Fair Value Measurements and Investments

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



	September 29, 2017		June 30, 2017
	(in millions)
Cash and cash equivalents	$	6,886	$	6,354
Short-term marketable securities	35		24
Long-term marketable securities	94		94
Total cash, cash equivalents and marketable securities	$	7,015	$	6,472

Financial Instruments Carried at Fair Value

Financial assets and liabilities that are remeasured and reported at fair value at each reporting period are classified and disclosed in one of the following three levels:


Level 1.	Quoted prices in active markets for identical assets or liabilities.


Level 2.	Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; 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 unobservable for the asset or liability and that are significant to the fair value of the assets or liabilities.

The following tables present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of September 29, 2017 and June 30, 2017, and indicate the fair value hierarchy of the valuation techniques utilized to determine such values:



	September 29, 2017
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets:
Cash equivalents:
Money market funds	$	3,585	$	—	$	—	$	3,585
Certificates of deposit	—		4		—		4
Total cash equivalents	3,585		4		—		3,589
Short-term investments:
Certificates of deposit	—		13		—		13
Corporate notes and bonds	—		12		—		12
Asset-backed securities	—		7		—		7
Equity securities	3		—		—		3
Total short-term investments	3		32		—		35
Long-term investments:
U.S. Treasury securities	6		—		—		6
U.S. Government agency securities	—		5		—		5
International government securities	—		1		—		1
Corporate notes and bonds	—		67		—		67
Asset-backed securities	—		5		—		5
Municipal notes and bonds	—		10		—		10
Total long-term investments	6		88		—		94
Foreign exchange contracts	—		19		—		19
Total assets at fair value	$	3,594	$	143	$	—	$	3,737
Liabilities:
Foreign exchange contracts	$	—	$	15	$	—	$	15
Total liabilities at fair value	$	—	$	15	$	—	$	15



	June 30, 2017
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets:
Cash equivalents:
Money market funds	$	2,836	$	—	$	—	$	2,836
Certificates of deposit	—		10		—		10
Total cash equivalents	2,836		10		—		2,846
Short-term investments:
Corporate notes and bonds	—		11		—		11
Asset-backed securities	—		7		—		7
Municipal notes and bonds	—		2		—		2
Equity securities	4		—		—		4
Total short-term investments	4		20		—		24
Long-term investments:
U.S. Treasury securities	5		—		—		5
U.S. Government agency securities	—		5		—		5
International government securities	—		1		—		1
Corporate notes and bonds	—		67		—		67
Asset-backed securities	—		7		—		7
Municipal notes and bonds	—		9		—		9
Total long-term investments	5		89		—		94
Foreign exchange contracts	—		16		—		16
Total assets at fair value	$	2,845	$	135	$	—	$	2,980
Liabilities:
Foreign exchange contracts	$	—	$	8	$	—	$	8
Interest rate swap contract	—		1		—		1
Exchange option	—		—		1		1
Total liabilities at fair value	$	—	$	9	$	1	$	10

During the three months ended September 29, 2017, the Company had no transfers of financial assets and liabilities between Level 1 and Level 2.

Available-for-Sale Securities

The cost basis of the Company’s investments classified as available-for-sale securities, individually and in the aggregate, approximated its fair value as of September 29, 2017 and June 30, 2017. The cost basis and fair value of the Company’s investments classified as available-for-sale securities as of September 29, 2017, by remaining contractual maturity, were as follows:



	Cost Basis		Fair Value
	(in millions)
Due in less than one year (short-term investments)	$	34	$	35
Due in one to five years (included in other non-current assets)	94		94
Total	$	128	$	129

The Company determined available-for-sale securities had no material other-than-temporary impairments in the three months ended September 29, 2017 or September 30, 2016.

Financial Instruments Not Carried at Fair Value

For financial instruments where the carrying value (which includes principal adjusted for any unamortized issuance costs, and discounts or premiums) differs from fair value (which is based on quoted market prices), the following table represents the related carrying value and fair value for each of the Company’s outstanding financial instruments. Each of the financial instruments presented below was categorized as Level 2 for all periods presented, based on the frequency of trading immediately prior to the end of the first quarter of 2018 and the fourth quarter of 2017, respectively.



	September 29, 2017				June 30, 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in millions)
Secured Notes	$	1,835	$	2,056	$	1,835	$	2,062
Unsecured Notes	3,248		3,939		3,244		3,956
Term Loan A	4,026		4,096		4,074		4,130
U.S. Term Loan B-2	2,962		2,983		2,968		2,989
Euro Term Loan B-2⁽¹⁾	1,030		1,039		1,000		1,010
Convertible Debt 2020	30		34		30		34
Total	$	13,131	$	14,147	$	13,151	$	14,181


⁽¹⁾	Euro Term Loan B-2 outstanding principal amounts as of September 29, 2017 and June 30, 2017 were based upon the Euro to U.S. dollar exchange rate as of those respective dates.

Cost Method Investments

From time to time, the Company enters into certain strategic investments for the promotion of business and strategic objectives. The Company reports these investments under the cost method of accounting as these investments consist of debt and equity securities of privately-held companies which do not have a readily determinable fair value. The Company assesses these securities for indications of other-than-temporary impairments. During the three months ended September 29, 2017, the Company recorded $6 million of impairment charges to Other expense, net in the Condensed Consolidated Statements of Operations. As of September 29, 2017 and June 30, 2017, these investments aggregated $57 million and $91 million, respectively, and are reported under Other non-current assets in the Condensed Consolidated Balance Sheets.