4. Investments & Fair Value Measurements

We use cash holdings to purchase investment grade securities diversified among security types, industries and issuers. All of our investment securities are measured at fair value, and are recorded within cash equivalents and both short-term and long-term investments in our consolidated balance sheets. With the exception of our mutual fund investments held in our SERP and classified as trading securities, all of our investment securities are classified as AFS securities.

Our investment securities primarily consist of municipal debt securities, corporate bonds, U.S. agency securities and commercial paper. In addition, our cash and cash equivalents also consist of highly-liquid money market funds. Consistent with our investment policy, none of our held municipal debt investments are supported by letters of credit or standby purchase agreements. Our cash and investment portfolio consists of the following (in thousands):



	March 31, 2017
	Cost		Unrealized							Estimated Fair Value
			Gains		Losses			Total		Level 1		Level 2		Level 3
Cash and cash equivalents:
Cash	$	522,850						$	522,850
Cash equivalents:
Money market funds	9,498		—		—			9,498		9,498
Corporate bonds	160		—		—			160				160
Cash and cash equivalents	532,508		—		—			532,508		9,498		160		—

Short-term investments:
Certificate of deposit (1)	28,318		19		(6		)	28,331				28,331
U.S. agency securities	2,715		—		(3		)	2,712		2,712
Commercial paper	15,353		5		(1		)	15,357				15,357
Corporate bonds	127,350		48		(109		)	127,289				127,289
Municipal debt securities	21,312		2		(6		)	21,308				21,308
Short-term investments	195,048		74		(125		)	194,997		2,712		192,285		—

Long-term investments:
Certificate of deposit (1)	6,230		—		(2		)	6,228				6,228
U.S. agency securities	24,809		—		(217		)	24,592		24,592
Government bonds	22,994		4		(197		)	22,801		22,801
Corporate bonds	228,406		322		(795		)	227,933				227,933
Municipal debt securities	41,592		52		(57		)	41,587				41,587
Other long-term investments (2)	3,282		377		—			3,659		377
Long-term investments	327,313		755		(1,268		)	326,800		47,770		275,748		—

Total cash, cash equivalents, and investments	$	1,054,869	$	829	$	(1,393	)	$	1,054,305	$	59,980	$	468,193	$	—

Investments held in supplemental retirement plan:
Assets	2,792							2,792		2,792
Included in prepaid expenses and other current assets & other non-current assets
Liabilities	2,792							2,792		2,792
Included in accrued liabilities & other non-current liabilities


(1)	Certificates of deposit include marketable securities, while those with a maturity in excess of one year as of March 31, 2017 are classified within long-term investments.


(2)	Other long-term investments as of March 31, 2017 include a marketable equity security of $0.4 million, and other investments that are not carried at fair value including an equity method investment of $0.8 million and two cost method investments of $2.0 million and $0.5 million.



	September 30, 2016
	Cost		Unrealized							Estimated Fair Value
			Gains		Losses			Total		Level 1		Level 2		Level 3
Cash and cash equivalents:
Cash	$	501,863						$	501,863
Cash equivalents:
Commercial paper	1,099		—		—			1,099				1,099
Corporate bonds	2,240		—		—			2,240				2,240
Money market funds	10,910		—		—			10,910		10,910
Cash and cash equivalents	516,112		—		—			516,112		10,910		3,339		—

Short-term investments:
Certificate of deposit (1)	13,912		6		—			13,918				13,918
Commercial paper	19,629		1		(10		)	19,620				19,620
Corporate bonds	63,762		24		(14		)	63,772				63,772
Municipal debt securities	24,334		—		(15		)	24,319				24,319
Short-term investments	121,637		31		(39		)	121,629		—		121,629		—

Long-term investments:
Certificate of deposit (1)	4,500		10		—			4,510				4,510
U.S. agency securities	27,536		24		(26		)	27,534		27,534
Government bonds	31,971		77		(12		)	32,036		32,036
Corporate bonds	295,921		715		(266		)	296,370				296,370
Municipal debt securities	30,090		28		(32		)	30,086				30,086
Other long-term investments (2)	3,002		366		—			3,368		366
Long-term investments	393,020		1,220		(336		)	393,904		59,936		330,966		—

Total cash, cash equivalents, and investments	$	1,030,769	$	1,251	$	(375	)	$	1,031,645	$	70,846	$	455,934	$	—

Investments held in supplemental retirement plan:
Assets	2,638							2,638		2,638
Included in prepaid expenses and other current assets & other non-current assets
Liabilities	2,638							2,638		2,638
Included in accrued liabilities & other non-current liabilities


(1)	Certificates of deposit include marketable securities, while those with a maturity in excess of one year as of September 30, 2016 are classified within long-term investments.


