Fair Value

12 Months Ended

Feb. 22, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

FAIR VALUE

Fair value measurements are classified under the following hierarchy:

Level 1 — Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date.

Level 2 — Inputs based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.

Level 3 — Inputs reflect management’s best estimate of what market participants would use to price the asset or liability at the measurement date in model-driven valuations. The inputs are unobservable in the market and significant to the instrument’s valuation.

Fair value measurements are classified according to the lowest level input or value-driver that is significant to the valuation. A measurement may therefore be classified within Level 3 even though there may be other significant inputs that are readily observable.

Assets and liabilities measured at fair value in our Consolidated Balance Sheets as of February 22, 2013 and February 24, 2012 are summarized below:

Fair Value of Financial Instruments	February 22, 2013
	Level 1		Level 2			Level 3		Total
Assets:
Cash and cash equivalents	$	150.4	$	—		$	—	$	150.4
Restricted cash	3.5		—			—		3.5
Managed investment portfolio and other investments
Corporate debt securities	—		30.3			—		30.3
U.S. agency debt securities	—		44.1			—		44.1
U.S. government debt securities	4.4		—			—		4.4
Asset backed securities	—		5.5			—		5.5
Municipal debt securities	—		14.1			—		14.1
Other investments	—		2.1			—		2.1
Foreign exchange forward contracts	—		1.3			—		1.3
Auction rate securities	—		—			9.8		9.8
Canadian asset-backed commercial paper restructuring notes	—		—			3.5		3.5
	$	158.3	$	97.4		$	13.3	$	269.0
Liabilities:
Foreign exchange forward contracts	$	—	$	(1.9	)	$	—	$	(1.9	)
	$	—	$	(1.9	)	$	—	$	(1.9	)
Fair Value of Financial Instruments	February 24, 2012
	Level 1		Level 2			Level 3		Total
Assets:
Cash and cash equivalents	$	112.1	$	—		$	—	$	112.1
Restricted cash	3.5		—			—		3.5
Managed investment portfolio and other investments
Corporate debt securities	—		47.8			—		47.8
U.S. agency debt securities	—		27.7			—		27.7
U.S. government debt securities	1.5		—			—		1.5
Asset backed securities	—		0.9			—		0.9
Municipal debt securities	—		0.9			—		0.9
Other investments	—		0.3			—		0.3
Foreign exchange forward contracts	—		0.9			—		0.9
Auction rate securities	—		—			12.9		12.9
Canadian asset-backed commercial paper restructuring notes	—		—			4.1		4.1
	$	117.1	$	78.5		$	17.0	$	212.6
Liabilities:
Foreign exchange forward contracts	$	—	$	(2.1	)	$	—	$	(2.1	)
	$	—	$	(2.1	)	$	—	$	(2.1	)

Managed Investment Portfolio and Other Investments

Our managed investment portfolio consists of U.S. agency debt securities, U.S. government debt securities, corporate debt securities, asset backed securities and municipal debt securities, and our investment manager operates under a mandate to keep the average duration of investments under two years. Our managed investment portfolio and other investments are considered available-for-sale. Fair values for these investments are based upon valuations for identical or similar instruments in active markets, with the resulting net unrealized holding gains or losses reflected net of tax as a component of Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

The cost basis for these investments, determined using the specific identification method, was $99.9 and $79.1 as of February 22, 2013 and February 24, 2012, respectively. Gross unrealized gains were $0.2 for 2013 and gross unrealized losses were $0.4 for 2012. As of February 22, 2013, approximately 40% of the debt securities mature within one year, approximately 27% in two years, approximately 16% in three years and approximately 17% in four or more years.

Foreign Exchange Forward Contracts

From time to time, we enter into forward contracts to mitigate the risk of translation into U.S. dollars of certain foreign-denominated net income, assets and liabilities. We primarily hedge intercompany working capital loans and certain forecasted currency flows from intercompany transactions. The fair value of foreign exchange forward contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward rate.

Auction Rate Securities

As of February 22, 2013, we held auction rate securities (“ARS”) totaling $11.7 of par value. Historically, liquidity for these securities was provided through a Dutch auction process that reset the applicable interest rate at pre-determined short-term intervals. The auctions failed in 2008 and are not being conducted at this time. We receive higher penalty interest rates on the securities ranging from 30-day LIBOR plus 2.0 to 2.5%. We will not be able to liquidate the related principal amounts until a buyer is found outside of the auction process, the issuer calls the security or the security matures according to contractual terms. We have the intent and ability to hold these securities until recovery of market value or maturity, and we believe the current inability to easily liquidate these investments will have no impact on our ability to fund our ongoing operations.

