Financial Instruments

9 Months Ended

Oct. 01, 2017

Financial Instruments (Thousands of Dollars) [Abstract]

(4) Financial Instruments

The Company's financial instruments include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable and certain accrued liabilities. At October 1, 2017, September 25, 2016 and December 25, 2016, the carrying cost of these instruments approximated their fair value. The Company's financial instruments at October 1, 2017, September 25, 2016 and December 25, 2016 also include certain assets and liabilities measured at fair value (see Notes 6 and 8) as well as long-term borrowings. The carrying costs, which are equal to the outstanding principal amounts, and fair values of the Company's long-term borrowings as of October 1, 2017, September 25, 2016 and December 25, 2016 are as follows:

	October 1, 2017				September 25, 2016				December 25, 2016
	Carrying		Fair		Carrying		Fair		Carrying		Fair
	Cost		Value		Cost		Value		Cost		Value
6.35% Notes Due 2040	$	500,000		613,750		500,000		611,200		500,000		584,850
3.50% Notes Due 2027		500,000		496,850		-		-		-		-
6.30% Notes Due 2017		-		-		350,000		366,205		350,000		361,900
5.10% Notes Due 2044		300,000		324,300		300,000		324,450		300,000		297,600
3.15% Notes Due 2021		300,000		306,840		300,000		310,620		300,000		300,450
6.60% Debentures Due 2028		109,895		132,830		109,895		132,786		109,895		123,984
Total long-term debt	$	1,709,895		1,874,570		1,559,895		1,745,261		1,559,895		1,668,784
Less: Current portion		-		-		350,000		366,205		350,000		361,900
Less: Deferred debt expenses		16,634		-		11,434		-		11,216		-
Long-term debt	$	1,693,261		1,874,570		1,198,461		1,379,056		1,198,679		1,306,884

In September 2017 the Company issued $500,000 of Notes due in 2027 that bear interest at a fixed rate of 3.50% (the "3.50% Notes"). Net proceeds from the issuance of the 3.50% Notes, after deduction of $6,122 of underwriting discount and debt issuance expenses, totaled $493,878. These costs are being amortized over the life of the 3.50% Notes, or 10 years. The Company may redeem the 3.50% Notes at its option at the greater of the principal amount of the Notes or the present value of the remaining scheduled payments discounted using the effective interest rate on applicable U.S. Treasury bills at the time of repurchase, plus 25 basis points. In addition, three months prior to their maturity date, the Company may redeem at its option the 3.50% Notes, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of the 3.50% Notes to be redeemed.

The proceeds from this debt issuance were used to repay the $350,000 aggregate principal amount of its 6.30% Notes that matured during the third quarter 2017. The Company used the remaining net proceeds for general corporate purposes.

Current portion of long-term debt at September 25, 2016 and December 25, 2016 of $349,611 and $349,713, respectively, as shown on the consolidated balance sheet represents the $350,000 principal of 6.30% notes less $389 and $287, respectively, of deferred debt expenses.

The fair values of the Company's long-term debt are considered Level 3 fair values (see Note 6 for further discussion of the fair value hierarchy) and are measured using the discounted future cash flows method. In addition to the debt terms, the valuation methodology includes an assumption of a discount rate that approximates the current yield on a similar debt security. This assumption is considered an unobservable input in that it reflects the Company's own assumptions about the inputs that market participants would use in pricing the asset or liability. The Company believes that this is the best information available for use in the fair value measurement.