Annual report pursuant to Section 13 and 15(d)

Marketable Securities

v3.8.0.1
Marketable Securities
 12 Months Ended
Sep. 24, 2017
Marketable Securities [Abstract]  
Marketable Securities
Marketable Securities
Marketable securities were comprised as follows (in millions):
 
Current
 
Noncurrent
 
September 24,
2017
 
September 25,
2016
 
September 24,
2017
 
September 25,
2016
Available-for-sale:
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
$
23

 
$
1,116

 
$
959

 
$
1,099

Corporate bonds and notes
2,014

 
10,159

 
271

 
8,584

Mortgage- and asset-backed and auction rate securities
93

 
1,363

 
40

 
534

Equity and preferred securities and equity funds
36

 
64

 
—

 
1,682

Debt funds
109

 
—

 
—

 
1,803

Total available-for-sale
2,275

 
12,702

 
1,270

 
13,702

Time deposits
4

 
—

 
—

 
—

Total marketable securities
$
2,279

 
$
12,702

 
$
1,270

 
$
13,702


During fiscal 2016, the Company exited an investment in a debt fund for which the Company elected the fair value option. The investment would have otherwise been recorded using the equity method. Changes in fair value associated with this investment were recognized in investment and other income, net. During fiscal 2016 and 2015, the net decrease in fair value associated with this investment was negligible and $10 million, respectively. At September 24, 2017, marketable securities also included $4 million of time deposits with original maturities that range from 94 to 285 days.
At September 24, 2017, the contractual maturities of available-for-sale debt securities were as follows (in millions):
 
September 24,
2017
Years to Maturity:
 
Less than one year
$
2,189

One to five years
1,079

Five to ten years
—

Greater than ten years
—

No single maturity date
241

Total
$
3,509


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
2017
$
553

 
$
(127
)
 
$
426

2016
277

 
(37
)
 
240

2015
540

 
(52
)
 
488


Available-for-sale securities were comprised as follows (in millions):
 
Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
September 24, 2017
 
 
 
 
 
 
 
Equity securities
$
8

 
$
28

 
$
—

 
$
36

Debt securities (including debt funds)
3,497

 
13

 
(1
)
 
3,509

 
$
3,505

 
$
41

 
$
(1
)
 
$
3,545

September 25, 2016
 
 
 
 
 
 
 
Equity securities
$
1,554

 
$
204

 
$
(12
)
 
$
1,746

Debt securities (including debt funds)
24,363

 
388

 
(93
)
 
24,658

 
$
25,917

 
$
592

 
$
(105
)
 
$
26,404


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 24, 2017
 
Less than 12 months
 
More than 12 months
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
Corporate bonds and notes
$
330

 
$
(1
)
 
$
21

 
$
—

 
September 25, 2016
 
Less than 12 months
 
More than 12 months
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
U.S. Treasury securities and government-related securities
$
444

 
$
(5
)
 
$
16

 
$
—

Corporate bonds and notes
2,775

 
(12
)
 
1,033

 
(65
)
Mortgage- and asset-backed and auction rate securities
337

 
(3
)
 
211

 
(2
)
Equity and preferred securities and equity funds
312

 
(4
)
 
130

 
(8
)
Debt funds
—

 
—

 
309

 
(6
)
 
$
3,868

 
$
(24
)
 
$
1,699

 
$
(81
)

In connection with the proposed NXP transaction (Note 9), the Company divested a substantial portion of its marketable securities portfolio in order to finance, in part, that transaction. Marketable securities that were expected to be used to finance the NXP transaction were classified as noncurrent at September 24, 2017 as they are not considered available for current operations. Given the change in the Company’s intention to sell certain marketable securities, the Company recognized other-than-temporary impairment losses in fiscal 2017 for such marketable securities (Note 2) and may recognize additional losses prior to the sale of such marketable securities. For the available-for-sale securities that are not expected to be sold to finance the NXP transaction, the Company concluded that the unrealized losses were temporary at September 24, 2017. Further, for debt securities with unrealized losses, as of September 24, 2017, the Company did not have the intent to sell, nor was it more likely than not that the Company would be required to sell, such securities before recovery or maturity.