Quarterly report pursuant to Section 13 or 15(d)

Financial Instruments

v3.21.2
Financial Instruments
 9 Months Ended
Sep. 25, 2021
Investments, Debt and Equity Securities [Abstract]  
Financial Instruments Financial Instruments
Fair Value Measurements
Financial Instruments Recorded at Fair Value on a Recurring Basis
September 25, 2021 December 26, 2020
Level 2(1)
Level 2(1)
Short-term investments (in millions)
Commercial paper $ 974  $ 295 
Time deposits 194  400 
Total $ 1,168  $ 695 
(1) Level 2 fair value estimates are based on quoted prices for identical or comparable instruments in markets that are not active, comparable instruments in active markets or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
During the three months ended September 25, 2021, the Company recognized a $60 million gain, in Other income (expense), due to an increase in the fair value of an equity investment. This equity investment is classified as Level 1 as it is valued using quoted prices for identical instruments in active markets. As of September 25, 2021, the fair value of this equity investment, included in Other non-current assets on the consolidated balance sheet, was $63 million.
Financial Instruments Not Recorded at Fair Value
The Company carries its financial instruments at fair value except for its debt. The carrying amounts and estimated fair values of the Company’s debt are as follows:
  September 25, 2021 December 26, 2020
  Carrying
Amount		 Estimated
Fair Value		 Carrying
Amount		 Estimated
Fair Value
  (In millions)
Short-term debt, net $ 312  $ 332  $ —  $ — 
Long-term debt, net 1  15  330  642 
The estimated fair value of the Company’s debt is based on Level 2 inputs of quoted prices for the Company’s debt and comparable instruments in inactive markets. The estimated fair value of the 2.125% Notes takes into account the current value of the Company’s stock price compared to the initial conversion price of approximately $8.00 per share of common stock.
The fair value of the Company’s accounts receivable, accounts payable and other short-term obligations approximate their carrying value based on existing terms.
Hedging Transactions and Derivative Financial Instruments
Foreign Currency Forward Contracts 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 18 months and are designated as accounting hedges. As of September 25, 2021 and December 26, 2020, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $888 million and $501 million, respectively. The fair value of these contracts was not material as of September 25, 2021 and December 26, 2020.
Foreign Currency Forward Contracts Not Designated as Accounting Hedges
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 September 25, 2021 and December 26, 2020, the notional value of these outstanding contracts was $403 million and $254 million, respectively. The fair value of these contracts was not material as of September 25, 2021 and December 26, 2020.