Financial Instruments

3 Months Ended

May 07, 2023

Investments, Debt and Equity Securities [Abstract]

Fair Value Measurements

We define fair value as the exchange price that would be received from sale of 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 on the measurement date. We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Three levels of inputs may be used to measure fair value:

•Level 1 - Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2 - Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments; and

•Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.

Cash Equivalents, Marketable Securities and Restricted Cash

We measure our cash equivalents, marketable securities, and restricted cash at fair value on a recurring basis. We classify our cash equivalents, marketable securities and restricted cash within Level 1 or Level 2 because they are valued using either quoted market prices or inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded. Our fixed income available-for-sale securities consist of high quality, investment grade securities from diverse issuers. The valuation techniques used to measure the fair value of our marketable securities were derived from non-binding market consensus prices that are corroborated by observable market data or quoted market prices for similar instruments. The following tables summarize our cash equivalents, marketable securities and restricted cash by significant investment categories and their classification within the fair value hierarchy at the end of fiscal 2023 and the first quarter of fiscal 2024 (in thousands):


	At the End of Fiscal 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Marketable Securities		Restricted Cash
Level 1
Money market accounts	$	—	$	—	$	—	$	49,733	$	39,189	$	—	$	10,544
Level 2

U.S. government treasury notes	425,977		170		(4,229)		421,918		32,008		389,910		—
U.S. government agencies	23,795		—		(289)		23,506		—		23,506		—
Corporate debt securities	527,164		901		(9,300)		518,765		—		518,765		—
Foreign government bonds	4,797		—		(44)		4,753		—		4,753		—
Asset-backed securities	61,371		281		(1,016)		60,636		—		60,636		—
Municipal bonds	3,950		—		(168)		3,782		—		3,782		—
Total	$	1,047,054	$	1,352	$	(15,046)	$	1,083,093	$	71,197	$	1,001,352	$	10,544


	At the End of the First Quarter of Fiscal 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Marketable Securities		Restricted Cash
Level 1
Money market accounts	$	—	$	—	$	—	$	28,305	$	18,345	$	—	$	9,960
Level 2
U.S. government treasury notes	253,286		634		(2,885)		251,035		—		251,035		—
U.S. government agencies	18,991		18		(95)		18,914		—		18,914		—
Corporate debt securities	479,168		1,049		(7,091)		473,126		—		473,126		—
Foreign government bonds	1,590		—		(31)		1,559		—		1,559		—
Asset-backed securities	57,826		275		(838)		57,263		—		57,263		—
Municipal bonds	3,950		—		(132)		3,818		—		3,818		—
Total	$	814,811	$	1,976	$	(11,072)	$	834,020	$	18,345	$	805,715	$	9,960

The amortized cost and estimated fair value of our marketable securities are shown below by contractual maturity (in thousands):


	At the End of the First Quarter of Fiscal 2024
	Amortized Cost		Fair Value
Due within one year	$	358,506	$	353,414
Due in one to five years	456,305		452,301

Total	$	814,811	$	805,715

Unrealized losses on our marketable securities have not been recorded into income because we do not intend to sell nor is it more likely than not that we will be required to sell these investments prior to recovery of their amortized cost basis. The decline in fair value of our marketable securities is largely due to the rising interest rate environment driven by current market conditions that has resulted in higher credit spreads. The credit ratings associated with our marketable securities are highly rated and the issuers continue to make timely principal and interest payments. As a result, there were no credit or non-credit impairment charges recorded in the first quarter of fiscal 2023 and 2024.

The following table presents gross unrealized losses and fair values for those investments that were in a continuous unrealized loss position at the end of fiscal 2023 and the first quarter of fiscal 2024, aggregated by investment category (in thousands):


	At the End of Fiscal 2023
	Less than 12 months				Greater than 12 months				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. government treasury notes	$	250,046	$	(130)	$	127,976	$	(4,099)	$	378,022	$	(4,229)
U.S. government agencies	5,194		(5)		18,312		(284)		23,506		(289)
Corporate debt securities	99,446		(330)		277,717		(8,970)		377,163		(9,300)
Foreign government bonds	3,200		(5)		551		(39)		3,751		(44)
Asset-backed securities	3,060		(25)		22,221		(991)		25,281		(1,016)
Municipal bonds	—		—		3,782		(168)		3,782		(168)
Total	$	360,946	$	(495)	$	450,559	$	(14,551)	$	811,505	$	(15,046)


	At the End of the First Quarter of Fiscal 2024
	Less than 12 months				Greater than 12 months				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. government treasury notes	$	21,981	$	(40)	$	100,205	$	(2,845)	$	122,186	$	(2,885)
U.S. government agencies	999		(1)		14,505		(94)		15,504		(95)
Corporate debt securities	90,761		(363)		242,140		(6,728)		332,901		(7,091)
Foreign government bonds	1,000		—		559		(31)		1,559		(31)
Asset-backed securities	6,626		(15)		20,034		(823)		26,660		(838)
Municipal bonds	—		—		3,818		(132)		3,818		(132)
Total	$	121,367	$	(419)	$	381,261	$	(10,653)	$	502,628	$	(11,072)

Realized gains or losses on sale of marketable securities were not significant for all periods presented.