FAIR VALUE

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The Company measures certain assets and liabilities at fair value on a recurring basis such as its financial instruments and derivatives. There have been no transfers between Level 1, 2 or 3 assets or liabilities during the fiscal year ended September 30, 2016.

Level 3 assets include an auction rate security that is classified as available for sale and recorded in other current assets and that is scheduled to mature in 2017. Due to the illiquid market for this security the Company has classified the carrying value as a Level 3 asset with the difference between the par and carrying value being categorized as a temporary loss and recorded in accumulated other comprehensive loss.

On August 1, 2016, the Company exercised its option and paid cash for the remaining interest in the joint venture with Panasonic as detailed in Note 3 of these Notes to Consolidated Financial Statements. This purchase option was recorded as a Level 3 liability as of October 2, 2015.

The Company held foreign currency call and put options (“foreign currency options”) that were intended to hedge the potential cash exposure related to the Panasonic purchase option. These foreign currency options expired unexercised during the fiscal year ended September 30, 2016, as the call and put options were out of the money,

The Company classifies its contingent consideration related to its business combinations as detailed in Note 3 of these Notes to Consolidated Financial Statements, made during the fiscal year ended September 30, 3016, as Level 3 liabilities. This assessment is based on management judgment involved in computing the expected achievements of specified objectives that are payable up to two years from the anniversary of the acquisitions. The Company reassesses the fair value of the contingent consideration on a quarterly basis and records any applicable adjustments to earnings in the period they are determined.

Assets and liabilities recorded at fair value on a recurring basis consisted of the following (in millions):



	As of September 30, 2016								As of October 2, 2015
			Fair Value Measurements								Fair Value Measurements
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets
Money market funds	$	408.7	$	408.7	$	—	$	—	$	464.6	$	464.6	$	—	$	—
Auction rate security	2.3		—		—		2.3		2.3		—		—		2.3
Foreign currency derivative assets	—		—		—		—		3.3		—		—		3.3
Total	$	411.0	$	408.7	$	—	$	2.3	$	470.2	$	464.6	$	—	$	5.6
Liabilities
Purchase obligation recorded for business combinations	$	—	$	—	$	—	$	—	$	75.4	$	—	$	—	$	75.4
Foreign currency derivative liabilities	—		—		—		—		2.8		—		—		2.8
Contingent consideration liability recorded for business combinations	7.9		—		—		7.9		0.5		—		—		0.5
Total	$	7.9	$	—	$	—	$	7.9	$	78.7	$	—	$	—	$	78.7

The following table summarizes changes to the fair value of the Level 3 assets (in millions):



	Auction rate security		Foreign currency derivative
Balance as of October 2, 2015	$	2.3	$	3.3
Changes in fair value included in earnings	—		(3.3		)
Balance as of September 30, 2016	$	2.3	$	—

The following table summarizes changes to the fair value of the Level 3 liabilities (in millions):



	Purchase obligation			Foreign currency derivative			Contingent consideration
Balance as of October 2, 2015	$	75.4		$	2.8		$	0.5
Increases to Level 3 liabilities	—			—			7.4
Changes in fair value included in earnings	—			(2.8		)	—
Decreases of Level 3 liabilities	(75.4		)	—			—
Balance as of September 30, 2016	$	—		$	—		$	7.9

Assets Measured and Recorded at Fair Value on a Nonrecurring Basis

The Company’s non-financial assets and liabilities, such as goodwill, intangible assets, and other long-lived assets resulting from business combinations are measured at fair value using income approach valuation methodologies at the date of acquisition and are subsequently re-measured if there are indicators of impairment.