Financial Instruments

12 Months Ended

Mar. 31, 2012

Financial Instruments [Abstract]

Financial Instruments

(3) Financial Instruments

We measure certain financial instruments at fair value on a recurring basis using the following valuation techniques:

(A) Market approach – Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

(B) Income approach – Uses valuation techniques to convert future estimated cash flows to a single present amount based on current market expectations about those future amounts, using present value techniques.

The fair values of our financial instruments were determined using the following input levels and valuation techniques:

	Fair Value Measurements at Reporting Date Using
March 31, 2012	Total		Quoted Prices in  Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
			(In millions)
Assets
Cash equivalents
Money-market funds	$	769.3	$	769.3	$	—	$	—		A
United States Treasury securities		49.9	$	49.9		—		—		A
Certificates of deposit		45.1		45.1		—		—		A
Short-term and long-term investments
United States Treasury securities		92.2		92.2		—		—		A
Auction rate securities		26.9		—		—		26.9		B
Mutual funds		19.6		19.6		—		—		A
Foreign currency forward contracts		8.1		—		8.1		—		A
Total	$	1,011.1	$	976.1	$	8.1	$	26.9
Liabilities
Foreign currency forward contracts	$	0.6	$	—	$	0.6	$	—		A
Total	$	0.6	$	—	$	0.6	$	—

Level 1 classification is applied to any asset or liability that has a readily available quoted market price from an active market where there is significant transparency in the executed/quoted price.

Level 2 classification is applied to assets and liabilities that have evaluated prices where the data inputs to these valuations are observable either directly or indirectly, but do not represent quoted market prices from an active market.

Level 3 classification is applied to assets and liabilities when prices are not derived from existing market data and requires us to develop our own assumptions about how market participants would price the asset or liability.

The following table summarizes the activity in Level 3 financial instruments:

	Year Ended March 31,
	2012								2011
	Auction Rate Securities			Put Option		Total			Auction Rate Securities			Put Option			Total
						(In millions)
Balance at the beginning of the period	$	27.2		$	—	$	27.2		$	60.5		$	1.1		$	61.6
Redemptions and sales of auction rate securities		(0.5	)		—		(0.5	)		(37.5	)		—			(37.5	)
Change in unrealized gain (loss) included in interest and other income, net		—			—		—			1.1			(1.1	)		—
Change in unrealized gain (loss) included in other comprehensive income (loss)		0.2			—		0.2			3.1			—			3.1
Balance at the end of the period	$	26.9		$	—	$	26.9		$	27.2		$	—		$	27.2

Investments

Our cash, cash equivalents and investments were comprised of the following:

	March 31,
	2012						2011
	Cash and Cash Equivalents		Short-term Investments		Long-term Investments		Cash and Cash Equivalents		Short-term Investments		Long-term Investments
	(In millions)
Measured at fair value:
Available-for-sale
United States Treasury securities	$	49.9	$	86.1	$	6.1	$	525.0	$	27.8	$	22.1
Certificates of deposit		45.1		—		—		38.4		—		—
Auction rate securities		—		—		26.9		—		—		27.2
Trading
Mutual funds		—		—		19.6		—		—		18.5
Total debt and equity investments measured at fair value		95.0		86.1		52.6		563.4		27.8		67.8
Cash on hand		632.6		—		—		412.8		—		—
Money-market funds		769.3		—		—		684.7		—		—
Total cash, cash equivalents and investments	$	1,496.9	$	86.1	$	52.6	$	1,660.9	$	27.8	$	67.8
Amounts included in accumulated other comprehensive income from available-for-sale securities (pre-tax):
Unrealized losses*	$	—	$	—	$	2.4	$	—	$	—	$	2.6

* The unrealized losses on available-for-sale securities at March 31, 2012 and 2011 relate to the auction rate securities.

