Fair Value Measurements

3 Months Ended

Feb. 28, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Recurring Fair Value Measurements

The following table details the fair value measurements within the fair value hierarchy of our financial assets at February 28, 2013 (in thousands):

			Fair Value Measurements Using
	Total Fair Value		Level 1		Level 2		Level 3
Money market funds	$	92,256	$	92,256	$	—	$	—
State and municipal bond obligations	42,158		—		42,158		—
Auction rate securities – municipal bonds	23,515		—		—		23,515
Auction rate securities – student loans	2,927		—		—		2,927
Foreign exchange derivatives	34		—		34		—

The following table details the fair value measurements within the fair value hierarchy of our financial assets at November 30, 2012 (in thousands):

				Fair Value Measurements Using
	Total Fair Value			Level 1		Level 2			Level 3
Money market funds	$	125,591		$	125,591	$	—		$	—
State and municipal bond obligations	50,818			—		50,818			—
Auction rate securities – municipal bonds	23,420			—		—			23,420
Auction rate securities – student loans	2,901			—		—			2,901
Corporate bonds	2,607			—		2,607			—
Foreign exchange derivatives	(186		)	—		(186		)	—

When developing fair value estimates, we maximize the use of observable inputs and minimize the use of unobservable inputs. When available, we use quoted market prices to measure fair value. The valuation technique used to measure fair value for our Level 1 and Level 2 assets is a market approach, using prices and other relevant information generated by market transactions involving identical or comparable assets. If market prices are not available, the fair value measurement is based on models that use primarily market based parameters including yield curves, volatilities, credit ratings and currency rates. In certain cases where market rate assumptions are not available, we are required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument.

The valuation technique used to measure fair value for our Level 3 assets, which consists of our ARS, is primarily an income approach, where the expected weighted average future cash flows are discounted back to present value for each asset. The significant unobservable inputs used in the fair value measurement of our ARS are the probability of earning the maximum rate until maturity, the probability of principal return prior to maturity, the probability of default, the liquidity risk premium and the recovery rate in default. Generally, interrelationships are such that a change in the assumptions used for the probability of principal return prior to maturity is accompanied by a directionally opposite change in one or more the following assumptions: the probability of earning the maximum rate until maturity, the probability of default and the liquidity risk premium. The recovery rate in default is somewhat independent and based upon the ARS' specific underlying assets and published recovery rate studies.

One issuer of our ARS is currently in default, but the underlying bond insurer is making interest payments on the issuers' behalf. In this situation, we used a market approach, where the significant unobservable inputs are the market credit default swap spread and the credit rating of the insurer.

The following table provides additional quantitative information about the unobservable inputs used in our Level 3 valuations as of February 28, 2013:

	Valuation Technique	Unobservable Input	Range (Weighted Average)
Auction rate securities	Discounted cash flow	Probability of earning the maximum rate until maturity	0.3% - 8.7% (1.5%)
		Probability of principal return prior to maturity	79.9% - 95.5% (88.8%)
		Probability of default	3.9% - 12.7% (9.6%)
		Liquidity risk premium	4.0%
		Recovery rate in default	50.0% - 70.0% (56.5%)
	Market valuation	Market credit default swap spread of insurer	3.5%
		Credit rating of insurer	AA-

Significant increases or decreases in the underlying assumptions used to value the ARS could significantly increase or decrease the fair value estimates recorded in the consolidated balance sheets.

The following table reflects the activity for our financial assets measured at fair value using Level 3 inputs for each period presented (in thousands):

	Three Months Ended
	February 28, 2013			February 29, 2012
Balance, beginning of period	$	26,321		$	33,539
Redemptions and repurchases	(25		)	(225		)
Unrealized gains included in accumulated other comprehensive loss	146			29
Balance, end of period	$	26,442		$	33,343

Nonrecurring Fair Value Measurements

The following table details our nonrecurring fair value measurements at November 30, 2012 (in thousands):

			Fair Value Measurements Using
	Total Fair Value		Level 1		Level 2		Level 3		Total Losses
Disposal group	$	16,487	$	—	$	16,487	$	—	$	8,601

The disposal group included the assets and liabilities held for sale of the Artix, Orbacus and Orbix product lines, which had a fair value of $16.5 million as of November 30, 2012. The carrying value at November 30, 2012, of $25.1 million, was written down to fair value, less costs to sell, resulting in a loss of $8.6 million. The loss was recorded in income (loss) from discontinued operations in fiscal year 2012. The assets and liabilities held for sale were divested in the first quarter of fiscal year 2013 (Note 6).

We evaluate all of our assets held for sale using undiscounted cash flow models or other valuation models, such as comparative transactions and market multiples, to determine their fair values. However, a market approach was more heavily used to value the assets held for sale related to the divestitures of our non-core product lines. As bid and transaction values became apparent as we moved through the marketing and divestiture process, the fair values of the assets held for sale was established. The impairment loss recorded for the Artix, Orbacus and Orbix product lines was primarily based on our expectations of a sale price as compared to our estimation of the net assets to be sold at closing.