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0000320193
20111026
10-K
1,057
The credit risk amounts represent the Company’s gross exposure to potential accounting loss on derivative instruments that are outstanding or unsettled if all counterparties failed to perform according to the terms of the contract, based on then-current currency exchange rates at each respective date.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,058
The Company’s gross exposure on these transactions may be further mitigated by collateral received from certain counterparties.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,059
The Company’s exposure to credit loss and market risk will vary over time as a function of currency exchange rates.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,060
Although the table above reflects the notional principal and credit risk amounts of the Company’s foreign exchange instruments, it does not reflect the gains or losses associated with the exposures and transactions that the foreign exchange instruments are intended to hedge.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,061
The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,062
The Company generally enters into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,063
To further limit credit risk, the Company generally enters into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,064
The Company presents its derivative assets and derivative liabilities at their gross fair values.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,065
As of September 24, 2011, the Company received cash collateral related to the derivative instruments under its collateral security arrangements of $288 million, which it recorded as accrued expenses in the Consolidated Balance Sheet.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,066
As of September 25, 2010, the Company posted cash collateral related to the derivative instruments under its collateral security arrangements of $445 million, which it recorded as other current assets in the Consolidated Balance Sheet.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,067
The Company did not have any derivative instruments with credit-risk related contingent features that would require it to post additional collateral as of September 24, 2011 or September 25, 2010.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,068
The following tables summarize the gross fair value of the Company’s derivative instruments as reflected in the Consolidated Balance Sheets as of September 24, 2011 and September 25, 2010 (in millions): (a) The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current ...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,069
(b) The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as accrued expenses in the Consolidated Balance Sheets.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,070
The following table summarizes the pre-tax effect of the Company’s derivative instruments designated as cash flow and net investment hedges in the consolidated financial statements for the years ended September 24, 2011 and September 25, 2010 (in millions): (a) Includes gains/(losses) reclassified from AOCI into income...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,071
There were no amounts reclassified from AOCI into income for the effective portion of net investment hedges for the year ended September 24, 2011.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,072
(b) Includes gains/(losses) reclassified from AOCI into income for the effective portion of cash flow hedges, of which $158 million and $(43) million were recognized within net sales and cost of sales, respectively, within the Consolidated Statement of Operations for the year ended September 25, 2010.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,073
There were no amounts reclassified from AOCI into income for the effective portion of net investment hedges for the year ended September 25, 2010.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,074
(c) Refer to Note 6, “Shareholders’ Equity and Share-based Compensation” of this Form 10-K, which summarizes the activity in AOCI related to derivatives.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,075
Accounts Receivable Trade Receivables The Company has considerable trade receivables outstanding with its third-party cellular network carriers, wholesalers, retailers, value-added resellers, small and mid-sized businesses, and education, enterprise and government customers.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,076
The Company generally does not require collateral from its customers; however, the Company will require collateral in certain instances to limit credit risk.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,077
In addition, when possible, the Company attempts to limit credit risk on trade receivables with credit insurance for certain customers or by requiring third-party financing, loans or leases to support credit exposure.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,078
These credit-financing arrangements are directly between the third-party financing company and the end customer.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,079
As such, the Company generally does not assume any recourse or credit risk sharing related to any of these arrangements.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,080
As of September 24, 2011, there were no customers that accounted for 10% or more of the Company’s total trade receivables.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,081
Trade receivables from two of the Company’s customers accounted for 15% and 12% of total trade receivables as of September 25, 2010.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,082
The Company’s cellular network carriers accounted for 52% and 64% of trade receivables as of September 24, 2011 and September 25, 2010, respectively.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,083
The additions and write-offs to the Company’s allowance for doubtful accounts during 2011, 2010 and 2009 were not significant.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,084
Vendor Non-Trade Receivables The Company has non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these manufacturing vendors who manufacture sub-assemblies or assemble final products for the Company.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,085
The Company purchases these components directly from suppliers.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,086
Vendor non-trade receivables from two of the Company’s vendors accounted for 53% and 29% of total non-trade receivables as of September 24, 2011 and vendor non-trade receivables from two of the Company’s vendors accounted for 57% and 24% of total non-trade receivables as of September 25, 2010.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,087
The Company does not reflect the sale of these components in net sales and does not recognize any profits on these sales until the related products are sold by the Company, at which time any profit is recognized as a reduction of cost of sales.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,088
Note 3 - Consolidated Financial Statement Details The following tables show the Company’s consolidated financial statement details as of September 24, 2011 and September 25, 2010 (in millions): Property, Plant and Equipment Accrued Expenses Non-Current Liabilities Note 4 - Goodwill and Other Intangible Assets The Compa...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,089
