Fair Value Measurement

12 Months Ended

Jan. 31, 2012

Fair Value Measurement

3. Fair Value Measurement

The Financial Accounting Standards Board’s (FASB) authoritative guidance established a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources. Unobservable inputs reflect our market assumptions. The fair value hierarchy consists of the following three levels:

• Level 1—Quoted prices for identical instruments in active markets;

• Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose significant inputs are observable; and

• Level 3—One or more significant inputs to the valuation model are unobservable.

We use an income approach to determine the fair value of our foreign currency exchange contracts. The net gains or losses for foreign currency exchange contracts designated as cash flow hedges, which are linked to a specific transaction, are reported in accumulated other comprehensive income in stockholders’ equity until the forecasted transaction occurs or the hedge is no longer effective. Once the forecasted transaction occurs or the hedge is no longer effective, we reclassify the gains or losses attributable to the foreign currency exchange contracts to our consolidated statement of operations. Foreign currency exchange contracts are recorded at fair value utilizing observable market inputs at measurement date and standard valuation techniques.

We recognize changes in fair value for foreign currency exchange contracts entered into to offset the variability in exchange rates on certain short-term monetary assets and liabilities in other income (expense), net, in our consolidated statement of operations. The fair value of foreign currency exchange contracts is included in other receivables, if the balance is an asset, or accrued liabilities, if the balance is a liability, on our consolidated balance sheet.

The following table presents information about financial assets and liabilities required to be carried at fair value on a recurring basis as of January 31, 2012:

	Fair Value			Level 1		Level 2		Level 3
Foreign currency exchange contracts	$	882		$	—	$	882	$	—
Contingent consideration		(6,120	)		—		—		(6,120	)
Total	$	(5,238	)	$	—	$	882	$	(6,120	)

The following table presents information about financial assets and liabilities required to be carried at fair value on a recurring basis as of January 31, 2011:

	Fair Value			Level 1		Level 2		Level 3
Foreign currency exchange contracts	$	826		$	—	$	826	$	—
Contingent consideration		(5,342	)		—		—		(5,342	)
Total	$	(4,516	)	$	—	$	826	$	(5,342	)

In connection with certain acquisitions in fiscal 2012, 2011 and 2010, payment of a portion of the purchase price is contingent upon the acquired business’ achievement of certain revenue goals. We have estimated the fair value of this contingent consideration as the present value of the expected contingent payments over the term of the arrangements. Of the total recorded balance, $510 was included in accrued liabilities and $5,610 was included in other long term liabilities on our consolidated balance sheet at January 31, 2012. The total recorded balance at January 31, 2011 was included in other long term liabilities on our consolidated balance sheet. During the year ended January 31, 2012, we recorded decreases in contingent consideration resulting in a net gain of $532 to special charges in our consolidated statement of operations. The adjustments in the liability were due to changes in the timing and amounts of the expected contingent payments. During the year ended January 31, 2011, we recorded a decrease in our fiscal 2010 liability for contingent consideration resulting in a gain of $760 to special charges in our consolidated statement of operations. The adjustment in the liability was due to a change in the timing of a future product release.

The following table summarizes Level 3 activity:

Balance as of January 31, 2010	$	1,822
Contingent consideration		4,260
Adjustment		(760	)
Interest accretion		20
Balance as of January 31, 2011	$	5,342
Contingent consideration		1,090
Payments/adjustments		(540	)
Interest accretion		228
Balance as of January 31, 2012	$	6,120

The following table summarizes the fair value and carrying value of notes payable:

As of January 31,	2012		2011
Fair value of notes payable	$	259,821	$	221,291
Carrying value of notes payable	$	214,573	$	209,348

We based the fair value of notes payable on the quoted market price or rates available to us for instruments with similar terms and maturities. Of the total carrying value of notes payable, $1,349 as of January 31, 2012 and $2,000 as of January 31, 2011, was classified as current on our consolidated balance sheets. The carrying amount of Short-term borrowings of $14,617 as of January 31, 2012 and $15,544 as of January 31, 2011 approximates fair value because of the short-term nature of the instruments.

The carrying amounts of cash equivalents, short-term investments, trade accounts receivable, net, term receivables, short-term borrowings, accounts payable, and accrued liabilities approximate fair value because of the short-term nature of these instruments or because amounts have been appropriately discounted. We based the fair value of long-term notes payable on the quoted market price or rates available to us for instruments with similar terms and maturities.