v2.4.0.6

Fair Value | 12 Months Ended
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Jul. 28, 2012
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 either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact, and it also 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 July 28, 2012 and July 30, 2011 were as follows (in millions):
|  | JULY 28, 2012 FAIR VALUE MEASUREMENTS |  |  | JULY 30, 2011 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 |  | $ | 2,506 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,506 |  |  | $ | 5,852 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,852 |
U.S. government agency securities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 1 |
Available-for-sale investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government securities |  |  | — |  |  |  | 24,241 |  |  |  | — |  |  |  | 24,241 |  |  |  | — |  |  |  | 19,139 |  |  |  | — |  |  |  | 19,139 |
U.S. government agency securities |  |  | — |  |  |  | 5,388 |  |  |  | — |  |  |  | 5,388 |  |  |  | — |  |  |  | 8,776 |  |  |  | — |  |  |  | 8,776 |
Non-U.S. government and agency securities |  |  | — |  |  |  | 1,638 |  |  |  | — |  |  |  | 1,638 |  |  |  | — |  |  |  | 3,132 |  |  |  | — |  |  |  | 3,132 |
Corporate debt securities |  |  | — |  |  |  | 6,030 |  |  |  | — |  |  |  | 6,030 |  |  |  | — |  |  |  | 4,394 |  |  |  | — |  |  |  | 4,394 |
Asset-backed securities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 121 |  |  |  | 121 |
Publicly traded equity securities |  |  | 1,620 |  |  |  | — |  |  |  | — |  |  |  | 1,620 |  |  |  | 1,361 |  |  |  | — |  |  |  | — |  |  |  | 1,361 |
Derivative assets |  |  | — |  |  |  | 263 |  |  |  | 1 |  |  |  | 264 |  |  |  | — |  |  |  | 220 |  |  |  | 2 |  |  |  | 222 |
Total |  | $ | 4,126 |  |  | $ | 37,560 |  |  | $ | 1 |  |  | $ | 41,687 |  |  | $ | 7,213 |  |  | $ | 35,662 |  |  | $ | 123 |  |  | $ | 42,998 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative liabilities |  | $ | — |  |  | $ | 42 |  |  | $ | — |  |  | $ | 42 |  |  | $ | — |  |  | $ | 24 |  |  | $ | — |  |  | $ | 24 |
Total |  | $ | — |  |  | $ | 42 |  |  | $ | — |  |  | $ | 42 |  |  | $ | — |  |  | $ | 24 |  |  | $ | — |  |  | $ | 24 |
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 following tables present a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended July 28, 2012 and July 30, 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 |  |  | (14 | ) |  |  | (1 | ) |  |  | (15 | )
Transfer into Level 2 |  |  | (107 | ) |  |  | — |  |  |  | (107 | )
Balance at July 28, 2012 |  | $ | — |  |  | $ | 1 |  |  | $ | 1 |
The Company’s asset-backed securities, prior to being sold, were reclassified from Level 3 to Level 2 during fiscal 2012, as the Company observed an increase in market activity and that observable market data was available for these financial assets.
