Fair Value

The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

The tables below, set forth by level, presents the Company’s financial assets and liabilities, excluding accrued interest components that are accounted for at fair value on a recurring basis as of August 4, 2018 and October 28, 2017. The tables exclude cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. As of August 4, 2018 and October 28, 2017, the Company held $375.1 million and $296.2 million, respectively, of cash and held-to-maturity investments that were excluded from the tables below.



	August 4, 2018
	Fair Value measurement at Reporting Date using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
Assets
Cash equivalents:
Available-for-sale:
Government and institutional money market funds	$	202,061	$	—	$	202,061
Corporate obligations (1)	—		195,452		195,452
Other assets:
Deferred compensation investments	42,279		—		42,279
Interest rate derivatives	—		3,101		3,101
Total assets measured at fair value	$	244,340	$	198,553	$	442,893
Liabilities
Forward foreign currency exchange contracts (2)	—		6,411		6,411
Total liabilities measured at fair value	$	—	$	6,411	$	6,411


(1)	The amortized cost of the Company’s investments classified as available-for-sale as of August 4, 2018 was $195.5 million.


(2)	The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 9, Derivatives, of these Notes to Condensed Consolidated Financial Statements for more information related to the Company's master netting arrangements.



	October 28, 2017
	Fair Value measurement at Reporting Date using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
Assets
Cash equivalents:
Available-for-sale:
Government and institutional money market funds	$	512,882	$	—	$	512,882
Corporate obligations (1)	—		238,796		238,796
Other assets:
Deferred compensation investments	33,510		—		33,510
Interest rate derivatives	—		2,966		2,966
Total assets measured at fair value	$	546,392	$	241,762	$	788,154
Liabilities
Forward foreign currency exchange contracts (2)	—		1,527		1,527
Total liabilities measured at fair value	$	—	$	1,527	$	1,527


(1)	The amortized cost of the Company’s investments classified as available-for-sale as of October 28, 2017 was $238.9 million.


(2)	The Company has master netting arrangements by counterparty with respect to derivative contracts. See Note 9, Derivatives, of these Notes to Condensed Consolidated Financial Statements for more information related to the Company's master netting arrangements.

In addition to the above, the Company has recognized contingent consideration payable at fair value (Level 3 measurement) of $7.6 million and $7.8 million as of August 4, 2018 and October 28, 2017, respectively. The changes in fair value in those periods were not material.

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

Cash equivalents and short-term investments — These investments are adjusted to fair value based on quoted market prices or are determined using a yield curve model based on current market rates.

Deferred compensation plan investments — The fair value of these mutual fund, money market fund and equity investments are based on quoted market prices.

Forward foreign currency exchange contracts — The estimated fair value of forward foreign currency exchange contracts, which includes derivatives that are accounted for as cash flow hedges and those that are not designated as cash flow hedges, is based on the estimated amount the Company would receive if it sold these agreements at the reporting date taking into consideration current interest rates as well as the creditworthiness of the counterparty for assets and the Company’s creditworthiness for liabilities. The fair value of these instruments is based upon valuation models using current market information such as strike price, spot rate, maturity date and volatility.

Interest rate derivatives — The fair value of the interest rate derivatives is estimated using a discounted cash flow analysis based on the contractual terms of the derivative.

Contingent consideration — The fair value of the contingent consideration was estimated utilizing the income approach and is based upon significant inputs not observable in the market. The income approach is based on two steps. The first step involves a projection of the cash flows that is based on the Company’s estimates of the timing and probability of achieving the defined milestones. The second step involves converting the cash flows into a present value equivalent through discounting. The discount rate reflects the Baa costs of debt plus the relevant risk associated with the asset and the time value of money.

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

The table below presents the estimated fair value of certain financial instruments not recorded at fair value on a recurring basis. The carrying amounts of the term loans approximate fair value. The term loans are classified as Level 2 measurements according to the fair value hierarchy. The fair values of the senior unsecured notes are obtained from broker prices and are classified as Level 1 measurements according to the fair value hierarchy.



	August 4, 2018				October 28, 2017
	Principal Amount Outstanding		Fair Value		Principal Amount Outstanding		Fair Value
3-Year term loan	$	650,000	650,000		1,950,000		1,950,000
5-Year term loan	1,350,000		1,350,000		2,100,000		2,100,000
2020 Notes, due March 2020	300,000		298,249		—		—
2021 Notes, due January 2021	450,000		445,787		—		—
2021 Notes, due December 2021	400,000		387,341		400,000		399,530
2023 Notes, due June 2023	500,000		483,362		500,000		498,582
2023 Notes, due December 2023	550,000		533,412		550,000		554,411
2025 Notes, due December 2025	850,000		839,784		850,000		884,861
2026 Notes, due December 2026	900,000		857,858		900,000		902,769
2036 Notes, due December 2036	250,000		243,616		250,000		259,442
2045 Notes, due December 2045	400,000		424,573		400,000		460,588
Total Debt	$	6,600,000	$	6,513,982	$	7,900,000	$	8,010,183