Financial Instruments And Fair Value

12 Months Ended

Apr. 27, 2012

Financial Instruments And Fair Value [Abstract]

Financial Instruments And Fair Value

9. Financial Instruments and Fair Value

The accounting guidance for fair value measurements provides a framework for measuring fair value on either a recurring or nonrecurring basis whereby the inputs used in valuation techniques are assigned a hierarchical level. The following are the three levels of inputs to measure fair value:

Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2: Inputs that reflect quoted prices for identical assets or liabilities in less active markets; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3: Unobservable inputs that reflect our own assumptions incorporated in valuation techniques used to measure fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

We consider an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an on-going basis, and consider an inactive market to be one in which there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, our own or the counterparty's non-performance risk is considered in measuring the fair values of liabilities and assets, respectively.

Investments

The following is a summary of our investments (in millions):

	April 27, 2012									April 29, 2011
	Cost or Amortized Cost		Gross Unrealized					Estimated Fair Value		Cost or Amortized Cost		Gross Unrealized					Estimated Fair Value
			Gains		Losses							Gains		Losses
Corporate bonds	$	2,665.2	$	9.5	$	(1.4	)	$	2,673.3	$	1,643.2	$	10.2	$	(0.6	)	$	1,652.8
U.S. treasury and government debt securities		836.7		1.2		(0.1	)		837.8		661.9		0.6		(0.7	)		661.8
Commercial paper		164.6		0.0		0.0			164.6		5.0		0.0		0.0			5.0
Certificates of deposit		347.7		0.5		0.0			348.2		96.3		0.0		0.0			96.3
Money market funds		724.8		0.0		0.0			724.8		1,539.6		0.0		0.0			1,539.6
Auction rate securities		54.1		0.9		(4.0	)		51.0		69.2		0.4		(4.5	)		65.1
Equity funds		25.5		0.0		0.0			25.5		20.2		0.0		0.0			20.2
Municipal bonds		0.0		0.0		0.0			0.0		1.5		0.0		0.0			1.5
Total debt and equity securities	$	4,818.6	$	12.1	$	(5.5	)	$	4,825.2	$	4,036.9	$	11.2	$	(5.8	)	$	4,042.3

We record unrealized gains or losses on available-for-sale securities in AOCI. The following table shows the gross unrealized losses and fair values of our investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss positions, as of April 27, 2012 (in millions):

	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Corporate bonds	$	771.1	$	(1.4	)	$	0.0	$	0.0		$	771.1	$	(1.4	)
Auction rate securities		4.8		(0.2	)		38.8		(3.8	)		43.6		(4.0	)
U.S. treasury and government debt securities		89.4		(0.1	)		0.0		0.0			89.4		(0.1	)
Total	$	865.3	$	(1.7	)	$	38.8	$	(3.8	)	$	904.1	$	(5.5	)

The following table shows the gross unrealized losses and fair values of our investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss positions, at April 29, 2011 (in millions):

	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Corporate bonds	$	236.7	$	(0.6	)	$	1.1	$	0.0		$	237.8	$	(0.6	)
Auction rate securities		0.0		0.0			51.0		(4.5	)		51.0		(4.5	)
U.S. treasury and government debt securities		193.4		(0.7	)		0.0		0.0			193.4		(0.7	)
Total	$	430.1	$	(1.3	)	$	52.1	$	(4.5	)	$	482.2	$	(5.8	)

The following table presents the contractual maturities of our debt investments as of April 27, 2012 (in millions):

	Amortized Cost		Fair Value
Due in one year or less	$	1,322.7	$	1,326.1
Due in one through five years		2,516.3		2,522.6
Due after ten years*		54.1		51.0
	$	3,893.1	$	3,899.7

* Consists of auction rate securities which have contractual maturities of greater than 10 years.

Fair Value of Financial Instruments

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of April 27, 2012 (in millions):

			Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Corporate bonds	$	2,673.3	$	0.0	$	2,673.3	$	0.0
U.S. treasuries and government debt securities		837.8		234.3		603.5		0.0
Commercial paper		164.6		0.0		164.6		0.0
Certificates of deposit		348.2		0.0		348.2		0.0
Money market funds		724.8		724.8		0.0		0.0
Auction rate securities		51.0		0.0		0.0		51.0
Equity funds		25.5		25.5		0.0		0.0
Foreign currency contracts		2.7		0.0		2.7		0.0
Total	$	4,827.9	$	984.6	$	3,792.3	$	51.0
Liabilities
Foreign currency contracts	$	2.6	$	0.0	$	2.6	$	0.0

Reported as (in millions):

			Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash equivalents	$	900.0	$	724.8	$	175.2	$	0.0
Short-term investments		3,848.7		234.3		3,614.4		0.0
Other current assets		9.0		6.3		2.7		0.0
Other non-current assets		70.2		19.2		0.0		51.0
Total	$	4,827.9	$	984.6	$	3,792.3	$	51.0
Liabilities
Other current liabilities	$	2.6	$	0.0	$	2.6	$	0.0

We classify investments within Level 1 if quoted prices are available in active markets.

