The Company follows the authoritative guidance on fair value measurements and disclosures, with respect to assets and liabilities that are measured at fair value on both a recurring and nonrecurring basis. Under this guidance, 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. The authoritative guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Descriptions of the three levels of the fair value hierarchy are discussed in Note 6 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended April 29, 2011.

See the section below titled Valuation Techniques for further discussion of how the Company determines fair value for financial assets and liabilities.

The authoritative guidance is principally applied to financial assets and liabilities such as marketable debt and equity securities that are classified and accounted for as trading, available-for-sale, and derivative instruments. Derivatives include cash flow hedges, freestanding derivative forward contracts, and interest rate swaps. These items are marked-to-market at each reporting period. The information in the following paragraphs and tables primarily addresses matters relative to these financial assets and liabilities.

The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis.

	Fair Value		Fair Value Measurements
	as of		Using Inputs Considered as
(in millions)	January 27, 2012		Level 1		Level 2		Level 3
Assets:
Corporate debt securities	$	2,940	$	-	$	2,930	$	10
Auction rate securities		133		-		-		133
Mortgage-backed securities		784		-		755		29
U.S. government and agency securities		3,015		1,530		1,485		-
Foreign government and agency securities		56		-		56		-
Certificates of deposit		73		-		73		-
Other asset-backed securities		475		-		469		6
Marketable equity securities		228		228		-		-
Exchange-traded funds		44		44		-		-
Derivative assets		293		129		164		-
Total assets	$	8,041	$	1,931	$	5,932	$	178

Liabilities:
Derivative liabilities	$	114	$	71	$	43	$	-
Total liabilities	$	114	$	71	$	43	$	-

	Fair Value		Fair Value Measurements
	as of		Using Inputs Considered as
(in millions)	April 29, 2011		Level 1		Level 2		Level 3
Assets:
Corporate debt securities	$	1,961	$	-	$	1,944	$	17
Auction rate securities		133		-		-		133
Mortgage-backed securities		785		-		750		35
U.S. government and agency securities		2,756		1,453		1,303		-
Foreign government and agency securities		131		-		131		-
Certificates of deposit		119		-		119		-
Other asset-backed securities		349		-		343		6
Marketable equity securities		237		237		-		-
Exchange-traded funds		39		39		-		-
Derivative assets		130		21		109		-
Total assets	$	6,640	$	1,750	$	4,699	$	191

Liabilities:
Derivative liabilities	$	303	$	303	$	-	$	-
Total liabilities	$	303	$	303	$	-	$	-

Financial assets that are classified as Level 1 securities include highly liquid government bonds within the U.S. government and agency securities, marketable equity securities, and exchange-traded funds for which quoted market prices are available. In addition, the Company has determined that foreign currency forward contracts will be included in Level 1 as these are valued using quoted market prices in active markets which have identical assets or liabilities.

The valuation for most fixed maturity securities are classified as Level 2. Financial assets that are classified as Level 2 include corporate debt securities, U.S. government and agency securities, foreign government and agency securities, certificates of deposit, other asset-backed securities, and certain mortgage-backed securities whose value is determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities. In addition, interest rate swaps are included in Level 2 as the Company uses inputs other than quoted prices that are observable for the asset. The Level 2 derivative instruments are primarily valued using standard calculations and models that use readily observable market data as their basis.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. Level 3 financial assets also include certain investment securities for which there is limited market activity such that the determination of fair value requires significant judgment or estimation. Level 3 investment securities primarily include certain corporate debt securities, auction rate securities, certain mortgage-backed securities, and certain other asset-backed securities for which there was a decrease in the observability of market pricing for these investments. At January 27, 2012, these securities were valued primarily using broker pricing models that incorporate transaction details such as contractual terms, maturity, timing, and amount of expected future cash flows, as well as assumptions about liquidity and credit valuation adjustments of marketplace participants. The Company uses level 3 inputs in the measurement of contingent milestone payments and related liabilities for all acquisitions subsequent to April 24, 2009. See Note 4 for further information regarding contingent consideration.