|  | 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 |  |  | 3 |  |  |  | (1 | ) |  |  | 2 |
Purchases, sales and maturities |  |  | (31 | ) |  |  | — |  |  |  | (31 | )
Balance at July 30, 2011 |  | $ | 121 |  |  | $ | 2 |  |  | $ | 123 |
Losses attributable to assets still held as of July 30, 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):
|  | July 28, 2012 |  |  | July 30, 2011 |  |  | July 31, 2010 |
|  | Net Carrying Value as of Year End |  |  | Total Gains (Losses) for the Year Ended |  |  | Net Carrying Value as of Year End |  |  | Total Gains (Losses) for the Year Ended |  |  | Net Carrying Value as of Year End |  |  | Total Gains (Losses) for the Year Ended |
Property held for sale |  | $ | 63 |  |  | $ | (413 | ) |  | $ | 20 |  |  | $ | (38 | ) |  | $ | 25 |  |  | $ | (86 | )
Investments in privately held companies |  | $ | 47 |  |  |  | (23 | ) |  | $ | 13 |  |  |  | (10 | ) |  | $ | 45 |  |  |  | (25 | )
Purchased intangible assets |  | $ | — |  |  |  | (12 | ) |  | $ | — |  |  |  | (164 | ) |  | $ | — |  |  |  | (28 | )
Manufacturing operations held for sale |  | $ | — |  |  |  | — |  |  | $ | 167 |  |  |  | (61 | ) |  | $ | — |  |  |  | — |
Gains on assets no longer held at end of fiscal year |  |  |  |  |  |  | 14 |  |  |  |  |  |  |  | — |  |  |  |  |  |  |  | 2 |
Total losses for nonrecurring measurements |  |  |  |  |  | $ | (434 | ) |  |  |  |  |  | $ | (273 | ) |  |  |  |  |  | $ | (137 | )
The assets in the preceding table were measured at fair value due to events or circumstances the Company identified as having significant impact on their fair value during the respective periods. To arrive at the valuation of these assets, the Company considers any significant changes in the financial metrics and economic variables and also uses third-party valuation reports to assist in the valuation as necessary. These assets were classified as Level 3 assets because the Company used unobservable inputs to value them. The property held for sale represents land and buildings which met the criteria to be classified as held for sale. The fair value of property held for sale was measured with the assistance of third-party valuation models which used comparable property values or discounted cash flow techniques as part of its analysis. The fair value measurement was categorized as Level 3 as significant unobservable inputs were used in the valuation report. The impairment charges as a result of the valuations, which represented the difference between the fair value less cost to sell and the carrying amount of the assets held for sale, were included in G&A expenses. The fair value measurement of the impaired investments was classified as Level 3 because significant unobservable inputs were used in the valuation due to the absence of quoted market prices and inherent lack of liquidity. Significant unobservable inputs, which included financial metrics of comparable private and public companies, financial condition and near-term prospects of the investees, recent financing activities of the investee, and the investee’s capital structure as well as other economic variables, reflected the assumptions market participants would use in pricing these assets. The impairment charges, representing the difference between the cost and the fair value as a result of the evaluation, were recorded to other income, net. The fair value of purchased intangible assets measured at fair value on a nonrecurring basis was categorized as Level 3 due to the use of significant unobservable inputs in the valuation. Significant unobservable inputs that were used included expected revenues and net income related to the assets and the expected life of the assets. The difference between the estimated fair value and the carrying value of the assets was recorded as an impairment charge. For the years ended July 28, 2012, July 30, 2011, and July 31, 2010, such impairment charges were recorded in cost of sales and operating expenses as appropriate. See Note 4. The loss related to the manufacturing operations held for sale was primarily related to a reduction in goodwill related to the sale of the Company’s set-top box manufacturing operations in Juarez, Mexico. See Note 5. This goodwill reduction represents the difference between the carrying value and the implied fair value of the goodwill associated with the disposal group being evaluated. (d) Other Fair Value Disclosures As of July 28, 2012, the carrying value of the Company’s investments in privately held companies that were accounted for under the cost method was $249 million. It was not practicable to estimate the fair value of this portfolio. The fair value of the Company’s short-term loan receivables and financed service contracts approximates their carrying value due to their short duration. The aggregate carrying value of the Company’s long-term loan receivables and financed service contracts and other as of July 28, 2012 and July 30, 2011 was $1.9 billion and $2.0 billion, respectively. The estimated fair value of the Company’s long-term loan receivables and financed service contracts and other approximates their carrying value. The Company uses significant unobservable inputs in determining discounted cash flows to estimate the fair value of its long-term loan receivables and financed service contracts and therefore they are categorized as Level 3. As of July 28, 2012, the fair value of the Company’s long-term debt was $18.8 billion with a carrying amount of $16.3 billion. This compares to a fair value of $17.4 billion and a carrying amount of $16.2 billion as of July 30, 2011. The fair value of the long-term debt was determined based on observable market prices in a less active market and was categorized as Level 2 in the fair value hierarchy.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 159 -Paragraph 17-22, 27, 28 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13433-108611 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15C, 15D -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13504-108611 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15A -Subparagraph a-d -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13537-108611 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 133 -Paragraph 44A, 44B -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 3, 10, 14, 15 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15B -Subparagraph a, b -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 32, 33, 34 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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