Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Measurements

NOTE 5 — Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 are classified using the fair value hierarchy in the table below:

	Total		Level 1		Level 2
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	677,523	$	677,523	$	—
Time deposits		89,084		—		89,084
Restricted cash:
Time deposits		9,855		—		9,855
Investments:
Time deposits		525,533		—		525,533
Corporate debt securities		245,477		—		245,477
Total assets	$	1,547,472	$	677,523	$	869,949
Liabilities
Derivatives:
Foreign currency forward contracts	$	3,290	$	—	$	3,290

Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2011 are classified using the fair value hierarchy in the table below:

	Total		Level 1		Level 2
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	310,075	$	310,075	$	—
Restricted cash:
Time deposits		9,754		—		9,754
Derivatives:
Foreign currency forward contracts		1,043		—		1,043
Investments:
Time deposits		592,162		—		592,162
Corporate debt securities		268,664		—		268,664
Total assets	$	1,181,698	$	310,075	$	871,623

We classify our cash equivalents and investments within Level 1 and Level 2 as we value our cash equivalents and investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Valuation of the foreign currency forward contracts is based on foreign currency exchange rates in active markets, a Level 2 input.

As of December 31, 2012 and 2011, our cash and cash equivalents consisted primarily of prime institutional money market funds with maturities of 90 days or less, time deposits as well as bank account balances.

We invest in investment grade corporate debt securities, all of which are classified as available for sale. As of December 31, 2012, we had $119 million of short-term and $126 million of long-term available for sale investments and the amortized cost basis of the investments approximated their fair value with gross unrealized gains of $2 million and gross unrealized losses of less than $1 million. As of December 31, 2011, we had $57 million of short-term and $212 million of long-term available for sale investments and the amortized cost basis of the investments approximated their fair value with gross unrealized gains of $2 million and gross unrealized losses of $1 million.

We also hold time deposit investments with financial institutions. Time deposits with original maturities of less than 90 days are classified as cash equivalents and those with remaining maturities of less than one year are classified within short-term investments. Additionally, we have time deposits classified as restricted cash to fulfill the requirement of an aviation authority of a certain foreign country to protect against the potential non-delivery of travel services in that country. Of the total time deposit investments, $274 million and $237 million as of December 31, 2012 and 2011 related to balances held by our majority-owned subsidiaries.

We use foreign currency forward contracts to economically hedge certain merchant revenue exposures and in lieu of holding certain foreign currency cash for the purpose of economically hedging our foreign currency-denominated operating liabilities. As of December 31, 2012, we were party to outstanding forward contracts hedging our liability exposures with a total net notional value of $667 million. We had a net forward liability of $3 million as of December 31, 2012 recorded in accrued expenses and other current liabilities and a net forward asset of $1 million as of December 31, 2011 recorded in prepaid expenses and other current assets. We recorded $(21) million, $(1) million and $6 million in net gains (losses) from foreign currency forward contracts in 2012, 2011 and 2010.