v2.3.0.15
Fair Value Measurements
12 Months Ended
Sep. 30, 2011
Fair Value Measurements [Abstract] 
Fair Value Measurements

4. Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. We minimize the use of unobservable inputs and use observable market data, if available, when determining fair value. We classify our inputs to measure fair value using the following three-level hierarchy:

 

     
   
Level 1:    Quoted prices in active markets at the measurement date for identical assets and liabilities.
   
Level 2:    Prices may be based upon quoted prices in active markets or inputs not quoted on active markets but are corroborated by market data.
   
Level 3:    Unobservable inputs are used when little or no market data is available and reflect management's estimates of assumptions that market participants would use in pricing the asset or liability.

 

Financial assets and liabilities carried at fair value as of September 24, 2010 are classified below:

 

                                 
     Level 1      Level 2      Level 3      Total  
     (in thousands)  

Assets:

         

Investments held in supplemental retirement plan (1)

    $ 2,200       $ —         $ —         $ 2,200   

Money market funds (2)

      354,428         —           —           354,428   

Commercial paper (2)

      —           29,983         —           29,983   

Corporate bonds (2)

      —           29,658         —           29,658   

Municipal debt securities (2)

      —           320,581         —           320,581   

U.S. agency securities (2)

       107,898         —          —           107,898   

U.S. government bonds (2)

       39,979         —          —           39,979   
    

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 504,505       $ 380,222       $ —         $ 884,727   
    

 

 

     

 

 

     

 

 

     

 

 

  

(1) These assets are included within prepaid expenses and other current assets and other non-current assets.
(2) These assets are included within cash and cash equivalents, short term investments, and long term investments.

 

                                 
     Level 1      Level 2      Level 3      Total  
     (in thousands)  

Liabilities:

                                    

Investments held in supplemental retirement plan (1)

    $ 2,200       $ —         $ —         $ 2,200   
    

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 2,200       $ —         $ —         $ 2,200   
    

 

 

     

 

 

     

 

 

     

 

 

  

(1) These liabilities are included within accrued compensation and benefits and other noncurrent liabilities.

Financial assets and liabilities carried at fair value as of September 30, 2011 are classified below:

 

                                 
     Level 1      Level 2      Level 3      Total  
     (in thousands)  

Assets:

                                    

Investments held in supplemental retirement plan (1)

    $ 1,891       $ —         $ —         $ 1,891   

Money market funds (2)

      142,038         —           —           142,038   

Corporate bonds (3)

      —           176,958         —           176,958   

Municipal debt securities (3)

      —           472,201         —           472,201   

U.S. agency securities (2), (3)

      29,919         —          —           29,919   
    

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 173,848       $ 649,159       $ —         $ 823,007   
    

 

 

     

 

 

     

 

 

     

 

 

  

(1) These assets are included within prepaid expenses and other current assets and other non-current assets.
(2) These assets are included within cash and cash equivalents.
(3) These assets are included within short-term investments and long-term investments.

 

                                 
     Level 1      Level 2      Level 3      Total  
     (in thousands)  

Liabilities:

                                    

Investments held in supplemental retirement plan (1)

    $ 1,891       $ —         $ —         $ 1,891   
    

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 1,891       $ —         $ —         $ 1,891   
    

 

 

     

 

 

     

 

 

     

 

 

  

(1) These liabilities are included within accrued compensation and benefits and other noncurrent liabilities.

We base the fair value of our Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments. Our Level 1 financial instruments include money market funds, U.S. agency securities, U.S. government bonds, and mutual fund investments held in our supplemental retirement plan.

We obtain the fair value of our Level 2 financial instruments from a professional pricing service, which may use quoted market prices for identical or comparable instruments, or inputs other than quoted prices that are observable either directly or indirectly. Our professional pricing service gathers quoted market prices and observable inputs for all of our fixed income securities from a variety of industry data providers. The valuation techniques used to measure the fair value of our Level 2 financial instruments were derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models such as discounted cash flow techniques.

We validate the quoted market prices provided by our primary pricing service by comparing their assessment of the fair values of our investment portfolio balance against the fair values of our investment portfolio balance obtained from an independent source, which may include our investment managers.

We did not own any Level 3 financial assets or liabilities as of September 24, 2010 or September 30, 2011.

We enter into foreign currency forward contracts to hedge against assets and liabilities for which we have foreign currency exchange rate exposure, in an effort to reduce the risk that our earnings will be adversely affected by foreign currency exchange rate fluctuations. These derivative instruments are carried at fair value with changes in the fair value recorded to interest and other (expense)/income, net in our consolidated statements of operations. Our foreign currency forward contracts which are not designated as hedging instruments are used to reduce the exchange rate risk associated primarily with intercompany receivables and payables. These contracts do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the related receivables and payables for which we have foreign currency exchange rate exposure. As of September 30, 2011, the outstanding balance sheet derivative instruments had maturities of 30 days or less and the total notional amounts of outstanding contracts were $4.7 million on our consolidated balance sheets, which are included in other current assets and other accrued liabilities.