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Derivative Instruments | 12 Months Ended
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Aug. 31, 2017
Derivative Instrument Detail [Abstract] |
Derivative Instruments | Derivative Instruments We use derivative instruments to manage our exposure to changes in currency exchange rates from our monetary assets and liabilities denominated in currencies other than the U.S. dollar. We do not use derivative instruments for speculative purpose. Derivative Instruments without Hedge Accounting Designation Currency Derivatives: To hedge our exposures of monetary assets and liabilities to changes in currency exchange rates, we generally utilize a rolling hedge strategy with currency forward contracts that mature within nine months. In addition, to mitigate the risk of the yen strengthening against the U.S. dollar with respect to our MMJ Creditor Payments due in December 2017 and 2018, we have forward contracts to purchase 18 billion yen in December 2017 and 28 billion yen in December 2018. At the end of each reporting period, monetary assets and liabilities denominated in currencies other than the U.S. dollar are remeasured into U.S. dollars and the associated outstanding forward contracts are marked to market. Currency forward contracts are valued at fair values based on the middle of bid and ask prices of dealers or exchange quotations (Level 2). Convertible Notes Settlement Obligations: In August 2017, holders of our certain of our 2033E Notes converted their notes. For converted notes with an aggregate principal amount of $16 million, we elected to settle the conversion obligation in excess of the principal amount in cash. As a result, those settlement obligations became derivative debt liabilities subject to mark-to-market accounting treatment based on the volume-weighted-average price of our common stock over a period of 20 consecutive trading days. The fair values of the underlying derivative settlement obligations were initially determined using the Black-Scholes option valuation model (Level 2), which requires inputs of stock price, expected stock-price volatility, estimated option life, risk-free interest rate, and dividend rate. The subsequent measurements and final settlement amounts of our convertible notes settlement obligations were based on the volume-weighted-average stock price (Level 1). Changes in fair values of the derivative settlement obligations were included in other non-operating income (expense), net. Total notional amounts and gross fair values for derivative instruments without hedge accounting designation were as follows:
|  | Notional Amount(1) |  | Fair Value of
Current Assets(2) |  | Current Liabilities(3) |  | Noncurrent Assets(4)
As of August 31, 2017 |  |  |  |  |  |  |  |
Currency forward contracts |  |  |  |  |  |  |  |
New Taiwan dollar |  | $ | 2,921 |  |  | $ | 22 |  |  | $ | (2 | ) |  | $ | — |
Yen |  | 1,209 |  |  | 5 |  |  | — |  |  | 1 |
Euro |  | 368 |  |  | 5 |  |  | (2 | ) |  | — |
Singapore dollar |  | 324 |  |  | 1 |  |  | — |  |  | — |
Other |  | 25 |  |  | 1 |  |  | (1 | ) |  | — |
|  | $ | 4,847 |  |  |  |  |  |  |
Convertible notes settlement obligation |  | 2 |  |  | — |  |  | (47 | ) |  | — |
|  |  |  | $ | 34 |  |  | $ | (52 | ) |  | $ | 1 |
As of September 1, 2016 |  |  |  |  |  |  |  |
Currency forward contracts |  |  |  |  |  |  |  |
Yen |  | $ | 1,668 |  |  | $ | — |  |  | $ | (10 | ) |  | $ | — |
Euro |  | 93 |  |  | — |  |  | — |  |  | — |
Singapore dollar |  | 206 |  |  | — |  |  | — |  |  | — |
Other |  | 85 |  |  | — |  |  | (1 | ) |  | — |
|  | $ | 2,052 |  |  | $ | — |  |  | $ | (11 | ) |  | $ | — |
(1) | Notional amounts of forward contracts in U.S. dollars and convertible notes settlement obligations in shares.
(2) | Included in receivables – other.
(3) | Included in accounts payable and accrued expenses – other for forward contracts and in current debt for convertible notes settlement obligations.
(4) | Included in other noncurrent assets.
Realized and unrealized gains and losses on derivative instruments without hedge accounting designation as well as the change in the underlying monetary assets and liabilities due to changes in currency exchange rates are included in other non-operating income (expense). For derivative instruments without hedge accounting designation, recognized gains (losses) were as follows:
For the year ended |  | 2017 |  | 2016 |  | 2015
Foreign exchange contracts |  | $ | (45 | ) |  | $ | 185 |  |  | $ | (64 | )
Convertible notes settlement obligations |  | (2 | ) |  | — |  |  | 7 |
Derivative Instruments with Cash Flow Hedge Accounting Designation Currency Derivatives: We may utilize currency forward contracts that generally mature within 12 months to hedge our exposure to changes in cash flows from changes in currency exchange rates for certain capital expenditures. Currency forward contracts are measured at fair value based on market-based observable inputs including currency exchange spot and forward rates, interest rates, and credit-risk spreads (Level 2). For derivative instruments designated as cash flow hedges, the effective portion of the realized and unrealized gain or loss on the derivatives is included as a component of accumulated other comprehensive income (loss). Amounts in accumulated other comprehensive income (loss) are reclassified into earnings in the same line items and in the same periods in which the underlying transactions affect earnings. The ineffective and excluded portion of the realized and unrealized gain or loss is included in other non-operating income (expense). Total notional amounts and gross fair values for derivative instruments with cash flow hedge accounting designation were as follows:
|  | Notional Amount (in U.S. Dollars) |  | Fair Value
|  | Current Assets(1) |  | Current Liabilities(2)
As of August 31, 2017 |  |  |  |  |  |
Yen |  | $ | 258 |  |  | $ | 4 |  |  | $ | — |
Euro |  | 198 |  |  | 13 |  |  | — |
|  | $ | 456 |  |  | $ | 17 |  |  | $ | — |
As of September 1, 2016 |  |  |  |  |  |  |  |
Yen |  | $ | 107 |  |  | $ | 2 |  |  | $ | (1 | )
Euro |  | 65 |  |  | — |  |  | (1 | )
|  | $ | 172 |  |  | $ | 2 |  |  | $ | (2 | )
(1) | Included in receivables – other.
(2) | Included in accounts payable and accrued expenses – other.
We recognized gains of $15 million and $10 million, and losses of $10 million, for 2017, 2016, and 2015, respectively, in accumulated other comprehensive income (loss) from the effective portion of cash flow hedges. Neither the ineffective portions of cash flow hedges recognized in other non-operating income (expense) nor the reclassifications from accumulated other comprehensive income (loss) to earnings were material in 2017, 2016, or 2015. The amounts from cash flow hedges included in accumulated other comprehensive income (loss) that are expected to be reclassified into earnings in the next 12 months were not material. Derivative Counterparty Credit Risk and Master Netting Arrangements Our derivative instruments expose us to credit risk to the extent counterparties may be unable to meet the terms of the contracts. Our maximum exposure to loss due to credit risk if counterparties fail completely to perform according to the terms of the contracts would generally equal the fair value of assets for these contracts as listed in the tables above. We seek to mitigate such risk by limiting our counterparties to major financial institutions and by spreading risk across multiple financial institutions. As of August 31, 2017 and September 1, 2016, amounts netted under our master netting arrangements were not material.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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