The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company's policy is to recognize transfers into and out of levels within the fair value hierarchy at the end of the fiscal quarter in which the actual event or change in circumstances that caused the transfer occurs. There were no significant transfers between Level 1, Level 2, or Level 3 during the three or nine months ended January 27, 2012 or January 28, 2011. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. The following tables provide a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) for the three and nine months ended January 27, 2012 and January 28, 2011

Three months ended January 27, 2012
(in millions)	Total Level 3 Investments		Corporate debt securities		Auction rate securities		Mortgage-backed securities		Other asset-backed securities
Balance as of October 28, 2011	$	174	$	10	$	127	$	31	$	6
Total realized losses and other-than-temporary impairment losses included in earnings		(1)		-		-		(1)		-
Total unrealized gains/(losses) included in other comprehensive income		6		-		6		-		-
Settlements		(1)		-		-		(1)		-
Balance as of January 27, 2012	$	178	$	10	$	133	$	29	$	6

Three months ended January 28, 2011
(in millions)	Total Level 3 Investments		Corporate debt securities		Auction rate securities		Mortgage-backed securities		Other asset-backed securities
Balance as of October 29, 2010	$	202	$	17	$	143	$	36	$	6
Total unrealized gains/(losses) included in other comprehensive income		3		-		3		-		-
Settlements		(9)		-		(9)		-		-
Balance as of January 28, 2011	$	196	$	17	$	137	$	36	$	6

Nine months ended January 27, 2012
(in millions)	Total Level 3 Investments		Corporate debt securities		Auction rate securities		Mortgage-backed securities		Other asset-backed securities
Balance as of April 29, 2011	$	191	$	17	$	133	$	35	$	6
Total realized losses and other-than-temporary impairment losses included in earnings		(3)		(1)		-		(1)		(1)
Total unrealized gains/(losses) included in other comprehensive income		1		1		-		(1)		1
Settlements		(11)		(7)		-		(4)		-
Balance as of January 27, 2012	$	178	$	10	$	133	$	29	$	6

Nine months ended January 28, 2011
(in millions)	Total Level 3 Investments		Corporate debt securities		Auction rate securities		Mortgage-backed securities		Other asset-backed securities
Balance as of April 30, 2010	$	213	$	16	$	142	$	39	$	16
Total realized losses and other-than-temporary impairment losses included in earnings		(4)		(2)		-		(2)		-
Total unrealized gains/(losses) included in other comprehensive income		10		4		4		2		-
Settlements		(23)		(1)		(9)		(3)		(10)
Balance as of January 28, 2011	$	196	$	17	$	137	$	36	$	6

Non-financial assets such as equity and other securities that are accounted for using the cost or equity method, goodwill, intangible assets, and property, plant, and equipment are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment is recognized.

The Company holds investments in equity and other securities that are accounted for using the cost or equity method, which are classified as long-term investments in the condensed consolidated balance sheets. The aggregate carrying amount of these investments was $503 million as of January 27, 2012 and $652 million as of April 29, 2011. These cost or equity method investments are measured at fair value on a nonrecurring basis. The fair value of the Company's cost or equity method investments is not estimated if there are no identified events or changes in circumstance that may have a significant adverse effect on the fair value of these investments. The Company did not record any impairment charges related to cost method investments during the three months ended January 27, 2012. During the nine months ended January 27, 2012 and the three and nine months ended January 28, 2011, the Company determined that the fair values of certain cost method investments were below their carrying values and that the carrying values of these investments were not expected to be recoverable within a reasonable period of time. As a result, the Company recognized $4 million in impairment charges during the nine months ended January 27, 2012, and $10 million and $15 million in impairment charges during the three and nine months ended January 28, 2011, respectively. The impairment charges related to the cost method investments were recorded in other expense in the condensed consolidated statements of earnings. These investments fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value, as the investments are privately held entities without quoted market prices. To determine the fair value of these investments, the Company used all pertinent financial information that was available related to the entities, including financial statements and market participant valuations from recent and proposed equity offerings.

