Investments

Our investments consist of (in millions):



	September 30,
	2018			2017
Fixed income securities	$	419.0		$	1,387.6
Equity securities	1,090.0			—
Other	69.9			62.7
Total investments	1,578.9			1,450.3
Less short-term investments	(290.9		)	(1,124.6		)
Long-term investments	$	1,288.0		$	325.7

We record investments in fixed income and equity securities, classified as available-for-sale investments or trading investments, at fair value.

Available-for-sale Investments

We invest in certificates of deposit, time deposits, commercial paper and other fixed income securities which are classified as available-for-sale. Unrealized gains and losses on available-for-sale investments are included in our Consolidated Balance Sheet as a component of accumulated other comprehensive loss, net of any deferred taxes. Realized gains and losses are included in net income.

Our available-for-sale investments consist of (in millions):



	September 30,
	2018		2017
Certificates of deposit and time deposits	$	169.6	$	1,005.3
Commercial paper	—		20.3
Corporate debt securities	158.4		199.4
Government securities	65.8		116.8
Asset-backed securities	25.2		45.8
Total	$	419.0	$	1,387.6

Pre-tax gross unrealized losses on available-for-sale investments were $2.7 million as of September 30, 2018. Pre-tax gross realized gains and losses on available-for-sale investments were not material for the years ended September 30, 2018 and 2017. At September 30, 2018, there were no outstanding purchases of available-for-sale investments recorded in accounts payable.

We evaluated all available-for-sale investments for which the fair value was less than amortized cost for impairment on an individual security basis at September 30, 2018. This assessment included consideration of our intent and ability to hold the security and the credit risks specific to each security. We determined that the declines in fair value of these investments were not other than temporary as of September 30, 2018, and accordingly we did not recognize any impairment charges in net income.

The table below summarizes the contractual maturities of our investments as of September 30, 2018 (in millions). Actual maturities may differ from the contractual maturities below as borrowers may have the right to prepay certain obligations.



	Fair Value
Less than one year	$	290.9
Due in one to five years	128.1
Total	$	419.0

Classification of our available-for-sale investments as current or noncurrent is based on the nature of the investment and when the investment is reasonably expected to be realized. These investments were included in the following line items within the Consolidated Balance Sheet (in millions):



	September 30,
	2018		2017
Short-term investments	$	290.9	$	1,124.6
Long-term investments	128.1		263.0
Total	$	419.0	$	1,387.6

Trading Investments

On July 19, 2018, we purchased 10,582,010 shares of PTC common stock (the "PTC Shares") in a private placement at a purchase price of $94.50 per share for an aggregate purchase price of approximately $1.0 billion ("the Purchase"). The PTC Shares are considered equity securities. For a period of approximately 3 years after the Purchase we are subject to entity-specific transfer restrictions subject to certain exceptions. Following the first anniversary of the Purchase, the Company will be allowed to transfer, in the aggregate in any 90-day period, a number of Shares equal to up to 1.0% of PTC's total outstanding shares of common stock as of the first day in such 90-day period, but no more than 2.0% of PTC's total outstanding shares of common stock in each of the second year and the third year after the Purchase.

The PTC Shares were recorded at fair value and classified as trading securities. At September 30, 2018, the fair value of the PTC Shares was $1,090.0 million, which was recorded in long-term investments in the Consolidated Balance Sheet. For the year ended September 30, 2018, a gain of $90.0 million related to the PTC Shares was recorded in other income (expense) in the Consolidated Statement of Operations. At September 30, 2018, the PTC Shares were valued using the most recent closing price of PTC common stock quoted on Nasdaq, resulting in a gain of $123.7 million, less a temporary discount for lack of marketability calculated using a put-option model, resulting in a loss of $33.7 million. The marketability discount is due to an instrument-specific restriction as the PTC Shares were issued to the Company in a private placement and are not currently registered for resale under the Securities Act of 1933, as amended. However, the PTC Shares are contractually required to be registered by PTC under the Securities Act of 1933, as amended, within one year, at which time the discount will be reversed.

Fair Value of Investments

We recognize all available-for-sale and trading investments at fair value in the Consolidated Balance Sheet. The valuation methodologies used for our investments measured at fair value are described below.

Certificates of deposit and time deposits — These investments are recorded at cost, which approximates fair value.

Commercial paper — These investments are recorded at amortized cost, which approximates fair value.

Corporate debt securities — Valued at either the yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risks.

Government securities — Valued at the most recent closing price on the active market on which the individual securities are traded or, absent an active market, utilizing observable inputs such as closing prices in less frequently traded markets.

Asset-backed securities — Valued using a discounted cash flow approach that maximizes observable inputs, such as current yields of benchmark instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risks.

Equity securities — Valued using the most recent closing price of PTC common stock quoted on Nasdaq, less a temporary discount for lack of marketability. The discount for lack of marketability, which will reverse upon registration of the PTC Shares, is calculated using a put-option model which includes observable and unobservable inputs and is categorized as Level 3 in the fair value hierarchy. The primary inputs include historical and implied PTC common stock volatility and the transfer restriction term.

Refer to Note 1 for further information regarding levels in the fair value hierarchy. We did not have any transfers between levels of fair value measurements during the periods presented.

Fair values of our investments were (in millions):



	September 30, 2018
	Level 1		Level 2		Level 3		Total
Certificates of deposit and time deposits	$	—	$	169.6	$	—	$	169.6
Corporate debt securities	—		158.4		—		158.4
Government securities	55.7		10.1		—		65.8
Asset-backed securities	—		25.2		—		25.2
Equity securities	—		—		1,090.0		1,090.0
Total	$	55.7	$	363.3	$	1,090.0	$	1,509.0



	September 30, 2017
	Level 1		Level 2		Level 3		Total
Certificates of deposit and time deposits	$	—	$	1,005.3	$	—	$	1,005.3
Commercial paper	—		20.3		—		20.3
Corporate debt securities	—		199.4		—		199.4
Government securities	98.9		17.9		—		116.8
Asset-backed securities	—		45.8		—		45.8
Total	$	98.9	$	1,288.7	$	—	$	1,387.6

The table below sets forth a summary of changes in the fair value of our Level 3 investments (in millions):



	Equity Securities
PTC Share purchase July 19, 2018	$	954.9
Unrealized gain	135.1
Balance September 30, 2018	$	1,090.0

Upon purchase of the PTC Shares, we recorded our investment of $954.9 million. The investment consisted of the purchase price of approximately $1.0 billion less a loss of $45.1 million, which includes a $71.9 million valuation adjustment pending registration of the PTC Shares, partially offset by a gain of $26.8 million, resulting from the difference between the purchase price of $94.50 per share and the most recent closing price of PTC common stock quoted on Nasdaq on the Purchase date. The unrealized gain of $135.1 million includes a gain of $96.9 million, resulting from appreciation of the PTC Shares between the Purchase date and the end of the fiscal year, and a $38.2 million decrease in the valuation adjustment associated with a reduction in the expected term of the transfer restriction.

The investment of $1,090.0 million at September 30, 2018 includes a gain of $123.7 million on investment and a $33.7 million valuation adjustment.