QUALCOMM Incorporated Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

Fair Value Measurements

9 Months Ended

Jun. 28, 2015

Notes to Financial Statements [Abstract]

Note 10 — 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 June 28, 2015 (in millions):



	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	5,207	$	4,465	$	—	$	9,672
Marketable securities (a)
U.S. Treasury securities and government-related securities	44		1,137		—		1,181
Corporate bonds and notes	—		16,272		—		16,272
Mortgage- and asset-backed securities	—		1,584		181		1,765
Auction rate securities	—		—		46		46
Common and preferred stock	753		683		—		1,436
Equity funds	496		—		—		496
Debt funds	—		4,042		—		4,042
Total marketable securities	1,293		23,718		227		25,238
Derivative instruments	2		7		—		9
Other investments (a)	356		—		—		356
Total assets measured at fair value	$	6,858	$	28,190	$	227	$	35,275
Liabilities
Derivative instruments	$	—	$	23	$	—	$	23
Other liabilities	310		—		—		310
Total liabilities measured at fair value	$	310	$	23	$	—	$	333

(a) Included amounts that are restricted (Note 11).

Activity between Levels of the Fair Value Hierarchy. There were no significant transfers between Level 1 and Level 2 during the nine months ended June 28, 2015 and June 29, 2014. 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 marketable securities classified within Level 3 of the valuation hierarchy (in millions):



	Nine Months Ended June 28, 2015						Nine Months Ended June 29, 2014
	Auction Rate Securities			Mortgage- and Asset-Backed Securities			Auction Rate Securities		Mortgage- and Asset-Backed Securities
Beginning balance of Level 3	$	83		$	186		$	83	$	239
Total realized and unrealized gains or losses:
Included in investment income, net	—			3			—		10
Included in other comprehensive income	—			(4		)	—		(4		)
Purchases	—			62			—		86
Sales	—			(46		)	—		(124		)
Settlements	(37		)	(20		)	—		(28		)
Transfers out of Level 3	—			—			—		(2		)
Ending balance of Level 3	$	46		$	181		$	83	$	177

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. There were no transfers in or out of Level 3 during the nine months ended June 28, 2015. Transfers out of Level 3 during the nine months ended June 29, 2014 primarily consisted of debt securities with significant upgrades in credit ratings.

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 nine months ended June 28, 2015 and June 29, 2014, 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 certain property, plant and equipment, intangible assets and goodwill (Note 2). The Company determined the fair values using cost, income and market approaches. 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 nine months ended June 28, 2015 and June 29, 2014, 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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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