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FINANCIAL INSTRUMENTS | 3 Months Ended
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Sep. 25, 2022
Fair Value Disclosures [Abstract] |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS The Company maintains an investment portfolio of various holdings, types, and maturities. The Company’s mutual funds, which are related to the Company’s obligations under the deferred compensation plan, are classified as trading securities. Investments classified as trading securities are recorded at fair value based upon quoted market prices. Differences between the cost and fair value of trading securities are recognized as other income (expense), net in the Condensed Consolidated Statements of Operations. All of the Company’s debt securities are classified as available-for-sale and consequently are recorded in the Condensed Consolidated Balance Sheets at fair value with unrealized gains or losses associated with market valuation changes, unrelated to credit losses, reported as a separate component of accumulated other comprehensive income (loss), net of tax; and credit losses, if any, recognized as other income (expense), net in the Condensed Consolidated Statements of Operations. The Company periodically invests in equity securities. For equity investments that do not have a readily determinable fair value, the Company records them using either 1) the measurement alternative which measures the equity investments at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes; or 2) the equity method whereby the Company recognizes its proportional share of the income or loss from the equity method investment on a one-quarter lag. The equity method is utilized when the Company does not have the ability to control the investee but is deemed to have the ability to exercise significant influence over the investee’s operating or financial policies. For equity investments that have a readily determinable fair value, the Company records them at fair market value on a recurring basis based upon quoted market prices. Realized and unrealized gains and losses resulting from application of the measurement alternative, the impact of the application of the equity method to the Company’s equity investments, and recognition of changes in fair market value, as applicable, are recognized as other income (expense), net in the Condensed Consolidated Statements of Operations. Fair Value The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability. A fair value hierarchy has been established that prioritizes the inputs to valuation techniques used to measure fair value. The level of an asset or liability in the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: Level 1: Valuations based on quoted prices in active markets for identical assets or liabilities with sufficient volume and frequency of transactions. Level 2: Valuations based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active for identical assets or liabilities, or model-derived valuations techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Valuations based on unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities and based on non-binding, broker-provided price quotes and may not have been corroborated by observable market data. The Company engages with pricing vendors to provide fair values for a majority of its Level 1 and Level 2 investments. The vendors provide either a quoted market price or use observable inputs without applying significant adjustments in their pricing. Significant observable inputs include interest rates and yield curves observable at commonly quoted intervals, volatility and credit risks. The fair value of derivative contracts is determined using observable market inputs such as the foreign currency rates, forward rate curves, currency volatility and interest rates and considers nonperformance risk of the Company and its counterparties. The Company’s primary financial instruments include its cash, cash equivalents, investments, restricted cash and investments, long-term investments, accounts receivable, accounts payable, long-term debt and leases, and foreign currency related derivative instruments. The estimated fair value of cash, time deposits, accounts receivable, and accounts payable approximates their carrying value due to the short period of time to their maturities. The estimated fair values of lease obligations approximate their