Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v2.4.0.6
Fair Value Measurements
 9 Months Ended
Feb. 29, 2012
Fair Value Measurements [Abstract]  
Fair Value Measurements

Note D: Fair Value Measurements

The carrying values of cash and cash equivalents, accounts receivable, net of allowance for doubtful accounts, and accounts payable approximate fair value due to the short maturities of these instruments. Marketable securities included in funds held for clients and corporate investments consist primarily of securities classified as available-for-sale and are recorded at fair value on a recurring basis.

The accounting standards related to fair value measurements include a hierarchy for information and valuations used in measuring fair value that is broken down into three levels based on reliability, as follows:

 

  •  

Level 1 valuations are based on quoted prices in active markets for identical instruments that the Company has the ability to access.

 

  •  

Level 2 valuations are based on quoted prices for similar, but not identical, instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; or other significant observable inputs besides quoted prices.

 

  •  

Level 3 valuations are based on information that is unobservable and significant to the overall fair value measurement.

The Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows:

 

 

                                 
    February 29, 2012  

In millions

   Carrying
value
(Fair value) 		    Quoted
prices  in
active
markets
(Level 1) 		    Significant
other
observable
inputs
(Level 2) 		    Significant
unobservable
inputs
(Level 3) 		 

Assets:

                                

Available-for-sale securities:

                                

General obligation municipal bonds

   $ 1,099.8     $ —       $ 1,099.8     $ —    

Pre-refunded municipal bonds

     365.7       —         365.7       —    

Revenue municipal bonds

     416.4       —         416.4       —    

Variable rate demand notes

     1,737.2       —         1,737.2       —    
   

 

 

    

 

 

    

 

 

    

 

 

  

Total available-for-sale securities

   $ 3,619.1     $ —       $ 3,619.1     $ —    

Other securities

   $ 9.3     $ 9.3     $ —       $ —    

Liabilities:

                                

Other long-term liabilities

   $ 9.3     $ 9.3     $ —       $ —    

 

                                 
    May 31, 2011  

In millions

   Carrying
value
(Fair value) 		    Quoted
prices  in
active
markets
(Level 1) 		    Significant
other
observable
inputs
(Level 2) 		    Significant
unobservable
inputs
(Level 3) 		 

Assets:

                                

Available-for-sale securities:

                                

General obligation municipal bonds

   $ 1,050.5     $ —       $ 1,050.5     $ —    

Pre-refunded municipal bonds

     484.7       —         484.7       —    

Revenue municipal bonds

     373.7       —         373.7       —    

Variable rate demand notes

     828.3       —         828.3       —    
   

 

 

    

 

 

    

 

 

    

 

 

  

Total available-for-sale securities

   $ 2,737.2     $ —       $ 2,737.2     $ —    

Other securities

   $ 8.9     $ 8.9     $ —       $ —    

Liabilities:

                                

Other long-term liabilities

   $ 8.9     $ 8.9     $ —       $ —    

In determining the fair value of its assets and liabilities, the Company predominately uses the market approach. In determining the fair value of its available-for-sale securities, the Company utilizes the Interactive Data Pricing service. Other securities are mutual fund investments, consisting of participants’ eligible deferral contributions under the Company’s non-qualified and unfunded deferred compensation plans. The related liability is reported as other long-term liabilities. The mutual funds are valued based on quoted market prices in active markets.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.