Fair Value Measures

3 Months Ended

Jan. 31, 2016

Accounting Standards Codification (ASC) 820-10, Fair Value Measurements and Disclosures, defines fair value, establishes guidelines and enhances disclosure requirements for fair value measurements. The accounting guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The accounting guidance also establishes a fair value hierarchy based on the independence of the source and objective evidence of the inputs used. There are three fair value hierarchies based upon the level of inputs that are significant to fair value measurement:

Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical instruments in active markets;

Level 2—Observable inputs other than quoted prices included in Level 1 for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-driven valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3—Unobservable inputs to the valuation derived from fair valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

On a recurring basis, the Company measures the fair value of certain of its assets and liabilities, which include cash equivalents, short-term investments, non-qualified deferred compensation plan assets, and foreign currency derivative contracts.

The Company’s cash equivalents and short-term investments are classified within Level 1 or Level 2 because they are valued using quoted market prices in an active market or alternative independent pricing sources and models utilizing market observable inputs.

The Company’s non-qualified deferred compensation plan assets consist of money market and mutual funds invested in domestic and international marketable securities that are directly observable in active markets and are therefore classified within Level 1.

The Company’s foreign currency derivative contracts are classified within Level 2 because these contracts are not actively traded and the valuation inputs are based on quoted prices and market observable data of similar instruments.

The Company’s borrowings under its credit and term loan facilities are classified within Level 2 because these borrowings are not actively traded and have a variable interest rate structure based upon market rates currently available to the Company for debt with similar terms and maturities. Refer to Note 7. Credit Facility.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below as of January 31, 2016:



			Fair Value Measurement Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Assets
Cash equivalents:
Money market funds	$	199,561	$	199,561	$	—	$	—
Commercial paper	1,199		—		1,199		—
Certificates of deposit	2,400		—		2,400		—
U.S. government agency securities	4,337		—		4,337		—
Short-term investments:
U.S. government agency securities	13,718		—		13,718		—
Municipal bonds	1,403		—		1,403		—
Certificates of deposit	8,297		—		8,297		—
Commercial paper	11,430		—		11,430		—
Corporate debt securities	65,107		—		65,107		—
Asset-backed securities	21,989		—		21,989		—
Non-U.S. government agency securities	1,004		—		1,004		—
Prepaid and other current assets:
Foreign currency derivative contracts	2,043		—		2,043		—
Other long-term assets:
Deferred compensation plan assets	149,401		149,401		—		—
Total assets	$	481,889	$	348,962	$	132,927	$	—
Liabilities
Accounts payable and accrued liabilities:
Foreign currency derivative contracts	$	18,455	$	—	$	18,455	$	—
Other long-term assets:
Deferred compensation plan liabilities	149,401		149,401		—		—
Total liabilities	$	167,856	$	149,401	$	18,455	$	—

Assets and liabilities measured at fair value on a recurring basis are summarized below as of October 31, 2015:



			Fair Value Measurement Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Assets
Cash equivalents:
Money market funds	$	233,839	$	233,839	$	—	$	—
Commercial paper	$	1,834	$	—	$	1,834	$	—
Certificates of deposit	$	3,500	$	—	$	3,500	$	—
Asset-backed securities	$	299	$	—	$	299	$	—
Short-term investments:
U.S. government agency securities	$	12,614	$	—	$	12,614	$	—
Municipal bonds	$	1,403	$	—	$	1,403	$	—
Certificates of deposit	$	9,800	$	—	$	9,800	$	—
Commercial paper	$	12,129	$	—	$	12,129	$	—
Corporate debt securities	$	67,188	$	—	$	67,188	$	—
Asset-backed securities	$	24,608	$	—	$	24,608	$	—
Non-U.S. government agency securities	$	1,005	$	—	$	1,005	$	—
Prepaid and other current assets:
Foreign currency derivative contracts	6,462		—		6,462		—
Other long-term assets:
Deferred compensation plan assets	158,462		158,462		—		—
Total assets	$	533,143	$	392,301	$	140,842	$	—
Liabilities
Accounts payable and accrued liabilities:
Foreign currency derivative contracts	$	10,281	$	—	$	10,281	$	—
Other long-term liabilities:
Deferred compensation plan liabilities	$	158,462	$	158,462	$	—	$	—
Total liabilities	$	168,743	$	158,462	$	10,281	$	—

Assets/Liabilities Measured at Fair Value on a Non-Recurring Basis

Non-Marketable Equity Securities

Equity investments in privately-held companies, also called non-marketable equity securities, are accounted for using either the cost or equity method of accounting.

The non-marketable equity securities are measured and recorded at fair value when an event or circumstance which impacts the fair value of these securities indicates an other-than-temporary decline in value has occurred. In such events, these equity investments would be classified within Level 3 as they are valued using significant unobservable inputs or data in an inactive market, and the valuation requires management judgment due to the absence of market price and inherent lack of liquidity. The non-marketable equity securities are measured and recorded at fair value when an event or circumstance which impacts the fair value of these securities indicates an other-than-temporary decline in value has occurred. The Company monitors these investments and generally uses the income approach to assess impairments based primarily on the financial conditions of these companies.

The Company did not recognize any impairment during the three months ended January 31, 2016 and 2015, respectively.

As of January 31, 2016, the fair value of the Company’s non-marketable securities was $10.2 million, of which $6.6 million and $3.6 million were accounted for under the cost method and equity method, respectively. As of October 31, 2015, the fair value of non-marketable securities was $10.3 million, of which $6.6 million and $3.7 million were accounted for under the cost method and equity method, respectively.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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