carrying value as the majority of these obligations have interest rates that adjust to market rates on a periodic basis. The fair value of the Company’s senior notes is based on the quoted price (level 2); the fair value of the Company's senior notes have not changed materially to that disclosed in Note 14, “Long Term Debt and Other Borrowings,” to our Consolidated Financial Statements in Part II, Item 8 of our 2022 Form 10-K. Equity Investments measured at fair value on a non-recurring basis As of September 25, 2022, and June 26, 2022, equity investments of $126.0 million and $125.2 million, respectively, were reported in other assets in the Condensed Consolidated Balance Sheets. Net gains resulting from the application of the measurement alternative to the Company’s equity investments were immaterial for the three months ended September 25, 2022, and September 26, 2021. Debt and Equity Investments measured at fair value on a recurring basis The following tables set forth the Company’s cash, cash equivalents, investments, restricted cash and investments, and other assets measured at fair value on a recurring basis as of September 25, 2022, and June 26, 2022:
| September 25, 2022
|  |  |  |  |  |  |  |  | (Reported Within)
| Cost |  | Unrealized Gain |  | Unrealized (Loss) |  | Fair Value |  | Cash and Cash Equivalents |  | Investments |  | Restricted Cash & Investments |  | Other Assets
| (in thousands)
Level 1: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds | $ | 1,237,763 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,237,763 |  |  | $ | 1,237,763 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Mutual funds | 82,051 |  |  | 9,915 |  |  | (2,518) |  |  | 89,448 |  |  | — |  |  | — |  |  | — |  |  | 89,448 |
Level 1 Total | 1,319,814 |  |  | 9,915 |  |  | (2,518) |  |  | 1,327,211 |  |  | 1,237,763 |  |  | — |  |  | — |  |  | 89,448 |
Level 2: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate notes and bonds | 122,644 |  |  | — |  |  | (2,093) |  |  | 120,551 |  |  | — |  |  | 120,551 |  |  | — |  |  | — |
Level 2 Total | 122,644 |  |  | — |  |  | (2,093) |  |  | 120,551 |  |  | — |  |  | 120,551 |  |  | — |  |  | — |
Total subject to fair value hierarchy | $ | 1,442,458 |  |  | $ | 9,915 |  |  | $ | (4,611) |  |  | $ | 1,447,762 |  |  |  |  |  |  |  |  |
Cash |  |  |  |  |  |  | $ | 1,644,514 |  |  | $ | 1,643,586 |  |  | $ | — |  |  | $ | 928 |  |  | $ | — |
Time deposits |  |  |  |  |  |  | 1,625,177 |  |  | 1,375,150 |  |  | — |  |  | 250,027 |  |  | — |
Total |  |  |  |  |  |  | $ | 4,717,453 |  |  | $ | 4,256,499 |  |  | $ | 120,551 |  |  | $ | 250,955 |  |  | $ | 89,448 |
| June 26, 2022
|  |  |  |  |  |  |  |  | (Reported Within)
| Cost |  | Unrealized Gain |  | Unrealized (Loss) |  | Fair Value |  | Cash and Cash Equivalents |  | Investments |  | Restricted Cash & Investments |  | Other Assets
| (in thousands)
Level 1: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds | $ | 712,076 |  |  | $ | — |  |  | $ | — |  |  | $ | 712,076 |  |  | $ | 712,076 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Mutual funds | 84,851 |  |  | 12,027 |  |  | (1,659) |  |  | 95,219 |  |  | — |  |  | — |  |  | — |  |  | 95,219 |
Level 1 Total | 796,927 |  |  | 12,027 |  |  | (1,659) |  |  | 807,295 |  |  | 712,076 |  |  | — |  |  | — |  |  | 95,219 |
Level 2: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate notes and bonds | 137,859 |  |  | — |  |  | (2,128) |  |  | 135,731 |  |  | — |  |  | 135,731 |  |  | — |  |  | — |
Level 2 Total | 137,859 |  |  | — |  |  | (2,128) |  |  | 135,731 |  |  | — |  |  | 135,731 |  |  | — |  |  | — |
Total subject to fair value hierarchy | $ | 934,786 |  |  | $ | 12,027 |  |  | $ | (3,787) |  |  | $ | 943,026 |  |  |  |  |  |  |  |  |
Cash |  |  |  |  |  |  | $ | 1,017,253 |  |  | $ | 1,015,747 |  |  | $ | — |  |  | $ | 1,506 |  |  | $ | — |
Time deposits |  |  |  |  |  |  | 2,044,206 |  |  | 1,794,178 |  |  | — |  |  | 250,028 |  |  | — |
Total |  |  |  |  |  |  | $ | 4,004,485 |  |  | $ | 3,522,001 |  |  | $ | 135,731 |  |  | $ | 251,534 |  |  | $ | 95,219 |
