Fair Value Measurements

9 Months Ended

Jun. 27, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

8. Fair Value Measurements

Fair value is defined 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 to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.  GAAP prescribes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

• Level 1: quoted prices (unadjusted) 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 in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities 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; or

• 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.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Money market funds, time deposits and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

Certificates of deposit, commercial paper and certain U.S. government agency securities are classified within Level 2 of the fair value hierarchy.  These instruments are valued based on quoted prices in markets that are not active or based on other observable inputs consisting of market yields, reported trades and broker/dealer quotes.

The principal market in which we execute our foreign currency contracts is the institutional market in an over-the-counter environment with a relatively high level of price transparency.  The market participants usually are large financial institutions.  Our foreign currency contracts’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment.  These contracts are typically classified within Level 2 of the fair value hierarchy.

Our significant financial assets and liabilities measured at fair value on a recurring basis as of June 27, 2020 and September 30, 2019 were as follows:

(in thousands)	June 27, 2020
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents	$	93,909	$	—	$	—	$	93,909
Marketable securities:
Commercial paper		—		1,500		—		1,500
Corporate notes/bonds		56,288		—		—		56,288
Forward contracts		—		2,372		—		2,372
	$	150,197	$	3,872	$	—	$	154,069
Financial liabilities:
Forward contracts		—		1,684		—		1,684
	$	—	$	1,684	$	—	$	1,684

(in thousands)	September 30, 2019
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents	$	108,020	$	—	$	—	$	108,020
Marketable securities:
Commercial paper		—		999		—		999
Corporate notes/bonds		56,436		—		—		56,436
Forward contracts		—		3,064		—		3,064
	$	164,456	$	4,063	$	—	$	168,519
Financial liabilities:
Forward contracts		—		2,771		—		2,771
	$	—	$	2,771	$	—	$	2,771

Non-Marketable Equity Investments

We account for non-marketable equity investments at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.  We monitor non-marketable equity investments for events that could indicate that the investments are impaired, such as deterioration in the investee's financial condition and business forecasts, and lower valuations in recent or proposed financings.  Changes in fair value of non-marketable equity investments are recorded in other income (expense), net on the Consolidated Statements of Operations.  The carrying value of our non-marketable equity investments is recorded in other assets on the Consolidated Balance Sheets and totaled $9.4 million as of both June 27, 2020 and September 30, 2019.