Seagate 2012 Annual Report Download - page 101

Table of Contents
SEAGATE TECHNOLOGY PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company classifies items in Level 1 if the financial assets consist of securities for which quoted prices are available in an active
market.
The Company classifies items in Level 2 if the financial asset or liability is valued using observable inputs. The Company uses observable
inputs including quoted prices in active markets for similar assets or liabilities. Level 2 assets include: agency bonds, corporate bonds,
commercial paper, municipal bonds, and U.S. Treasuries. These debt investments are priced using observable inputs and valuation models which
vary by asset class. The Company uses a pricing service to assist in determining the fair values of all of its cash equivalents and short-term
investments. For the cash equivalents and short-term investments in the Company's portfolio, multiple pricing sources are generally available.
The pricing service uses inputs from multiple industry standard data providers or other third party sources and various methodologies, such as
weighting and models, to determine the appropriate price at the measurement date. The Company corroborates the prices obtained from the
pricing service against other independent sources and, as of June 28, 2013, has not found it necessary to make any adjustments to the prices
obtained. The Company's derivative financial instruments are also classified within Level 2. The Company's derivative financial instruments
consist of foreign currency forward exchange contracts. The Company recognizes derivative financial instruments in its consolidated financial
statements at fair value. The Company determines the fair value of these instruments by considering the estimated amount it would pay or
receive to terminate these agreements at the reporting date.
The Company's Level 3 assets consist of auction rate securities with a par value of $17 million, all of which are collateralized by student
loans guaranteed by the Federal Family Education Loan Program. Beginning in fiscal year 2008, these securities failed to settle at auction and
have continued to fail through June 28, 2013. Since there is no active market for these securities, the Company valued them using a discounted
cash flow model. The valuation model is based on the income approach and reflects both observable and significant unobservable inputs.
The Company's auction rate securities are measured at fair value on a recurring basis, excluding accrued interest components, using
significant unobservable inputs (Level 3). The fair value of the Company's auction rate securities for the fiscal years ended June 28, 2013 and
June 29, 2012 totaled $15 million and $15 million, respectively.
93
Fair Value Measurements at Reporting Date Using
(Dollars in millions)
Quoted
Prices in
Active
Markets for
Identical
Instruments
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Balance
Assets:
Cash and cash equivalents
$
1,140
$
393
$
—
$
1,533
Short
-
term investments
—
411
—
411
Restricted cash and investments
91
2
—
93
Other current assets
—
2
—
2
Other assets, net
—
—
15
15
Total Assets
$
1,231
$
808
$
15
$
2,054
Liabilities:
Accrued expenses
$
—
$
(
2
)
$
—
$
(
2
)
Total Liabilities
$
—
$
(
2
)
$
—
$
(
2
)