FINANCIAL INSTRUMENTS

Short-term investments

Fair values were as follows:



	December 28, 2013								June 29, 2013
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
	(in thousands)
Available-for-sale investments
Government agency securities	$	—	$	—	$	—	$	—	$	25,024	$	36	$	—	$	25,060
Total available-for-sale investments	$	—	$	—	$	—	$	—	$	25,024	$	36	$	—	$	25,060

In the six months ended December 28, 2013 and the year ended June 29, 2013, the Company did not recognize any impairment charges on short-term investments.

The government agency securities matured on December 18, 2013.

Derivative instruments and hedging activities

The Company generates less than 5% of its revenues in various global markets based on orders obtained in non-U.S. currencies, primarily the Japanese Yen, the Euro and the British Pound. The Company incurs expenditures denominated in non-U.S. currencies, principally the Philippine Peso and Thai Baht associated with the Company’s manufacturing activities in the Philippines and Thailand, respectively, and expenditures for sales offices and research and development activities undertaken outside of the U.S.

The Company has established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. The Company does not use these foreign currency forward contracts for trading purposes.

Derivatives designated as cash flow hedging instruments

The Company designates certain forward contracts as hedging instruments pursuant to ASC 815 Derivatives and Hedging. As of December 28, 2013 and June 29, 2013, respectively, the notional amounts of the forward contracts we held to purchase U.S. Dollars in exchange for other international currencies were $49.0 million and $53.8 million, respectively, and the notional amounts of forward contracts we held to sell U.S. Dollars in exchange for other international currencies were $3.4 million and $3.2 million, respectively.

Derivatives not designated as hedging instruments

As of December 28, 2013 and June 29, 2013, respectively, the notional amounts of the forward contracts we held to purchase U.S. Dollars in exchange for other international currencies were $16.0 million and $15.0 million, respectively, and the notional amounts of forward contracts we held to sell U.S. Dollars in exchange for other international currencies were $35.5 million and $36.5 million, respectively. The fair values of our outstanding foreign currency forward contracts and amounts included in the statement of income were not material for six months ended December 28, 2013 and year ended June 29, 2013.

Long-term debt

The following table summarizes the Company’s long-term debt:



	December 28, 2013			June 29, 2013
	(in thousands)
3.375% fixed rate notes due March 2023	$	500,000		$	500,000
2.5% fixed rate notes due November 2018	500,000			—
Notes denominated in Euro
Term fixed rate notes (2.0%-2.5%) due up to September 2015	2,965			4,804
Amortizing floating rate notes (EURIBOR plus 1.5%) due up to June 2014	871			784
Total	1,003,836			505,588
Less: Current portion	(2,965		)	(2,015		)
Total long-term debt	$	1,000,871		$	503,573

On November 21, 2013, the Company completed a public offering of $500 million aggregate principal amount of the Company’s 2.5% coupon senior unsecured and unsubordinated notes due in November 2018 (“2018 Notes”), with an effective interest rate of 2.6%. Interest on the 2018 Notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing on May 15, 2014. The net proceeds of this offering were approximately $494.5 million, after issuing at a discount and deducting paid expenses, and are included in the financing activities in the Condensed Consolidated Statements of Cash Flows.

On March 18, 2013, the Company completed a public offering of $500 million aggregate principal amount of the Company’s 3.375% senior unsecured and unsubordinated notes due in March 2023 (“2023 Notes”), with an effective interest rate of 3.5%. Interest on the 2023 Notes is payable semi-annually in arrears on March 15 and September 15 of each year.

The 2018 Notes and the 2023 Notes are governed by a base indenture, dated June 10, 2010, and supplemental indentures, dated March 18, 2013 with respect to the 2023 Notes and November 21, 2013 with respect to the 2018 Notes, between the Company and Wells Fargo Bank, National Association, as trustee.

The Company accounts for all the notes above based on their amortized cost. The discount and expenses are being amortized to Interest and other income (expense), net over the life of the notes. Interest expense associated with the notes was $5.6 million and $2.6 million during the three months ended December 28, 2013 and December 29, 2012, respectively. Interest expense associated with the notes was $9.9 million and $5.2 million during the six months ended December 28, 2013 and December 29, 2012, respectively. The interest expense is recorded in Interest and other income (expense), net in the Condensed Consolidated Statements of Income.

The estimated fair value of the Company’s debt was approximately $958 million as of December 28, 2013. The estimated fair value of the debt is based primarily on observable market inputs and is a Level 2 measurement.

Other Financial Instruments

For the balance of the Company’s financial instruments, cash equivalents, accounts receivable, accounts payable and other accrued liabilities, the carrying amounts approximate fair value due to their short maturities.