Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v2.4.1.9
Fair Value Measurements
3 Months Ended
Dec. 28, 2014
Notes to Financial Statements [Abstract]  
Fair Value Measurements
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 December 28, 2014 (in millions):
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
Cash equivalents
$
3,226

 
$
2,692

 
$

 
$
5,918

Marketable securities (a)
 
 
 
 
 
 
 
U.S. Treasury securities and government-related securities
389

 
1,115

 

 
1,504

Corporate bonds and notes

 
15,594

 

 
15,594

Mortgage- and asset-backed securities

 
1,353

 
183

 
1,536

Auction rate securities

 

 
47

 
47

Common and preferred stock
1,126

 
687

 

 
1,813

Equity funds
763

 

 

 
763

Debt funds
473

 
3,548

 

 
4,021

Total marketable securities
2,751

 
22,297

 
230

 
25,278

Derivative instruments
1

 
5

 

 
6

Other investments (a)
326

 

 

 
326

Total assets measured at fair value
$
6,304

 
$
24,994

 
$
230

 
$
31,528

Liabilities
 
 
 
 
 
 
 
Derivative instruments
$

 
$
6

 
$

 
$
6

Other liabilities
288

 

 

 
288

Total liabilities measured at fair value
$
288

 
$
6

 
$

 
$
294


(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 three months ended December 28, 2014 or December 29, 2013. 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):
 
Three Months Ended December 28, 2014
 
Three Months Ended December 29, 2013
 
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

 

 

 
2

Included in other comprehensive income
1

 
(1
)
 

 
(1
)
Purchases

 
29

 

 
23

Sales

 
(24
)
 

 
(9
)
Settlements
(37
)
 
(7
)
 

 
(8
)
Ending balance of Level 3
$
47

 
$
183

 
$
83

 
$
246


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 three months ended December 28, 2014 or December 29, 2013.
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 three months ended December 28, 2014, the Company updated the business plan and related internal forecasts related to the Company’s business that provides push-to-talk enablement services to wireless operators, resulting in a goodwill impairment charge of $69 million. During the three months ended December 29, 2013, the Company recorded impairment charges of $444 million and $16 million to write down certain property, plant and equipment related to the Company’s QMT division and goodwill related to its former QRS division, respectively. The impairment charges were recorded in other operating expenses. 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 three months ended December 28, 2014 and December 29, 2013, 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.