The Company accounts for its investment portfolio at fair value. Realized gains (losses) for investment sales are specifically identified. Management assesses the fair value of investments in debt securities that are not actively traded through consideration of interest rates and their impact on the present value of the cash flows to be received from the investments. The Company evaluates its investments with fair value less than amortized cost by first considering whether the Company has the intent to sell the security or whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. In either such situation, the difference between fair value and amortized cost is recognized as a loss in the income statement. Where such sales are not likely to occur, the Company considers whether a portion of the loss is the result of a credit loss. To the extent such losses are the result of credit losses, those amounts are recognized in the income statement. All other differences between fair value and amortized cost are recognized in other comprehensive income. No such losses were recognized through the income statement during the three months ended September 25, 2022 and September 26, 2021. Gross realized gains/(losses) from sales of investments were insignificant in the three months ended September 25, 2022 and September 26, 2021. The following is an analysis of the Company’s investments in unrealized loss positions:
| September 25, 2022
| Unrealized Losses Less than 12 Months |  | Unrealized Losses 12 Months or Greater |  | Total
| Fair Value |  | Gross Unrealized Loss |  | Fair Value |  | Gross Unrealized Loss |  | Fair Value |  | Gross Unrealized Loss
| (in thousands)
Mutual funds | $ | 35,363 |  |  | $ | (2,259) |  |  | $ | 1,488 |  |  | $ | (259) |  |  | $ | 36,851 |  |  | $ | (2,518) |
Corporate notes and bonds | 119,857 |  |  | (2,093) |  |  | — |  |  | — |  |  | 119,857 |  |  | (2,093) |
| $ | 155,220 |  |  | $ | (4,352) |  |  | $ | 1,488 |  |  | $ | (259) |  |  | $ | 156,708 |  |  | $ | (4,611) |
The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities are as follows as of September 25, 2022:
| Cost |  | Fair Value
| (in thousands)
Due in one year or less | $ | 2,937,758 |  |  | $ | 2,936,838 |
Due after one year through five years | 47,826 |  |  | 46,653 |
| $ | 2,985,584 |  |  | $ | 2,983,491 |
The Company has the ability, if necessary, to liquidate its investments in order to meet the Company’s liquidity needs in the next 12 months. Accordingly, those investments with contractual maturities greater than 12 months from the date of purchase nonetheless are classified as short-term on the accompanying Condensed Consolidated Balance Sheets. Derivative Instruments and Hedging The Company’s hedging strategies and policies are unchanged to those disclosed in Note 9, “Financial Instruments,” to our Consolidated Financial Statements in Part II, Item 8 of our 2022 Form 10-K. The financial statement impacts from derivative instruments and hedging activities were not material as of and for the three months ended September 25, 2022 and September 26, 2021. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, investments, restricted cash and investments, trade accounts receivable, and derivative financial instruments used in hedging activities. Cash is placed on deposit at large, global financial institutions. Such deposits may be in excess of insured limits. Management believes that the financial institutions that hold the Company’s cash are creditworthy and, accordingly, minimal credit risk exists with respect to these balances. The Company’s overall portfolio of available-for-sale securities must maintain an average minimum rating of “AA-” or “Aa3” as rated by Standard and Poor’s, Fitch Ratings, or Moody’s Investor Services. To ensure diversification and minimize concentration, the Company’s policy limits the amount of credit exposure with any one financial institution or commercial issuer. The Company is exposed to credit losses in the event of nonperformance by counterparties on foreign currency and interest rate hedge contracts that are used to mitigate the effect of exchange rate and interest rate fluctuations, and on contracts related to structured share repurchase arrangements. These counterparties are large global financial institutions, and, to date, no such counterparty has failed to meet its financial obligations to the Company. Credit risk evaluations, including trade references, bank references, and Dun & Bradstreet ratings, are performed on all new customers and the Company monitors its customers’ financial condition and payment performance. In general, the Company does not require collateral on sales.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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