The following table summarizes the components of gross and net intangible asset balances as of September 24, 2011 and September 25, 2010 (in millions): During 2011 and 2010, the Company completed various business acquisitions.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,090
In 2011, the aggregate cash consideration, net of cash acquired, was $244 million, of which $167 million was allocated to goodwill and $77 million to acquired intangible assets.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,091
In 2010, the aggregate cash consideration, net of cash acquired, was $638 million, of which $535 million was allocated to goodwill and $107 million to acquired intangible assets.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,092
During 2011, the Company, as part of a consortium, acquired Nortel Networks Corporation’s patent portfolio for an overall purchase price of $4.5 billion, of which the Company’s contribution was approximately $2.6 billion.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,093
The majority of the acquisition price has been recorded in acquired intangible assets, which the Company expects to amortize over seven years.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,094
The Department of Justice is reviewing this transaction.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,095
The Company’s gross carrying amount of goodwill was $896 million and $741 million as of September 24, 2011 and September 25, 2010, respectively.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,096
The Company did not have any goodwill impairment during 2011, 2010 or 2009.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,097
The Company’s goodwill is allocated primarily to the Americas and Europe reportable operating segments.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,098
Amortization expense related to acquired intangible assets was $192 million, $69 million and $53 million in 2011, 2010 and 2009, respectively.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,099
As of September 24, 2011 the weighted-average amortization period for acquired intangible assets was 6.2 years.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,100
The expected annual amortization expense related to acquired intangible assets as of September 24, 2011, is as follows (in millions): Note 5 - Income Taxes The provision for income taxes for the three years ended September 24, 2011, consisted of the following (in millions): The foreign provision for income taxes is bas...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,101
The Company’s consolidated financial statements provide for any related tax liability on amounts that may be repatriated, aside from undistributed earnings of certain of the Company’s foreign subsidiaries that are intended to be indefinitely reinvested in operations outside the U.S. As of September 24, 2011, U.S. incom...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,102
The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be approximately $8.0 billion.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,103
As of September 24, 2011 and September 25, 2010, $54.3 billion and $30.8 billion, respectively, of the Company’s cash, cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,104
Amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,105
Deferred tax assets and liabilities reflect the effects of tax losses, credits, and the future income tax effects of temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply t...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,106
As of September 24, 2011 and September 25, 2010, the significant components of the Company’s deferred tax assets and liabilities were (in millions): A reconciliation of the provision for income taxes, with the amount computed by applying the statutory federal income tax rate (35% in 2011, 2010 and 2009) to income befor...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,107
For stock options, the Company receives an income tax benefit calculated as the difference between the fair market value of the stock issued at the time of the exercise and the option price, tax effected.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,108
For RSUs, the Company receives an income tax benefit upon the award’s vesting equal to the tax effect of the underlying stock’s fair market value.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,109
The Company had net excess tax benefits from equity awards of $1.1 billion, $742 million and $246 million in 2011, 2010 and 2009, respectively, which were reflected as increases to common stock.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,110
Uncertain Tax Positions Tax positions are evaluated in a two-step process.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,111
The Company first determines whether it is more likely than not that a tax position will be sustained upon examination.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,112
If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,113
The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,114
The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as non-current liabilities in the Consolidated Balance Sheets.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,115
As of September 24, 2011, the total amount of gross unrecognized tax benefits was $1.4 billion, of which $563 million, if recognized, would affect the Company’s effective tax rate.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,116
As of September 25, 2010, the total amount of gross unrecognized tax benefits was $943 million, of which $404 million, if recognized, would affect the Company’s effective tax rate.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,117
The aggregate changes in the balance of gross unrecognized tax benefits, which excludes interest and penalties, for the three years ended September 24, 2011, is as follows (in millions): The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,118
As of September 24, 2011 and September 25, 2010, the total amount of gross interest and penalties accrued was $261 million and $247 million, respectively, which is classified as non-current liabilities in the Consolidated Balance Sheets.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,119
In connection with tax matters, the Company recognized interest expense in 2011 and 2009 of $14 million and $64 million, respectively, and in 2010 the Company recognized an interest benefit of $43 million.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,120
The Company is subject to taxation and files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,121
For U.S. federal income tax purposes, all years prior to 2004 are closed.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,122
The Internal Revenue Service (the “IRS”) has completed its field audit of the Company’s federal income tax returns for the years 2004 through 2006 and proposed certain adjustments.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,123
The Company has contested certain of these adjustments through the IRS Appeals Office.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,124
The IRS is currently examining the years 2007 through 2009.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,125
In addition, the Company is also subject to audits by state, local and foreign tax authorities.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,126
