Fair Value Measurements

3 Months Ended

Mar. 01, 2019

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 three months ended March 1, 2019.

The fair value of our financial assets and liabilities at March 1, 2019 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	$	1,383,033	$	1,383,033	$	—	$	—
Time deposits	14,454		14,454		—		—
Short-term investments:
Asset-backed securities	33,438		—		33,438		—
Corporate debt securities	1,433,496		—		1,433,496		—
Foreign government securities	2,386		—		2,386		—
Municipal securities	18,091		—		18,091		—
Prepaid expenses and other current assets:
Foreign currency derivatives	24,477		—		24,477		—
Other assets:
Deferred compensation plan assets	80,817		3,287		77,530		—
Total assets	$	2,990,192	$	1,400,774	$	1,589,418	$	—



Liabilities:
Accrued expenses:
Foreign currency derivatives	$	1,075	$	—	$	1,075	$	—
Other liabilities:
Interest rate swap derivatives	6,278		—		6,278		—
Total liabilities	$	7,353	$	—	$	7,353	$	—

The fair value of our financial assets and liabilities at November 30, 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:
Money market mutual funds	$	1,234,188	$	1,234,188	$	—	$	—
Time deposits	40,023		40,023		—		—
Short-term investments:
Asset-backed securities	41,508		—		41,508		—
Corporate debt securities	1,522,208		—		1,522,208		—
Foreign government securities	4,155		—		4,155		—
Municipal securities	18,316		—		18,316		—
Prepaid expenses and other current assets:
Foreign currency derivatives	44,259		—		44,259		—
Other assets:
Deferred compensation plan assets	68,988		3,895		65,093		—
Total assets	$	2,973,645	$	1,278,106	$	1,695,539	$	—



Liabilities:
Accrued expenses:
Foreign currency derivatives	$	816	$	—	$	816	$	—
Other liabilities:
Interest rate swap derivatives	9,744		—		9,744		—
Total liabilities	$	10,560	$	—	$	10,560	$	—

See Note 4 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 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 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 months ended March 1, 2019 and March 2, 2018, we determined there were no other-than-temporary impairments of our cost method investments.

The fair value of our senior notes was $1.92 billion as of March 1, 2019, based on observable market prices in less active markets and categorized as Level 2. See Note 14 for further details regarding our debt.

- 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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