11. INVESTMENTS AND FAIR VALUE MEASUREMENTS

The Company had cash and cash equivalents of $712.7 million and $477.1 million at September 30, 2013 and December 31, 2012, respectively. Cash and cash equivalents consist of cash in banks, as well as highly liquid investments in money market funds, time deposits, savings accounts, commercial paper, U.S. government and agency securities, municipal securities and corporate debt securities. At September 30, 2013, the Company’s long-term investments had contractual maturities of one to two years.

In addition, the Company has short-term and long-term investments in debt securities which are summarized as follows (in thousands):

	Cost Basis
Balances at September 30, 2013:
Investments—Short-term:
U.S. government securities	$	14,531	$	7	$	—		$	14,538
U.S. government agency securities		51,293		30		—			51,323
Non-U.S. government securities		13,933		7		—			13,940
Corporate debt securities		81,527		22		(11	)		81,538
Total investments – short-term	$	161,284	$	66	$	(11	)	$	161,339
Investments—Long-term:
U.S. government securities	$	17,480	$	11	$	—		$	17,491
U.S. government agency securities		29,057		16		(1	)		29,072
Non-U.S. government securities		7,737		10		—			7,747
Corporate debt securities		25,465		9		(8	)		25,466
Total investments – long-term	$	79,739	$	46	$	(9	)	$	79,776

Balances at December 31, 2012:
Investments—Short-term:
U.S. government securities	$	24,205	$	3	$	—		$	24,208
U.S. government agency securities		101,036		39		(5	)		101,070
Non-U.S. government securities		1,527		—		—			1,527
Corporate debt securities		70,386		20		(15	)		70,391
Total investments – short-term	$	197,154	$	62	$	(20	)	$	197,196
Investments—Long-term:
U.S. government securities	$	6,396	$	4	$	—		$	6,400
U.S. government agency securities		22,145		17		(2	)		22,160
Non-U.S. government securities		422		—		—			422
Corporate debt securities		21,368		—		(17	)		21,351
Total investments – long-term	$	50,331	$	21	$	(19	)	$	50,333

As of September 30, 2013, the Company’s total cash and cash equivalents and investments held in the United States totaled $490.9 million with the remaining $462.9 million held by various foreign subsidiaries outside of the United States.

U.S. Government Securities

The Company’s U.S. government securities are mostly comprised of direct U.S. Treasury obligations that are guaranteed by the U.S. government. To ensure that the investment portfolio is sufficiently diversified, the Company’s investment policy requires that a certain percentage of the Company’s portfolio be invested in these types of securities.

U.S. Government Agency Securities

The Company’s U.S. government agency securities are mostly comprised of U.S. government agency instruments, including mortgage-backed securities. To ensure that the investment portfolio is sufficiently diversified, the Company’s investment policy requires that a certain percentage of the Company’s portfolio be invested in these types of securities.

Non-U.S. Government Securities

The Company’s Non-U.S. government securities are mostly comprised of non-U.S. government instruments, including state, municipal and foreign government securities. To ensure that the investment portfolio is sufficiently diversified, the Company’s investment policy allows a certain percentage of the Company’s portfolio be invested in these types of securities.

Corporate Debt Securities

The Company’s corporate debt securities are comprised of publicly-traded domestic and foreign corporate debt securities. The Company does not purchase auction rate securities, and cash investments are in instruments that meet high quality credit rating standards, as specified in its investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issuer or type of instrument.

Unrealized Losses

The following table summarizes the fair value and gross unrealized losses of the Company’s investments, including those that are categorized as cash equivalents, with unrealized losses aggregated by type of investment instrument and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2013 and December 31, 2012 (in thousands):

	Less than 12 Months												Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses				Fair Value			Gross Unrealized Losses
September 30, 2013:
U.S. government agencies securities	$	11,334	$	(1	)	$	—		$	—			$	11,334		$	(1	)
Corporate debt securities		39,099		(17	)		2,999			(2	)			42,098			(19	)
Total investments	$	50,433	$	(18	)	$	2,999		$	(2	)		$	53,432		$	(20	)
December 31, 2012:
U.S. government agency securities	$	21,768	$	(7	)	$	—		$	—			$	21,768		$	(7	)
Corporate debt securities		43,743		(32	)		1,999			—				45,742			(32	)
Total investments	$	65,511	$	(39	)	$	1,999		$	—			$	67,510		$	(39	)

The Company reviews the individual securities in its portfolio to determine whether a decline in a security’s fair value below the amortized cost basis is other-than-temporary. If the decline in fair value is considered to be other-than-temporary, the cost basis of the individual security is written down to its fair value as a new cost basis and the amount of the write-down is accounted for as a realized loss and included in earnings or other comprehensive income. During the three and nine months ended September 30, 2013 and 2012, the Company determined that there were no investments in its portfolio that were other-than temporarily impaired.

