Investments and Fair Value Measurements

The Company’s total cash, cash equivalents and marketable securities were as follows (in thousands):



	September 28, 2014		December 29, 2013
Cash and cash equivalents	$	930,835	$	986,246
Short-term marketable securities	1,370,257		1,919,611
Long-term marketable securities	2,843,933		3,179,471
Total cash, cash equivalents and marketable securities	$	5,145,025	$	6,085,328

For certain of the Company’s financial instruments, including cash held in banks, accounts receivable and accounts payable, the carrying amounts approximate fair value due to their short maturities, and are therefore excluded from the fair value tables below.

Financial assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following types of instruments (in thousands):



	September 28, 2014								December 29, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Money market funds	$	720,906	$	—	$	—	$	720,906	$	760,363	$	—	$	—	$	760,363
Fixed income securities	16,688		4,214,333		—		4,231,021		160,194		4,985,059		—		5,145,253
Derivative assets	—		2,254		—		2,254		—		777		—		777
Total financial assets	$	737,594	$	4,216,587	$	—	$	4,954,181	$	920,557	$	4,985,836	$	—	$	5,906,393

Derivative liabilities	$	—	$	24,031	$	—	$	24,031	$	—	$	45,859	$	—	$	45,859
Total financial liabilities	$	—	$	24,031	$	—	$	24,031	$	—	$	45,859	$	—	$	45,859

Financial assets and liabilities measured and recorded at fair value on a recurring basis were presented on the Company’s Condensed Consolidated Balance Sheets as follows (in thousands):



	September 28, 2014								December 29, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents⁽¹⁾	$	720,906	$	16,831	$	—	$	737,737	$	773,435	$	33,099	$	—	$	806,534
Short-term marketable securities	4,915		1,365,342		—		1,370,257		15,090		1,904,521		—		1,919,611
Long-term marketable securities	11,773		2,832,160		—		2,843,933		132,032		3,047,439		—		3,179,471
Other current assets	—		2,254		—		2,254		—		777		—		777
Total financial assets	$	737,594	$	4,216,587	$	—	$	4,954,181	$	920,557	$	4,985,836	$	—	$	5,906,393
Other current accrued liabilities	$	—	$	24,031	$	—	$	24,031	$	—	$	45,741	$	—	$	45,741
Non-current liabilities	—		—		—		—		—		118		—		118
Total financial liabilities	$	—	$	24,031	$	—	$	24,031	$	—	$	45,859	$	—	$	45,859


⁽¹⁾	Cash equivalents exclude cash holdings of $193.1 million and $179.7 million included in Cash and cash equivalents on the Company’s Condensed Consolidated Balance Sheets as of September 28, 2014 and December 29, 2013, respectively.

During the nine months ended September 28, 2014, the Company had no transfers of financial assets or liabilities between Level 1 and Level 2. As of September 28, 2014 and December 29, 2013, the Company had no financial assets or liabilities categorized as Level 3 and had not elected the fair value option for any financial assets and liabilities for which such an election would have been permitted.

Available-for-Sale Investments. Available-for-sale investments were as follows (in thousands):



	September 28, 2014									December 29, 2013
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
U.S. Treasury securities	$	16,706	$	2	$	(21	)	$	16,687	$	160,598	$	21	$	(424	)	$	160,195
U.S. government-sponsored agency securities	18,912		—		(13		)	18,899		8,112		10		(1		)	8,121
International government securities	79,582		13		(202		)	79,393		38,492		1		(224		)	38,269
Corporate notes and bonds	766,419		860		(820		)	766,459		864,331		1,504		(1,565		)	864,270
Asset-backed securities	168,190		51		(277		)	167,964		226,620		114		(170		)	226,564
Mortgage-backed securities	51,831		24		(138		)	51,717		86,542		18		(554		)	86,006
Municipal notes and bonds	3,115,376		14,791		(265		)	3,129,902		3,744,138		18,931		(1,241		)	3,761,828
Total available-for-sale investments	$	4,217,016	$	15,741	$	(1,736	)	$	4,231,021	$	5,128,833	$	20,599	$	(4,179	)	$	5,145,253

The fair value and gross unrealized losses on the available-for-sale securities that have been in a continuous unrealized loss position, aggregated by type of investment instrument, and the length of time that individual securities have been in a continuous unrealized loss position as of September 28, 2014, are summarized in the following table (in thousands). Available-for-sale securities that were in an unrealized gain position have been excluded from the table.



	Less than 12 months					Greater than 12 months
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss
U.S. Treasury securities	$	5,756	$	(21	)	$	—	$	—
U.S. government-sponsored agency securities	8,902		(13		)	—		—
International government securities	57,285		(202		)	—		—
Corporate notes and bonds	397,241		(820		)	1,027		—
Asset-backed securities	100,795		(277		)	—		—
Mortgage-backed securities	32,892		(135		)	227		(3		)
Municipal notes and bonds	225,140		(265		)	—		—
Total	$	828,011	$	(1,733	)	$	1,254	$	(3	)

The gross unrealized loss related to these securities was primarily due to changes in interest rates. The gross unrealized loss on all available-for-sale fixed income securities at September 28, 2014 was considered temporary in nature. Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and the Company’s intent and ability to hold an investment for a period of time sufficient to allow for any anticipated recovery in market value. For debt security investments, the Company considered additional factors including the Company’s intent to sell the investments or whether it is “more likely than not” the Company will be required to sell the investments before the recovery of its amortized cost.

The following table shows the realized gains and (losses) on sales of available-for-sale securities (in thousands):



	Three months ended						Nine months ended
	September 28, 2014			September 29, 2013			September 28, 2014			September 29, 2013
Realized gains	$	3,388		$	2,184		$	8,098		$	3,869
Realized losses	(460		)	(1,105		)	(1,187		)	(2,239		)
Net realized gains (losses)	$	2,928		$	1,079		$	6,911		$	1,630

Fixed income securities by contractual maturity as of September 28, 2014 are shown below (in thousands). Actual maturities may differ from contractual maturities because issuers of the securities may have the right to prepay obligations or the Company has the option to demand payment.



	Amortized Cost		Fair Value
Due in one year or less	$	777,581	$	779,489
After one year through five years	2,692,208		2,702,665
After five years through ten years	121,207		121,216
After ten years	626,020		627,651
Total	$	4,217,016	$	4,231,021

For those financial instruments where the carrying amounts differ from fair value, the following table represents the related carrying values and fair values, which are based on quoted market prices (in thousands). The 1.5% Convertible Senior Notes due 2017 were categorized as Level 1, and the 0.5% Convertible Senior Notes due 2020 were categorized as Level 2 due to a lack of frequent trading as of both September 28, 2014 and December 29, 2013. See Note 6, “Financing Arrangements,” regarding details of each convertible note presented.



	September 28, 2014				December 29, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value
1.5% Convertible Senior Notes due 2017	$	861,628	$	1,947,660	$	829,792	$	1,467,160
0.5% Convertible Senior Notes due 2020	1,188,356		1,813,590		1,155,571		1,480,290
Total	$	2,049,984	$	3,761,250	$	1,985,363	$	2,947,450