The Company assesses the impairment of intangible assets annually or whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. The aggregate carrying amount of intangible assets, excluding IPR&D, was $2.344 billion as of January 27, 2012 and $2.387 billion as of April 29, 2011, respectively. These assets are measured at fair value on a nonrecurring basis. The fair value of the Company's intangible assets is not estimated if there is no change in events or circumstances that indicate the carrying amount of an intangible asset may not be recoverable. During the three months ended January 27, 2012, the Company performed its annual intangible assets impairment review. As part of the annual impairment review, the Company determined that a change in events and circumstances indicated that the carrying amount of certain intangible assets may not be fully recoverable. The carrying amount of these certain intangible assets were less than five percent of the total aggregate carrying amount of intangible assets as of January 27, 2012. To determine the potential impairments, the Company calculated the excess of the intangible assets' carrying values over their undiscounted future cash flows. As a result of the analysis performed, the intangible assets were deemed to be recoverable, and therefore, no impairments were recorded. The Company did not record any intangible asset impairments during the nine months ended January 27, 2012. During the three months ended January 28, 2011, the Company determined that a change in events and circumstances indicated that the carrying amount of an intangible asset may not be fully recoverable. To determine the impairment, the Company calculated the excess of the intangible asset's carrying value over its fair value utilizing a discounted future cash flow analysis. As a result of the analysis performed, the fair value of the intangible asset was deemed to be less than the carrying value, resulting in a pre-tax impairment loss of $9 million that was recorded in other expense in the condensed consolidated statement of earnings. The Company did not record any other intangible asset impairments during the nine months ended January 28, 2011. The inputs used in the fair value analyses fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value.

The Company assesses the impairment of goodwill and IPR&D annually in the third quarter and whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. The aggregate carrying amount of goodwill was $9.915 billion as of January 27, 2012 and $9.520 billion as of April 29, 2011, respectively. The aggregate carrying amount of IPR&D was $369 million as of January 27, 2012 and $338 million as of April 29, 2011, respectively. During the three months ended January 27, 2012 and January 28, 2011, the Company performed its annual impairment reviews of goodwill and IPR&D. The goodwill impairment test requires the Company to make several estimates about fair value, most of which are based on projected future cash flows. The Company calculated the excess of each reporting unit's goodwill carrying value over its fair value utilizing a discounted future cash flow analysis. As a result of the analysis performed, the fair value of each reporting unit's goodwill was deemed to be greater than the carrying value; resulting in no impairment loss. Similar to the goodwill impairment test, the IPR&D impairment test requires the Company to make several estimates about fair value, most of which are based on projected future cash flows. The Company calculated the excess of the IPR&D asset carrying values over their fair values utilizing a discounted future cash flow analysis. As a result of the analysis performed, the fair value of each IPR&D asset was deemed to be greater than the carrying value, resulting in no impairment loss. The Company did not record any goodwill or IPR&D impairments during the three and nine months ended January 27, 2012 or January 28, 2011. However, due to the nature of IPR&D projects, the Company may experience delays or failures to obtain regulatory approvals to conduct clinical trials, failures of such clinical trials, delays or failures to obtain required market clearances or other failures to achieve a commercially viable product, and as a result, may record impairment losses in the future.

The Company assesses the impairment of property, plant, and equipment whenever events or changes in circumstances indicate that the carrying amount of a property, plant, and equipment asset may not be recoverable. The Company did not recognize any significant impairments of property, plant, and equipment during the three and nine months ended January 27, 2012 or January 28, 2011.

The estimated fair value of the Company's long-term debt, including the short-term portion, as of January 27, 2012 was $8.900 billion compared to a principal value of $8.063 billion, and as of April 29, 2011 was $8.524 billion compared to a principal value of $8.096 billion. Fair value was estimated using quoted market prices for the same or similar instruments. The fair values and principal values consider the terms of the related debt and exclude the impacts of debt discounts and derivative/hedging activity.

- 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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