Private Company Investments

For strategic reasons the Company has made various investments in private companies. The private company investments are carried at cost and written down to their estimated net realizable value when indications exist that these investments have been impaired. The Company did not record such impairment charges during the three and nine months ended September 30, 2013 and 2012. The cost of these investments at both September 30, 2013 and December 31, 2012 was $2.0 million, and is recorded in “Other assets” in the Company’s condensed consolidated balance sheets.

Fair Value Measurements

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As the basis for considering such assumptions, a three-tier value hierarchy prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, the Company measures certain financial assets and liabilities at fair value, including its marketable securities and foreign currency contracts.

The Company’s cash and investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using inputs such as quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The types of instruments valued based on quoted market prices for identical assets in active markets include money market funds and are generally classified within Level 1 of the fair value hierarchy.

The types of instruments valued based on other observable inputs include U.S. Treasury securities and other government agencies, corporate bonds and commercial paper. Such instruments are generally classified within Level 2 of the fair value hierarchy. Level 2 instruments are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. There have been no transfers between Level 1 and Level 2 during the nine months ended September 30, 2013. The Company does not hold any investments classified as Level 3 as of September 30, 2013 and December 31, 2012.

As of September 30, 2013, the Company’s fixed income available-for-sale securities include U.S. Treasury obligations and other government agency instruments (46%), corporate bonds (31%), commercial paper (15%), non-U.S. Government securities (8%), and money market funds (0%). Included in available-for-sale securities is approximately $10.9 million of cash equivalents, which consist of investments with original maturities of three months or less and include money market funds.

The principal market where the Company executes its foreign currency contracts is the retail market in an over-the-counter environment with a relatively high level of price transparency. The market participants and the Company’s counterparties are large money center banks and regional banks. The Company’s foreign currency contracts valuation inputs are based on quoted prices and quoted pricing intervals from public data sources such as spot rates, interest rate differentials and credit default rates, which do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.

The Company’s Term Loan under its Credit Agreement is classified within Level 2 instruments as the borrowings are not actively traded and have a variable interest rate structure based upon market rates currently available to the Company for debt with similar terms and maturities. See Note 10. The Company has elected not to record its Term Loan at fair value, but has measured it at fair value for disclosure purpose. At September 30, 2013, the carrying amount of the Term Loan approximated its estimated fair value based on observable market inputs.

The fair value of the Company’s marketable securities and foreign currency contracts was determined using the following inputs at September 30, 2013 and December 31, 2012 (in thousands):

			Fair Value Measurements at September 30, 2013 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
			(Level 1)		(Level 2)
Assets:
Fixed income available-for-sale securities (a)	$	252,040	$	200	$	251,840
Foreign currency forward contracts (b)	$	7,131	$	—	$	7,131
Liabilities:
Foreign currency forward contracts (c)	$	5,612	$	—	$	5,612

			Fair Value Measurements at December 31, 2012 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
			(Level 1)		(Level 2)
Assets:
Fixed income available-for-sale securities (a)	$	260,792	$	795	$	259,997
Foreign currency forward contracts (b)	$	4,158	$	—	$	4,158
Liabilities:
Foreign currency forward contracts (c)	$	3,273	$	—	$	3,273

(a) Included in cash and cash equivalents, and short and long-term investments on the Company’s condensed consolidated balance sheets.

(b) Included in short-term derivative assets as prepaid expenses and other current assets on the Company’s condensed consolidated balance sheets.

(c) Included in short-term derivative liabilities as other accrued liabilities on the Company’s condensed consolidated balance sheets.

The Company’s current accounting policy and practice is not to offset derivative assets and liabilities in its condensed consolidated balance sheets. See Note 12.