The following summarizes the underlying contractual maturities of our available-for-sale investments in debt securities:

	Year Ended March 31,
	2012				2011
	Cost		Fair Value		Cost		Fair Value
			(In millions)
Due in one year or less	$	181.1	$	181.1	$	591.2	$	591.2
Due between one and two years		6.1		6.1		22.1		22.1
Due after ten years		29.3		26.9		29.8		27.2
Total	$	216.5	$	214.1	$	643.1	$	640.5

At March 31, 2012 and 2011, we held auction rate securities with a par value of $29.3 million and $29.8 million, respectively, which were classified as available-for-sale. The total estimated fair value of our auction rate securities was $26.9 million and $27.2 million at March 31, 2012 and 2011, respectively. Our auction rate securities consist entirely of bonds issued by public agencies that are backed by student loans with at least a 97% guarantee by the federal government under the United States Department of Education’s Federal Family Education Loan Program. All of these bonds are currently rated investment grade by Moody’s or Standard and Poor’s. Auctions for these securities began failing in early 2008 and have continued to fail, resulting in our continuing to hold such securities and the issuers paying interest at the maximum contractual rates. We do not believe that any of the underlying issuers of these auction rate securities are presently at risk of default or that the underlying credit quality of the assets backing the auction rate security investments has been impacted by the reduced liquidity of these investments. Due to the illiquidity in the auction rate securities market caused by failed auctions, we estimated the fair value of these securities and the put option discussed below using internally developed models of the expected cash flows of the securities on a discounted basis. These models incorporate assumptions about the expected cash flows of the underlying student loans discounted at an estimate of the rate of return required by investors, which includes an adjustment to reflect a lack of liquidity in the market for these securities. The range of and weighted average discount rates used in our models for the year ended March 31, 2012 were 4.0% to 6.7%, and 4.9%, respectively. Significant increases (decreases) in the discount rate used in the valuation would result in decreases (increases) in the fair value of the auction rate securities. Periodically, the issuers of certain of our auction rate securities have redeemed portions of our holdings at par value plus accrued interest. During the years ended March 31, 2012 and 2011, issuers redeemed available-for-sale holdings of $0.5 million par value and $20.9 million par value, respectively, and trading holdings of $5.4 million par value during the year ended March 31, 2011.

In November 2008, we entered into a put agreement with a bank from which we acquired certain auction rate securities. On July 1, 2010, we exercised our right under this agreement to put the remaining securities subject to this agreement, with $11.2 million par value, to the bank. The auction rate securities subject to the put agreement were classified as short-term investments and trading securities and, accordingly, any changes in the fair value of these securities were recognized in earnings. In addition, we elected the option under GAAP to record the put option at fair value. The fair value adjustments to these auction rate securities and the related put option resulted in minimal net impact to the consolidated statements of comprehensive income for the years ended March 31, 2011 and 2010.

The unrealized loss on our available-for-sale auction rate securities, which have a fair value of $26.9 million at March 31, 2012, was $2.4 million and was recorded in accumulated other comprehensive income (loss) as we believe the decline in fair value of these auction rate securities is temporary. In making this determination, we primarily considered the financial condition and near-term prospects of the issuers, the probability scheduled cash flows will continue to be made and the likelihood we would be required to sell the investments before recovery of our cost basis. These available-for-sale auction rate securities have been in an unrealized loss position for greater than twelve months. Because of the uncertainty related to the timing of liquidity associated with these auction rate securities, these securities are classified as long-term investments at March 31, 2012 and 2011.

Derivative Financial Instruments

The fair value of our outstanding foreign currency forward contracts that closed in a gain position at March 31, 2012 and 2011 was $8.1 million and $5.8 million, respectively, and was recorded within other current assets in our consolidated balance sheets. The fair value of our outstanding foreign currency forward contracts that closed in a loss position at March 31, 2012 and 2011 was $0.6 million and $3.3 million, respectively, and was recorded within accrued liabilities in our consolidated balance sheets. The notional amounts at contract exchange rates of our foreign currency forward contracts outstanding were:

