Quarterly report pursuant to Section 13 or 15(d)

Composition of Certain Financial Statement Items (Notes)

v3.19.2
Composition of Certain Financial Statement Items (Notes)
 9 Months Ended
Jun. 30, 2019
Balance Sheet Related Disclosures [Abstract]  
Composition of Certain Financial Statement Items Composition of Certain Financial Statement Items
Accounts Receivable (in millions)
 
 
 
 
June 30,
2019
 
September 30,
2018
Trade, net of allowances for doubtful accounts of $47 and $56, respectively
$
1,036

 
$
2,667

Unbilled receivables
1,332

 
201

Other
22

 
36

 
$
2,390

 
$
2,904


The increase in unbilled receivables was primarily due to the adoption of ASC 606 (Note 1). Accounts receivable, trade at September 30, 2018 included approximately $960 million related to the short payment in the second quarter of fiscal 2017 of royalties reported by and deemed collectible from Apple’s contract manufacturers. This same amount was recorded in customer-related liabilities (in other current liabilities) for Apple, since we did not have the contractual right to offset these amounts. In the third quarter of fiscal 2019, we entered into settlement agreements with Apple and its contract manufacturers to dismiss all outstanding litigation between the parties, and as a result, these amounts, as well as others, were settled (Note 6).
Inventories (in millions)
 
 
 
 
June 30,
2019
 
September 30,
2018
Raw materials
$
81

 
$
72

Work-in-process
896

 
715

Finished goods
797

 
906

 
$
1,774

 
$
1,693


Equity Method and Non-marketable Equity Investments. The carrying values of our equity method and non-marketable equity investments are recorded in other noncurrent assets and were as follows (in millions):
 
June 30,
2019
 
September 30,
2018
Equity method investments
$
330

 
$
402

Non-marketable equity investments
800

 
650

 
$
1,130

 
$
1,052


In the second quarter of fiscal 2019, non-marketable debt and equity securities (non-cash consideration) with an aggregate fair value of $98 million were received related to a development contract with one of our equity method investees, which was recognized as revenues in the second quarter of fiscal 2019. In addition, in the second quarter of fiscal 2019, non-marketable equity securities (non-cash consideration) with a fair value of $53 million were received in connection with the sale of certain assets as part of the Cost Plan (Note 8).
Other Current Liabilities (in millions)
 
 
 
 
June 30,
2019
 
September 30,
2018
Customer incentives and other customer-related liabilities
$
1,105

 
$
3,500

Accrual for EC fines (Note 6)
1,430

 
1,167

Income taxes payable
668

 
453

RF360 Holdings put and call option
1,149

 
1,137

Other
373

 
721

 
$
4,725

 
$
6,978


Beginning on August 4, 2019, for a period of 60 days, we have the option to acquire (and the minority owner has the option to sell) the minority ownership interest in the RF360 Holdings joint venture for $1.15 billion, and we expect one of such options to be exercised during this period. At June 30, 2019 and September 30, 2018, the accreted value of such amount was included in other current liabilities.
Accumulated Other Comprehensive Income. Changes in the components of accumulated other comprehensive income, net of income taxes, in stockholders’ equity in the nine months ended June 30, 2019 were as follows (in millions):
 
Foreign Currency Translation Adjustment
 
Noncredit Other-than-Temporary Impairment Losses and Subsequent Changes in Fair Value for Certain Available-for-Sale Debt Securities
 
Net Unrealized Gain (Loss) on Other Available-for-Sale Securities
 
Net Unrealized (Loss) Gain on Derivative Instruments
 
Other Gains
 
Total Accumulated Other Comprehensive Income
Balance at September 30, 2018
$
11

 
$
23

 
$
243

 
$
(13
)
 
$
1

 
$
265

Other comprehensive (loss) income before reclassifications
(27
)
 
—

 
(6
)
 
23

 
(5
)
 
(15
)
Reclassifications from accumulated other comprehensive income
1

 
—

 
(51
)
 
(5
)
 
—

 
(55
)
Other comprehensive (loss) income
(26
)
 
—

 
(57
)
 
18

 
(5
)
 
(70
)
Balance at June 30, 2019
$
(15
)
 
$
23

 
$
186

 
$
5

 
$
(4
)
 
$
195


Reclassifications from accumulated other comprehensive income included adjustments of $51 million to the opening retained earnings balance as a result of the adoption of new accounting guidance in the first quarter of fiscal 2019 related to financial instruments and hedge instruments (Note 1). Reclassifications from accumulated other comprehensive income (excluding adjustments to opening retained earnings) related to available-for-sale securities were negligible in the three and nine months ended June 30, 2019 and June 24, 2018 and were recorded in investment and other income, net.
Other Income, Costs and Expenses. Other expenses in the three months ended June 30, 2019 consisted of a $275 million charge related to the fine imposed by the European Commission (EC) related to the Icera complaint (2019 EC fine) (Note 6) and negligible net charges related to our Cost Plan. Other expenses in the nine months ended June 30, 2019 included $275 million related to the 2019 EC fine, $207 million in net restructuring and restructuring-related charges related to our Cost Plan, partially offset by a $43 million gain due to the partial recovery of a fine we previously paid to the Korea Fair Trade Commission (KFTC) and a $31 million gain related to a favorable legal settlement.
Other expenses in the three and nine months ended June 24, 2018 consisted of $112 million and $422 million, respectively, in restructuring and restructuring-related charges related to our Cost Plan. Other expenses in the nine months ended June 24, 2018 also included a $1.2 billion charge related to an EC fine (2018 EC fine) (Note 6).
Investment and Other Income, Net (in millions)
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
June 30,
2019
 
June 24,
2018
 
June 30,
2019
 
June 24,
2018
Interest and dividend income
$
81

 
$
182

 
$
237

 
$
461

Net gains on marketable securities
326

 
10

 
293

 
24

Net gains on other investments
6

 
16

 
47

 
77

Impairment losses on marketable securities and other investments
(42
)
 
(19
)
 
(111
)
 
(40
)
Net losses on derivative investments
—

 
(30
)
 
(10
)
 
(21
)
Equity in net losses of investees
(22
)
 
(28
)
 
(79
)
 
(67
)
Net (losses) gains on foreign currency transactions
(5
)
 
112

 
—

 
20

 
$
344

 
$
243

 
$
377

 
$
454