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Fair Value Measurements | 3 Months Ended
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Dec. 28, 2013
Fair Value Disclosures [Abstract] |
Fair Value Measurements | FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows: Level 1 — Unadjusted quoted prices available in active markets for the identical assets or liabilities at the measurement date. Level 2 — Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:
• | Quoted prices for similar assets or liabilities in active markets;
• | Quoted prices for identical or similar assets in non-active markets;
• | Inputs other than quoted prices that are observable for the asset or liability; and
• | Inputs derived principally from or corroborated by other observable market data.
Level 3 — Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. Assets and Liabilities Measured at Fair Value on a Recurring Basis The fair value hierarchy requires the use of observable market data when available. In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following tables set forth by level within the fair value hierarchy our financial assets and liabilities accounted for at fair value on a recurring basis according to the valuation techniques we used to determine their fair values (in millions):
December 28, 2013 | Level 1 |  | Level 2 |  | Level 3 |  | Netting (a) |  | Total
Assets: |  |  |  |  |  |  |  |  |
Commodity Derivatives | $ | — |  |  | $ | 26 |  |  | $ | — |  |  | $ | (19 | ) |  | $ | 7 |
Foreign Exchange Forward Contracts | — |  |  | 1 |  |  | — |  |  | — |  |  | 1 |
Available-for-Sale Securities: |  |  |  |  |  |  |  |  |
Current | — |  |  | 1 |  |  | — |  |  | — |  |  | 1 |
Non-current | 3 |  |  | 26 |  |  | 64 |  |  | — |  |  | 93 |
Deferred Compensation Assets | 13 |  |  | 208 |  |  | — |  |  | — |  |  | 221 |
Total Assets | $ | 16 |  |  | $ | 262 |  |  | $ | 64 |  |  | $ | (19 | ) |  | $ | 323 |
Liabilities: |  |  |  |  |  |  |  |  |
Commodity Derivatives | $ | — |  |  | $ | 55 |  |  | $ | — |  |  | $ | (53 | ) |  | $ | 2 |
Foreign Exchange Forward Contracts | — |  |  | 2 |  |  | — |  |  | (1 | ) |  | 1 |
Total Liabilities | $ | — |  |  | $ | 57 |  |  | $ | — |  |  | $ | (54 | ) |  | $ | 3 |
September 28, 2013 | Level 1 |  | Level 2 |  | Level 3 |  | Netting (a) |  | Total
Assets: |  |  |  |  |  |  |  |  |
Commodity Derivatives | $ | — |  |  | $ | 29 |  |  | $ | — |  |  | $ | (21 | ) |  | $ | 8 |
Foreign Exchange Forward Contracts | — |  |  | 3 |  |  | — |  |  | (1 | ) |  | 2 |
Available-for-Sale Securities: |  |  |  |  |  |  |  |  |
Current | — |  |  | 1 |  |  | — |  |  | — |  |  | 1 |
Non-current | 4 |  |  | 24 |  |  | 65 |  |  | — |  |  | 93 |
Deferred Compensation Assets | 23 |  |  | 191 |  |  | — |  |  | — |  |  | 214 |
Total Assets | $ | 27 |  |  | $ | 248 |  |  | $ | 65 |  |  | $ | (22 | ) |  | $ | 318 |
Liabilities: |  |  |  |  |  |  |  |  |
Commodity Derivatives | $ | — |  |  | $ | 101 |  |  | $ | — |  |  | $ | (101 | ) |  | $ | — |
Foreign Exchange Forward Contracts | — |  |  | 1 |  |  | — |  |  | — |  |  | 1 |
Total Liabilities | $ | — |  |  | $ | 102 |  |  | $ | — |  |  | $ | (101 | ) |  | $ | 1 |
(a) | Our derivative assets and liabilities are presented in our Consolidated Condensed Balance Sheets on a net basis. We net derivative assets and liabilities, including cash collateral, when a legally enforceable master netting arrangement exists between the counterparty to a derivative contract and us. At December 28, 2013, and September 28, 2013, we had posted with various counterparties $35 million and $79 million, respectively, of cash collateral related to our commodity derivatives and held no cash collateral.
