The Company maintains an investment portfolio of various holdings, types, and maturities. The Company’s mutual funds, which are related to the Company’s obligations under the deferred compensation plan, are classified as trading securities. Investments classified as trading securities are recorded at fair value based upon quoted market prices. Differences between the cost and fair value of trading securities are recognized as other income (expense) in the Condensed Consolidated Statements of Operations. All of the Company’s other investments are classified as available-for-sale and consequently are recorded in the Condensed Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income (loss), net of tax.

The Company defines fair value 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 or permitted 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.

A fair value hierarchy has been established that prioritizes the inputs to valuation techniques used to measure fair value. The level of an asset or liability in the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 2: Valuations based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or model-derived valuations techniques for which all significant inputs are observable in the market or can be corroborated by observable market data, for substantially the full term of the assets or liabilities.

The Company’s primary financial instruments include its cash, cash equivalents, investments, restricted cash and investments, long-term investments, accounts receivable, accounts payable, long-term debt and leases, and foreign currency related derivative instruments. The estimated fair value of cash, accounts receivable, and accounts payable approximates their carrying value due to the short period of time to their maturities. The estimated fair values of lease obligations approximate their carrying value as the substantial majority of these obligations have interest rates that adjust to market rates on a periodic basis. Refer to Note 12 - Long-Term Debt and Other Borrowings for additional information regarding the fair value of the Company’s senior notes and convertible senior notes.



	March 29, 2020
										(Reported Within)
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Value		Cash and Cash Equivalents		Investments		Restricted Cash & Investments		Other Assets
	(in thousands)
Cash	$	1,486,663	$	—	$	—		$	1,486,663	$	1,482,536	$	—	$	4,127	$	—
Time deposit	1,735,157		—		—			1,735,157		1,485,129		—		250,028		—
Level 1:
Money market funds	944,788		—		—			944,788		944,788		—		—		—
U.S. Treasury and agencies	429,712		995		—			430,707		37,501		393,206		—		—
Mutual funds	68,757		3,354		(491		)	71,620		—		—		—		71,620
Level 1 Total	1,443,257		4,349		(491		)	1,447,115		982,289		393,206		—		71,620
Level 2:
Government-sponsored enterprises	2,011		1		—			2,012		—		2,012		—		—
Foreign government bonds	32,230		48		(47		)	32,231		—		32,231		—		—
Corporate notes and bonds	998,591		658		(6,280		)	992,969		11,632		981,337		—		—
Mortgage backed securities — residential	3,628		59		—			3,687		—		3,687		—		—
Mortgage backed securities — commercial	18,957		120		—			19,077		—		19,077		—		—
Level 2 Total	1,055,417		886		(6,327		)	1,049,976		11,632		1,038,344		—		—
Total	$	5,720,494	$	5,235	$	(6,818	)	$	5,718,911	$	3,961,586	$	1,431,550	$	254,155	$	71,620



	June 30, 2019
										(Reported Within)
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Value		Cash and Cash Equivalents		Investments		Restricted Cash & Investments		Other Assets
	(in thousands)
Cash	$	467,460	$	—	$	—		$	467,460	$	462,310	$	—	$	5,150	$	—
Time deposit	1,563,686		—		—			1,563,686		1,313,659		—		250,027		—
Level 1:
Money market funds	1,644,659		—		—			1,644,659		1,644,659		—		—		—
U.S. Treasury and agencies	465,655		283		(24		)	465,914		86,981		378,933		—		—
Mutual funds	76,961		1,063		(283		)	77,741		—		—		—		77,741
Level 1 Total	2,187,275		1,346		(307		)	2,188,314		1,731,640		378,933		—		77,741
Level 2:
Government-sponsored enterprises	16,005		5		(41		)	15,969		—		15,969		—		—
Foreign government bonds	24,408		35		—			24,443		—		24,443		—		—
Corporate notes and bonds	1,466,167		2,310		(99		)	1,468,378		150,610		1,317,768		—		—
Mortgage backed securities — residential	6,148		—		(4		)	6,144		—		6,144		—		—
Mortgage backed securities — commercial	29,587		140		—			29,727		—		29,727		—		—
Level 2 Total	1,542,315		2,490		(144		)	1,544,661		150,610		1,394,051		—		—
Total	$	5,760,736	$	3,836	$	(451	)	$	5,764,121	$	3,658,219	$	1,772,984	$	255,177	$	77,741

The Company accounts for its investment portfolio at fair value. Realized gains (losses) for investment sales are specifically identified. Management assesses the fair value of investments in debt securities that are not actively traded through consideration of interest rates and their impact on the present value of the cash flows to be received from the investments. The Company also considers whether changes in the credit ratings of the issuer could impact the assessment of fair value. Additionally, the Company also considers factors such as the Company’s intent to sell the security and whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis.

