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Fair Value Measurements
 12 Months Ended
Sep. 27, 2019
Fair Value Disclosures [Abstract]  
Investments and Fair Value Measurements Investments & Fair Value Measurements
We use cash holdings to purchase investment grade securities diversified among security types, industries, and issuers. All of our investment securities are measured at fair value, and are recorded within cash equivalents and both short-term and long-term investments in our consolidated balance sheets. With the exception of our mutual fund investments held in our SERP and classified as trading securities, all of our investments are classified as AFS securities.
Our investment securities primarily consist of government bonds, certificates of deposit, municipal debt securities, corporate bonds, U.S. agency securities, and commercial paper. In addition, our cash and cash equivalents also consist of highly-liquid money market funds. Consistent with our investment policy, none of our municipal debt investments are supported by letters of credit or standby purchase agreements. Our cash and investment portfolio consisted of the following (in thousands):
 
September 27,
2019
 
Cost
Unrealized
 
 
Estimated Fair Value
 
Gains
Losses
Total
 
Level 1
Level 2
Level 3
Cash and cash equivalents:








 






Cash
$
680,287

$
—

$
—

$
680,287

 
$
680,287

$
—

$
—

Cash equivalents:








 






Corporate bonds
1,000

—

—

1,000

 
—

1,000

—

Money market funds
115,270

—

—

115,270

 
115,270

—

—

Government bonds
653

—

—

653

 
653

—

—

Cash and cash equivalents
797,210

—

—

797,210

 
796,210

1,000

—










 






Short-term investments:








 






Certificate of deposit
1,265

1

—

1,266

 
—

1,266

—

U.S. agency securities
10,973

8

(9
)
10,972

 
—

10,972

—

Government bonds
8,381

11

(1
)
8,391

 
5,784

2,607

—

Commercial paper
6,347

9

—

6,356

 
—

6,356

—

Corporate bonds
76,802

172

(34
)
76,940

 
—

76,940

—

Municipal debt securities
15,210

18

(7
)
15,221

 
—

15,221

—

Short-term investments
118,978

219

(51
)
119,146

 
5,784

113,362

—










 






Long-term investments:








 






Asset backed securities
400

2

—

402

 
—

402

—

U.S. agency securities
7,102

146

—

7,248

 
—

7,248

—

Government bonds
23,563

187

—

23,750

 
19,670

4,080

—

Corporate bonds
134,360

1,700

—

136,060

 
—

136,060

—

Municipal debt securities
10,315

87

(6
)
10,396

 
—

10,396

—

Other long-term investments (1)
1,731

—

—

1,731

 
—

—

—

Long-term investments
177,471

2,122

(6
)
179,587

 
19,670

158,186

—










 






Total cash, cash equivalents, and investments
$
1,093,659

$
2,341

$
(57
)
$
1,095,943

 
$
821,664

$
272,548

$
—

 
 
 
 
 
 
 
 
 
Investments held in supplemental retirement plan:
 
 
 
 
 
 
 
 
Assets
3,564

—

—

3,564

 
3,564

—

—

Included in prepaid expenses and other current assets & other non-current assets
 
 
 
 
 
Liabilities
3,564

—

—

3,564

 
3,564

—

—

Included in accrued liabilities & other non-current liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Currency derivatives as hedge instruments:
 
 
 
 
 
 
 
 
Assets
—

—

—

—

 
—

—

—

Included in other current assets
 
 
 
 
 
 
 
 
Liabilities
—

—

(242
)
(242
)
 
—

(242
)
—

Included in other accrued expenses
 
 
 
 
 
 
 
 
(1)
Other long-term investments as of September 27, 2019 includes an investment that is not carried at fair value including an equity method investment of $1.7 million.
 
September 28,
2018
 
Cost
Unrealized
 
 
Estimated Fair Value
 
Gains
Losses
Total
 
Level 1
Level 2
Level 3
Cash and cash equivalents:








 






Cash
$
905,660

$
—

$
—

$
905,660

 
$
905,660

$
—

$
—

Cash equivalents:








 






Commercial paper
5,058

—

—

5,058

 
—

5,058

—

Corporate bonds
1,005

—

—

1,005

 
—

1,005

—

Money market funds
3,301

—

—

3,301

 
3,301

—

—

Municipal debt securities
545

—

(1
)
544

 
—

544

—

Government bonds
2,495

—

—

2,495

 
2,495

—

—

Cash and cash equivalents
918,064

—

(1
)
918,063

 
911,456

6,607

—










 






Short-term investments:








 






Certificate of deposit
12,875

14

—

12,889

 
—

12,889

—

U.S. agency securities
11,997

—

(135
)
11,862

 
—

11,862

—

Government bonds
7,970

—

(15
)
7,955

 
7,955

—

—

Commercial paper
4,276

—

—

4,276

 
—

4,276

—

Corporate bonds
111,245

50

(494
)
110,801

 
—

110,801

—

Municipal debt securities
30,475

—

(120
)
30,355

 
—

30,355

—

Short-term investments
178,838

64

(764
)
178,138

 
7,955

170,183

—










 






Long-term investments:








 






U.S. agency securities
9,791

—

(166
)
9,625

 
—

9,625

—

Government bonds
15,966

—

(317
)
15,649

 
15,649

—

—

Corporate bonds
146,561

33

(1,810
)
144,784

 
—

144,784

—

Municipal debt securities
17,235

—

(112
)
17,123

 
—

17,123

—

Other long-term investments (1)
355

246

—

601

 
246

—

—

Long-term investments
189,908

279

(2,405
)
187,782

 
15,895

171,532

—










 






Total cash, cash equivalents, and investments
$
1,286,810

$
343

$
(3,170
)
$
1,283,983

 
$
935,306

$
348,322

$
—

 
 
