 
$
(311
)
 
$
1,221

 
$
(117
)
 
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
)

At December 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 $22 million and negligible at December 27, 2015 and December 28, 2014, respectively.