Fair Value

6 Months Ended

Jan. 28, 2012

Fair Value [Abstract]

Fair Value

9. Fair Value

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.

(a) Fair Value Hierarchy

The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

(b) Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis as of January 28, 2012 and July 30, 2011 were as follows (in millions):

		JANUARY 28, 2012								JULY 30, 2011
	FAIR VALUE MEASUREMENTS								FAIR VALUE MEASUREMENTS
	Level 1		Level 2		Level 3		Total Balance		Level 1		Level 2		Level 3		Total Balance
Assets
Cash equivalents:
Money market funds	$	6,612	$	—	$	—	$	6,612	$	5,852	$	—	$	—	$	5,852
U.S. government agency securities (1)		—		—		—		—		—		1		—		1
Available-for-sale investments:
U.S. government securities		—		21,044		—		21,044		—		19,139		—		19,139
U.S. government agency securities (1)		—		8,546		—		8,546		—		8,776		—		8,776
Non-U.S. government and agency securities (2)		—		2,890		—		2,890		—		3,132		—		3,132
Corporate debt securities		—		4,234		—		4,234		—		4,394		—		4,394
Asset-backed securities		—		107		—		107		—		—		121		121
Publicly traded equity securities		1,360		—		—		1,360		1,361		—		—		1,361
Derivative assets		—		238		1		239		—		220		2		222
Total	$	7,972	$	37,059	$	1	$	45,032	$	7,213	$	35,662	$	123	$	42,998
Liabilities:
Derivative liabilities	$	—	$	48	$	—	$	48	$	—	$	24	$	—	$	24
Total	$	—	$	48	$	—	$	48	$	—	$	24	$	—	$	24

⁽¹⁾  Includes corporate debt securities that are guaranteed by the FDIC.

⁽²⁾  Includes agency and corporate debt securities that are guaranteed by non-U.S. governments.

Level 2 fixed income securities are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. The Company uses such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any material adjustments to such inputs. The Company is ultimately responsible for the financial statements and underlying estimates. The Company's derivative instruments are primarily classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs. The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.

Level 3 assets include certain derivative instruments, the values of which are determined based on discounted cash flow models using inputs that the Company could not corroborate with market data. The asset-backed securities were reclassified from Level 3 to Level 2 at the end of the three months ended January 28, 2012 as circumstances indicated an increase in market activity and related market observable data is available for such financial assets.

The following tables present a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended January 28, 2012 and January 29, 2011 (in millions):

	Asset-Backed Securities			Derivative Assets			Total
Balance at July 30, 2011	$	121		$	2		$	123
Total gains and losses (realized and unrealized):
Included in other income, net		3			—			3
Included in other comprehensive income		(3	)		—			(3	)
Sales and maturities		(14	)		(1	)		(15	)
Transfer into Level 2		(107	)		—			(107	)
Balance at January 28, 2012	$	—		$	1		$	1
	Asset-Backed Securities			Derivative Assets			Total
Balance at July 31, 2010	$	149		$	3		$	152
Total gains and losses (realized and unrealized):
Included in other income, net		—			(1	)		(1	)
Included in other comprehensive income		—			—			—
Sales and maturities		(11	)		—			(11	)
Balance at January 29, 2011	$	138		$	2		$	140
Losses attributable to assets still held as of January 29, 2011	$	—		$	(1	)	$	(1	)

(c) Assets Measured at Fair Value on a Nonrecurring Basis

The following tables present the Company's financial instruments and nonfinancial assets that were measured at fair value on a nonrecurring basis during the indicated periods and the related recognized gains and losses for the periods (in millions):

		$000,00000		$000,00000		$000,00000		$000,00000		$000,00000			$000,00000
			FAIR VALUE MEASUREMENTS
	Net Carrying Value as of January 28, 2012		Level 1		Level 2		Level 3		Total Losses for the  Three Months Ended January 28, 2012			Total Losses for the  Six Months Ended January 28, 2012
Investments in privately held companies	$	6	$	—	$	—	$	6	$	(1	)	$	(2	)
Property held for sale	$	39	$	—	$	—	$	39		(27	)		(116	)
Gains on assets no longer held as of January 28, 2012										14			14
Total losses for nonrecurring measurements									$	(14	)	$	(104	)

		$000,00000		$000,00000		$000,00000		$000,00000		$000,00000			$000,00000
			FAIR VALUE MEASUREMENTS
	Net Carrying Value as of January 29, 2011		Level 1		Level 2		Level 3		Total Losses for the  Three Months Ended January 29, 2011			Total Losses for the Six Months Ended January 29, 2011
Investments in privately held companies	$	11	$	—	$	—	$	11	$	(2	)	$	(5	)
Purchased intangible assets	$	8	$	—	$	—	$	8		(155	)		(155	)
Total losses for nonrecurring measurements									$	(157	)	$	(160	)

The assets in the preceding tables were classified as Level 3 assets because the Company used unobservable inputs to value them, reflecting the Company's assessment of the assumptions market participants would use in pricing these assets due to the absence of quoted market prices and the inherent lack of liquidity. These assets were measured at fair value due to events or circumstances the Company identified as having significantly impacted the fair value during the respective indicated periods.

The fair value for investments in privately held companies was measured using financial metrics, comparison to other private and public companies, and analysis of the financial condition and near-term prospects of the issuers, including recent financing activities and their capital structure as well as other economic variables. The impairment as a result of the evaluation for the investments in privately held companies was recorded to other income, net.

The fair value of property held for sale was measured using discounted cash flow techniques.

The fair value for purchased intangible assets for which the carrying amount was not deemed to be recoverable was determined using the future undiscounted cash flows that the assets are expected to generate. The difference between the estimated fair value and the carrying value of the assets was recorded as an impairment charge and included in product cost of sales and operating expenses as indicated in Note 4.

(d) Other

The fair value of certain of the Company's financial instruments that are not measured at fair value, including accounts receivable, accounts payable, accrued compensation and other current liabilities, approximates the carrying amount because of their short maturities. In addition, the fair value of the Company's loan receivables and financed service contracts also approximates the carrying amount. The fair value of the Company's debt is disclosed in Note 10 and was determined using quoted market prices for those securities.