 
 
 
 
 
 
 
Investments held in supplemental retirement plan:
 
 
 
 
 
 
 
Assets
3,486

—

—

3,486

 
3,486

—

—

Included in prepaid expenses and other current assets & other non-current assets
 
 
 
 
 
Liabilities
3,486

—

—

3,486

 
3,486

—

—

Included in accrued liabilities & other non-current liabilities
 
 
 
 
 

(1)
Other long-term investments as of September 28, 2018 include a marketable equity security of $0.2 million, and other investments that are not carried at fair value including an equity method investment of $0.4 million. During fiscal 2018, we recorded write-off charges to reduce the carrying value of two cost method equity investments to zero in recognition of an other-than-temporary impairment for each investment.
Fair Value Hierarchy.    Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. We minimize the use of unobservable inputs and use observable market data, if available, when determining fair value. We classify our inputs to measure fair value using the following three-level hierarchy:
Level 1: Quoted prices in active markets at the measurement date for identical assets and liabilities. We base the fair value of our Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments.
Level 2: Prices may be based upon quoted prices in active markets or inputs not quoted on active markets but are corroborated by market data. We obtain the fair value of our Level 2 financial instruments from a professional pricing service, which may use quoted market prices for identical or comparable instruments, or model driven valuations using observable market data or inputs corroborated by observable market data. To validate the fair value determination provided by our primary pricing service, we perform quality controls over values received which include comparing our pricing service provider’s assessment of the fair values of our investment securities against the fair values of our investment securities obtained from another independent source, reviewing the pricing movement in the context of overall market trends, and reviewing trading information from our investment managers. In addition, we assess the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy.
Level 3: Unobservable inputs are used when little or no market data is available and reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.
The following table describes the valuation techniques and inputs applicable to each class of security held within our investment portfolio as of September 27, 2019:
Asset Type
Primary Source
Update Frequency
Fair Value Methodology
Secondary Source
 
 
 
 
 
Level 1
 
 
 
 
Money Market Funds
ICE (Intercontinental Exchange)
Daily
$1 per share
Not Applicable
U.S. Government Bonds
ICE (Intercontinental Exchange)
Daily
Institutional Bond Quotes - evaluations based on various market and industry inputs
Bloomberg
 
 
 
 
 
Level 2
 
 
 
 
Certificates of Deposit
ICE (Intercontinental Exchange)
Monthly
Market Prices
Bloomberg
Commercial Paper
U.S. Bank Pricing Unit
Daily
Matrix Pricing
Not Applicable
Corporate Bonds
ICE (Intercontinental Exchange)
Daily
Institutional Bond Quotes - evaluations based on various market and industry inputs
Bloomberg
Municipal Debt Securities
ICE (Intercontinental Exchange)
Daily
Evaluations based on various market and industry inputs
Bloomberg
U.S. Agency Securities
ICE (Intercontinental Exchange)
Daily
Institutional Bond Quotes - evaluations based on various market and industry inputs
Bloomberg
Int'l Government Bonds
ICE (Intercontinental Exchange)
Extel Financial Ltd
Daily
Evaluations based on various market factors
Bloomberg

Securities In Gross Unrealized Loss Position.    We periodically evaluate our investments for other-than-temporary declines in fair value. The unrealized losses on our AFS securities were primarily the result of unfavorable changes in interest rates subsequent to the initial purchase of these securities. The following table presents the gross unrealized losses and fair value for those AFS securities that were in an unrealized loss position as of September 27, 2019 and September 28, 2018 (in thousands):
 
September 27, 2019
 
September 28, 2018
 
Less Than 12 Months
Greater Than 12 Months
 
Less Than 12 Months
Greater Than 12 Months
Investment Type
Fair Value
Gross Unrealized Losses
Fair Value
Gross Unrealized Losses
 
Fair Value
Gross Unrealized Losses
Fair Value
Gross Unrealized Losses
Certificate of deposit
$
300

$
—

$
—

$
—

 
$
—

$
—

$
—

$
—

U.S. agency securities
—

—

4,787

(9
)
 
—

—

21,486

(302
)
Government bonds
1,426

—

—

—

 
16,633

(332
)
—

—

Commercial paper
—

—

—

—

 
5,737

(1
)
—

—

Corporate bonds
7,647

(3
)
27,078

(32
)
 
143,051

(1,680
)
52,162

(624
)
Municipal debt securities
9,552

(13
)
900

—

 
41,058

(191
)
6,965

(41
)
Total
$
18,925

$
(16
)
$
32,765

$
(41
)
 
$
206,479

$
(2,204
)
$
80,613

$
(967
)

Although we had certain securities that were in an unrealized loss position as of September 27, 2019, we expect to recover the full carrying value of these securities as we do not intend to, nor do we currently anticipate a need to sell these securities prior to recovering the associated unrealized losses. As a result, we do not consider any portion of the unrealized losses at either September 27, 2019 or September 28, 2018 to represent an other-than-temporary impairment, nor do we consider any of the unrealized losses to be credit losses.
Investment Maturities.    The following table summarizes the amortized cost and estimated fair value of the AFS securities within our investment portfolio based on stated maturities as of September 27, 2019 and September 28, 2018, which are recorded within cash equivalents and both short and long-term investments in our consolidated balance sheets (in thousands):
 
September 27, 2019
 
September 28, 2018
Range of maturity
Amortized Cost
Fair Value
 
Amortized Cost
Fair Value
Due within 1 year
$
238,186

$
238,354

 
$
191,241

$
190,541

Due in 1 to 2 years
93,948

94,899

 
122,131

120,545

Due in 2 to 3 years
81,793

82,957

 
67,423

66,637

Total
$
413,927

$
416,210

 
$
380,795

$
377,723