Fair Value Measurements

9 Months Ended

Sep. 02, 2022

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

The fair value of our financial assets and liabilities at September 2, 2022 was determined using the following inputs:


(in millions)	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	$	21	$	—	$	21	$	—

Money market funds	3,202		3,202		—		—

Time deposits	25		25		—		—
U.S. agency securities	13		—		13		—
U.S. Treasury securities	14		—		14		—
Short-term investments:
Asset-backed securities	112		—		112		—
Corporate debt securities	1,300		—		1,300		—
Foreign government securities	5		—		5		—

Municipal securities	23		—		23		—

U.S. agency securities	19		—		19		—
U.S. Treasury securities	435		—		435		—
Prepaid expenses and other current assets:
Foreign currency derivatives	183		—		183		—

Other assets:
Deferred compensation plan assets	150		150		—		—

Total assets	$	5,502	$	3,377	$	2,125	$	—


Liabilities:
Accrued expenses:

Foreign currency derivatives	$	9	$	—	$	9	$	—

The fair value of our financial assets and liabilities at December 3, 2021 was determined using the following inputs:


(in millions)	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	$	5	$	—	$	5	$	—
Money market funds	2,914		2,914		—		—

Time deposits	175		175		—		—

Short-term investments:
Asset-backed securities	124		—		124		—
Corporate debt securities	1,425		—		1,425		—


Municipal securities	28		—		28		—

U.S. Treasury securities	377		—		377		—
Prepaid expenses and other current assets:
Foreign currency derivatives	98		—		98		—
Other assets:
Deferred compensation plan assets	151		151		—		—

Total assets	$	5,297	$	3,240	$	2,057	$	—


Liabilities:
Accrued expenses:

Foreign currency derivatives	$	8	$	—	$	8	$	—

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 AA-. 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 funds, time deposits and deferred compensation plan assets, which consist of money market and other mutual funds, are based on quoted prices in active markets at the measurement date.

Our over-the-counter foreign currency 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 other current financial assets and current financial liabilities have fair values that approximate their carrying values.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The fair value of our senior notes was $3.91 billion as of September 2, 2022, 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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