Financial Instruments

The Company's financial instruments consist primarily of cash and cash equivalents, time deposits, accounts receivable, investments, accounts payable, and debt and derivative financial instruments. The fair value of cash and cash equivalents, time deposits, accounts receivable, and accounts payable approximated book value as of December 26, 2014 and September 26, 2014. The fair value of derivative financial instruments was not material to any of the periods presented. See below for the fair value of investments and Note 9 for the fair value of debt.

Derivative Instruments

In the normal course of business, Tyco is exposed to market risk arising from changes in currency exchange rates, interest rates and commodity prices. The Company may use derivative financial instruments to manage exposures to foreign currency, interest rate and commodity risks. The Company's objective for utilizing derivative financial instruments is to manage these risks using the most effective methods to eliminate or reduce the impacts of these exposures. The Company does not use derivative financial instruments for trading or speculative purposes. As of and during the three months ended December 26, 2014, the Company did not hold or enter into any commodity derivative instruments or interest rate swaps.

As of December 26, 2014 and September 26, 2014, the total gross notional amount of the Company's foreign exchange contracts was $282 million and $258 million, respectively. The fair value of these derivative financial instruments and impact of such changes in the fair value was not material to the Consolidated Balance Sheets as of December 26, 2014 and September 26, 2014 or Consolidated Statements of Operations and Consolidated Statements of Cash Flows for the quarters ended December 26, 2014 and December 27, 2013.

Counterparty Credit Risk

The use of derivative financial instruments exposes the Company to counterparty credit risk. Tyco has established policies and procedures to limit the potential for counterparty credit risk, including establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. As a matter of practice, the Company deals with major banks worldwide having strong investment grade long-term credit ratings. To further reduce the risk of loss, the Company generally enters into International Swaps and Derivatives Association master netting agreements with substantially all of its counterparties. The Company's derivative contracts do not contain any credit risk related contingent features and do not require collateral or other security to be furnished by the Company or the counterparties. The Company's exposure to credit risk associated with its derivative instruments is measured on an individual counterparty basis, as well as by groups of counterparties that share similar attributes. We do not anticipate any non-performance by any of our counterparties, and the concentration of risk with financial institutions does not present significant credit risk to the Company.

Investments

Investments may primarily include marketable securities such as U.S. government obligations, U.S. government agency and corporate debt securities, equity securities, or time deposits with banks.

When available, the Company uses quoted market prices to determine the fair value of investment securities. Such investments are included in Level 1. When quoted market prices are not readily available, pricing determinations are made based on the results of market approach valuation models using observable market data such as recently reported trades, bid and offer information and benchmark securities. These investments are included in Level 2 and consist primarily of U.S. government agency securities and corporate debt securities.

Assets Measured at Fair Value on a Recurring Basis

The following table presents the Company's hierarchy for its assets measured at fair value on a recurring basis as of December 26, 2014 and September 26, 2014 ($ in millions):



							Consolidated Balance Sheet Classification
	As of December 26, 2014						Prepaids and Other Current Assets
Investment Assets:	Level 1		Level 2		Total
Exchange traded equity funds	$	65	$	—	$	65	$	65
	$	65	$	—	$	65	$	65



							Consolidated Balance Sheet Classification
	As of September 26, 2014						Prepaids and Other Current Assets
Investment Assets:	Level 1		Level 2		Total		Prepaids and Other Current Assets
Time deposits	$	275	$	—	$	275	$	275
Exchange traded equity funds	62		—		62		62
	$	337	$	—	$	337	$	337

During the quarters ended December 26, 2014 and December 27, 2013, the Company did not have any significant transfers between levels within the fair value hierarchy.

Other

The Company had $1.5 billion of intercompany loans designated as permanent in nature as of both December 26, 2014 and September 26, 2014. Additionally, for the quarters ended December 26, 2014 and December 27, 2013, the Company recorded $70 million and $12 million of a cumulative translation loss, respectively, through Accumulated other comprehensive loss related to these loans.