(2)	Other long-term investments as of September 30, 2016 include a marketable equity security of $0.4 million, and other investments that are not carried at fair value including an equity method investment of $0.5 million and two cost method investments of $2.0 million and $0.5 million.

Fair Value Hierarchy. Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. We minimize the use of unobservable inputs and use observable market data, if available, when determining fair value. We classify our inputs to measure fair value using the following three-level hierarchy:

Level 1: Quoted prices in active markets at the measurement date for identical assets and liabilities. We base the fair value of our Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments.

Level 2: Prices may be based upon quoted prices in active markets or inputs not quoted on active markets but are corroborated by market data. We obtain the fair value of our Level 2 financial instruments from a professional pricing service, which may use quoted market prices for identical or comparable instruments, or model driven valuations using observable market data or inputs corroborated by observable market data. To validate the fair value determination provided by our primary pricing service, we perform quality controls over values received which include comparing our pricing service provider’s assessment of the fair values of our investment securities against the fair values of our investment securities obtained from another independent source, reviewing the pricing movement in the context of overall market trends, and reviewing trading information from our investment managers. In addition, we assess the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy.

Level 3: Unobservable inputs are used when little or no market data is available and reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

Securities In Gross Unrealized Loss Position. We periodically evaluate our investments for other-than- temporary declines in fair value. The unrealized losses on our AFS securities were primarily the result of unfavorable changes in interest rates subsequent to the initial purchase of these securities. The following table presents the gross unrealized losses and fair value for those AFS securities that were in an unrealized loss position for less than twelve months and for twelve months or greater as of March 31, 2017 and September 30, 2016 (in thousands):



	March 31, 2017										September 30, 2016
	Less Than 12 Months					12 Months Or Greater					Less Than 12 Months					12 Months Or Greater
Investment Type	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Certificate of deposit	$	14,412	$	(8	)	$	—	$	—		$	—	$	—		$	—	$	—
U.S. agency securities	27,304		(220		)	—		—			22,988		(38		)	—		—
Government bonds	19,799		(197		)	—		—			—		—			—		—
Commercial paper	4,951		(1		)	—		—			11,479		(10		)	—		—
Corporate bonds	212,903		(904		)	—		—			153,491		(280		)	1,000		—
Municipal debt securities	33,902		(62		)	1,250		(1		)	35,625		(42		)	4,615		(5		)
Total	$	313,271	$	(1,392	)	$	1,250	$	(1	)	$	223,583	$	(370	)	$	5,615	$	(5	)

Although we had certain securities that were in an unrealized loss position as of March 31, 2017, we expect to recover the full carrying value of these securities as we do not intend to, nor do we currently anticipate a need to sell these securities prior to recovering the associated unrealized losses. As a result, we do not consider any portion of the unrealized losses at either March 31, 2017 or September 30, 2016 to represent an other-than-temporary impairment, nor do we consider any of the unrealized losses to be credit losses.

Investment Maturities. The following table summarizes the amortized cost and estimated fair value of the AFS securities within our investment portfolio based on stated maturities as of March 31, 2017 and September 30, 2016, which are recorded within cash equivalents and both short and long-term investments in our consolidated balance sheets (in thousands):



	March 31, 2017				September 30, 2016
Range of maturity	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within 1 year	$	204,708	$	204,655	$	135,886	$	135,884
Due in 1 to 2 years	219,732		219,571		225,679		225,953
Due in 2 to 3 years	104,297		103,570		164,339		164,583
Total	$	528,737	$	527,796	$	525,904	$	526,420