The Company did not recognize any losses on investments due to other-than-temporary impairments during the three and nine months ended March 29, 2020 or March 31, 2019. Additionally, gross realized gains/(losses) from sales of investments were insignificant in the three and nine months ended March 29, 2020 and March 31, 2019.



	March 29, 2020
	Unrealized Losses Less than 12 Months					Unrealized Losses 12 Months or Greater					Total
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss
	(in thousands)
Mutual funds	$	6,363	$	(193	)	$	8,108	$	(298	)	$	14,471	$	(491	)
Foreign government bonds	3,900		(47		)	—		—			3,900		(47		)
Corporate notes and bonds	676,318		(6,280		)	—		—			676,318		(6,280		)
	$	686,581	$	(6,520	)	$	8,108	$	(298	)	$	694,689	$	(6,818	)

The amortized cost and fair value of cash equivalents, investments, and restricted investments with contractual maturities are as follows as of March 29, 2020:



	Cost		Estimated Fair Value
	(in thousands)
Due in one year or less	$	3,794,435	$	3,793,166
Due after one year through five years	349,695		346,732
Due in more than five years	20,944		20,730
	$	4,165,074	$	4,160,628

The Company has the ability, if necessary, to liquidate its investments in order to meet the Company’s liquidity needs in the next 12 months. Accordingly, those investments with contractual maturities greater than 12 months from the date of purchase nonetheless are classified as short-term on the accompanying Condensed Consolidated Balance Sheets.

The Company carries derivative financial instruments (“derivatives”) on its Condensed Consolidated Balance Sheets at their fair values. The Company enters into foreign currency forward contracts and foreign currency options with financial institutions with the primary objective of reducing volatility of earnings and cash flows related to foreign currency exchange rate fluctuations. In addition, the Company enters into interest rate swap arrangements to manage interest rate risk. The counterparties to these derivatives are large global financial institutions that the Company believes are creditworthy, and therefore, it does not consider the risk of counterparty nonperformance to be material.

The Company’s financial position is routinely subjected to market risk associated with foreign currency exchange rate fluctuations on non-U.S. dollar transactions or cash flows, primarily from Japanese yen-denominated revenues and euro- denominated and Korean won-denominated expenses. The Company’s policy is to mitigate the foreign exchange risk arising from the fluctuations in the value of these non-U.S. dollar denominated transactions or cash flows through a foreign currency cash flow hedging program, using forward contracts and foreign currency options that generally expire within 12 months and no later than 24 months. These hedge contracts are designated as cash flow hedges and are carried on the Company’s balance sheet at fair value with the effective portion of the contracts’ gains or losses included in accumulated other comprehensive income (loss) and subsequently recognized in revenue/expense in the same period the hedged items are recognized.

In addition, the Company has entered into interest rate swap agreements to hedge against the variability of cash flows due to changes in certain benchmark interest rates on fixed rate debt. These instruments are designated as cash flow hedges at inception and are settled in conjunction with the issuance of debt. The effective portion of the contracts’ gains or losses is included in accumulated other comprehensive income (loss) and is amortized into income as the hedged item impacts earnings. During the nine months ended March 29, 2020, the Company entered into a series of these interest rate swap agreements with a total notional value of $400 million. As of March 29, 2020, the Company had a net loss of $29.9 million accumulated in other comprehensive income, net of tax, related to these interest rate swap agreements.

At inception and at each quarter-end, hedges are tested prospectively and retrospectively for effectiveness using regression analysis. Changes in the fair value of foreign exchange contracts due to changes in time value are included in the assessment of effectiveness. To qualify for hedge accounting, the hedge relationship must meet criteria relating to both the derivative instrument and the hedged item. These criteria include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows will be measured. There were no material gains or losses during the three and nine months ended March 29, 2020 and March 31, 2019 associated with forecasted transactions that failed to occur.

To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be tested to demonstrate an expectation of providing highly effective offsetting changes to future cash flows on hedged transactions. When derivative instruments are designated and qualify as effective cash flow hedges, the Company recognizes effective changes in the fair value of the hedging instrument within accumulated other comprehensive income (loss) until the hedged exposure is realized. Consequently, the Company’s results of operations are not subject to fluctuation as a result of changes in the fair value of the derivative instruments. If hedges are not highly effective or if the Company does not believe that the underlying hedged forecasted transactions will occur, the Company may not be able to account for its derivative instruments as cash flow hedges. If this were to occur, future changes in the fair values of the Company’s derivative instruments would be recognized in earnings. Additionally, related amounts previously recorded in other comprehensive

income would be reclassified to income immediately. As of March 29, 2020, the Company had a net gain of $3.4 million accumulated in other comprehensive income, net of tax, related to foreign exchange cash flow hedges which it expects to reclassify from other comprehensive income into earnings over the next 12 months. Additionally, as of March 29, 2020, the Company had a net loss of $2.0 million accumulated in other comprehensive income, net of tax, related to interest rate contracts which it expects to reclassify from other comprehensive income into earnings over the next 5.0 years.

