Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

v3.8.0.1
Fair Value Measurements
 12 Months Ended
Sep. 24, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [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 September 24, 2017 (in millions):
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
Cash equivalents
$
21,016

 
$
12,933

 
$
—

 
$
33,949

Marketable securities
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
969

 
13

 
—

 
982

Corporate bonds and notes
—

 
2,285

 
—

 
2,285

Mortgage- and asset-backed and auction rate securities
—

 
93

 
40

 
133

Equity and preferred securities and equity funds
36

 
—

 
—

 
36

Debt funds
—

 
109

 
—

 
109

Total marketable securities
1,005

 
2,500

 
40

 
3,545

Derivative instruments
—

 
14

 
—

 
14

Other investments
369

 
—

 
125

 
494

Total assets measured at fair value
$
22,390

 
$
15,447

 
$
165

 
$
38,002

Liabilities
 
 
 
 
 
 
 
Derivative instruments
$
—

 
$
27

 
$
—

 
$
27

Other liabilities
369

 
—

 
196

 
565

Total liabilities measured at fair value
$
369

 
$
27

 
$
196

 
$
592


Activity between Levels of the Fair Value Hierarchy. There were no significant transfers between Level 1 and Level 2 during fiscal 2017 and 2016.
The following table includes the activity for marketable securities, other investments and other liabilities classified within Level 3 of the valuation hierarchy (in millions):
 
2017
 
2016
 
Marketable Securities
 
Other Investments
 
Other Liabilities
 
Marketable Securities
 
Other Investments
Beginning balance of Level 3
$
43

 
$
37

 
$
—

 
$
224

 
$
13

Total realized and unrealized gains or losses:
 
 
 
 
 
 
 
 
 
Included in selling, general and administrative expenses
—

 
—

 
(7
)
 
—

 
—

Included in investment and other income, net
—

 
3

 
—

 
(4
)
 
(23
)
Included in other comprehensive income (loss)
—

 
8

 
—

 
(1
)
 
15

Issuances
—

 
—

 
203

 
—

 
—

Purchases
—

 
111

 
—

 
2

 
40

Sales
—

 
—

 
—

 
(106
)
 
—

Settlements
(3
)
 
(34
)
 
—

 
(45
)
 
(8
)
Transfers into Level 3
—

 
—

 
—

 
—

 
—

Transfers out of Level 3
—

 
—

 
—

 
(27
)
 
—

Ending balance of Level 3
$
40

 
$
125

 
$
196

 
$
43

 
$
37


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 fiscal 2016 for marketable securities primarily consisted of debt securities with significant upgrades in credit ratings or for which there were observable inputs.
Nonrecurring Fair Value Measurements. The Company measures certain assets and liabilities at fair value on a nonrecurring basis. These assets and liabilities 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 fiscal 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 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 fiscal 2017, 2016 and 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.