Annual report pursuant to Section 13 and 15(d)

Marketable Securities

v2.4.0.8
Marketable Securities
 12 Months Ended
Sep. 28, 2014
Notes to Financial Statements [Abstract]  
Note 13 - Marketable Securities
Note 13. Marketable Securities
Marketable securities were comprised as follows (in millions):
 
Current
 
Noncurrent
 
September 28, 2014
 
September 29, 2013
 
September 28, 2014
 
September 29, 2013
Trading:
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
$
320

 
$
241

 
$
38

 
$
49

Corporate bonds and notes
191

 
269

 
367

 
256

Mortgage- and asset-backed securities
—

 
—

 
237

 
104

Total trading
511

 
510

 
642

 
409

Available-for-sale:
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
805

 
721

 
392

 
71

Corporate bonds and notes
6,274

 
4,533

 
7,649

 
6,812

Mortgage- and asset-backed securities
1,063

 
745

 
195

 
328

Auction rate securities
—

 
—

 
83

 
83

Common and preferred stock
192

 
8

 
1,605

 
2,351

Equity funds
—

 
—

 
541

 
960

Debt funds
813

 
2,307

 
2,560

 
2,889

Total available-for-sale
9,147

 
8,314

 
13,025

 
13,494

Fair value option:
 
 
 
 
 
 
 
Debt fund
—

 
—

 
790

 
537

Total marketable securities
$
9,658

 
$
8,824

 
$
14,457

 
$
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 September 28, 2014, the Company had an effective ownership interest in the debt fund of 26%. Net increases in fair value associated with this investment of $33 million, $17 million and $45 million were recognized in net investment income in fiscal 2014, 2013 and 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 recognized on debt securities classified as trading held at September 28, 2014 and September 29, 2013 were $5 million and $20 million, respectively.
At September 28, 2014, the contractual maturities of available-for-sale debt securities were as follows (in millions):
Years to Maturity
 
No Single
 
 
Less Than
 
One to
 
Five to
 
Greater Than
 
Maturity
 
 
One Year
 
Five Years
 
Ten Years
 
Ten Years
 
Date
 
Total
$
3,577

 
$
9,334

 
$
1,509

 
$
700

 
$
4,714

 
$
19,834


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):
Fiscal Year
Gross Realized Gains
 
Gross Realized Losses
 
Net Realized Gains
2014
$
732

 
$
(18
)
 
$
714

2013
430

 
(142
)
 
288

2012
296

 
(25
)
 
271


Available-for-sale securities were comprised as follows (in millions):
 
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair Value
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

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):
 
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 securities
484

 
(1
)
 
52

 
(1
)
Auction rate securities
—

 
—

 
83

 
(1
)
Common and preferred stock
86

 
(3
)
 
52

 
(3
)
Debt funds
133

 
(1
)
 
384

 
(19
)
 
$
5,906

 
$
(38
)
 
$
675

 
$
(28
)
 
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 September 28, 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. 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 ending balance of the credit loss portion of other-than-temporary impairments on debt securities held by the Company for fiscal 2014, 2013 and 2012 was $8 million, $4 million and $31 million, respectively.