Derivative Asset |
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May 02, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Asset | Derivative Asset During the first quarter of fiscal 2026, the Company entered into Put/Call Pairs providing economic exposure to 22,176,000 shares of eBay Common Stock. In addition, the Company acquired direct beneficial ownership of 25,000 shares of eBay Common Stock. Collectively, these positions represented an approximately 5% economic interest in the outstanding eBay Common Stock, based on the 444 million shares reported by eBay as outstanding as of April 24, 2026 in its most recent Quarterly Report on Form 10‑Q filed with the SEC on April 29, 2026. The Put/Call Pairs are scheduled to expire on February 23, 2028. Each Put/Call Pair, a combination of non-transferable embedded purchased call option and non-transferable embedded written put option entered into contemporaneously with the same counterparty, is accounted for as a single forward contract. The Put/Call Pairs were settleable solely in cash until such time as the Company provided the counterparty with evidence that all applicable filings had been made and any required waiting periods had expired or approvals had been obtained under the Hart‑Scott‑Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act Condition”). The HSR Act Condition was satisfied on June 3, 2026. See Note 14, "Subsequent Events," for further information regarding the Put/Call Pairs, including with regard to additional Put/Call Pairs entered into after May 2, 2026. The Master Agreement provides for the exchange of cash collateral when the fair value of the Put/Call Pairs exceeds or falls below specified contractual thresholds. Cash collateral posted by the Company is held in a restricted account in the Company’s name, but controlled by the counterparty. As of May 2, 2026, the Company had pledged $983.3 million of collateral in connection with the Put/Call Pairs, which is presented as Collateral pledged for derivative asset in the condensed consolidated balance sheets. Under the Master Agreement, all payment and share delivery obligations between the Company and the counterparty are subject to netting. The Put/Call Pairs also include a cross-default provision that may be exercised by the counterparty if the Company defaults on certain indebtedness. As of May 2, 2026, no additional collateral would have been required if this provision had been triggered; based on the $285.3 million fair value of the instruments, the Company would expect a net settlement inflow upon termination. The Company presents the gross fair value of the derivative asset in its condensed consolidated balance sheets. As of May 2, 2026, the fair value of the Put/Call Pairs was $285.3 million, classified as Level 2 within the ASC 820 fair value hierarchy and presented as Derivative asset within Current assets in the condensed consolidated balance sheets. For the three months ended May 2, 2026, the Company recognized an unrealized mark-to-market gain of $285.3 million on a gross basis. This amount is presented net of certain transaction-related costs in Unrealized gain on derivative asset, net within nonoperating income in the condensed consolidated statements of operations. The Put/Call Pairs have not been designated as hedging instruments. The objective for holding these derivatives is to obtain economic exposure to eBay Common Stock. The following table presents the Company's derivative asset holdings as of May 2, 2026:
(1)The Put/Call Pairs were acquired in tranches with strike prices ranging between $84.40 to $95.49. (2) Actual amount; not in millions.
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