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Fair Value | 9 Months Ended
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Apr. 02, 2021
Fair Value Disclosures [Abstract] |
Fair Value | Fair Value Measurement of Fair Value Fair value is defined 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 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. Fair Value Hierarchy A fair value hierarchy is based on whether the market participant assumptions used in determining fair value are obtained from independent sources (observable inputs) or reflect the Company’s own assumptions of market participant valuation (unobservable inputs). A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value are: Level 1 — Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 — Quoted prices for identical assets and liabilities in markets that are inactive; quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; or Level 3 — Prices or valuations that require inputs that are both unobservable and significant to the fair value measurement. The Company considers an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and views an inactive market as one in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, the Company’s or the counterparty’s non-performance risk is considered in determining the fair values of liabilities and assets, respectively. Items Measured at Fair Value on a Recurring Basis The following tables present the Company’s assets and liabilities, by financial instrument type and balance sheet line item, that are measured at fair value on a recurring basis, excluding accrued interest components, as of April 2, 2021:
|  | Fair Value Measurements at Reporting Date Using
(Dollars in millions) |  | Quoted Prices in Active Markets for Identical Instruments (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total Balance
Assets: |  |  |  |  |  |  |  |
Money market funds |  | $ | 530 |  |  | $ | — |  |  | $ | — |  |  | $ | 530 |
Total cash equivalents |  | 530 |  |  | — |  |  | — |  |  | 530 |
Restricted cash and investments: |  |  |  |  |  |  |  |
Money market funds |  | 1 |  |  | — |  |  | — |  |  | 1 |
Time deposits and certificates of deposit |  | — |  |  | 1 |  |  | — |  |  | 1 |
Other debt securities |  | — |  |  | — |  |  | 18 |  |  | 18 |
Derivative assets |  | — |  |  | 6 |  |  | — |  |  | 6 |
Total assets |  | $ | 531 |  |  | $ | 7 |  |  | $ | 18 |  |  | $ | 556 |
Liabilities: |  |  |  |  |  |  |  |
Derivative liabilities |  | $ | — |  |  | $ | 16 |  |  | $ | — |  |  | $ | 16 |
Total liabilities |  | $ | — |  |  | $ | 16 |  |  | $ | — |  |  | $ | 16 |
|  | Fair Value Measurements at Reporting Date Using
(Dollars in millions) |  | Quoted Prices in Active Markets for Identical Instruments (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total Balance
Assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 530 |  |  | $ | — |  |  | $ | — |  |  | $ | 530 |
Other current assets |  | 1 |  |  | 7 |  |  | — |  |  | 8 |
Other assets, net |  | — |  |  | — |  |  | 18 |  |  | 18 |
Total assets |  | $ | 531 |  |  | $ | 7 |  |  | $ | 18 |  |  | $ | 556 |
Liabilities: |  |  |  |  |  |  |  |
Accrued expenses |  | $ | — |  |  | $ | 16 |  |  | $ | — |  |  | $ | 16 |
Total liabilities |  | $ | — |  |  | $ | 16 |  |  | $ | — |  |  | $ | 16 |
The following tables present the Company’s assets and liabilities, by financial instrument type and balance sheet line item, that are measured at fair value on a recurring basis, excluding accrued interest components, as of July 3, 2020:
|  | Fair Value Measurements at Reporting Date Using
(Dollars in millions) |  | Quoted Prices in Active Markets for Identical Instruments (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total Balance
Assets: |  |  |  |  |  |  |  |
Money market funds |  | $ | 494 |  |  | $ | — |  |  | $ | — |  |  | $ | 494 |
Time deposits and certificates of deposit |  | — |  |  | 55 |  |  | — |  |  | 55 |
Total cash equivalents |  | 494 |  |  | 55 |  |  | — |  |  | 549 |
Restricted cash and investments: |  |  |  |  |  |  |  |
Money market funds |  | 1 |  |  | — |  |  | — |  |  | 1 |
Time deposits and certificates of deposit |  | — |  |  | 1 |  |  | — |  |  | 1 |
Other debt securities |  | — |  |  | — |  |  | 18 |  |  | 18 |
Derivative assets |  | — |  |  | 6 |  |  | — |  |  | 6 |
Total assets |  | $ | 495 |  |  | $ | 62 |  |  | $ | 18 |  |  | $ | 575 |
Liabilities: |  |  |  |  |  |  |  |
Derivative liabilities |  | $ | — |  |  | $ | 29 |  |  | $ | — |  |  | $ | 29 |
Total liabilities |  | $ | — |  |  | $ | 29 |  |  | $ | — |  |  | $ | 29 |
|  | Fair Value Measurements at Reporting Date Using
(Dollars in millions) |  | Quoted Prices in Active Markets for Identical Instruments (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total Balance
Assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 494 |  |  | $ | 55 |  |  | $ | — |  |  | $ | 549 |
Other current assets |  | 1 |  |  | 7 |  |  | — |  |  | 8 |
Other assets, net |  | — |  |  | — |  |  | 18 |  |  | 18 |
Total assets |  | $ | 495 |  |  | $ | 62 |  |  | $ | 18 |  |  | $ | 575 |
Liabilities: |  |  |  |  |  |  |  |
Accrued expenses |  | $ | — |  |  | $ | 29 |  |  | $ | — |  |  | $ | 29 |
Total liabilities |  | $ | — |  |  | $ | 29 |  |  | $ | — |  |  | $ | 29 |