The Company had interest rate contracts whereby the Company received fixed rates and paid variable rates based on certain benchmark interest rates, resulting in a net increase or decrease to interest expense, a component of other (expense) income, net in its Condensed Consolidated Statement of Operations. These interest rate contracts were designated as fair value hedges and hedge against changes in the fair value of the debt portfolio. The Company concluded that these interest rate contracts met the criteria necessary to qualify for the short-cut method of hedge accounting, and as such an assumption was made that the change in the fair value of the hedged debt, due to changes in the benchmark rate, exactly offset the change in the fair value of the interest rate swap. Therefore, the derivative was considered to be effective at achieving offsetting changes in the fair value of the hedged liability, and no ineffectiveness was recognized. During the three and nine months ended March 29, 2020, the Company terminated and consequently discontinued the hedging relationship of these interest rate contracts; refer to Note 12 - Long-Term Debt and Other Borrowings for additional information regarding the accumulated fair value adjustment and the related amortization.

The Company also enters into foreign currency forward contracts to hedge fluctuations associated with foreign currency denominated monetary assets and liabilities, primarily cash, third-party accounts receivable, accounts payable, and intercompany receivables and payables. These forward contracts are not designated for hedge accounting treatment. Therefore, the change in fair value of these derivatives is recorded as a component of other income (expense) and offsets the change in fair value of the foreign currency denominated assets and liabilities, which are also recorded in other income (expense).



	Notional Value
	Derivatives Designated as Hedging Instruments:				Derivatives Not Designated as Hedging Instruments:
	(in thousands)
	Buy Contracts		Sell Contracts		Buy Contracts		Sell Contracts
Japanese yen	$	—	$	190,470	$	28,759	$	—
Euro	80,061		—		42,354		—
Korean won	35,357		—		407		—
Taiwan dollar	—		—		46,686		—
Chinese renminbi	—		—		21,327		—
Swiss franc	—		—		16,360		—
Indian rupee	—		—		9,841		—
British pound sterling	—		—		8,263		—
Singapore dollar	—		—		5,529		—
	$	115,418	$	190,470	$	179,526	$	—



	March 29, 2020						June 30, 2019
	Fair Value of Derivative Instruments (Level 2)						Fair Value of Derivative Instruments (Level 2)
	Derivative Assets			Derivative Liabilities			Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	(in thousands)
Derivatives designated as hedging instruments:
Foreign exchange contracts	Prepaid expense and other assets	$	7,133	Accrued expenses and other current liabilities	$	3,538	Prepaid expense and other assets	$	119	Accrued expenses and other current liabilities	$	2,756
Interest rate contracts, short-term				Accrued expenses and other current liabilities	38,506					Accrued expenses and other current liabilities	5,149
Interest rate contracts, long-term	Other assets	—			—		Other assets	1,537			—

Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepaid expense and other assets	5		Accrued expenses and other current liabilities	234		Prepaid expense and other assets	1,249		Accrued expenses and other current liabilities	748
Total Derivatives		$	7,138		$	42,278		$	2,905		$	8,653

Under the master netting agreements with the respective counterparties to the Company’s derivative contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. However, the Company has elected to present the derivative assets and derivative liabilities on a gross basis on its balance sheet. As of March 29, 2020, the potential effect of rights of offset associated with the above foreign exchange and interest rate contracts would be an offset to assets and liabilities by $6.7 million, resulting in a net derivative asset of $0.4 million and net derivative liability of $35.6 million. As of June 30, 2019, the potential effect of rights of offset associated with the above foreign exchange and interest rate contracts would be an offset to both assets and liabilities by $2.4 million, resulting in a net derivative asset of $0.5 million and a net derivative liability of $6.2 million. The Company is not required to pledge, nor is the Company entitled to receive, cash collateral for these derivative transactions.

