Experimental Results

The Company’s total cash, cash equivalents and marketable securities was as follows (in thousands):

December 29, 2013

December 30, 2012

Cash and cash equivalents $ 986,246 $ 995,470

Short-term marketable securities 1,919,611 1,880,034

Long-term marketable securities 3,179,471 2,835,931

Total cash, cash equivalents and marketable securities $ 6,085,328 $ 5,711,435

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, municipal notes and bonds, asset-backed securities and mortgage-backed securities. The Company’s Level 2 securities are primarily valued using quoted market prices for similar instruments and nonbinding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes and other similar data, which are obtained from

independent pricing vendors, quoted market prices or other sources to determine the ultimate fair value of the Company’s assets and liabilities. The inputs and fair value are reviewed for reasonableness and may be further validated by comparison to publicly available information or compared to multiple independent valuation sources. In addition, the Company reviews third-party valuation models, independently calculates the fair value of selective financial instruments and assesses the controls at its third-party valuation service providers in determining the overall reasonableness of the fair value of its Level 2 financial instruments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following types of instruments (in thousands):

December 29, 2013

December 30, 2012

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Money market funds $ 760,363 $ — $ — $ 760,363 $ 582,743 $ — $ — $ 582,743

Fixed income securities 160,194 4,985,059 — 5,145,253 27,386 4,917,939 — 4,945,325

Derivative assets — 777 — 777 — 20,058 — 20,058

Total financial assets $ 920,557 $ 4,985,836 $ — $ 5,906,393 $ 610,129 $ 4,937,997 $ — $ 5,548,126

Derivative liabilities $ — $ 45,859 $ — $ 45,859 $ — $ 13,584 $ — $ 13,584

Total financial liabilities $ — $ 45,859 $ — $ 45,859 $ — $ 13,584 $ — $ 13,584

Financial assets and liabilities measured and recorded at fair value on a recurring basis were presented on the Company’s Consolidated Balance Sheets as follows (in thousands):

December 29, 2013

December 30, 2012

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Cash equivalents⁽¹⁾ $ 773,435 $ 33,099 $ — $ 806,534 $ 582,743 $ 229,360 $ — $ 812,103

Short-term marketable securities 15,090 1,904,521 — 1,919,611 16,589 1,863,445 — 1,880,034

Long-term marketable securities 132,032 3,047,439 — 3,179,471 10,797 2,825,134 — 2,835,931

Other current assets — 777 — 777 — 19,064 — 19,064

Other non-current assets — — — — — 994 — 994

Total financial assets $ 920,557 $ 4,985,836 $ — $ 5,906,393 $ 610,129 $ 4,937,997 $ — $ 5,548,126

Other current accrued liabilities $ — $ 45,741 $ — $ 45,741 $ — $ 13,584 $ — $ 13,584

Non-current liabilities — 118 — 118 — — — —

Total financial liabilities $ — $ 45,859 $ — $ 45,859 $ — $ 13,584 $ — $ 13,584

(1) Cash equivalents exclude cash of $179.7 million and $183.4 million included in Cash and cash equivalents on the Consolidated Balance Sheets as of December 29, 2013 and December 30, 2012, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the fiscal year ended December 29, 2013, the Company had no transfers of financial assets or liabilities between Level 1 and Level 2. As of December 29, 2013 and December 30, 2012, the Company had no financial assets or liabilities categorized as Level 3 and had not elected the fair value option for any financial assets and liabilities for which such an election would have been permitted.

Available-for-Sale Investments. Available-for-sale investments were as follows (in thousands):

December 29, 2013

agency securities 8,112 10 (1) 8,121 28,339 41 (1) 28,379

International government

securities 38,492 1 (224) 38,269 153,936 13 (3) 153,946

Corporate notes and bonds 864,331 1,504 (1,565) 864,270 864,170 3,890 (938) 867,122

Asset-backed securities 226,620 114 (170) 226,564 179,356 453 — 179,809

Mortgage-backed securities 86,542 18 (554) 86,006 1,872 8 (14) 1,866

Municipal notes and bonds 3,744,138 18,931 (1,241) 3,761,828 3,665,032 22,697 (912) 3,686,817

Total available-for-sale

investments $ 5,128,833 $ 20,599 $ (4,179) $ 5,145,253 $ 4,920,082 $ 27,111 $ (1,868) $ 4,945,325

The fair value and gross unrealized loss on the available-for-sale securities that have been in a continuous unrealized loss position, aggregated by type of investment instrument for 12 months or less, are summarized in the following table (in thousands). As of December 29, 2013, the Company had an immaterial amount of securities that have been in a continuous unrealized loss position for more than twelve months. The unrealized loss on these securities was immaterial. Available-for-sale securities that were in an unrealized gain position have been excluded from the table.

Fair Value Gross Unrealized Loss

The gross unrealized loss related to U.S. Treasury securities, U.S. government-sponsored agency securities, international government securities, corporate and municipal notes and bonds, and mortgage-backed securities was primarily due to changes in interest rates. The gross unrealized loss on all available-for-sale fixed income securities at December 29, 2013 was considered temporary in nature. Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and the Company’s intent and ability to hold an investment for a period of time sufficient to allow for any anticipated recovery in market value. For debt security investments, the Company considered additional factors including the Company’s intent to sell the investments or whether it is “more likely than not” the Company will be required to sell the investments before the recovery of its amortized cost.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table shows the gross realized gains and (losses) on sales of available-for-sale securities (in thousands).

Fiscal years ended December 29,

2013

December 30, 2012

January 1, 2012

Gross realized gains $ 4,724 $ 3,867 $ 36,762

Gross realized losses (2,349) (898) (2,213)

Fixed income securities by contractual maturity as of December 29, 2013 are shown below (in thousands). Actual maturities may differ from contractual maturities because issuers of the securities may have the right to prepay obligations or the Company has the option to demand payment.

Amortized Cost Fair Value

Due in one year or less $ 1,220,506 $ 1,224,980

After one year through five years 3,338,613 3,350,852

After five years through ten years 79,295 79,084

After ten years 490,419 490,337

Total $ 5,128,833 $ 5,145,253

For those financial instruments where the carrying amounts differ from fair value, the following table represents the related carrying values and fair values, which are based on quoted market prices (in thousands). These financial instruments were categorized as Level 1 as of both December 29, 2013 and December 30, 2012 with the exception of the 0.5% Sr. Convertible Notes due 2020, which is categorized as Level 2. See Note 6, “Financing Arrangements,”

regarding details of each convertible note presented.

December 29, 2013 December 30, 2012

Carrying Value Fair Value Carrying Value Fair Value

1% Sr. Convertible Notes due 2013 $ — $ — $ 906,708 $ 927,820

1.5% Sr. Convertible Notes due 2017 829,792 1,467,160 789,913 1,159,370

0.5% Sr. Convertible Notes due 2020 1,155,571 1,480,290 — —

Total $ 1,985,363 $ 2,947,450 $ 1,696,621 $ 2,087,190

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS