Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

v3.10.0.1
Fair Value Measurements
 12 Months Ended
Sep. 30, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]  
Fair Value Measurements
Fair Value Measurements
The following table presents our fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at September 30, 2018 (in millions):
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
Cash equivalents
$
7,147

 
$
2,867

 
$
—

 
$
10,014

Marketable securities:
 
 
 
 
 
 
 
Corporate bonds and notes
—

 
144

 
—

 
144

Auction rate securities
—

 
—

 
35

 
35

Equity and preferred securities
167

 
—

 
—

 
167

Total marketable securities
167

 
144

 
35

 
346

Derivative instruments
—

 
3

 
—

 
3

Other investments
380

 
—

 
16

 
396

Total assets measured at fair value
$
7,694

 
$
3,014

 
$
51

 
$
10,759

Liabilities
 
 
 
 
 
 
 
Derivative instruments
$
—

 
$
71

 
$
—

 
$
71

Other liabilities
380

 
—

 
86

 
466

Total liabilities measured at fair value
$
380

 
$
71

 
$
86

 
$
537


Activity within Level 3 of the Fair Value Hierarchy. The following table includes the activity for marketable securities, other investments and other liabilities classified within Level 3 of the valuation hierarchy (in millions):
 
2018
 
2017
 
Marketable Securities
 
Other Investments
 
Other Liabilities
 
Marketable Securities
 
Other Investments
 
Other Liabilities
Beginning balance of Level 3
$
40

 
$
125

 
$
196

 
$
43

 
$
37

 
$
—

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

 
—

 
(64
)
 
—

 
—

 
(7
)
Included in investment and other income, net
—

 
6

 
—

 
—

 
3

 
—

Included in other comprehensive (loss) income
—

 
7

 
—

 
—

 
8

 
—

Issuances
—

 
—

 
—

 
—

 
—

 
203

Purchases
—

 
7

 
—

 
—

 
111

 
—

Sales
—

 
—

 
—

 
—

 
—

 
—

Settlements
(5
)
 
(129
)
 
(46
)
 
(3
)
 
(34
)
 
—

Transfers into Level 3
—

 
—

 
—

 
—

 
—

 
—

Transfers out of Level 3
—

 
—

 
—

 
—

 
—

 
—

Ending balance of Level 3
$
35

 
$
16

 
$
86

 
$
40

 
$
125

 
$
196


We recognize 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. Other investments and other liabilities included in Level 3 at September 30, 2018 and September 24, 2017 were comprised of convertible debt instruments issued by private companies and contingent consideration related to business combinations, respectively.
Nonrecurring Fair Value Measurements. We measure 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 2018, we updated the business plans and related internal forecasts related to certain of our businesses, resulting in impairment charges to write down certain property, plant and equipment, intangible assets and goodwill (Note 10). We determined the fair values using cost, market and income 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 2018, 2017 and 2016, we 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.