v2.4.0.6
Fair Value Measurements
 6 Months Ended
Mar. 01, 2012
Notes to Financial Statements [Abstract]  
Fair Value Measurements
Fair Value Measurements

Accounting standards establish three levels of inputs that may be used to measure fair value: quoted prices in active markets for identical assets or liabilities (referred to as Level 1), observable inputs other than Level 1 that are observable for the asset or liability either directly or indirectly (referred to as Level 2) and unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities (referred to as Level 3).

Fair Value Measurements on a Recurring Basis

Assets measured at fair value on a recurring basis were as follows:

 
 
March 1, 2012
 
September 1, 2011
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Money market(1)
 
$
1,520

 
$
—

 
$
—

 
$
1,520

 
$
1,462

 
$
—

 
$
—

 
$
1,462

Certificates of deposit(1)
 
—

 
2

 
—

 
2

 
—

 
155

 
—

 
155

Marketable equity investments(2)
 
4

 
10

 
—

 
14

 
37

 
15

 
—

 
52

Assets held for sale(2)
 
—

 
—

 
30

 
30

 
—

 
—

 
35

 
35

 
 
$
1,524

 
$
12

 
$
30

 
$
1,566

 
$
1,499

 
$
170

 
$
35

 
$
1,704

(1) 
Included in cash and equivalents.
(2) 
Included in other noncurrent assets.

Certificates of deposit: Certificates of deposit assets were valued using observable inputs in active markets for similar assets (Level 2).

Marketable equity investments: All marketable equity investments were classified as available-for-sale. For the second quarter of 2012, we realized gains of $34 million from the sale of marketable equity investments. Gross realized gains and gross realized losses on sales of our marketable equity investments were not significant for the second quarter or first six months of 2011. Marketable equity investments included approximately 20 million ordinary shares of Tower Semiconductor Ltd. received in connection with our sale of our wafer fabrication facility in Japan in June 2011. As of September 1, 2011, the shares were valued using quoted market prices in an active market and discounted using a protective put model for our resale restriction (Level 2). During the second quarter of 2012, the resale restrictions lapsed for 5 million of the shares, which were valued using quoted market prices (Level 1) as of March 1, 2012.

Assets held for sale: Assets held for sale primarily included semiconductor equipment and facilities.  Fair value for semiconductor equipment was based on quotations obtained from equipment dealers, which consider the remaining useful life and configuration of the equipment. Fair value for facilities was determined based on sales of similar facilities and properties in comparable markets (Level 3).  Losses recognized in the second quarters and first six months of 2012 and 2011 due to fair value measurements using Level 3 inputs, were not significant. For the second quarter and first six months of 2012, activity of assets held for sale was not significant.

Fair Value of Financial Instruments

Amounts reported as cash and equivalents, receivables, and accounts payable and accrued expenses approximate fair value. The estimated fair value and carrying value of debt instruments (carrying value excludes the equity component of the 2014 Notes, the 2027 Notes and the 2031 Notes which is classified in equity) were as follows:

 
 
March 1, 2012
 
September 1, 2011
 
 
Fair
Value
 
Carrying
Value
 
Fair
Value
 
Carrying
Value
Convertible debt instruments (Level 1)
 
$
951

 
$
837

 
$
1,216

 
$
1,049

Convertible debt instruments (Level 2)
 
1,184

 
776

 
629

 
529

Other debt instruments
 
713

 
702

 
436

 
423



The fair value of our Level 1 convertible debt instruments was based on quoted market prices in active markets.  The fair value of our Level 2 convertible debt instruments was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including our stock price and interest rates based on similar debt issued by parties with credit ratings similar to ours.  The fair value of our other debt instruments was estimated based on discounted cash flows using inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including interest rates based on similar debt issued by parties with credit ratings similar to ours (Level 2).