Fair Value Measurements

12 Months Ended

Jul. 31, 2012

Fair Value Measurements

Note 3—Fair Value Measurements

At July 31, 2012, the Company did not have any assets or liabilities measured at fair value on a recurring basis. At July 31, 2012 and 2011, the Company had $6.4 million and $5.7 million, respectively, in investments in hedge funds, of which $0.1 million and $0.2 million, respectively, were included in “Investments—short term” and $6.3 million and $5.5 million, respectively, were included in “Investments—long-term” in the accompanying consolidated balance sheets. The Company’s investments in hedge funds are accounted for using the equity method or the cost method, therefore investments in hedge funds are not measured at fair value.

In fiscal 2011 and fiscal 2010, the Company’s marketable securities included auction rate securities for which the underlying asset was preferred stock of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. The fair values of the auction rate securities, which could not be corroborated by the market, were estimated based on the value of the underlying assets and the Company’s assumptions, and were classified as Level 3.

The following table summarizes, for the year ended July 31, 2011, the change in the balance of the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

(in thousands)
Balance, beginning of year	$	218
Total gains (losses) (realized or unrealized):
Included in earnings in “Other (expense) income, net”		5,379
Included in other comprehensive (loss) income		131
Purchases, sales, issuances and settlements:
Sales		(5,728	)
Transfers in (out) of Level 3		—
Balance, end of year	$	—
The amount of total gains or losses for the year included in earnings in “Other (expense) income, net” attributable to the change in unrealized gains or losses relating to assets or liabilities still held at the end of the year	$	—

Fair Value of Other Financial Instruments

The estimated fair value of the Company’s other financial instruments was determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting this data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

Cash and cash equivalents, restricted cash and cash equivalents—short-term, certificates of deposit, investments—short-term, other current assets, customer deposits, notes payable—current portion and other current liabilities. At July 31, 2012 and 2011, the carrying amounts approximate fair value because of the short period of time to maturity. The fair value estimates for cash, cash equivalents and restricted cash and cash equivalents—short-term were classified as Level 1 and certificates of deposit, investments—short-term, other current assets, customer deposits, notes payable—current portion and other current liabilities were classified as Level 2 of the fair value hierarchy.

Restricted cash and cash equivalents—long-term. At July 31, 2012 and 2011, the fair value of restricted cash and cash equivalents—long-term was estimated based on the anticipated cash flows once the restrictions are removed, which approximates carrying value, and was classified as Level 2 of the fair value hierarchy.

Other liabilities. At July 31, 2012 and 2011, the carrying value of other liabilities approximates fair value. The fair value of other liabilities was estimated based on the Company’s assumptions, and were classified as Level 3 of the fair value hierarchy.

It is not practicable to estimate the fair value of the Company’s notes payable—long-term portion at July 31, 2012 and 2011 without incurring excessive cost. See Note 7 for the carrying amount, effective interest rate and maturity date of the Notes payable—long-term portion.

The Company’s investments-long-term at July 31, 2012 and 2011 included investments in the equity of certain privately held entities that are accounted for at cost. It is not practicable to estimate the fair value of these investments because of the lack of a quoted market price for the shares of these entities, and the inability to estimate their fair value without incurring excessive cost. The carrying value of these investments was $1.1 million and $3.5 million at July 31, 2012 and 2011, respectively, which the Company believes was not impaired.