	Notional Amount
	March 31,
	2012		2011
	(In millions)
Foreign Currency Forward Contracts (receive United States dollar/pay foreign currency)
Euro	$	214.2	$	158.5
Australian dollar		29.9		13.9
British pound		19.2		5.0
Chinese yuan renminbi		11.7		7.6
Brazilian real		8.7		5.6
Swedish krona		8.2		2.4
Swiss franc		6.8		1.5
Danish krone		3.9		3.0
Singapore dollar		3.8		0.6
New Zealand dollar		3.4		2.9
Mexican peso		3.2		—
South Korean won		2.6		4.6
Canadian dollar		—		4.2
Other		6.4		3.2
Total	$	322.0	$	213.0
Foreign Currency Forward Contracts (pay United States dollar/receive foreign currency)
Israeli shekel	$	158.2	$	151.6
Mexican peso		—		9.3
Indian rupee		15.0		9.1
Other		4.8		2.2
Total	$	178.0	$	172.2

Our use of foreign currency forward exchange contracts is intended to principally offset gains and losses associated with foreign currency exposures. Therefore, the notional amounts and currencies underlying our foreign currency forward contracts will fluctuate period to period as they are principally dependent on the balances and currency denomination of monetary assets and liabilities maintained by our global entities. The effect of the foreign currency forward contracts for the years ended March 31, 2012, 2011 and 2010 was a loss of $10.6 million, a gain of $3.3 million and a loss of $9.9 million, respectively, which, after including gains and losses on our foreign currency exposures, resulted in net losses of $3.3 million, $2.9 million and $2.2 million, respectively, recorded in interest and other income, net.

We are exposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments, but we do not expect any counterparties to fail to meet their obligations given their high credit ratings. In addition, we diversify this risk across several counterparties and utilize netting agreements to mitigate the counterparty credit risk.

Trade Finance Receivables

A substantial portion of our trade finance receivables are transferred to financial institutions on a non-recourse basis. We utilize wholly-owned finance subsidiaries in these finance receivables transfers. These entities are consolidated into our financial position and results of operations. We account for such transfers as sales in accordance with applicable accounting rules pertaining to the transfer of financial assets and the sale of future revenue when we have surrendered control of such receivables (including determining that such assets have been isolated beyond our reach and the reach of our creditors) and when we do not have significant continuing involvement in the generation of cash flows due the financial institutions. During fiscal 2012, 2011 and 2010, we transferred $227.9 million, $172.3 million and $208.8 million, respectively, of such receivables through these programs. Finance receivables are typically transferred within several months after origination and the outstanding principal balance at the time of transfer typically approximates fair value.

For those finance receivables not transferred, we evaluate the credit risk of finance receivables in our portfolio based on regional characteristics specific to the risk climate in each of our geographic operations as well as based on internal credit quality indicators for individual receivables. We evaluate the credit risk of finance receivables using an internal credit rating system based on whether an individual receivable meets specific internal criteria including counterparty credit rating and receivable maturity date and assign an internal credit rating of 1, 2 or 3, with a credit rating of 1 representing the best credit quality.

For all regions and credit categories, a finance receivable will be specifically reserved once deemed uncollectible. As of March 31, 2012, we held $188.1 million of finance receivables, net of $0.6 million of specific receivables which have been fully reserved.

At March 31, 2012, our finance receivables balance, net of allowance, by region and by class of internal credit rating is as follows:

	North America		EMEA		Asia Pacific		Latin America		Total
					(In millions)
Class 1	$	73.6	$	40.3	$	12.7	$	1.8	$	128.4
Class 2		26.7		22.7		4.0		4.6		58.0
Class 3		0.1		0.3		0.6		0.7		1.7
Balance at the end of the period	$	100.4	$	63.3	$	17.3	$	7.1	$	188.1

Other Financial Instruments

The fair value of our senior unsecured notes due 2018 at March 31, 2012 and 2011, based on market prices (Level 2), was $368.4 million and $348.9 million, respectively, compared to the carrying value of $298.9 million and $298.7 million, respectively.

The fair value of our senior unsecured notes due 2022 at March 31, 2012, based on market prices (Level 1), was $506.6 million, compared to the carrying value of $497.4 million.

The carrying values of all other financial instruments, consisting primarily of trade and finance receivables, accounts payable and other borrowings, approximate their respective fair values.