The following table provides a reconciliation between the beginning and ending balance of debt securities measured at fair value on a recurring basis in the table above that used significant unobservable inputs (Level 3) (in millions):
| Three Months Ended
| December 28, 2013 |  | December 29, 2012
Balance at beginning of year | $ | 65 |  |  | $ | 86 |
Total realized and unrealized gains (losses): |  |  |
Included in earnings | — |  |  | — |
Included in other comprehensive income (loss) | — |  |  | — |
Purchases | 7 |  |  | 3 |
Issuances | — |  |  | — |
Settlements | (8 | ) |  | (4 | )
Balance at end of period | $ | 64 |  |  | $ | 85 |
Total gains (losses) for the three-month period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at end of period | $ | — |  |  | $ | — |
The following methods and assumptions were used to estimate the fair value of each class of financial instrument: Derivative Assets and Liabilities: Our commodities and foreign exchange forward contracts primarily include exchange-traded and over-the-counter contracts which are further described in Note 11: Derivative Financial Instruments. We record our commodity derivatives at fair value using quoted market prices adjusted for credit and non-performance risk and internal models that use as their basis readily observable market inputs including current and forward commodity market prices. Our foreign exchange forward contracts are recorded at fair value based on quoted prices and spot and forward currency prices adjusted for credit and non-performance risk. We classify these instruments in Level 2 when quoted market prices can be corroborated utilizing observable current and forward commodity market prices on active exchanges or observable market transactions of spot currency rates and forward currency prices. Available-for-Sale Securities: Our investments in marketable debt securities are classified as available-for-sale and are reported at fair value based on pricing models and quoted market prices adjusted for credit and non-performance risk. Short-term investments with maturities of less than 12 months are included in Other current assets in the Consolidated Condensed Balance Sheets and primarily include certificates of deposit and commercial paper. All other marketable debt securities are included in Other Assets in the Consolidated Condensed Balance Sheets and have maturities ranging up to 35 years. We classify our investments in U.S. government, U.S. agency, certificates of deposit and commercial paper debt securities as Level 2 as fair value is generally estimated using discounted cash flow models that are primarily industry-standard models that consider various assumptions, including time value and yield curve as well as other readily available relevant economic measures. We classify certain corporate, asset-backed and other debt securities as Level 3 as there is limited activity or less observable inputs into valuation models, including current interest rates and estimated prepayment, default and recovery rates on the underlying portfolio or structured investment vehicle. Significant changes to assumptions or unobservable inputs in the valuation of our Level 3 instruments would not have a significant impact to our consolidated condensed financial statements. Additionally, we have 0.8 million shares of Syntroleum Corporation common stock and 0.4 million warrants, which expire in June 2015, to purchase an equivalent amount of Syntroleum Corporation common stock at an average price of $28.70. We record the shares and warrants in Other Assets in the Consolidated Condensed Balance Sheets at fair value based on quoted market prices. We classify the shares as Level 1 as the fair value is based on unadjusted quoted prices available in active markets. We classify the warrants as Level 2 as fair value can be corroborated based on observable market data. The following table sets forth our available-for-sale securities' amortized cost basis, fair value and unrealized gain (loss) by significant investment category (in millions):
| December 28, 2013 |  | September 28, 2013
| Amortized Cost Basis |  |  | Fair Value |  |  | Unrealized Gain/(Loss) |  |  | Amortized Cost Basis |  |  | Fair Value |  |  | Unrealized Gain/(Loss) |
Available-for-Sale Securities: |  |  |  |  |  |  |  |  |  |  |
Debt Securities: |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and Agency | $ | 27 |  |  | $ | 27 |  |  | $ | — |  |  | $ | 25 |  |  | $ | 25 |  |  | $ | — |
Corporate and Asset-Backed | 63 |  |  | 64 |  |  | 1 |  |  | 64 |  |  | 65 |  |  | 1 |
Equity Securities: |  |  |  |  |  |  |  |  |  |  |
Common Stock and Warrants (a) | 3 |  |  | 3 |  |  | — |  |  | 9 |  |  | 4 |  |  | (5 | )
(a) | At December 28, 2013, the amortized cost basis for Equity Securities had been reduced by accumulated other than temporary impairment of approximately $6 million.
Unrealized holding gains (losses), net of tax, are excluded from earnings and reported in OCI until the security is settled or sold. On a quarterly basis, we evaluate whether losses related to our available-for-sale securities are temporary in nature. Losses on equity securities are recognized in earnings if the decline in value is judged to be other than temporary. If losses related to our debt securities are determined to be other than temporary, the loss would be recognized in earnings if we intend, or more likely than not will be required, to sell the security prior to recovery. For debt securities in which we have the intent and ability to hold until maturity, losses determined to be other than temporary would remain in OCI, other than expected credit losses which are recognized in earnings. We consider many factors in determining whether a loss is temporary, including the length of time and extent to which the fair value has been below cost, the financial condition and near-term prospects of the issuer and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. We recognized $6 million of other than temporary impairment for the three months ended December 28, 2013, which is recorded in the Consolidated Condensed Statements of Income in Other, net. No other than temporary losses were deferred in OCI as of December 28, 2013, and September 28, 2013. Deferred Compensation Assets: We maintain non-qualified deferred compensation plans for certain executives and other highly compensated employees. Investments are maintained within a trust and include money market funds, mutual funds and life insurance policies. The cash surrender value of the life insurance policies is invested primarily in mutual funds. The investments are recorded at fair value based on quoted market prices and are included in Other Assets in the Consolidated Condensed Balance Sheets. We classify the investments which have observable market prices in active markets in Level 1 as these are generally publicly-traded mutual funds. The remaining deferred compensation assets are classified in Level 2, as fair value can be corroborated based on observable market data. Realized and unrealized gains (losses) on deferred compensation are included in earnings. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. We did not have any significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition during the three months ended December 28, 2013 and December 29, 2012. Other Financial Instruments Fair value of our debt is principally estimated using Level 2 inputs based on quoted prices for those or similar instruments. Fair value and carrying value for our debt are as follows (in millions):
| December 28, 2013 |  | September 28, 2013
| Fair Value |  | Carrying Value |  | Fair Value |  | Carrying Value
Total Debt | $ | 2,058 |  |  | $ | 1,942 |  |  | $ | 2,541 |  |  | $ | 2,408 |

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13504-108611 + Details
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