FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

We measure certain financial assets and liabilities at fair value on a recurring basis. There have been no transfers between fair value measurement levels during the nine months ended August 31, 2018.

The fair value of our financial assets and liabilities at August 31, 2018 was determined using the following inputs (in thousands):



	Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents:
Corporate debt securities	$	24,011	$	—	$	24,011	$	—
Money market mutual funds	1,302,801		1,302,801		—		—
Time deposits	33,405		33,405		—		—
Short-term investments:
Asset-backed securities	77,010		—		77,010		—
Corporate debt securities	2,451,763		—		2,451,763		—
Foreign government securities	4,149		—		4,149		—
Municipal securities	18,917		—		18,917		—
U.S. Treasury securities	645,487		—		645,487		—
Prepaid expenses and other current assets:
Foreign currency derivatives	43,084		—		43,084		—
Other assets:
Deferred compensation plan assets	69,705		3,192		66,513		—
Total assets	$	4,670,332	$	1,339,398	$	3,330,934	$	—



Liabilities:
Accrued expenses:
Foreign currency derivatives	$	2,463	$	—	$	2,463	$	—
Other liabilities:
Interest rate swap derivatives	10,312		—		10,312		—
Total liabilities	$	12,775	$	—	$	12,775	$	—

The fair value of our financial assets and liabilities at December 1, 2017 was determined using the following inputs (in thousands):



	Fair Value Measurements at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents:
Money market mutual funds	$	2,006,741	$	2,006,741	$	—	$	—
Time deposits	18,843		18,843		—		—
Short-term investments:
Asset-backed securities	98,001		—		98,001		—
Corporate debt securities	2,454,260		—		2,454,260		—
Foreign government securities	2,388		—		2,388		—
Municipal securities	21,065		—		21,065		—
U.S. Treasury securities	937,988		—		937,988		—
Prepaid expenses and other current assets:
Foreign currency derivatives	14,198		—		14,198		—
Other assets:
Deferred compensation plan assets	56,690		2,573		54,117		—
Total assets	$	5,610,174	$	2,028,157	$	3,582,017	$	—



Liabilities:
Accrued expenses:
Foreign currency derivatives	$	1,598	$	—	$	1,598	$	—
Other liabilities:
Interest rate swap derivatives	1,058		—		1,058		—
Total liabilities	$	2,656	$	—	$	2,656	$	—

See Note 3 for further information regarding the fair value of our financial instruments.

Our fixed income available-for-sale debt securities consist of high quality, investment grade securities from diverse issuers with a weighted average credit rating of A+. We value these securities based on pricing from independent pricing vendors who use matrix pricing valuation techniques including market approach methodologies that model information generated by market transactions involving identical or comparable assets, as well as discounted cash flow methodologies. Inputs include quoted prices in active markets for identical assets or inputs other than quoted prices that are observable either directly or indirectly in determining fair value, including benchmark yields, issuer spreads off benchmark yields, interest rates and U.S. Treasury or swap curves. We therefore classify all of our fixed income available-for-sale securities as Level 2. We perform routine procedures such as comparing prices obtained from multiple independent sources to ensure that appropriate fair values are recorded.

The fair values of our money market mutual funds and time deposits are based on the closing price of these assets as of the reporting date. We classify our money market mutual funds and time deposits as Level 1.

Our Level 2 over-the-counter foreign currency and interest rate swap derivatives are valued using pricing models and discounted cash flow methodologies based on observable foreign exchange and interest rate data at the measurement date.

Our deferred compensation plan assets consist of money market mutual funds and other mutual funds.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We also have direct investments in privately held companies accounted for under the cost and equity method, which are periodically assessed for other-than-temporary impairment. If we determine that an other-than-temporary impairment has occurred, we write down the investment to its fair value. We estimate fair value of our cost and equity method investments considering available information such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. For the three and nine months ended August 31, 2018 and September 1, 2017, we determined there were no other-than-temporary impairments of our cost and equity method investments.

The fair value of our senior notes was $1.91 billion as of August 31, 2018, based on observable market prices in less active markets and categorized as Level 2. See Note 13 for further details regarding our debt.