Fair Value Measurements

3 Months Ended

Nov. 28, 2013

Disclosure Text Block [Abstract]

Fair Value Measurements

Fair Value Measurements

Accounting standards establish three levels of inputs that may be used to measure fair value: quoted prices in active markets for identical assets or liabilities (referred to as Level 1), inputs other than Level 1 that are observable for the asset or liability either directly or indirectly (referred to as Level 2) and unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities (referred to as Level 3).

Fair Value Measurements on a Recurring Basis

All marketable debt and equity investments are classified as available-for-sale and are carried at fair value. Assets measured at fair value on a recurring basis were as follows:

As of	November 28, 2013								August 29, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	1,677	$	—	$	—	$	1,677	$	1,188	$	—	$	—	$	1,188
Certificates of deposit	—		543		—		543		—		38		—		38
Commercial paper	—		5		—		5		—		35		—		35
	1,677		548		—		2,225		1,188		73		—		1,261
Short-term investments:
Corporate bonds	—		112		—		112		—		112		—		112
Commercial paper	—		58		—		58		—		26		—		26
Government securities	—		37		—		37		—		72		—		72
Certificates of deposit	—		8		—		8		—		9		—		9
Asset-backed securities	—		1		—		1		—		2		—		2
	—		216		—		216		—		221		—		221
Long-term marketable investments:
Corporate bonds	—		330		—		330		—		302		—		302
Asset-backed securities	—		106		—		106		—		95		—		95
Government securities	—		96		—		96		—		96		—		96
Marketable equity securities	6		—		—		6		6		—		—		6
	6		532		—		538		6		493		—		499
Restricted cash:
Certificates of deposit	—		7		—		7		—		302		—		302
	—		7		—		7		—		302		—		302
	$	1,683	$	1,303	$	—	$	2,986	$	1,194	$	1,089	$	—	$	2,283

Government securities consist of securities issued directly by or deemed to be guaranteed by government entities such as U.S and non U.S. agency securities, government bonds and treasury securities. Level 2 securities are valued using information obtained from pricing services, which obtain quoted market prices for similar instruments, non-binding market consensus prices that are corroborated by observable market data, or various other methodologies, to determine the appropriate value at the measurement date. We perform supplemental analysis to validate information obtained from our pricing services. As of November 28, 2013, no adjustments were made to such pricing information.

Fair Value Measurements on a Nonrecurring Basis

In connection with the Exchange Transactions, we determined the fair value of the debt component of the Exchanged Notes as if it were a stand-alone instrument using an average interest rate for similar nonconvertible debt issued by entities with credit ratings comparable to ours at the time of issuance.

In connection with the Termination of Conversion Rights and Redemption Notice on November 7, 2013, our settlement obligations for the 2027 Notes and 2031A Notes were treated as derivative instruments without hedge accounting designation from November 7, 2013 through their settlement dates, which range between December 10, 2013 and January 9, 2014. The fair values of the underlying conversion options were initially determined using the Black-Scholes option valuation model (Level 2 fair value measurements). The Black-Scholes model requires the input of assumptions, including the stock price, expected stock-price volatility, estimated option life, risk-free interest rate and dividend rate. The subsequent measurements as of November 28, 2013 of our convertible notes settlement obligations were based on the value-weighted average stock price (Level 1 fair value measurements). Changes in fair values of the derivative settlement obligations were included in other non-operating income (expense).

Fair Value of Financial Instruments

Amounts reported as cash and equivalents, receivables, and accounts payable and accrued expenses approximate fair value. The estimated fair value and carrying value of debt instruments (carrying value excludes the equity components of our convertible notes classified in equity) were as follows:

As of	November 28, 2013				August 29, 2013
	Fair Value		Carrying Value		Fair Value		Carrying Value
Convertible notes	$	6,076	$	3,019	$	4,167	$	2,506
Elpida creditor installment payments and other notes	1,680		1,677		2,269		2,279

The fair values of our convertible debt instruments were determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including our stock price and interest rates based on similar debt issued by parties with credit ratings similar to ours (Level 2).  The fair value of our other debt instruments was estimated based on discounted cash flows using inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including interest rates based on similar debt issued by parties with credit ratings similar to ours (Level 2).