Medtronic 2015 Annual Report Download - page 104

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Medtronic plc
Notes to Consolidated Financial Statements (Continued)
The following table represents the range of the unobservable inputs utilized in the fair value measurement of the auction rate
securities classified as Level 3 as of April 24, 2015:
Valuation
Technique Unobservable Input
Range
(Weighted Average)
Auction rate securities Discounted cash flow Years to principal recovery
Illiquidity premium
2 yrs. - 12 yrs. (3 yrs.)
6%
The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation
inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company’s policy is to
recognize transfers into and out of levels within the fair value hierarchy at the end of the fiscal quarter in which the actual event
or change in circumstances that caused the transfer occurs. There were no transfers between Level 1, Level 2, or Level 3 during
the fiscal years ended April 24, 2015 or April 25, 2014. When a determination is made to classify an asset or liability within
Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement.
The following tables provide reconciliations of the beginning and ending balances of items measured at fair value on a recurring
basis that used significant unobservable inputs (Level 3):
(in millions)
Total Level 3
Investments
Corporate debt
securities
Auction rate
securities
Mortgage-
backed securities
Balance as of April 25, 2014 $ 106 $ 9 $ 97 $ —
Total realized losses and other-than-temporary
impairment losses included in earnings (5) (5) — —
Total unrealized gains included in other comprehensive
income 10 2 8 —
Settlements (5) (5) — —
Balance as of April 24, 2015 $ 106 $ 1 $ 105 $ —
(in millions)
Total Level 3
Investments
Corporate debt
securities
Auction rate
securities
Mortgage-
backed securities
Balance as of April 26, 2013 $ 127 $ 10 $ 103 $ 14
Total realized losses and other-than-temporary
impairment losses included in earnings (5) — (5) —
Total unrealized gains included in other comprehensive
income 4 — 3 1
Settlements (20) (1) (4) (15)
Balance as of April 25, 2014 $ 106 $ 9 $ 97 $ —
Assets and Liabilities That Are Measured at Fair Value on a Nonrecurring Basis
Non-financial assets such as equity and other securities that are accounted for using the cost or equity method, goodwill and
IPR&D, intangible assets, and property, plant, and equipment are measured at fair value when there is an indicator of
impairment and recorded at fair value only when impairment is recognized.
The Company holds investments in equity and other securities that are accounted for using the cost or equity method, which are
classified as other assets in the consolidated balance sheets. The aggregate carrying amount of these investments was $520
million and $666 million as of April 24, 2015 and April 25, 2014, respectively. These cost or equity method investments are
measured at fair value on a nonrecurring basis. The fair value of the Company’s cost or equity method investments is not
estimated if there are no identified events or changes in circumstance that may have a significant adverse effect on the fair value
of these investments. During fiscal years 2015, 2014, and 2013, the Company determined that the fair values of certain cost
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