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, presents the Company’s financial assets and liabilities, excluding accrued interest components that are accounted for at fair value on a recurring basis as of July 30, 2016 and October 31, 2015. 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 July 30, 2016 and October 31, 2015, the Company held $58.8 million and $76.4 million, respectively, of cash and held-to-maturity investments that were excluded from the tables below.



	July 30, 2016
	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	$	224,363	$	—	$	—	$	224,363
Corporate obligations (1)	—		820,481		—		820,481
Short-term investments:
Available-for-sale:
Securities with one year or less to maturity:
Corporate obligations (1)	—		2,192,194		—		2,192,194
Floating rate notes, issued at par	—		30,003		—		30,003
Floating rate notes (1)	—		477,567		—		477,567
Other assets:
Deferred compensation investments	26,892		—		—		26,892
Forward foreign currency exchange contracts (2)	—		633		—		633
Total assets measured at fair value	$	251,255	$	3,520,878	$	—	$	3,772,133
Liabilities
Contingent consideration	—		—		4,093		4,093
Total liabilities measured at fair value	$	—	$	—	$	4,093	$	4,093


(1)	The amortized cost of the Company’s investments classified as available-for-sale as of July 30, 2016 was $3.3 billion.


(2)	The Company has a master netting arrangement by counterparty with respect to derivative contracts. See Note 10, Derivatives, for more information related to the Company's master netting arrangements.



	October 31, 2015
	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	$	198,853	$	—	$	—	$	198,853
Corporate obligations (1)	—		609,082		—		609,082
Short-term investments:
Available-for-sale:
Securities with one year or less to maturity:
Corporate obligations (1)	—		1,899,374		—		1,899,374
Floating rate notes, issued at par	—		99,648		—		99,648
Floating rate notes (1)	—		145,553		—		145,553
Other assets:
Deferred compensation investments	24,124		—		—		24,124
Total assets measured at fair value	$	222,977	$	2,753,657	$	—	$	2,976,634
Liabilities
Contingent consideration	—		—		2,843		2,843
Forward foreign currency exchange contracts (2)	—		3,083		—		3,083
Interest rate swap agreements	—		32,737		—		32,737
Total liabilities measured at fair value	$	—	$	35,820	$	2,843	$	38,663


(1)	The amortized cost of the Company’s investments classified as available-for-sale as of October 31, 2015 was $2.6 billion.


(2)	The Company has a master netting arrangement by counterparty with respect to derivative contracts. See Note 10, Derivatives, for more information related to the Company's master netting arrangements.

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

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. The fair value of these instruments is based upon valuation models using current market information such as strike price, spot rate, maturity date and volatility.

Interest rate swap agreements — The fair value of interest rate swap agreements is based on the quoted market price for the same or similar financial instruments.

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 that 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.