Fair Value Measurements

12 Months Ended

Sep. 24, 2021

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. Derivative contracts are used to hedge currency risk, these are carried at fair value and classified as other assets and other liabilities.

Our investment securities primarily consist of corporate bonds, municipal debt securities, government bonds, commercial paper, U.S. agency securities, and certificates of deposit. 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 24, 2021
	Cost		Unrealized						Estimated Fair Value
			Gains		Losses		Total		Level 1		Level 2		Level 3
Cash and cash equivalents:
Cash	$	990,182	$	—	$	—	$	990,182	$	990,182	$	—	$	—
Cash equivalents:


Money market funds	235,198		—		—		235,198		235,198		—		—


Cash and cash equivalents	1,225,380		—		—		1,225,380		1,225,380		—		—

Short-term investments:
Certificate of deposit	1,795		—		—		1,795		—		1,795		—
U.S. agency securities	1,096		6		—		1,102		—		1,102		—
Government bonds	100		2		—		102		102		—		—
Commercial paper	5,184		2		—		5,186		—		5,186		—
Corporate bonds	18,850		116		—		18,966		—		18,966		—
Municipal debt securities	11,660		29		(1)		11,688		—		11,688		—
Short-term investments	38,685		155		(1)		38,839		102		38,737		—

Long-term investments:


U.S. agency securities	2,264		13		(2)		2,275		—		2,275		—
Government bonds	11,784		38		(16)		11,806		4,966		6,840		—

Corporate bonds	32,116		61		(25)		32,152		—		32,152		—
Municipal debt securities	10,080		58		(8)		10,130		—		10,130		—
Other long-term investments (1)	6,456		—		—		6,456		—		—		—
Long-term investments	62,700		170		(51)		62,819		4,966		51,397		—

Total cash, cash equivalents, and investments	$	1,326,765	$	325	$	(52)	$	1,327,038	$	1,230,448	$	90,134	$	—

Investments held in supplemental retirement plan:
Assets	$	4,975	$	—	$	—	$	4,975	$	4,975	$	—	$	—
Included in prepaid expenses and other current assets and other non-current assets
Liabilities	$	4,975	$	—	$	—	$	4,975	$	4,975	$	—	$	—
Included in accrued liabilities and other non-current liabilities

Currency derivatives as hedge instruments:
Assets: Included in other current assets	$	—	$	689	$	—	$	689	$	—	$	689	$	—

Liabilities: Included in other accrued liabilities	—		—		(197)		(197)		—		(197)		—

(1)Other long-term investments as of September 24, 2021 is comprised of one equity method investment which is not carried at fair value of $6.5 million.


	September 25, 2020
	Cost		Unrealized						Estimated Fair Value
			Gains		Losses		Total		Level 1		Level 2		Level 3
Cash and cash equivalents:
Cash	$	856,740	$	—	$	—	$	856,740	$	856,740	$	—	$	—
Cash equivalents:
Commercial paper	900		—		—		900		—		900		—

Money market funds	214,111		—		—		214,111		214,111		—		—

Government bonds	125		—		—		125		125		—		—
Cash and cash equivalents	1,071,876		—		—		1,071,876		1,070,976		900		—

Short-term investments:
Certificate of deposit	2,277		1		—		2,278		—		2,278		—
U.S. agency securities	999		12		—		1,011		—		1,011		—
Government bonds	5,118		47		—		5,165		1,370		3,795		—
Commercial paper	4,727		4		—		4,731		—		4,731		—
Corporate bonds	18,754		87		(3)		18,838		—		18,838		—
Municipal debt securities	14,828		97		—		14,925		—		14,925		—
Short-term investments	46,703		248		(3)		46,948		1,370		45,578		—

Long-term investments:


U.S. agency securities	2,214		56		—		2,270		—		2,270		—
Government bonds	5,137		80		—		5,217		1,633		3,584		—

Corporate bonds	24,657		419		(7)		25,069		—		25,069		—
Municipal debt securities	15,220		203		(6)		15,417		—		15,417		—
Other long-term investments (1)	4,176		—		—		4,176		—		—		—
Long-term investments	51,404		758		(13)		52,149		1,633		46,340		—

Total cash, cash equivalents, and investments	$	1,169,983	$	1,006	$	(16)	$	1,170,973	$	1,073,979	$	92,818	$	—

Investments held in supplemental retirement plan:
Assets	$	4,279	$	—	$	—	$	4,279	$	4,279	$	—	$	—
Included in prepaid expenses and other current assets and other non-current assets
Liabilities	$	4,279	$	—	$	—	$	4,279	$	4,279	$	—	$	—
Included in accrued liabilities and other non-current liabilities

Currency derivatives as hedge instruments:
Assets: Included in other current assets	$	—	$	4,267	$	—	$	4,267	$	—	$	4,267	$	—
Assets: included in other non-current assets	—		369		—		369		—		369		—
Liabilities: Included in other accrued liabilities	—		—		(79)		(79)		—		(79)		—

(1)Other long-term investments as of September 25, 2020 is comprised of one equity method investment which is not carried at fair value of $4.7 million.

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. The fair value of the currency derivatives are calculated from market spot rates, forward rates, interest rates, and credit ratings at the end of the period.

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 24, 2021:

Asset Type

Primary Source

Update Frequency

Fair Value Methodology

Secondary Source

Level 1

Money Market Funds

Not Applicable

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)

Daily

Institutional Bond Quotes - evaluations based on various market and industry inputs

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 for less than twelve months as of September 24, 2021 and September 25, 2020 (in thousands):


	September 24, 2021				September 25, 2020
	Less Than 12 Months					Less Than 12 Months
Investment Type	Fair Value		Gross Unrealized Losses				Fair Value		Gross Unrealized Losses
Certificate of deposit	$	600	$	—			$	—	$	—
U.S. agency securities	1,449		(2)				—		—
Government bonds	8,940		(16)				—		—

Corporate bonds	22,964		(25)				7,076		(10)
Municipal debt securities	7,031		(9)				2,505		(6)
Total	$	40,984	$	(52)			$	9,581	$	(16)

As of September 24, 2021 and September 25, 2020, there were no gross unrealized losses and no AFS securities that were in an unrealized loss position for twelve months or greater. Although we had certain securities that were in an unrealized loss position for less than twelve months as of September 24, 2021, we expect to recover the full carrying value of these securities.

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 24, 2021 and September 25, 2020, which are recorded within cash equivalents and both short and long-term investments in our consolidated balance sheets (in thousands):


	September 24, 2021				September 25, 2020
Range of maturity	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within 1 year	$	273,884	$	274,037	$	351,385	$	351,582
Due in 1 to 2 years	40,739		40,874		29,799		30,006
Due in 2 to 3 years	15,506		15,490		18,749		18,713
Total	$	330,129	$	330,401	$	399,933	$	400,301