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- or long-term marketable securities as of December 28, 2013 and September 28, 2013 (in millions):


	December 28, 2013
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities

Cash	$	8,404	$	0	$	0		$	8,404	$	8,404	$	0	$	0

Level 1 (a):
Money market funds		2,236		0		0			2,236		2,236		0		0
Mutual funds		4,045		0		(248	)		3,797		0		3,797		0

Subtotal		6,281		0		(248	)		6,033		2,236		3,797		0


Level 2 (b):
U.S. Treasury securities		39,177		11		(62	)		39,126		629		8,498		29,999
U.S. agency securities		16,087		7		(37	)		16,057		1,016		3,854		11,187
Non-U.S. government securities		5,470		25		(141	)		5,354		0		276		5,078
Certificates of deposit and time deposits		1,438		0		0			1,438		668		494		276
Commercial paper		2,212		0		0			2,212		1,122		991		99
Corporate securities		57,709		297		(221	)		57,785		2		7,658		50,125
Municipal securities		6,246		49		(13	)		6,282		0		1,021		5,261
Mortgage- and asset-backed securities		16,221		23		(93	)		16,151		0		45		16,106

Subtotal		144,560		412		(567	)		144,405		3,437		22,837		118,131


Total	$	159,245	$	412	$	(815	)	$	158,842	$	14,077	$	26,634	$	118,131


	September 28, 2013
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Securities		Long-Term Marketable Securities

Cash	$	8,705	$	0	$	0		$	8,705	$	8,705	$	0	$	0

Level 1 (a):
Money market funds		1,793		0		0			1,793		1,793		0		0
Mutual funds		3,999		0		(197	)		3,802		0		3,802		0

Subtotal		5,792		0		(197	)		5,595		1,793		3,802		0


Level 2 (b):
U.S. Treasury securities		27,642		24		(47	)		27,619		431		7,554		19,634
U.S. agency securities		16,878		12		(52	)		16,838		177		3,412		13,249
Non-U.S. government securities		5,545		35		(137	)		5,443		50		313		5,080
Certificates of deposit and time deposits		2,344		0		0			2,344		1,264		844		236
Commercial paper		2,998		0		0			2,998		1,835		1,163		0
Corporate securities		54,586		275		(252	)		54,609		0		8,077		46,532
Municipal securities		6,257		45		(22	)		6,280		4		1,114		5,162
Mortgage- and asset-backed securities		16,396		23		(89	)		16,330		0		8		16,322

Subtotal		132,646		414		(599	)		132,461		3,761		22,485		106,215


Total	$	147,143	$	414	$	(796	)	$	146,761	$	14,259	$	26,287	$	106,215

(a)	The fair value of Level 1 securities is estimated based on quoted prices in active markets for identical assets or liabilities.

(b)

The fair value of Level 2 securities is estimated based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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 December 28, 2013 and September 28, 2013 (in millions):


	December 28, 2013				September 28, 2013
	Notional Principal		Credit Risk Amounts		Notional Principal		Credit Risk Amounts
Instruments designated as accounting hedges:
Foreign exchange contracts	$	23,553	$	331	$	35,013	$	159
Interest rate contracts	$	3,000	$	55	$	3,000	$	44

Instruments not designated as accounting hedges:
Foreign exchange contracts	$	16,859	$	48	$	16,131	$	25

The following tables show the Company’s derivative instruments at gross fair value as reflected in the Condensed Consolidated Balance Sheets as of December 28, 2013 and September 28, 2013 (in millions):


	December 28, 2013
	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	$	263	$	48	$	311
Interest rate contracts	$	55	$	0	$	55

Derivative liabilities (b):
Foreign exchange contracts	$	231	$	36	$	267


	September 28, 2013
	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	$	145	$	25	$	170
Interest rate contracts	$	44	$	0	$	44

Derivative liabilities (b):
Foreign exchange contracts	$	389	$	46	$	435

(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 table shows 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 months ended December 28, 2013 and December 29, 2012 (in millions):


	Three Months Ended
	Gains/(Losses) Recognized in OCI - Effective Portion				Gains/(Losses) Reclassified from AOCI into Net Income - Effective Portion						Gains/(Losses) Recognized - Ineffective Portion and Amount Excluded from Effectiveness Testing
	December 28, 2013		December 29, 2012		December 28, 2013			December 29, 2012			Financial Statement Line Item	December 28, 2013			December 29, 2012
Cash flow hedges:
Foreign exchange contracts	$	264	$	205	$	(74	)	$	(159	)	Other income/(expense), net	$	(3	)	$	9
Interest rate contracts		21		0		(4	)		0		Other income/(expense), net		0			0

Net investment hedges:
Foreign exchange contracts		24		36		0			0		Other income/(expense), net		1			0

Total	$	309	$	241	$	(78	)	$	(159	)		$	(2	)	$	9

- 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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