In major states and major foreign jurisdictions, the years subsequent to 1988 and 2001, respectively, generally remain open and could be subject to examination by the taxing authorities.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,127
Management believes that an adequate provision has been made for any adjustments that may result from tax examinations.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,128
However, the outcome of tax audits cannot be predicted with certainty.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,129
If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,130
Although timing of the resolution and/or closure of audits is not certain, the Company does not believe it is reasonably possible that its unrecognized tax benefits would materially change in the next 12 months.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,131
Note 6 - Shareholders’ Equity and Share-based Compensation Preferred Stock The Company has five million shares of authorized preferred stock, none of which is issued or outstanding.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,132
Under the terms of the Company’s Restated Articles of Incorporation, the Board of Directors is authorized to determine or alter the rights, preferences, privileges and restrictions of the Company’s authorized but unissued shares of preferred stock.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,133
Comprehensive Income Comprehensive income consists of two components, net income and other comprehensive income.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,134
Other comprehensive income refers to revenue, expenses, gains and losses that under GAAP are recorded as an element of shareholders’ equity but are excluded from net income.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,135
The Company’s other comprehensive income consists of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency, unrealized gains and losses on marketable securities classified as available-for-sale, and net deferred gains and losses on certain derivative ins...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,136
The following table summarizes the components of AOCI, net of taxes, as of September 24, 2011, September 25, 2010, and September 26, 2009 (in millions): The change in fair value of available-for-sale securities included in other comprehensive income was $(41) million, $123 million and $118 million, net of taxes in 2011...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,137
The tax effect related to the change in unrealized gains/losses on available-for-sale securities was $24 million, $(72) million and $(78) million for 2011, 2010 and 2009, respectively.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,138
The following table summarizes activity in other comprehensive income related to derivatives, net of taxes, held by the Company during the three years ended September 24, 2011 (in millions): The tax effect related to the changes in fair value of derivatives was $(50) million, $97 million and $(135) million for 2011, 20...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,139
The tax effect related to derivative gains/losses reclassified from other comprehensive income to income was $(250) million, $43 million and $149 million for 2011, 2010 and 2009, respectively.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,140
Employee Benefit Plans 2003 Employee Stock Plan The 2003 Employee Stock Plan (the “2003 Plan”) is a shareholder approved plan that provides for broad-based equity grants to employees, including executive officers.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,141
The 2003 Plan permits the granting of incentive stock options, nonstatutory stock options, RSUs, stock appreciation rights, stock purchase rights and performance-based awards.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,142
Options granted under the 2003 Plan generally expire seven to ten years after the grant date and generally become exercisable over a period of four years, based on continued employment, with either annual, semi-annual or quarterly vesting.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,143
In general, RSUs granted under the 2003 Plan vest over two to four years, based on continued employment and are settled upon vesting in shares of the Company’s common stock on a one-for-one basis.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,144
Each share issued with respect to an award granted under the 2003 Plan (other than a stock option or stock appreciation right) reduces the number of shares available for grant under the plan by two shares, whereas shares issued in respect of an option or stock appreciation right count against the number of shares avail...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,145
As of September 24, 2011, approximately 50.8 million shares were reserved for future issuance under the 2003 Plan.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,146
1997 Director Stock Plan The 1997 Director Stock Plan (the “Director Plan”) is a shareholder approved plan that (i) permits the Company to grant awards of RSUs or stock options to the Company’s non-employee directors, (ii) provides for automatic initial grants of RSUs upon a non-employee director joining the Board and ...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,147
Each share issued with respect to RSUs granted under the Director Plan reduces the number of shares available for grant under the plan by two shares.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,148
The Director Plan expires November 9, 2019.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,149
As of September 24, 2011, approximately 190,000 shares were reserved for future issuance under the Director Plan.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,150
Rule 10b5-1 Trading Plans During the fourth quarter of 2011, executive officers Timothy D. Cook, Peter Oppenheimer, D. Bruce Sewell, Phil Schiller and Jeffrey E. Williams, and directors William V. Campbell and Arthur D. Levinson had trading plans pursuant to Rule 10b5-1(c)(1) of the Securities Exchange Act of 1934, as ...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,151
A trading plan is a written document that pre-establishes the amounts, prices and dates (or a formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including the exercise and sale of employee stock options and shares acquired pursuant to the Company’s employee stock...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,152
Employee Stock Purchase Plan The Employee Stock Purchase Plan (the “Purchase Plan”) is a shareholder approved plan under which substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or...
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,153
An employee’s payroll deductions under the Purchase Plan are limited to 10% of the employee’s compensation and employees may not purchase more than $25,000 of stock during any calendar year.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,154
As of September 24, 2011, approximately 3.1 million shares were reserved for future issuance under the Purchase Plan.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,155
Employee Savings Plan The Employee Savings Plan (the “Savings Plan”) is a deferred salary arrangement under Section 401(k) of the Internal Revenue Code.
0001193125-11-282113/full-submission.txt
0000320193
20111026
10-K
1,156
Under the Savings Plan, participating U.S. employees may defer a portion of their pre-tax earnings, up to the IRS annual contribution limit ($16,500 for calendar year 2011).
0001193125-11-282113/full-submission.txt