Investments

Investments were comprised of the following:



	August 27, 2011		February 26, 2011		August 28, 2010
Short-term investments
Money market fund	$	—	$	2	$	2
U.S. Treasury bills	80		20		—
Total short-term investments	$	80	$	22	$	2

Equity and other investments
Debt securities (auction rate securities)	$	88	$	110	$	134
Marketable equity securities	122		146		97
Other investments	74		72		62
Total equity and other investments	$	284	$	328	$	293

Debt Securities

Our debt securities are comprised of auction rate securities (“ARS”). ARS were intended to behave like short-term debt instruments because their interest rates reset periodically through an auction process, most commonly at intervals of seven, 28 and 35 days. The auction process had historically provided a means by which we could rollover the investment or sell these securities at par in order to provide us with liquidity as needed. As a result, we classify our investments in ARS as available-for-sale and carry them at fair value.

In February 2008, auctions began to fail due to insufficient buyers, as the amount of securities submitted for sale in auctions exceeded the aggregate amount of the bids. For each failed auction, the interest rate on the security moves to a maximum rate specified for each security, and generally resets at a level higher than specified short-term interest rate benchmarks. To date, we have collected all interest due on our ARS and expect to continue to do so in the future. Due to persistent failed auctions, and the uncertainty of when these investments could be liquidated at par, we have classified all of our investments in ARS as non-current assets within equity and other investments in our condensed consolidated balance sheet at August 27, 2011.

We sold $8 of ARS at par during the second quarter of fiscal 2012. However, at August 27, 2011, our entire remaining ARS portfolio, consisting of 19 investments in ARS having an aggregate value at par of $93, was subject to failed auctions.

Our ARS portfolio consisted of the following, at fair value:



Description	Nature of collateral or guarantee	August 27, 2011		February 26, 2011		August 28, 2010
Student loan bonds	Student loans guaranteed 95% to 100% by the U.S. government	$	86	$	108	$	116
Municipal revenue bonds	100% insured by AA/Aa-rated bond insurers at August 27, 2011	2		2		18
Total fair value plus accrued interest⁽¹⁾		$	88	$	110	$	134


⁽¹⁾	The par value and weighted-average interest rates (taxable equivalent) of our ARS were $93, $115 and $144, and 0.40%, 0.80% and 0.91%, respectively, at August 27, 2011, February 26, 2011, and August 28, 2010, respectively.

At August 27, 2011, our ARS portfolio was 88% AAA/Aaa-rated, 3% AA/Aa-rated and 9% A/A-rated.

The investment principal associated with failed auctions will not be accessible until successful auctions occur, a buyer is found outside of the auction process, the issuers establish a different form of financing to replace these securities, or final payments are due according to the contractual maturities of the debt issuances, which range from five to 30 years. We do not intend to sell our remaining ARS until we can recover the full principal amount through one of the means described above. In addition, we do not believe it is more likely than not that we would be required to sell our remaining ARS until we can recover the full principal amount based on our other sources of liquidity.

We evaluated our entire ARS portfolio of $93 (par value) for impairment at August 27, 2011, based primarily on the methodology described in Note 3, Fair Value Measurements. As a result of this review, we determined that the fair value of our ARS portfolio at August 27, 2011, was $88. Accordingly, a $5 pre-tax unrealized loss is recognized in accumulated other comprehensive income. This unrealized loss reflects a temporary impairment on all of our investments in ARS. The estimated fair value of our ARS portfolio could change significantly based on future market conditions. We will continue to assess the fair value of our ARS portfolio for substantive changes in relevant market conditions, changes in our financial condition or other changes that may alter our estimates described above.

We may be required to record an additional unrealized holding loss or an impairment charge to earnings if we determine that our ARS portfolio has incurred a further decline in fair value that is temporary or other-than-temporary, respectively. Factors that we consider when assessing our ARS portfolio for other-than-temporary impairment include the duration and severity of the impairment, the reason for the decline in value, the potential recovery period, the nature of the collateral or guarantees in place and our intent and ability to hold an investment.

We had $(3), $(3) and $(6) of unrealized loss, net of tax, recorded in accumulated other comprehensive income at August 27, 2011, February 26, 2011, and August 28, 2010 respectively, related to our investments in debt securities.

Marketable Equity Securities

We invest in marketable equity securities and classify them as available-for-sale. Investments in marketable equity securities are classified as non-current assets within equity and other investments in our condensed consolidated balance sheets and are reported at fair value based on quoted market prices.

Our investments in marketable equity securities were as follows:



	August 27, 2011		February 26, 2011		August 28, 2010
Common stock of TalkTalk Telecom Group PLC	$	69	$	62	$	51
Common stock of Carphone Warehouse Group plc	53		84		44
Other	—		—		2
Total	$	122	$	146	$	97

We purchased shares of The Carphone Warehouse Group PLC (“CPW”) common stock in fiscal 2008, representing nearly 3% of CPW’s then outstanding shares. In March 2010, CPW demerged into two new holding companies: TalkTalk Telecom Group PLC (“TalkTalk”), which is the holding company for the fixed line voice and broadband telecommunications business of the former CPW, and Carphone Warehouse Group plc (“Carphone Warehouse”), which includes the former CPW’s 50% ownership interest in Best Buy Europe Distributions Limited (“Best Buy Europe”). Accordingly, our investment in CPW was exchanged for equivalent levels of investment in TalkTalk and Carphone Warehouse. A $63 pre-tax unrealized gain is recorded in accumulated other comprehensive income related to these investments at August 27, 2011.

We review all investments for other-than-temporary impairment at least quarterly or as indicators of impairment exist. Indicators of impairment include the duration and severity of the decline in fair value as well as the intent and ability to hold the investment to allow for a recovery in the market value of the investment. In addition, we consider qualitative factors that include, but are not limited to: (i) the financial condition and business plans of the investee including its future earnings potential, (ii) the investee’s credit rating, and (iii) the current and expected market and industry conditions in which the investee operates. If a decline in the fair value of an investment is deemed by management to be other-than-temporary, the cost basis of the investment is written down to fair value, and the amount of the write-down is included in net earnings.

All unrealized holding gains or losses related to our investments in marketable equity securities are reflected net of tax in accumulated other comprehensive income in shareholders’ equity. The total unrealized gain, net of tax, included in accumulated other comprehensive income was $54, $75 and $35 at August 27, 2011, February 26, 2011, and August 28, 2010, respectively.

Other Investments

The aggregate carrying values of investments accounted for using either the cost method or the equity method, at August 27, 2011, February 26, 2011, and August 28, 2010, were $74, $72 and $62, respectively.