The effect of derivative instruments designated as cash flow hedges on the Company’s Condensed Consolidated Statements of Operations, including accumulated other comprehensive income (“AOCI”) was as follows:



		Three Months Ended						Nine Months Ended
		March 29, 2020						March 29, 2020
	Location of Gain or (Loss) Recognized in or Reclassified into Income	Gain (loss) Recognized in AOCI			Gain (Loss) Reclassified from AOCI into Income			Gain (Loss) Recognized in AOCI			Gain (Loss) Reclassified from AOCI into Income
Derivatives in Cash Flow Hedging Relationships		(in thousands)
Foreign Exchange Contracts	Revenue	$	6,334		$	1,279		$	9,532		$	773
Foreign Exchange Contracts	Cost of goods sold	(2,589		)	(186		)	(3,656		)	(2,086		)
Foreign Exchange Contracts	Selling, general, and administrative	(1,394		)	6			(1,859		)	(887		)
Interest Rate Contracts	Other (expense) income, net	(40,901		)	(36		)	(38,507		)	(106		)
		$	(38,550	)	$	1,063		$	(34,490	)	$	(2,306	)



		Three Months Ended						Nine Months Ended
		March 31, 2019						March 31, 2019
	Location of Gain or (Loss) Recognized in or Reclassified into Income	(Loss) Gain Recognized in AOCI			Gain (Loss) Reclassified from AOCI into Income			Gain (Loss) Recognized in AOCI			Gain (Loss) Reclassified from AOCI into Income
Derivatives in Cash Flow Hedging Relationships		(in thousands)
Foreign Exchange Contracts	Revenue	$	(7,203	)	$	206		$	9,467		$	8,693
Foreign Exchange Contracts	Cost of goods sold	(1,395		)	(2,097		)	(3,484		)	(4,505		)
Foreign Exchange Contracts	Selling, general, and administrative	(475		)	(600		)	(1,353		)	(1,778		)
Interest Rate Contracts	Other (expense) income, net	—			(34		)	—			(100		)
		$	(9,073	)	$	(2,525	)	$	4,630		$	2,310



		Three Months Ended						Nine Months Ended
		March 29, 2020			March 31, 2019			March 29, 2020			March 31, 2019
Derivatives Not Designated as Hedging Instruments:	Location of Gain (Loss) Recognized in Income	Loss Recognized in Income			Loss Recognized in Income			Loss Recognized in Income			Gain Recognized in Income
		(in thousands)
Foreign Exchange Contracts	Other (expense) income, net	$	(6,858	)	$	(6,747	)	$	(8,788	)	$	4,142

The following table presents the effect of the fair value cash flow hedge accounting on the Statement of Financial Performance as well as presents the location and amount of gain/(loss) recognized in Income on fair value and cash flow hedging relationships:



	Three Months Ended										Nine Months Ended
	March 29, 2020										March 29, 2020
	Revenue		Cost of Goods Sold			Selling, General and Admini-strative		Other (Expense) Income, Net			Revenue		Cost of Goods Sold			Selling, General and Admini-strative			Other (Expense) Income, Net
	(in thousands)
Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded:
	$	2,503,625	$1,336,618			$	164,979	$	(64,619	)	$	7,252,872	$	3,924,511		$	496,679		$	(91,271	)

The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships in Subtopic 815-20:
Interest contracts:
Hedged items	$	—	$	—		$	—	$	(7,789	)	$	—	$	—		$	—		$	(12,862	)
Derivatives designated as hedging instruments	$	—	$	—		$	—	$	7,789		$	—	$	—		$	—		$	12,862

Gain or (loss) on cash flow hedging relationships in Subtopic 815-20:
Foreign exchange contracts:
Amount of gain (loss) reclassified from accumulated other comprehensive income into income	$	1,279	$	(186	)	$	6	$	—		$	773	$	(2,086	)	$	(887	)	$	—
Interest rate contracts:
Amount of loss reclassified from accumulated other comprehensive income into income	$	—	$	—		$	—	$	(36	)	$	—	$	—		$	—		$	(106	)

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, investments, restricted cash and investments, trade accounts receivable, and derivative financial instruments used in hedging activities. Cash is placed on deposit at large global financial institutions. Such deposits may be in excess of insured limits. Management believes that the financial institutions that hold the Company’s cash are creditworthy and, accordingly, minimal credit risk exists with respect to these balances.

The Company’s overall portfolio of available-for-sale securities must maintain an average minimum rating of “AA-” or “Aa3” as rated by Standard and Poor’s, Fitch Ratings, or Moody’s Investor Services. To ensure diversification and minimize concentration, the Company’s policy limits the amount of credit exposure with any one financial institution or commercial issuer.

The Company is exposed to credit losses in the event of nonperformance by counterparties on foreign currency and interest rate hedge contracts that are used to mitigate the effect of exchange rate and interest rate fluctuations, and on contracts related to structured share repurchase arrangements. These counterparties are large global financial institutions and, to date, no such counterparty has failed to meet its financial obligations to the Company.