Fair Value Measurements

12 Months Ended

Jul. 31, 2011

Fair Value Measurements

Fair Value Measurements

15.  Fair Value Measurements

The company is required to categorize financial assets and liabilities based on the following fair value hierarchy:

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

•  Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with observable market data.

•  Level 3: Unobservable inputs that reflect the reporting entity's own assumptions.

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. When available, the company uses unadjusted quoted market prices to measure the fair value and classifies such items as Level 1. If quoted market prices are not available, the company bases fair value upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates.

Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the company's financial assets and liabilities that are measured at fair value on a recurring basis at July 31, 2011 and August 1, 2010, consistent with the fair value hierarchy:

	Fair Value	Fair Value Measurements at			Fair Value	Fair Value Measurements at
	as of	July  31, 2011 Using			as of	August 1, 2010 Using
	July 31,	Fair Value Hierarchy			August 1,	Fair Value Hierarchy
	2011	Level 1	Level 2	Level 3	2010	Level 1	Level 2	Level 3
Assets
Interest rate swaps(1)	$     33	$     —	$    33	$     —	$     46	$     —	$    46	$     —
Foreign exchange forward contracts(2)	—	—	—	—	2	—	2	—
Cross-currency swap contracts(3)	1	—	1	—	17	—	17	—
Commodity derivative contracts(5)	3	3	—	—	4	4	—	—
Total assets at fair value	$     37	$       3	$    34	$     —	$     69	$       4	$    65	$     —
Liabilities
Foreign exchange forward contracts(2)	$       9	$     —	$       9	$     —	$       2	$     —	$       2	$     —
Cross-currency swap contracts(3)	129	—	129	—	38	—	38	—
Deferred compensation derivative contracts(4)	3	—	3	—	2	—	2	—
Commodity derivative contracts(5)	2	2	—	—	1	1	—	—
Deferred compensation obligation(6)...	144	97	47	—	149	95	54	—
Total liabilities at fair value	$  287	$   99	$  188	$     —	$  192	$    96	$    96	$     —

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(1)	Based on LIBOR swap rates.
(2)	Based on observable market transactions of spot currency rates and forward rates.
(3)	Based on observable local benchmarks for currency and interest rates.
(4)	Based on LIBOR and equity index swap rates.
(5)	Based on quoted futures exchanges.
(6)	Based on the fair value of the participants' investments.

Items Measured at Fair Value on a Nonrecurring Basis

In addition to assets and liabilities measured at fair value on a recurring basis, the company is required to measure certain assets at fair value on a nonrecurring basis, generally as a result of an impairment charge. In 2011, as part of the company's annual review of intangible assets, an impairment charge of $3 was recognized related to the Heisse Tasse trademark used in the International Simple Meals and Beverages segment. The fair value of the trademark was $11 at July 31, 2011 based on Level 3 inputs. Fair value was determined based on discounted cash flow analyses that include significant management assumptions such as revenue growth rates, weighted average cost of capital, and assumed royalty rates.