Senior Notes, Fair Value

[Table of Contents](#i11f673a761214399ab28a3a12dfa4686_7)  
ADOBE INC.  
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)  
(Unaudited)The fair value of our financial assets and liabilities at December 3, 2021 was determined using the following inputs:

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| (in millions) | Fair Value Measurements at Reporting Date Using |
|   |   |  | Quoted Pricesin ActiveMarkets forIdentical Assets |  | SignificantOtherObservableInputs |  | SignificantUnobservableInputs |
|   | 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  |  |  | $ | —  |  |



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| Liabilities: |   |  |   |  |   |  |   |
| Accrued expenses: |   |  |   |  |   |  |   |
|  |  |  |  |  |  |  |  |
| Foreign currency derivatives | $ | 8  |  |  | $ | —  |  |  | $ | 8  |  |  | $ | —  |  |
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[See Note 4 for further information regarding the fair value of our financial instruments.](#i11f673a761214399ab28a3a12dfa4686_43) 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 BasisThe 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.](#i11f673a761214399ab28a3a12dfa4686_82)17
