Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Measurements

Fair Value Measurements

NOTE 4. FAIR VALUE MEASUREMENTS

The Company measures certain financial assets, including cash equivalents, available-for-sale securities and foreign currency derivatives at their fair value. The fair value of these financial assets was determined based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following tables represent the Company's fair value hierarchy for its financial assets and liabilities as of June 30, 2011 and December 31, 2010 (in millions):

	Fair Value Measurements at June 30, 2011 Using
Assets	Level 1		Level 2		Level 3		Total
Available-for-sale securities
Money Market funds	$	337.9	$	0	$	0	$	337.9
U.S. treasuries		125.4		0		0		125.4
Commercial paper		0		114.1		0		114.1
Corporate debt & equity securities		1.2		553.2		0		554.4
U.S. government agencies		0		388.7		0		388.7
Non-U.S. government securities		0		33.0		0		33.0
Municipal notes		0		229.5		18.7		248.2
Total available-for-sale securities		464.5		1,318.5		18.7		1,801.7
Total assets measured at fair value	$	464.5	$	1,318.5	$	18.7	$	1,801.7
Liabilities
Foreign Currency Derivatives	$	0	$	2.2	$	0	$	2.2
Total liabilities measured at fair value	$	0	$	2.2	$	0	$	2.2

	Fair Value Measurements at December 31, 2010 Using
Assets	Level 1		Level 2		Level 3		Total
Available-for-sale securities
Money Market funds	$	211.2	$	0	$	0	$	211.2
U.S. treasuries		116.3		0		0		116.3
Commercial paper		0		122.5		0		122.5
Corporate debt		0		476.8		0		476.8
U.S. government agencies		0		389.2		0		389.2
Non-U.S. government securities		0		21.1		0		21.1
Municipal notes		0		233.1		18.6		251.7
Total available-for-sale securities		327.5		1,242.7		18.6		1,588.8
Foreign Currency Derivatives		0		0.2		0		0.2
Total assets measured at fair value	$	327.5	$	1,242.9	$	18.6	$	1,589.0
Liabilities
Foreign Currency Derivatives	$	0	$	2.1	$	0	$	2.1
Total liabilities measured at fair value	$	0	$	2.1	$	0	$	2.1

Level 2 securities are priced using quoted market prices for similar instruments, nonbinding market prices that are corroborated by observable market data, or discounted cash flow techniques. The Company's derivative instruments are primarily classified as Level 2 as they are not actively traded and are valued using pricing models that use observable market inputs. There have been no transfers between Level 1 and Level 2 measurements during the three and six months ended June 30, 2011. Level 3 assets consist of municipal bonds with an auction reset feature (ARS) whose underlying assets are student loans which are substantially backed by the federal government. Since the auctions for these securities have continued to fail since February 2008, these investments are not currently trading and therefore do not have a readily determinable fair value. The Company has valued the ARS using a discounted cash flow model based on Level 3 assumptions, including estimates of, based on data available as of June 30, 2011, interest rates, timing and amount of cash flows, credit and liquidity premiums and expected holding periods of the ARS.

Foreign currency derivative

Cash Flow Hedges

The Company enters into currency forward contracts as cash flow hedges to hedge certain forecasted revenue transactions denominated in currencies other than the U.S. dollar, primarily the Euro and GBP.

As of June 30, 2011 and December 31, 2010, the Company had notional amounts of €24.5 million and €21.0 million, respectively, of outstanding currency forward contracts entered into to hedge Euro dominated sales. The net gains (losses) reclassified to revenue related to hedged revenue transactions for the three and six months ended June 30, 2011 were $(1.0) million and $(1.6) million, respectively, compared with $1.9 million and $2.5 million, respectively, for the same periods in 2010.

Other Derivatives Not Designated as Hedging Instruments

Other derivatives not designated as hedging instruments consist primarily of forward contracts that the Company uses to hedge intercompany balances and other monetary assets or liabilities denominated in currencies other than the U.S. dollar, primarily the Euro and GBP.

As of June 30, 2011, the Company had notional amounts of €22.5 million and £2.7 million outstanding currency forward contracts that were entered into to hedge non-functional currency denominated net monetary assets, compared to €26.0 million and £2.2 million at December 31, 2010. For the three months ended June 30, 2011 and 2010, the Company had recognized gains (losses) of approximately $(1.0) million and $1.9 million, respectively, in interest and other income, net, related to derivative instruments used to hedge against balance sheet foreign currency exposures. These were offset by net foreign exchange gains (losses) of approximately $1.0 million and $(2.2) million during the three months ended June 30, 2011 and 2010, respectively, primarily related to the re-measurement of non-functional currency denominated net monetary assets. For the six months ended June 30, 2011 and 2010, the Company had recognized gains (losses) of approximately $(3.2) million and $4.1 million, respectively, in interest and other income, net, related to derivative instruments used to hedge against balance sheet foreign currency exposures. These were offset by net foreign exchange gains (losses) of approximately $3.3 million and $(4.9) million during the six months ended June 30, 2011 and 2010, respectively, primarily related to the re-measurement of non-functional currency denominated net monetary assets.