Fair value measurements (Note)

3 Months Ended

Sep. 26, 2015

FAIR VALUE MEASUREMENTS

Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable.


Level 1:	Quoted prices for identical instruments in active markets.


Level 2:	Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.


Level 3:	Valuations derived from valuation techniques in which one or more significant inputs are not observable.

The following tables summarize the valuation of our financial instruments carried at fair value by the above pricing categories at September 26, 2015 and June 27, 2015 (in millions):



	September 26, 2015
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities	$	16.5	$	—	$	—	$	16.5
Foreign currency forward contracts	—		4.8		—		4.8
Funds associated with Israeli post-employment benefits	—		16.5		—		16.5
Total assets	$	16.5	$	21.3	$	—	$	37.8
Liabilities:
Foreign currency forward contracts	—		5.9		—		5.9
Total liabilities	$	—	$	5.9	$	—	$	5.9



	June 27, 2015
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities	$	12.7	$	—	$	—	$	12.7
Foreign currency forward contracts	—		12.4		—		12.4
Funds associated with Israeli post-employment benefits	—		17.3		—		17.3
Total assets	$	12.7	$	29.7	$	—	$	42.4
Liabilities:
Foreign currency forward contracts	—		4.6		—		4.6
Total liabilities	$	—	$	4.6	$	—	$	4.6

There were no transfers between Levels 1, 2, and 3 during the three months ended September 26, 2015. Our policy regarding the recording of transfers between levels is to record any such transfers at the end of the reporting period. See Note 6 for information on our investment securities. See Note 7 for a discussion of derivatives.

Israeli post-employment benefits represent amounts we have deposited in funds managed by financial institutions designated by management to cover post-employment benefits for its Israeli employees as required by Israeli law. The funds are recorded in Other non-current assets and values are determined using prices for recently traded financial instruments with similar underlying terms, as well as directly or indirectly observable inputs, such as interest rates and yield curves, that are observable at commonly quoted intervals.

As of September 26, 2015 and June 27, 2015, our fixed rate long-term debt consisted of public bonds, retail bonds, and private placement notes. The fair value of the public bonds was determined by quoted market prices (Level 1). As of September 26, 2015, the public bonds had a carrying value of $3.9 billion and a fair value of $3.8 billion. As of June 27, 2015, the public bonds had a carrying value and a fair value of $3.9 billion. The fair value of the retail bonds and private placement notes was determined by discounting the future cash flows of the financial instruments to their present value, using interest rates offered for borrowings of a similar nature and remaining maturities (Level 2). As of September 26, 2015 and June 27, 2015, the retail bonds and private placement notes had a carrying value of $822.7 million and $820.9 million, respectively, and a fair value of $890.9 million and $902.4 million, respectively.

The carrying amounts of our other financial instruments, consisting of cash and cash equivalents, accounts receivable, accounts payable, short-term debt and variable rate long-term debt, approximate their fair value.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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