Fair Value

9 Months Ended

Aug. 04, 2012

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

The tables below set forth by level the Company’s financial assets and liabilities, excluding accrued interest components that were accounted for at fair value on a recurring basis as of August 4, 2012 and October 29, 2011. The tables exclude cash on hand and assets and liabilities that are measured at historical cost or any basis other than fair value. As of August 4, 2012 and October 29, 2011, the Company held $154.5 million and $31.6 million, respectively, of cash and held-to-maturity investments that were excluded from the tables below.

	August 4, 2012
	Fair Value measurement at Reporting Date using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total
Assets
Cash equivalents:
Available-for-sale:
Institutional money market funds	$	110,313	$	—	$	—	$	110,313
Corporate obligations (1)	—		310,329		—		310,329
Short - term investments:
Available-for-sale:
Securities with one year or less to maturity:
Corporate obligations (1)	—		2,745,579		—		2,745,579
Floating rate notes, issued at par	—		210,068		—		210,068
Floating rate notes (1)	—		167,773		—		167,773
Securities with greater than one year to maturity:
Floating rate notes, issued at par			50,002				50,002
Floating rate notes (1)	—		16,522		—		16,522
Other assets:
Deferred compensation investments	27,850		—		—		27,850
Total assets measured at fair value	$	138,163	$	3,500,273	$	—	$	3,638,436
Liabilities
Forward foreign currency exchange contracts (2)	$	—	$	4,031	$	—	$	4,031
Contingent consideration	—		—		12,316		12,316
Total liabilities measured at fair value	$	—	$	4,031	$	12,316	$	16,347

(1) The amortized cost of the Company’s investments classified as available-for-sale as of August 4, 2012 was $3,242.5 million.

(2) The Company has a master netting arrangement by counterparty with respect to derivative contracts. As of August 4, 2012, contracts in an asset position of $1.1 million were netted against contracts in a liability position in the condensed consolidated balance sheet.

	October 29, 2011
	Fair Value measurement at Reporting Date using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total
Assets
Cash equivalents:
Available-for-sale:
Institutional money market funds	$	1,278,121	$	—	$	—	$	1,278,121
Corporate obligations (1)	—		95,948		—		95,948
Short - term investments:
Available-for-sale:
Securities with one year or less to maturity:
Corporate obligations (1)	—		2,169,078		—		2,169,078
Floating rate notes (1)	—		17,704		—		17,704
Other assets:
Forward foreign currency exchange contracts (2)	—		2,472		—		2,472
Deferred compensation investments	26,410		—		—		26,410
Other investments	1,135		—		—		1,135
Interest rate swap agreements	—		22,187		—		22,187
Total assets measured at fair value	$	1,305,666	$	2,307,389	$	—	$	3,613,055
Liabilities
$375 million aggregate principal 5.0% debt (3)	$	—	$	396,337	$	—	$	396,337
Contingent consideration	—		—		13,973		13,973
Total liabilities measured at fair value	$	—	$	396,337	$	13,973	$	410,310

(1) The amortized cost of the Company’s investments classified as available-for-sale as of October 29, 2011 was $2,284.9 million.

(2) The Company has a master netting arrangement by counterparty with respect to derivative contracts. As of October 29, 2011, contracts in a liability position of $0.8 million were netted against contracts in an asset position in the condensed consolidated balance sheet.

(3) Equal to the accreted notional value of the debt plus the fair value of the interest rate component of the long-term debt. The fair value of the long-term debt as of October 29, 2011 was $413.4 million, which is classified as a level 1 measurement according to the fair value hierarchy.

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:

Cash equivalents and short-term investments — These investments are adjusted to fair value based on quoted market prices or are determined using a yield curve model based on current market rates.

Deferred compensation plan investments and other investments — The fair value of these mutual fund, money market fund and equity investments are based on quoted market prices.

Long-term debt — The fair value of long-term debt is based on quotes received from third-party banks.

Interest rate swap agreements — The fair value of interest rate swap agreements is based on quotes received from third-party banks. These values represent the estimated amount the Company would receive or pay to terminate the agreements taking into consideration current interest rates as well as the creditworthiness of the counterparty.

Forward foreign currency exchange contracts — The estimated fair value of forward foreign currency exchange contracts, which includes derivatives that are accounted for as cash flow hedges and those that are not designated as cash flow hedges, is based on the estimated amount the Company would receive if it sold these agreements at the reporting date taking into consideration current interest rates as well as the creditworthiness of the counterparty for assets and the Company’s creditworthiness for liabilities.

Contingent consideration — The fair value of the contingent consideration was estimated utilizing the income approach and is based upon significant inputs not observable in the market. The income approach is based on two steps. The first step involves a projection of the cash flows which is based on the Company’s estimates of the timing and probability of achieving the defined milestones. The second step involves converting the cash flows into a present value equivalent through discounting. The discount rate reflects the Baa costs of debt plus the relevant risk associated with the asset and the time value of money.

The fair value measurement of the contingent consideration encompasses the following significant unobservable inputs:

Unobservable Inputs	Range
Estimated contingent consideration payments	$13,000
Discount rate	7% - 10%
Timing of cash flows	1 - 16 months
Probability of achievement	100%

Changes in the fair value of the contingent consideration subsequent to the acquisition date that are primarily driven by assumptions pertaining to the achievement of the defined milestones will be recognized in operating income in the period of the estimated fair value change. Significant increases or decreases in any of the inputs in isolation could result in a fluctuation in the fair value measurement.

The following table summarizes the change in the fair value of the contingent consideration measured using significant unobservable inputs (Level 3) as of October 29, 2011 and August 4, 2012:

	Contingent Consideration
Balance as of October 30, 2010	$	—
Contingent consideration liability recorded	13,790
Fair value adjustment (1)	183
Balance as of October 29, 2011	$	13,973
Payment made (2)	(2,000		)
Fair value adjustment (1)	343
Balance as of August 4, 2012	$	12,316

(1) Recorded in research and development expense in the condensed consolidated statements of income.

(2) The payment is reflected in the statements of cash flows as cash used in financing activities related to the liability recognized at fair value as of the acquisition date and as cash provided by operating activities related to the fair value adjustments previously recognized in earnings.

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

On June 30, 2009, the Company issued $375.0 million aggregate principal amount of 5.0% senior unsecured notes due July 1, 2014 (the 5.0% Notes) with semi-annual fixed interest payments due on January 1 and July 1 of each year, commencing January 1, 2010 . Based on quotes received from third-party banks, the fair value of the 5.0% Notes as of August 4, 2012 was $405.7 million and is classified as a Level 1 measurement according to the fair value hierarchy.

On April 4, 2011, the Company issued $375.0 million aggregate principal amount of 3.0% senior unsecured notes due April 15, 2016 (the 3.0% Notes) with semi-annual fixed interest payments due on April 15 and October 15 of each year, commencing October 15, 2011. Based on quotes received from third-party banks, the fair value of the 3.0% Notes as of August 4, 2012 and October 29, 2011 was $403.9 million and $392.8 million, respectively and is classified as a Level 1 measurement according to the fair value hierarchy.