Fair Value Measurements and Investments

3 Months Ended

Oct. 04, 2019

Financial Instruments Carried at Fair Value

Financial assets and liabilities that are remeasured and reported at fair value at each reporting period are classified and disclosed in one of the following three levels:


Level 1.	Quoted prices in active markets for identical assets or liabilities.


Level 2.	Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.


Level 3.	Inputs that are unobservable for the asset or liability and that are significant to the fair value of the assets or liabilities.

The following tables present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of October 4, 2019 and June 28, 2019, and indicate the fair value hierarchy of the valuation techniques utilized to determine such values:



	October 4, 2019
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets:
Cash equivalents - Money market funds	$	889	$	—	$	—	$	889
Foreign exchange contracts	—		22		—		22
Total assets at fair value	$	889	$	22	$	—	$	911
Liabilities:
Foreign exchange contracts	$	—	$	18	$	—	$	18
Interest rate swap contract	—		88		—		88
Total liabilities at fair value	$	—	$	106	$	—	$	106



	June 28, 2019
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets:
Cash equivalents:
Money market funds	$	1,388	$	—	$	—	$	1,388
Certificates of deposit	—		17		—		17
Total cash equivalents	1,388		17		—		1,405
Foreign exchange contracts	—		44		—		44
Interest rate swap contracts	—		2		—		2
Total assets at fair value	$	1,388	$	63	$	—	$	1,451
Liabilities:
Foreign exchange contracts	$	—	$	40	$	—	$	40
Interest rate swap contract	—		65		—		65
Total liabilities at fair value	$	—	$	105	$	—	$	105

During the three months ended October 4, 2019 and September 28, 2018, the Company had no transfers of financial assets and liabilities between levels.

Financial Instruments Not Carried at Fair Value

The carrying value of the Company’s revolving credit facility approximates its fair value given the revolving nature of the balance and the variable market interest rate. For financial instruments where the carrying value (which includes principal adjusted for any unamortized issuance costs, and discounts or premiums) differs from fair value (which is based on quoted market prices), the following table represents the related carrying value and fair value for each of the Company’s outstanding financial instruments. Each of the financial instruments presented below was categorized as Level 2 for all periods presented, based on the frequency of trading immediately prior to the end of the first quarter of 2020 and the fourth quarter of 2019, respectively.



	October 4, 2019				June 28, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in millions)
0.50% convertible senior notes due 2020	$	33	$	33	$	33	$	31
Variable interest rate Term Loan A-1 maturing 2023	4,762		4,774		4,824		4,780
Variable interest rate U.S. Term Loan B-4 maturing 2023	2,168		2,167		2,424		2,370
1.50% convertible notes due 2024	965		1,058		958		986
4.750% senior unsecured notes due 2026	2,284		2,351		2,283		2,263
Total	$	10,212	$	10,383	$	10,522	$	10,430

- 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 + Details