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), 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

All of our marketable debt and equity investments were classified as available-for-sale and carried at fair value. Assets measured at fair value on a recurring basis were as follows:



	December 4, 2014						August 28, 2014
	Level 1		Level 2		Total		Level 1		Level 2		Total
Cash equivalents:
Money market funds	$	866	$	—	$	866	$	1,281	$	—	$	1,281
Certificates of deposit	—		528		528		—		402		402
Government securities	—		31		31		—		—		—
Commercial paper	—		7		7		—		22		22
Corporate bonds	—		1		1		—		—		—
	866		567		1,433		1,281		424		1,705
Short-term investments:
Corporate bonds	—		217		217		—		154		154
Government securities	—		136		136		—		136		136
Commercial paper	—		86		86		—		85		85
Certificates of deposit	—		24		24		—		8		8
Asset-backed securities	—		3		3		—		1		1
	—		466		466		—		384		384
Long-term marketable investments:
Corporate bonds	—		581		581		—		407		407
Government securities	—		273		273		—		284		284
Asset-backed securities	—		217		217		—		127		127
Certificates of deposit	—		5		5		—		—		—
Marketable equity securities	1		—		1		1		—		1
	1		1,076		1,077		1		818		819
Restricted cash:
Certificates of deposit	—		24		24		—		27		27
	—		24		24		—		27		27

	$	867	$	2,133	$	3,000	$	1,282	$	1,653	$	2,935

Government securities consist of securities issued directly by or deemed to be guaranteed by government entities such as U.S. and non U.S. agency securities, government bonds and treasury securities. Level 2 securities are valued using information obtained from pricing services, which obtain quoted market prices for similar instruments, non-binding market consensus prices that are corroborated by observable market data, or various other methodologies, to determine the appropriate value at the measurement date. We perform supplemental analysis to validate information obtained from these pricing services. As of December 4, 2014, no adjustments were made to such pricing information.

Fair Value Measurements on a Nonrecurring Basis

In connection with our repurchases of debt in the first quarter of 2015, we determined the fair value of the debt components of our convertible notes as if they were stand-alone instruments, using interest rates for similar nonconvertible debt issued by entities with credit ratings comparable to ours (Level 2).

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 and mezzanine components of our convertible notes) were as follows:



	December 4, 2014				August 28, 2014
	Fair Value		Carrying Value		Fair Value		Carrying Value
Convertible notes	$	5,799	$	1,755	$	5,886	$	2,143
MMJ creditor installment payments and other notes	3,290		3,234		3,634		3,539

The fair values of our convertible notes were determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the trading price of our convertible notes, when available, our stock price and interest rates based on similar debt issued by parties with credit ratings similar to ours (Level 2). 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).

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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