Fair Value Measures

3 Months Ended

Jan. 31, 2012

Fair Value Measures [Abstract]

Fair Value Measures

Note 4. Fair Value Measures

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, foreign currency derivative contracts and contingent consideration associated with business combinations.

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 liabilities for contingent consideration are classified within Level 3 because these valuations are based on management assumptions including discount rates and estimated probabilities of achievement of certain milestones which are unobservable in the market. The Company recorded a reduction of $2.3 million and $0.2 million during the three months ended January 31, 2012 and January 31, 2011, respectively, in research and development expenses due to the change in fair value of the liability for the contingent consideration. As of January 31, 2012 and October 31, 2011, the fair value of the liabilities for contingent consideration was estimated at $2.8 million and $4.3 million, respectively. No cash has been paid related to these liabilities as of January 31, 2012.

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, 2012:

			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	$	515,617	$	515,617	$	—	$	—
Short-term investments:
Municipal securities		132,150		—		132,150		—
Prepaid and other current assets:
Foreign currency derivative contracts		1,382		—		1,382		—
Other long-term assets:
Deferred compensation plan assets		93,946		93,946		—		—
Total assets	$	743,095	$	609,563	$	133,532	$	—
Liabilities
Accounts payable and accrued liabilities:
Foreign currency derivative contracts	$	16,494	$	—	$	16,494	$	—
Contingent consideration(1)		1,416		—		—		1,416
Other long-term liabilities:
Contingent consideration(1)		1,336		—		—		1,336
Total liabilities	$	19,246	$	—	$	16,494	$	2,752

(1) Includes addition of contingent consideration of $0.7 million arising from a business combination completed during fiscal 2012 which is payable over 2 years.

Assets and liabilities measured at fair value on a recurring basis are summarized below as of October 31, 2011:

			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	$	543,770	$	543,770	$	—	$	—
Short-term investments:
Municipal securities		148,997		—		148,997		—
Prepaid and other current assets:
Foreign currency derivative contracts		2,161		—		2,161		—
Other long-term assets:
Deferred compensation plan assets		90,060		90,060		—		—
Total assets	$	784,988	$	633,830	$	151,158	$	—
Liabilities
Accounts payable and accrued liabilities:
Foreign currency derivative contracts	$	16,856	$	—	$	16,856	$	—
Contingent consideration		2,096		—		—		2,096
Other long-term liabilities:
Contingent consideration		2,200		—		—		2,200
Total liabilities	$	21,152	$	—	$	16,856	$	4,296

Equity investments in privately-held companies are accounted for under the cost method of accounting. These equity investments (also called non-marketable equity securities) are 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. As of January 31, 2012, the carrying value of these investments was $4.0 million.

The following non-marketable equity securities were measured and recorded at fair value within other long-term assets on a non-recurring basis. The losses on these securities were recorded in other (expense) income, net.

	Balance as of January 31,  2011		Significant Unobservable Inputs (Level 3)		Total (losses) during three months ended January 31, 2011
	(in thousands)
Non-marketable equity securities	$	92	$	92	$	(908	)

The Company did not recognize any impairment during the three months ended January 31, 2012.