We classify items in Level 2 if the investments are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Investments are held by a custodian who prices some of the investments themselves using standard inputs in various asset price models or obtains investment prices from a third party pricing provider that incorporates standard inputs in various asset price models. We review Level 2 inputs and fair value for reasonableness and the values may be further validated by comparison to multiple independent pricing sources. In addition, we review third-party pricing provider models, key inputs and assumptions and understand the pricing processes at our third-party providers in determining the overall reasonableness of the fair value of our Level 2 financial instruments. As of April 27, 2012 and April 29, 2011, we have not made any adjustments to the prices obtained from our third party pricing providers.

The unrealized losses on our available-for-sale investments in corporate bonds were caused by market value declines as a result of the economic environment, as well as fluctuations in market interest rates. Because the decline in market value is attributable to changes in market conditions and not credit quality, and because we neither intend to sell nor are likely to be required to sell these investments prior to a recovery of par value, we do not consider these investments to be other-than temporarily impaired as of April 27, 2012.

Our foreign currency derivative contracts are classified within Level 2 as the valuation inputs are based on quoted market prices of similar instruments in active markets. We determine the fair value of these instruments by considering the estimated amount we would pay or receive to terminate these agreements at the reporting date. We use observable inputs, including quoted prices in active markets for similar assets or liabilities.

We classify auction rate securities as Level 3 investments, which are valued using a pricing model, based on unobservable inputs in the market or that require us to develop our own assumptions.

Quantitative information about our Level 3 fair value measurements is as follows (fair value in millions):

	Fair Value at April 27, 2012	Valuation Techniques	Unobservable Inputs		Range (Weighted average)
ARSs	$ 51.0	Discounted cash flow		Time-to-economic maturity	6.4 yrs - 16.1 yrs (10.2 yrs)
				Liquidity risk premium, market credit spread and other factors	1.8% - 3.2% (2.2%)
				Coupon rate	1.2% - 3.2% (1.8%)
		Market comparable securities		Discount rate	4.7% - 12.6% (8.6%)

As of April 27, 2012 and April 29, 2011, we had ARSs with a par value of $55.6 million and $71.3 million, respectively, and an estimated fair value of $51.0 million and $65.1 million, respectively. All of our ARSs are classified as other non-current assets and are backed by pools of student loans guaranteed by the U.S. Department of Education. As of April 27, 2012, we recorded cumulative net temporary impairment charges of $3.1 million in AOCI and had recognized cumulative other-than-temporary impairments of $1.4 million in our results of operations. Prior to the three months ended October 28, 2011, we estimated the fair value for each individual ARS using an income (discounted cash flow) approach that incorporates both observable and unobservable inputs to discount the expected future cash flows. Key inputs into the discounted cash flow analysis include the time-to-economic maturity, liquidity risk premium, market credit spread and other factors and a coupon rate. Beginning October 28, 2011, we included the market approach to the valuation technique in order to incorporate secondary market activity into our estimated fair value for each individual ARS. This change had no material impact on the valuation of our ARS portfolio. The key input into the market approach is a discount rate. A significant increase (decrease) in the time-to-economic maturity, liquidity risk premium, market credit spread and other factors, coupon rate and discount rate could result in a significantly lower (higher) fair value estimate. We review the fair value of our Level 3 financial instruments for overall reasonableness by reviewing service provider pricing methodologies, key inputs and assumptions and by understanding the processes used by our third-party service providers. Based on our ability to access our cash and other short-term investments, our expected operating cash flows, and our other sources of cash, we do not intend to sell these investments prior to recovery of value. We will continue to monitor our ARS investments in light of the current debt market environment and evaluate these investments for impairment and classification.

The table below provides a reconciliation of the beginning and ending balance of our Level 3 auction rate securities measured at fair value on a recurring basis using significant unobservable inputs as of April 27, 2012, April 29, 2011 and April 30, 2010, respectively (in millions).

	Year Ended
	April 27, 2012			April 29, 2011			April 30, 2010
Balance at beginning of period	$	65.1		$	69.0		$	66.5
Total unrealized gains (losses), net included in other comprehensive income		0.9			(1.4	)		4.2
Total realized gains included in earnings		0.7			0.0			0.0
Settlements		(15.7	)		(2.5	)		(1.7	)
Balance at end of period	$	51.0		$	65.1		$	69.0