SanDisk 2014 Annual Report Download - page 154

SANDISK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Investments and Fair Value Measurements
The Company’s total cash, cash equivalents and marketable securities was as follows (in thousands):
December 28, December 29,
2014 2013
Cash and cash equivalents ......................................... $ 809,003 $ 986,246
Short-term marketable securities .................................... 1,455,509 1,919,611
Long-term marketable securities .................................... 2,758,475 3,179,471
Total cash, cash equivalents and marketable securities .................. $ 5,022,987 $ 6,085,328
Fair Value of Financial Instruments. For certain of the Company’s financial instruments, including cash
held in banks, accounts receivable and accounts payable, the carrying amounts approximate fair value due
to their short maturities, and are therefore excluded from the fair value tables below.
The Company categorizes the fair value of its financial assets and liabilities according to the hierarchy
established by the FASB, which prioritizes the inputs to valuation techniques used to measure fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy are:
Level 1 Valuations based on quoted prices in active markets for identical assets or liabilities that
the Company has the ability to directly access.
Level 2 Valuations based on quoted prices for similar assets or liabilities; valuations for interest-
bearing securities based on non-daily quoted prices in active markets; quoted prices in
markets that are not active; or other inputs that are observable or can be corroborated by
observable data for substantially the full term of the assets or liabilities.
Level 3 Valuations based on inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input
that is significant to the fair value measurement.
In circumstances in which a quoted price in an active market for the identical liability is not available,
the Company is required to use the quoted price of the identical liability when traded as an asset, quoted
prices for similar liabilities, or quoted prices for similar liabilities when traded as assets. If these quoted
prices are not available, the Company is required to use another valuation technique, such as an income
approach or a market approach.
The Company’s financial assets are measured at fair value on a recurring basis. Instruments that are
classified within Level 1 of the fair value hierarchy generally include money market funds and U.S.
Treasury securities. Level 1 securities represent quoted prices in active markets, and therefore do not
require significant management judgment.
Instruments that are classified within Level 2 of the fair value hierarchy primarily include U.S.
government-sponsored agency securities, international government securities, corporate notes and bonds,
asset-backed securities, mortgage-backed securities and municipal notes and bonds. The Company’s
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