Quarterly report pursuant to Section 13 or 15(d)

Financial Instruments

v3.23.1
Financial Instruments
 3 Months Ended
Apr. 01, 2023
Investments, Debt and Equity Securities [Abstract]  
Fair Value Disclosures Financial Instruments
Fair Value Measurements
The Company’s financial instruments are measured and recorded at fair value on a recurring basis, except for non-marketable equity investments in privately-held companies. These equity investments are generally accounted for under the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or circumstances indicate that a decline in value may have occurred.
Financial Instruments Recorded at Fair Value on a Recurring Basis
April 1, 2023 December 31, 2022
(In millions) Level 1 Level 2 Total Level 1 Level 2 Total
Cash equivalents
Money market funds $ 2,624  $ —  $ 2,624  $ 3,017  $ —  $ 3,017 
Commercial paper —  149  149  —  224  224 
U.S. Treasury and agency securities 248  —  248  —  —  — 
Time deposits and certificate of deposits —  65  65  —  159  159 
Short-term investments
Commercial paper —  814  814  —  441  441 
Asset-backed and mortgage-backed securities —  38  38  —  39  39 
U.S. Treasury and agency securities 868  —  868  466  —  466 
Foreign government securities —  394  394  —  74  74 
Other non-current assets
Time deposits and certificates of deposits —  10  10  —  9  9 
Equity investments 8  —  8  8  —  8 
Deferred compensation plan investments 98  —  98  90  —  90 
Total assets measured at fair value $ 3,846  $ 1,470  $ 5,316  $ 3,581  $ 946  $ 4,527 
Deferred compensation plan investments are primarily mutual fund investments held in a Rabbi trust established to maintain the Company’s executive deferred compensation plan.
The following is a summary of cash equivalents and short-term investments:
April 1, 2023 December 31, 2022
Cost/ Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair
Value		 Cost/ Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair
Value
(in millions) (in millions)
Asset-backed and mortgage-backed securities $ 41  $ —  $ (3) $ 38  $ 42  $ —  $ (3) $ 39 
Commercial paper 967  —  (4) 963  669  —  (4) 665 
Money market funds 2,624  —  —  2,624  3,017  —  —  3,017 
Time deposits and certificates of deposits 65  —  —  65  159  —  —  159 
U.S. Treasury and agency securities 1,122  —  (6) 1,116  471  —  (5) 466 
Foreign government securities 395  —  (1) 394  74  —  —  74 
$ 5,214  $ —  $ (14) $ 5,200  $ 4,432  $ —  $ (12) $ 4,420 
As of April 1, 2023, the Company did not have material available-for-sale debt securities which had been in a continuous unrealized loss position of more than twelve months.
The contractual maturities of investments classified as available-for-sale are as follows:
April 1, 2023 December 31, 2022
Amortized Cost Fair Value Amortized Cost Fair Value
(In millions) (In millions)
Due within 1 year $ 2,474  $ 2,464  $ 1,224  $ 1,218 
Due in 1 year through 5 years 87  85  159  156 
Due in 5 years and later 39  37  41  38 
$ 2,600  $ 2,586  $ 1,424  $ 1,412 
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:
  April 1, 2023 December 31, 2022
  Carrying
Amount		 Estimated
Fair Value		 Carrying
Amount		 Estimated
Fair Value
  (In millions) (In millions)
Long-term debt $ 2,467  $ 2,345  $ 2,467  $ 2,281 
The estimated fair value of the Company’s long-term debt is based on Level 2 inputs of quoted prices for the Company’s debt and comparable instruments in inactive markets.
The fair value of the Company’s accounts receivable, accounts payable and other short-term obligations approximate their carrying value based on existing terms.
Financial Instruments Measured at Fair Value on a Non-Recurring Basis
The Company’s investments in non-marketable securities in privately-held companies are recorded using a measurement alternative that adjusts the securities to fair value when the Company recognizes an observable price adjustment or an impairment. As of April 1, 2023 and December 31, 2022, the Company had non-marketable securities in privately-held companies of $135 million and $137 million, respectively, that are recorded under Other non-current assets in the balance sheet. Impairment losses or observable price adjustments were not material during the three months ended April 1, 2023 and December 31, 2022.
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 24 months and are designated as accounting hedges. As of April 1, 2023 and December 31, 2022, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $1.7 billion and $1.9 billion, respectively. The fair value of these contracts, recorded as a liability, was $5 million and $27 million as of April 1, 2023 and December 31, 2022, respectively.
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 April 1, 2023 and December 31, 2022, the notional value of these outstanding contracts was $486 million and $485 million, respectively. The fair value of these contracts was not material as of April 1, 2023 and December 31, 2022.