3.Fair Value

The Company has determined that the only assets and liabilities in the Company’s financial statements that are required to be measured at fair value on a recurring basis are the Company’s investment portfolio assets. Financial instruments are categorized in a fair value hierarchy that prioritizes the information used to develop assumptions for measuring fair value and expands disclosures about fair value measurements. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 input); then to quoted prices (in non-active markets or in active markets for similar assets or liabilities), inputs other than quoted prices that are observable for the asset or liability, and inputs that are not directly observable, but that are corroborated by observable market data for the asset or liability (Level 2 input); then the lowest priority to unobservable inputs, for example, the Company’s data about the assumptions that market participants would use in pricing an asset or liability (Level 3 input). Fair value is a market-based measurement, not an entity-specific measurement, and a fair value measurement should therefore be based on the assumptions that market participants would use in pricing the asset or liability.

The Company’s Level 1 assets consist of investments in money-market funds and United States Treasury securities that are actively traded. The Company’s Level 2 assets consist of municipal bonds, obligations of U.S. government-sponsored enterprises, corporate debt and commercial paper that are less actively traded in the market, but where quoted market prices exist for similar instruments that are actively traded. The Company determines the fair value of its Level 2 assets by obtaining non-binding market prices from its third-party portfolio managers on the last day of the quarter. The Company has no Level 3 assets.

The following table presents the Company’s fair value hierarchy for its financial assets (cash equivalents and marketable securities) measured at fair value on a recurring basis as of January 1, 2017:


In thousands	Quoted Prices in		Significant
	Active Markets		Other
	for Identical		Observable
	Instruments		Inputs
Description	(Level 1)		(Level 2)		Total
Assets
Investments in U.S. Treasury securities and money-market funds	$	539,765	$	—	$	539,765
Investments in municipal bonds, obligations of U.S. government-sponsored enterprises and commercial paper		—		911,842		911,842
Total assets measured at fair value	$	539,765	$	911,842	$	1,451,607

The following table presents the Company’s fair value hierarchy for its financial assets (cash equivalents and marketable securities) measured at fair value on a recurring basis as of July 3, 2016:



In thousands	Quoted Prices in		Significant
	Active Markets		Other
	for Identical		Observable
	Instruments		Inputs
Description	(Level 1)		(Level 2)		Total
Assets
Investments in U.S. Treasury securities and money-market funds	$	513,193	$	—	$	513,193
Investments in municipal bonds, obligations of U.S. government-sponsored enterprises and commercial paper		—		832,438		832,438
Total assets measured at fair value	$	513,193	$	832,438	$	1,345,631