During Q4 2013, one issuance held in our portfolio was redeemed at par for $5.0 in proceeds. During Q4 2011, three of the issuances held in our portfolio were redeemed at par aggregating $9.8 in proceeds. While there has been no payment default with respect to our remaining ARS, these investments are not widely traded and therefore do not currently have a readily-determinable market value. To estimate fair value, we used an internally-developed discounted cash flow analysis. Our discounted cash flow analysis considers, among other factors, (i) the credit ratings of the ARS, (ii) the credit quality of the underlying securities or the credit rating of issuers, (iii) the estimated timing and amount of cash flows and (iv) the formula applicable to each security which defines the penalty interest rate paid as a result of the failed auctions. Our discounted cash flow analysis estimates future cash flows from our ARS over their anticipated workout period at discount rates equal to the sum of (a) the yield on U.S. Treasury securities with a term through the estimated workout date plus (b) a risk premium based on similarly rated observable securities. These assumptions are based on our current judgment and our view of current market conditions. Based upon these factors, ARS with an original par value of approximately $11.7 have been adjusted to an estimated fair value of $9.8 as of February 22, 2013.

We periodically review our investment portfolio to determine if any investment is other-than-temporarily impaired due to changes in credit risk or other potential valuation concerns. Since the inception of our ARS investments, we have recorded other-than-temporary impairment losses and unrealized gains of $2.5 and $0.6, respectively. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which estimated fair value has been less than the cost basis, the financial condition and near-term prospects of the issuer and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value. The investments other-than-temporarily impaired as of February 22, 2013 were impaired due to general credit declines, and the impairments were recorded in Investment Income in the Consolidated Statements of Income. Unrealized gains are recorded in Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets. The unrealized gains are due to changes in interest rates and are expected to fluctuate over the contractual term of the instruments. The use of different assumptions could result in a different valuation and additional impairments. For example, an increase in the recovery period by one year would reduce the estimated fair value of our investment in ARS by approximately $0.1. An increase to the discount rate of 100 basis points would reduce the estimated fair value of our investment in ARS by approximately $0.5.

We continue to monitor the market for ARS and consider the impact, if any, on the estimated fair value of these investments. If current market conditions deteriorate further, or the anticipated recovery in market values does not occur, we may be required to record additional other-than-temporary impairments and/or unrealized impairment losses.

Canadian Asset-Backed Commercial Paper Restructuring Notes

As of February 22, 2013, we held four floating-rate Canadian asset-backed commercial paper restructuring notes with a combined par value of Canadian $4.4. These notes replaced an investment in Canadian asset-backed commercial paper, which, as a result of a lack of liquidity in the market, failed to settle on maturity and went into default. We recorded an other-than-temporary impairment of our investment in 2008 of $0.9. During Q4 2013, one note held in our portfolio matured and was redeemed at par for $0.5 in proceeds.

The restructuring notes were issued under the court-approved restructuring entity, Master Asset Vehicle II, in 2009. We hold a class A-1 note, a class A-2 note, a class B note and a class C note. The class A-1 note is rated “A” by Dominion Bond Rating Service and equals 75% of the par value of the notes; the class A-2 note is rated “BBB” by Dominion Bond Rating Service and equals 19% of the par value. The class B and class C notes carry no rating, are subordinated to the class A notes and approximate 6% of the par value of the notes. There is not an active trading market for any of these notes, and they pay interest quarterly at a rate equal to the Canadian Bankers Acceptance Rate less 50 basis points. Due to historically low short-term interest rates, the amount of interest received during 2013, 2012 and 2011 was immaterial.

Our valuation of these notes is based on data from the administrator of the restructuring committee and reflects the payment priority among the various classes of notes.

Below is a roll-forward of assets and liabilities measured at estimated fair value using Level 3 inputs for the years ended February 22, 2013 and February 24, 2012:

Roll-forward of Fair Value Using Level 3 Inputs	Auction Rate Securities			Canadian Asset-Backed Commercial Paper
Balance as of February 25, 2011	$	13.8		$	4.2
Unrealized loss on investments	(0.6		)	—
Other-than-temporary impairments	(0.3		)	—
Currency translation adjustment	—			(0.1		)
Balance as of February 24, 2012	$	12.9		$	4.1
Unrealized gain on investments	1.9			—
Sale of investments	(5.0		)	—
Maturities of investments	—			(0.5		)
Other-than-temporary impairments	—			—
Currency translation adjustment	—			(0.1		)
Balance as of February 22, 2013	$	9.8		$	3.5

There were no transfers in or transfers out of Level 3 during either 2013 or 2012.