The Company classifies items in Level 1 if the financial assets consist of securities for which quoted prices are available in an active market. The Company classifies items in Level 2 if the financial asset or liability is valued using observable inputs. The Company uses observable inputs including quoted prices in active markets for similar assets or liabilities. Level 2 assets include: agency bonds, corporate bonds, commercial paper, municipal bonds, U.S. Treasuries, time deposits and certificates of deposit. These debt investments are priced using observable inputs and valuation models which vary by asset class. The Company uses a pricing service to assist in determining the fair value of all of its cash equivalents. For the cash equivalents in the Company’s portfolio, multiple pricing sources are generally available. The pricing service uses inputs from multiple industry-standard data providers or other third-party sources and various methodologies, such as weighting and models, to determine the appropriate price at the measurement date. The Company corroborates the prices obtained from the pricing service against other independent sources and, as of April 2, 2021, has not found it necessary to make any adjustments to the prices obtained. The Company’s derivative financial instruments are also classified within Level 2. The Company’s derivative financial instruments consist of foreign currency forward exchange contracts, interest rate swaps and the TRS. The Company recognizes derivative financial instruments in its condensed consolidated financial statements at fair value. The Company determines the fair value of these instruments by considering the estimated amount it would pay or receive to terminate these agreements at the reporting date. Items Measured at Fair Value on a Non-Recurring Basis From time to time, the Company enters into certain strategic investments for the promotion of business and strategic objectives. These strategic investments primarily include cost basis investments representing those where the Company does not have the ability to exercise significant influence. These investments are included in Other assets, net on the Company’s Condensed Consolidated Balance Sheets, and are periodically analyzed to determine whether or not there are indicators of impairment. As of April 2, 2021 and July 3, 2020, the carrying value of the Company’s strategic investments was $163 million and $135 million, respectively. The Company’s strategic investments are recorded at fair value only if an impairment or observable price change is recognized in the current period. If an observable price change or impairment is recognized on the Company’s strategic investments during the period, the Company classifies these assets as Level 3 within the fair value hierarchy based on the nature of the fair value inputs. For the three and nine months ended April 2, 2021, the Company recorded upward adjustments of $10 million and $33 million, respectively, due to observa ble price changes of strategic investments, which are included in Other, net in the Company’s Condensed Consolidated Statement of Operations. For the three months ended April 2, 2021, there were no downward adjustments on strategic investments. For the nine months ended April 2, 2021, the Company recorded downward adjustments of $7 million to write down the carrying amount of certain investments to their fair value, which are included in Other, net in the Company’s Condensed Consolidated Statement of Operations. For the three months ended April 3, 2020, there were no downward adjustments on strategic investments. For the nine months ended April 3, 2020, the Company recorded a downward adjustment of $1 million in order to write down the carrying amount of an investment to its fair value. For the three and nine months ended April 3, 2020, there were no upward adjustments for strategic investments. Other Fair Value Disclosures The Company’s debt is carried at amortized cost. The estimated fair value of the Company’s debt is derived using the closing price of the same debt instruments as of the date of valuation, which takes into account the yield curve, interest rates and other observable inputs. Accordingly, these fair value measurements are categorized as Level 2. The following table presents the fair value and amortized cost of the Company’s debt in order of maturity:
|  | April 2, 2021 |  | July 3, 2020
(Dollars in millions) |  | Carrying Amount |  | Estimated Fair Value |  | Carrying Amount |  | Estimated Fair Value
4.250% Senior Notes due March 2022 |  | $ | 220 |  |  | $ | 226 |  |  | $ | 229 |  |  | $ | 237 |
4.750% Senior Notes due June 2023 |  | 540 |  |  | 578 |  |  | 546 |  |  | 576 |
4.875% Senior Notes due March 2024 |  | 499 |  |  | 538 |  |  | 498 |  |  | 541 |
4.750% Senior Notes due January 2025 |  | 479 |  |  | 522 |  |  | 479 |  |  | 517 |
4.875% Senior Notes due June 2027 |  | 504 |  |  | 556 |  |  | 504 |  |  | 549 |
4.091% Senior Notes due June 2029 |  | 460 |  |  | 510 |  |  | 456 |  |  | 523 |
3.125% Senior Notes due July 2029 |  | 500 |  |  | 484 |  |  | — |  |  | — |
4.125% Senior Notes due January 2031 |  | 499 |  |  | 508 |  |  | 499 |  |  | 524 |
3.375% Senior Notes due July 2031 |  | 500 |  |  | 481 |  |  | — |  |  | — |
5.750% Senior Notes due December 2034 |  | 489 |  |  | 557 |  |  | 489 |  |  | 543 |
LIBOR Based Term Loan due September 2025 |  | 488 |  |  | 488 |  |  | 500 |  |  | 490 |
|  | 5,178 |  |  | 5,448 |  |  | 4,200 |  |  | 4,500 |
Less: debt issuance costs |  | (36) |  |  | — |  |  | (25) |  |  | — |
Debt, net of debt issuance costs |  | 5,142 |  |  | 5,448 |  |  | 4,175 |  |  | 4,500 |
Less: current portion of debt, net of debt issuance costs |  | (245) |  |  | (251) |  |  | (19) |  |  | (19) |
Long-term debt, less current portion, net of debt issuance costs |  | $ | 4,897 |  |  | $ | 5,197 |  |  | $ | 4,156 |  |  | $ | 4,481 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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