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Table of Contents
Note 3 – Fair Value Measurements
The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are
required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact
and the market-
based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk,
transfer restrictions and credit risk.
The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the
categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1
– Quoted prices in active markets for identical assets or liabilities.
Level 2
–
Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar
assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the
full term of the assets or liabilities.
Level 3
– Inputs that are generally unobservable and typically reflect management’
s estimates of assumptions that market participants would use
in pricing the asset or liability.
The Company’
s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were
derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of all other
financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven
valuations using significant inputs derived from or corroborated by observable market data.
Assets/Liabilities Measured at Fair Value on a Recurring Basis
The following table presents the Company’
s assets and liabilities measured at fair value on a recurring basis as of September 25, 2010 and
September 26, 2009 (in millions):
64
September 25, 2010
Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total (a)
Assets:
Money market funds
$
2,753
$
0
$
0
$
2,753
U.S. Treasury securities
0
9,914
0
9,914
U.S. agency securities
0
8,727
0
8,727
Non
-
U.S. government securities
0
2,661
0
2,661
Certificates of deposit and time deposits
0
2,739
0
2,739
Commercial paper
0
3,168
0
3,168
Corporate securities
0
17,442
0
17,442
Municipal securities
0
1,917
0
1,917
Marketable equity securities
132
0
0
132
Foreign exchange contracts
0
107
0
107
Total assets measured at fair value
$
2,885
$
46,675
$
0
$
49,560
Liabilities:
Foreign exchange contracts
$
0
$
606
$
0
$
606