Investments and Fair Value Measurements

The Company’s total cash, cash equivalents and marketable securities was as follows:



	September 27, 2015		December 28, 2014
	(In thousands)
Cash and cash equivalents	$	698,073	$	809,003
Short-term marketable securities	1,000,621		1,455,509
Long-term marketable securities	2,176,095		2,758,475
Total cash, cash equivalents and marketable securities	$	3,874,789	$	5,022,987

For certain of the Company’s financial assets and liabilities, including cash held in banks, accounts receivable and accounts payable, the carrying amounts approximate fair value due to their short maturities, and those financial assets and liabilities 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:



	September 27, 2015								December 28, 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Money market funds	$	458,566	$	—	$	—	$	458,566	$	533,133	$	—	$	—	$	533,133
Fixed income securities	7,640		3,194,942		—		3,202,582		25,162		4,213,599		—		4,238,761
Derivative assets	—		5,639		—		5,639		—		4,800		—		4,800
Total financial assets	$	466,206	$	3,200,581	$	—	$	3,666,787	$	558,295	$	4,218,399	$	—	$	4,776,694

Derivative liabilities	$	—	$	1,723	$	—	$	1,723	$	—	$	8,224	$	—	$	8,224
Total financial liabilities	$	—	$	1,723	$	—	$	1,723	$	—	$	8,224	$	—	$	8,224

Financial assets and liabilities measured and recorded at fair value on a recurring basis were presented on the Condensed Consolidated Balance Sheets as follows:



	September 27, 2015								December 28, 2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Cash equivalents⁽¹⁾	$	458,566	$	25,866	$	—	$	484,432	$	533,133	$	24,777	$	—	$	557,910
Short-term marketable securities	820		999,801		—		1,000,621		3,327		1,452,182		—		1,455,509
Long-term marketable securities	6,820		2,169,275		—		2,176,095		21,835		2,736,640		—		2,758,475
Other current assets	—		5,639		—		5,639		—		4,800		—		4,800
Total financial assets	$	466,206	$	3,200,581	$	—	$	3,666,787	$	558,295	$	4,218,399	$	—	$	4,776,694

Other current accrued liabilities	$	—	$	1,723	$	—	$	1,723	$	—	$	8,224	$	—	$	8,224
Total financial liabilities	$	—	$	1,723	$	—	$	1,723	$	—	$	8,224	$	—	$	8,224


⁽¹⁾	Cash equivalents exclude cash holdings of $213.6 million and $251.1 million included in Cash and cash equivalents on the Condensed Consolidated Balance Sheets as of September 27, 2015 and December 28, 2014, respectively.

During the nine months ended September 27, 2015 and during 2014, the Company had no transfers of financial assets and liabilities between Level 1 and Level 2.

As of September 27, 2015 and December 28, 2014, 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:



	September 27, 2015									December 28, 2014
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(In thousands)
U.S. Treasury securities	$	7,620	$	20	$	—		$	7,640	$	25,194	$	—	$	(32	)	$	25,162
U.S. government-sponsored agency securities	10,213		5		(1		)	10,217		7,511		—		(18		)	7,493
International government securities	57,274		97		(17		)	57,354		82,033		—		(314		)	81,719
Corporate notes and bonds	555,413		502		(921		)	554,994		774,869		325		(2,052		)	773,142
Asset-backed securities	136,022		137		(89		)	136,070		171,221		42		(353		)	170,910
Mortgage-backed securities	24,260		67		(20		)	24,307		48,378		6		(173		)	48,211
Municipal notes and bonds	2,405,506		6,964		(470		)	2,412,000		3,124,189		9,733		(1,798		)	3,132,124
Total available-for-sale investments	$	3,196,308	$	7,792	$	(1,518	)	$	3,202,582	$	4,233,395	$	10,106	$	(4,740	)	$	4,238,761

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 27, 2015, are summarized in the following table. 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
	(In thousands)
U.S. Treasury securities	$	—	$	—		$	—	$	—
U.S. government-sponsored agency securities	2,335		(1		)	—		—
International government securities	11,707		(17		)	—		—
Corporate notes and bonds	303,881		(910		)	5,232		(11		)
Asset-backed securities	58,579		(79		)	6,466		(10		)
Mortgage-backed securities	7,846		(13		)	1,659		(7		)
Municipal notes and bonds	266,730		(447		)	8,614		(23		)
Total	$	651,078	$	(1,467	)	$	21,971	$	(51	)

The gross unrealized loss related to these securities was due primarily to changes in interest rates. The gross unrealized loss on all available-for-sale fixed income securities at September 27, 2015 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:



	Three months ended						Nine months ended
	September 27, 2015			September 28, 2014			September 27, 2015			September 28, 2014
	(In thousands)
Realized gains	$	670		$	3,388		$	4,135		$	8,098
Realized losses	(611		)	(460		)	(1,557		)	(1,187		)
Net realized gains	$	59		$	2,928		$	2,578		$	6,911

Fixed income securities by contractual maturity as of September 27, 2015 are shown below. 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
	(In thousands)
Due in one year or less	$	571,603	$	572,651
After one year through five years	1,999,230		2,003,399
After five years through ten years	94,761		94,860
After ten years	530,714		531,672
Total	$	3,196,308	$	3,202,582

Financial Instruments. 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. As of September 27, 2015, the 1.5% Convertible Senior Notes due 2017 and the 0.5% Convertible Senior Notes due 2020 were both categorized as Level 1, based on the frequency of trading of each respective convertible note directly prior to the end of the third quarter of 2015. As of December 28, 2014, the 1.5% Convertible Senior Notes due 2017 was categorized as Level 1 and the 0.5% Convertible Senior Notes due 2020 was classified as Level 2, both based on the frequency of trading of each respective convertible note directly prior to the end of 2014. See Note 7, “Financing Arrangements,” regarding details of each convertible note presented.



	September 27, 2015				December 28, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
1.5% Convertible Senior Notes due 2017	$	903,515	$	1,197,304	$	869,645	$	1,948,721
0.5% Convertible Senior Notes due 2020	1,234,222		1,389,000		1,199,696		1,789,500
Total	$	2,137,737	$	2,586,304	$	2,069,341	$	3,738,221

Cost Method Investments. As of September 27, 2015, and December 28, 2014, the Company had aggregate net investments under the cost method of accounting of $38.1 million and $29.3 million, respectively, and these investments consisted of privately-held equity securities without a readily determinable fair value. These privately-held equity investments are reported under Other non-current assets in the Condensed Consolidated Balance Sheets.