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. There have been no transfers between Level 1, 2 or 3 assets or liabilities during the fiscal year ended September 29, 2017.

During the fiscal year ended September 29, 2017, the auction rate security that the Company carried as a Level 3 asset was redeemed at its par value. Upon receipt of the par value, the Company reversed the difference between the carrying value and par value of this security that it had previously temporarily impaired from accumulated other comprehensive income. There was no gain or loss recognized in earnings during the twelve months ended September 29, 2017, as a result of this transaction.

Contingent consideration related to business combinations is recorded as a Level 3 liability because management uses significant judgments and unobservable inputs to determine the fair value. The Company reassesses the fair value of its contingent consideration liabilities on a quarterly basis and records any fair value adjustments to earnings in the period that they are determined. The increase in Level 3 liabilities during fiscal 2017, relates to the fair value of the contingent consideration associated with a business combination completed during the period, as detailed in Note 3 of these Notes to Consolidated Financial Statements. The fair value of the contingent consideration was determined using a weighted average probability of the expected revenue to be generated from the acquired business over a three-year period, with the contingent payments being made in each of the respective years. The increase in Level 3 liabilities was offset by payments of contingent consideration liabilities and net adjustments to the fair value of contingent consideration liabilities during the fiscal year ended September 29, 2017, which were included in selling, general and administrative expenses.

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



	As of September 29, 2017								As of September 30, 2016
			Fair Value Measurements								Fair Value Measurements
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets
Money market funds	$	592.6	$	592.6	$	—	$	—	$	408.7	$	408.7	$	—	$	—
Auction rate security	—		—		—		—		2.3		—		—		2.3
Total	$	592.6	$	592.6	$	—	$	—	$	411.0	$	408.7	$	—	$	2.3
Liabilities
Contingent consideration liability recorded for business combinations	11.9		—		—		11.9		7.9		—		—		7.9
Total	$	11.9	$	—	$	—	$	11.9	$	7.9	$	—	$	—	$	7.9

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



	Auction rate security
Balance as of September 30, 2016	$	2.3
Decreases in Level 3 assets	(2.3		)
Balance as of September 29, 2017	$	—

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



	Contingent consideration
Balance as of September 30, 2016	$	7.9
Increases to Level 3 liabilities	10.7
Changes in fair value included in earnings	(1.3		)
Decreases of Level 3 liabilities	(5.4		)
Balance as of September 29, 2017	$	11.9

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.