Financial Instruments (Tables)

The following tables show the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or short- and long-term marketable securities as of June 30, 2012 and September 24, 2011 (in millions):


	June 30, 2012
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities

Cash	$	3,269	$	0	$	0		$	3,269	$	3,269	$	0	$	0

Level 1:
Money market funds		1,181		0		0			1,181		1,181		0		0
Mutual funds		1,894		34		(17	)		1,911		0		1,911		0

Subtotal		3,075		34		(17	)		3,092		1,181		1,911		0


Level 2:
U.S. Treasury securities		20,587		10		(6	)		20,591		1,100		4,169		15,322
U.S. agency securities		19,197		41		(3	)		19,235		479		2,026		16,730
Non-U.S. government securities		6,919		103		(7	)		7,015		1		1,842		5,172
Certificates of deposit and time deposits		2,411		2		0			2,413		857		377		1,179
Commercial paper		2,301		0		0			2,301		991		1,310		0
Corporate securities		44,545		306		(31	)		44,820		24		7,482		37,314
Municipal securities		5,541		61		(3	)		5,599		43		588		4,968
Mortgage- and asset-backed securities		8,867		24		(5	)		8,886		0		4		8,882

Subtotal		110,368		547		(55	)		110,860		3,495		17,798		89,567


Total	$	116,712	$	581	$	(72	)	$	117,221	$	7,945	$	19,709	$	89,567


	September 24, 2011
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities

Cash	$	2,903	$	0	$	0		$	2,903	$	2,903	$	0	$	0

Level 1:
Money market funds		1,911		0		0			1,911		1,911		0		0
Mutual funds		1,227		0		(34	)		1,193		0		1,193		0

Subtotal		3,138		0		(34	)		3,104		1,911		1,193		0


Level 2:
U.S. Treasury securities		10,717		39		(3	)		10,753		1,250		2,149		7,354
U.S. agency securities		13,467		24		(3	)		13,488		225		1,818		11,445
Non-U.S. government securities		5,559		11		(2	)		5,568		551		1,548		3,469
Certificates of deposit and time deposits		4,175		2		(2	)		4,175		728		977		2,470
Commercial paper		2,853		0		0			2,853		2,237		616		0
Corporate securities		35,241		132		(114	)		35,259		10		7,241		28,008
Municipal securities		3,411		56		0			3,467		0		595		2,872

Subtotal		75,423		264		(124	)		75,563		5,001		14,944		55,618


Total	$	81,464	$	264	$	(158	)	$	81,570	$	9,815	$	16,137	$	55,618

The following table shows the notional principal amounts of the Company’s outstanding derivative instruments and credit risk amounts associated with outstanding or unsettled derivative instruments as of June 30, 2012 and September 24, 2011 (in millions):


	June 30, 2012				September 24, 2011
	Notional Principal		Credit Risk Amounts		Notional Principal		Credit Risk Amounts
Instruments designated as accounting hedges:
Foreign exchange contracts	$	33,892	$	569	$	13,705	$	537
Instruments not designated as accounting hedges:
Foreign exchange contracts	$	10,637	$	40	$	9,891	$	56

The following tables show the Company’s derivative instruments at gross fair value as reflected in the Condensed Consolidated Balance Sheets as of June 30, 2012 and September 24, 2011 (in millions):


	June 30, 2012
	Fair Value of Derivatives Designated as Hedge Instruments		Fair Value of Derivatives Not Designated as Hedge Instruments		Total Fair Value
Derivative assets (a):
Foreign exchange contracts	$	548	$	40	$	588
Derivative liabilities (b):
Foreign exchange contracts	$	165	$	13	$	178


	September 24, 2011
	Fair Value of Derivatives Designated as Hedge Instruments		Fair Value of Derivatives Not Designated as Hedge Instruments		Total Fair Value
Derivative assets (a):
Foreign exchange contracts	$	460	$	56	$	516
Derivative liabilities (b):
Foreign exchange contracts	$	72	$	37	$	109

(a)	The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets in the Condensed Consolidated Balance Sheets.

(b)	The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued expenses in the Condensed Consolidated Balance Sheets.

The following tables show the pre-tax effect of the Company’s derivative instruments designated as cash flow and net investment hedges in the Condensed Consolidated Statements of Operations for the three- and nine-month periods ended June 30, 2012 and June 25, 2011 (in millions):


	Three Months Ended
	Gains/(Losses) Recognized in OCI - Effective Portion (e)					Gains/(Losses) Reclassified from AOCI into Income - Effective Portion (e)					Gains/(Losses) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing
	June 30, 2012		June 25, 2011			June 30, 2012 (a)		June 25, 2011 (b)			Location	June 30, 2012			June 25, 2011
Cash flow hedges:
Foreign exchange contracts	$	234	$	12		$	84	$	(162	)	Other income and expense	$	(39	)	$	15
Net investment hedges:
Foreign exchange contracts		3		(7	)		0		0		Other income and expense		1			1

Total	$	237	$	5		$	84	$	(162	)		$	(38	)	$	16


	Nine Months Ended
	Gains/(Losses) Recognized in OCI - Effective Portion (e)					Gains/(Losses) Reclassified from AOCI into Income - Effective Portion (e)					Gains/(Losses) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing
	June 30, 2012		June 25, 2011			June 30, 2012 (c)		June 25, 2011 (d)			Location	June 30, 2012			June 25, 2011
Cash flow hedges:
Foreign exchange contracts	$	337	$	(270	)	$	468	$	(701	)	Other income and expense	$	(248	)	$	(104	)
Net investment hedges:
Foreign exchange contracts		10		(21	)		0		0		Other income and expense		2			1

Total	$	347	$	(291	)	$	468	$	(701	)		$	(246	)	$	(103	)

(a)

Includes gains/(losses) reclassified from AOCI into net income for the effective portion of cash flow hedges, of which $63 million and $21 million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the three months ended June 30, 2012. There were no amounts reclassified from AOCI into net income for the effective portion of net investment hedges for the three months ended June 30, 2012.

(b)

Includes gains/(losses) reclassified from AOCI into net income for the effective portion of cash flow hedges, of which $(101) million and $(61) million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the three months ended June 25, 2011. There were no amounts reclassified from AOCI into net income for the effective portion of net investment hedges for the three months ended June 25, 2011.

(c)

Includes gains/(losses) reclassified from AOCI into net income for the effective portion of cash flow hedges, of which $404 million and $64 million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the nine months ended June 30, 2012. There were no amounts reclassified from AOCI into net income for the effective portion of net investment hedges for the nine months ended June 30, 2012.

(d)

Includes gains/(losses) reclassified from AOCI into net income for the effective portion of cash flow hedges, of which $(382) million and $(319) million were recognized within net sales and cost of sales, respectively, within the Condensed Consolidated Statement of Operations for the nine months ended June 25, 2011. There were no amounts reclassified from AOCI into net income for the effective portion of net investment hedges for the nine months ended June 25, 2011.

(e)	Refer to Note 5, “Shareholders’ Equity and Share-based Compensation” of this Form 10-Q, which summarizes the activity in AOCI related to derivatives.

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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+ Details

- Definition

Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

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