Financial Instruments |
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Dec. 26, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments | Financial Instruments Fair Value Measurements
Financial Instruments Recorded at Fair Value on a Recurring Basis
As of December 26, 2020 and December 28, 2019, the Company had $295 million and $37 million of commercial paper, respectively, included in Short-term investments on the Company’s consolidated balance sheets. The commercial paper is classified within Level 2 as its fair value estimates were based on quoted prices for comparable instruments.
In addition, as of December 26, 2020 and December 28, 2019, the Company also had approximately $46 million and $30 million, respectively, of investments in mutual funds held in a Rabbi trust established for the Company’s deferred compensation plan, which were included in Other non-current assets on the Company’s consolidated balance sheets. As of December 28, 2019, the Company also had approximately $4 million of investments in money market funds, used as collateral for letters of credit deposits, which were included in Other current assets on the Company’s consolidated balance sheets. These money market funds and mutual funds are classified within Level 1 because they are valued using quoted prices for identical instruments in active markets. Their amortized cost approximates the fair value for all periods presented. The Company is restricted from accessing these investments.
Financial Instruments Not Recorded at Fair Value
The Company carries its financial instruments at fair value with the exception of its long-term debt. The carrying amounts and estimated fair values of the Company’s long-term debt are as follows:
The estimated fair value of the Company’s long-term debt are based on Level 2 inputs as the fair value is based on quoted prices for the Company’s debt and comparable instruments in inactive markets. The Company’s 2.125% Notes, included in Long-term debt, net, above, were convertible at the option of the holder as of December 26, 2020. The estimated fair value of the 2.125% Notes as of December 26, 2020 takes into account the value of the Company’s stock price of $91.81 as of December 24, 2020, the last trading date for the year ended December 26, 2020 and the initial conversion price of approximately $8.00 per share of common stock.
The fair value of the Company’s time deposits, accounts receivable, accounts payable and other short-term obligations approximate their carrying value based on existing terms.
Hedging Transactions and Derivative Financial Instruments
Cash Flow Hedges Designated as Accounting Hedges and Foreign Currency Forward Contracts not Designated as Accounting Hedges
The Company enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange rate risk related to future forecasted transactions denominated in currencies other than the U.S. Dollar. These contracts generally mature within 12 months and are designated as accounting hedges. As of December 26, 2020 and December 28, 2019, the notional values of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges were $501 million and $467 million, respectively. The fair value of these contracts was not material as of December 26, 2020 and December 28, 2019.
The Company also enters into foreign currency forward contracts to reduce the short-term effects of foreign currency fluctuations on certain receivables or payables denominated in currencies other than the U.S. Dollar. These forward contracts generally mature within 3 months and are not designated as accounting hedges. As of December 26, 2020 and December 28, 2019, the notional values of outstanding contracts were $254 million and $272 million, respectively. The fair value of these contracts was not material as of December 26, 2020 and December 28, 2019.
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