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Investments And Fair Value Measurements
 6 Months Ended
Jan. 31, 2012
Investments And Fair Value Measurements [Abstract]  
Investments And Fair Value Measurements
8. Investments and Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The following table represents the Company's fair value hierarchy for its financial assets (cash and cash equivalents and investments) measured at fair value on a recurring basis as of January 31, 2012 and July 31, 2011:

 

    January 31, 2012     July 31, 2011  
        Cash and Cash    
Equivalents		         Auction Rate    
Securities		         Cash and Cash    
Equivalents		         Auction Rate    
Securities		  

Levels of Input:                

        

Level 1

       $ 156,206          $ –          $ 215,435          $ –   

Level 2

     –        –        –        –   

Level 3

     –        1,619        –        2,042   
 

 

 

    

 

 

    

 

 

    

 

 

  
      $ 156,206          $ 1,619          $ 215,435          $ 2,042   
 

 

 

    

 

 

    

 

 

    

 

 

  

The Company's cash equivalents are comprised of money market funds traded in an active market with no restrictions.

Level 3 assets consist of bonds with an auction reset feature ("auction rate securities" or "ARS") whose underlying assets are primarily student loans which are substantially backed by the federal government. Auction rate securities are long-term floating rate bonds tied to short-term interest rates. After the initial issuance of the securities, the interest rate on the securities is reset periodically, at intervals established at the time of issuance based on market demand for a reset period. Auction rate securities are bought and sold in the marketplace through a competitive bidding process often referred to as a "Dutch auction." If there is insufficient interest in the securities at the time of an auction, the auction may not be completed and the rates may be reset to pre-determined "penalty" or "maximum" rates based on mathematical formulas in accordance with each security's prospectus. Since February 12, 2008, most auctions have failed for these securities and there is no assurance that future auctions on the ARS in our investment portfolio will succeed and, as a result, our ability to liquidate our investment and fully recover the par value of our investment in the near term may be limited or not exist. An auction failure means that the parties wishing to sell securities could not. We believe we will be able to liquidate our investments without significant loss primarily due to the government guarantee of the underlying securities; however, it could take until the final maturity of the underlying notes to realize our investments' par value. These investments are included in other assets on the Condensed Consolidated Balance Sheets.

The following table provides a reconciliation of the beginning and ending balances for the assets measured at fair value using significant unobservable inputs (Level 3 financial assets):

 

     Fair Value Measurements at
Reporting Date Using
Significant Unobservable
Inputs
(Level 3)		  

Balances at August 1, 2011

          $ 2,042    

 Net change in other comprehensive income

      (23)    

 Net loss included in earnings

      –    

 Purchases

      –    

 Sales/Maturities

      (400)    
  

 

 

  

Balances at January 31, 2012

          $ 1,619    
  

 

 

  

In addition to the above investments, the Company holds other securities of $8,777 at January 31, 2012 ($8,715 at July 31, 2011) for the benefit of certain employees of the Company as part of a deferred compensation plan for which an equal and offsetting liability is also recorded. These securities represent Level 1 investments primarily in mutual funds which are valued using observable market prices in active markets. The securities are included in other assets and the related deferred compensation is included in other accrued liabilities on the Condensed Consolidated Balance Sheets. Changes in the fair value of these assets and the related deferred liability are both reflected in net income.