Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Notes)

v3.7.0.1
Fair Value Measurements (Notes)
9 Months Ended
Jun. 25, 2017
Notes to Financial Statements [Abstract]  
Fair Value Measurements
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 25, 2017 (in millions):
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
Cash equivalents
$
3,540

 
$
10,133

 
$

 
$
13,673

Marketable securities
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
2,766

 
73

 

 
2,839

Corporate bonds and notes

 
17,822

 

 
17,822

Mortgage- and asset-backed and auction rate securities

 
958

 
40

 
998

Equity and preferred securities and equity funds
32

 

 

 
32

Debt funds

 
447

 

 
447

Total marketable securities
2,798

 
19,300

 
40

 
22,138

Derivative instruments

 
21

 

 
21

Other investments
358

 

 
135

 
493

Total assets measured at fair value
$
6,696

 
$
29,454

 
$
175

 
$
36,325

Liabilities
 
 
 
 
 
 
 
Derivative instruments
$

 
$
7

 
$

 
$
7

Other liabilities
358

 

 
193

 
551

Total liabilities measured at fair value
$
358

 
$
7

 
$
193

 
$
558


Activity between Levels of the Fair Value Hierarchy. There were no significant transfers between Level 1 and Level 2 in the nine months ended June 25, 2017 and June 26, 2016. 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 of marketable securities out of Level 3 in the nine months ended June 26, 2016 primarily consisted of debt securities with significant upgrades in credit ratings or for which there were observable inputs.
Other investments and other liabilities included in Level 3 at June 25, 2017 were comprised of convertible debt instruments issued by private companies and contingent consideration related to business combinations, respectively, in the nine months ended June 25, 2017. There were no transfers of convertible debt instruments or contingent consideration amounts into or out of Level 3 during the nine months ended June 25, 2017. 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 fair value of convertible debt instruments is estimated by the Company based on the estimated timing and amount of future cash flows, as well as assumptions related to liquidity, default likelihood and recovery. The fair value of contingent consideration related to business combinations is estimated by the Company using a real options approach, which includes inputs, such as projected financial information, market volatility, discount rates and timing of contractual payments. The inputs used by the Company to estimate the fair values of the convertible debt instruments and contingent consideration are generally unobservable, and therefore, they are included in Level 3.
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. In the nine months ended June 25, 2017 and June 26, 2016, the Company did not have any significant assets or liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition.