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46
or other comprehensive income. The adoption of ASU No. 2013-02 did not have a significant impact on the Company’s
consolidated financial statements.
Foreign Currency Translation
The Company’s Canadian and U.K. operations use their local currency as their functional currency. Foreign currency transaction
gains and losses related to Canadian intercompany operations are charged to net income in the period incurred. Foreign currency
gains and losses were not material in fiscal year 2013, 2012 or 2011. Intercompany transaction gains and losses associated with
our U.K. operations are excluded from the determination of net income since these transactions are considered long-term
investments in nature. Assets and liabilities are translated at exchange rates in effect at the balance sheet date. Income and
expense accounts are translated at the average exchange rates during the fiscal year. Resulting translation adjustments are recorded
as a separate component of accumulated other comprehensive income.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and revenues and expenses during the period reported. Actual amounts could
differ from those estimates.
Reclassifications
Where appropriate, we have reclassified prior years’ financial statements to conform to current year presentation.
Recent Accounting Pronouncements
In July 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2013-11, “Presentation of an Unrecognized
Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists,” which amends
ASC 740, “Income Taxes.” The amendments provide guidance on the financial statement presentation of an unrecognized tax
benefit as either a reduction of a deferred tax asset or as a liability, when a net operating loss carryforward, similar tax loss or a
tax credit carryforward exists. The amendments are effective for fiscal years, and interim periods within those years, beginning
after December 15, 2013 and may be applied on either a prospective or retrospective basis. The provisions are effective for the
Company’s first quarter of fiscal year ending September 27, 2015. We do not expect the adoption of these provisions to have a
significant impact on the Company’s consolidated financial statements.
In February 2013, the FASB issued ASU No. 2013-04, “Obligations Resulting from Joint and Several Liability Arrangements
for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task
Force),” which amends ASC 405, “Liabilities.” The amendments provide guidance on the recognition, measurement, and
disclosure of obligations resulting from joint and several liability arrangements, including debt arrangements, other contractual
obligations, and settled litigation and judicial rulings, for which the total amount of the obligation is fixed at the reporting date.
The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 and
should be applied retrospectively. The provisions are effective for the Company’s first quarter of fiscal year ending September
27, 2015. We do not expect the adoption of these provisions to have a significant impact on the Company’s consolidated financial
statements.
(3) Fair Value Measurements
Assets Measured at Fair Value on a Recurring Basis
The Company held the following financial assets measured at fair value on a recurring basis based on the hierarchy levels
indicated (in millions):
September 29, 2013 Level 1 Inputs Level 2 Inputs Level 3 Inputs Total
Cash equivalents:
Money market fund $ 73 $ — $ — $ 73
Commercial paper — 104 — 104
Municipal bonds — 17 — 17
Marketable securities - available-for-sale:
Corporate bonds — 5 — 5
Municipal bonds — 1,010 — 1,010
Variable rate demand notes — 20 — 20
Total $ 73 $ 1,156 $ — $ 1,229