Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Notes)

v3.3.1.900
Fair Value Measurements (Notes)
 6 Months Ended
Mar. 27, 2016
Notes to Financial Statements [Abstract]  
Fair Value Measurements
Note 11. Fair Value Measurements
The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at March 27, 2016 (in millions):
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
Cash equivalents
$
2,860

 
$
1,884

 
$
—

 
$
4,744

Marketable securities
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
103

 
1,019

 
—

 
1,122

Corporate bonds and notes
—

 
16,696

 
—

 
16,696

Mortgage- and asset-backed and auction rate securities
—

 
1,901

 
65

 
1,966

Equity and preferred securities and equity funds
1,088

 
403

 
—

 
1,491

Debt funds
—

 
2,934

 
—

 
2,934

Total marketable securities
1,191

 
22,953

 
65

 
24,209

Derivative instruments
—

 
60

 
—

 
60

Other investments
289

 
—

 
—

 
289

Total assets measured at fair value
$
4,340

 
$
24,897

 
$
65

 
$
29,302

Liabilities
 
 
 
 
 
 
 
Derivative instruments
$
—

 
$
7

 
$
—

 
$
7

Other liabilities
288

 
—

 
—

 
288

Total liabilities measured at fair value
$
288

 
$
7

 
$
—

 
$
295


Activity between Levels of the Fair Value Hierarchy. There were no significant transfers between Level 1 and Level 2 during the six months ended March 27, 2016 and March 29, 2015. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. The following table includes the activity for mortgage- and asset-backed and auction rate securities classified within Level 3 of the valuation hierarchy (in millions):
 
Six Months Ended
 
March 27,
2016
 
March 29,
2015
Beginning balance of Level 3
$
224

 
$
269

Total realized and unrealized gains or losses:
 
 
 
Included in investment income, net
(3
)
 
3

Included in other comprehensive income (loss)
(2
)
 
(4
)
Purchases
2

 
50

Sales
(101
)
 
(41
)
Settlements
(40
)
 
(49
)
Transfers out of Level 3
(15
)
 
—

Ending balance of Level 3
$
65

 
$
228


The Company recognizes transfers into and out of levels within the fair value hierarchy at the end of the fiscal month in which the actual event or change in circumstances that caused the transfer occurs. Transfers out of Level 3 during the six months ended March 27, 2016 primarily consisted of debt securities with significant upgrades in credit ratings or for which there were observable inputs. There were no transfers into or out of Level 3 during the six months ended March 29, 2015.
Nonrecurring Fair Value Measurements. The Company measures certain assets at fair value on a nonrecurring basis. These assets include cost and equity method investments when they are deemed to be other-than-temporarily impaired, assets acquired and liabilities assumed in an acquisition or in a nonmonetary exchange, and property, plant and equipment and intangible assets that are written down to fair value when they are held for sale or determined to be impaired. During the six months ended March 29, 2015, the Company updated the business plans and related internal forecasts related to certain of the Company’s businesses, resulting in impairment charges to write down goodwill (Note 2). The Company determined the fair values using an income approach. The estimation of fair value and cash flows used in the fair value measurements required the use of significant unobservable inputs, and as a result, the fair value measurements were classified as Level 3. During the six months ended March 27, 2016 and March 29, 2015, the Company did not have any other significant assets or liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition.