Fair Value Measurements

6 Months Ended

Jun. 30, 2013

The tables below present information about our assets and liabilities that are regularly measured and carried at fair value and indicate the level within the fair value hierarchy of the valuation techniques we utilized to determine such fair value:



(In millions)	As of June 30, 2013		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	261.5	$	—	$	261.5	$	—
Marketable debt securities:
Corporate debt securities	99.6		—		99.6		—
Government securities	273.2		—		273.2		—
Mortgage and other asset backed securities	9.5		—		9.5		—
Marketable equity securities	28.9		28.9		—		—
Venture capital investments	23.5		—		—		23.5
Derivative contracts	5.9		—		5.9		—
Plan assets for deferred compensation	16.1		—		16.1		—
Total	$	718.2	$	28.9	$	665.8	$	23.5
Liabilities:
Derivative contracts	$	5.9	$	—	$	5.9	$	—
Contingent consideration obligations	281.0		—		—		281.0
Total	$	286.9	$	—	$	5.9	$	281.0



(In millions)	As of December 31, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	439.4	$	—	$	439.4	$	—
Marketable debt securities:
Corporate debt securities	1,001.0		—		1,001.0		—
Government securities	1,657.8		—		1,657.8		—
Mortgage and other asset backed securities	512.9		—		512.9		—
Marketable equity securities	9.0		9.0		—		—
Venture capital investments	20.3		—		—		20.3
Derivative contracts	1.8		—		1.8		—
Plan assets for deferred compensation	14.3		—		14.3		—
Total	$	3,656.5	$	9.0	$	3,627.2	$	20.3
Liabilities:
Derivative contracts	$	14.4	$	—	$	14.4	$	—
Contingent consideration obligations	293.9		—		—		293.9
Total	$	308.3	$	—	$	14.4	$	293.9

There has been no impairment of our assets measured at fair value during the three and six months ended June 30, 2013. In addition, there were no changes in valuation techniques or inputs utilized or transfers between fair value measurement levels during the three and six months ended June 30, 2013. The fair value of Level 2 instruments classified as cash equivalents and marketable debt securities were determined through valuation models of third party pricing services. For a description of our validation procedures related to prices provided by third party pricing services, refer to Note 1, Summary of Significant Accounting Policies: Fair Value Measurements, to our consolidated financial statements included within our 2012 Form 10-K.

Marketable Equity Securities and Venture Capital Investments

Our marketable equity securities represent investments in publicly traded equity securities. Our venture capital investments, which are Level 3 measurements, include investments in certain venture capital funds, accounted for at fair value, that primarily invest in small privately-owned, venture-backed biotechnology companies. These venture capital investments represented approximately 0.2% of total assets as of June 30, 2013 and December 31, 2012, respectively.

The following table provides a roll-forward of the fair value of our venture capital investments that are Level 3 assets:



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(In millions)	2013			2012			2013			2012
Fair value, beginning of period	$	18.0		$	22.1		$	20.3		$	23.5
Unrealized gains included in earnings	6.1			3.1			6.7			3.5
Unrealized losses included in earnings	(0.6		)	(0.2		)	(2.0		)	(2.0		)
Purchases	—			0.4			—			0.4
Settlements	—			—			(1.5		)	—
Fair value, end of period	$	23.5		$	25.4		$	23.5		$	25.4

Debt Instruments

The fair and carrying values of our debt instruments, which are Level 2 liabilities, are summarized as follows:



	As of June 30, 2013				As of December 31, 2012
(In millions)	Fair Value		Carrying Value		Fair Value		Carrying Value
Notes payable to Fumedica	$	15.9	$	14.4	$	20.0	$	17.9
Credit facility	—		—		—		—
6.0% Senior Notes due March 1, 2013	—		—		453.7		450.0
6.875% Senior Notes due March 1, 2018	654.3		583.3		681.6		586.4
Total	$	670.2	$	597.7	$	1,155.3	$	1,054.3

The fair value of our notes payable to Fumedica was estimated using market observable inputs, including current interest and foreign currency exchange rates. The fair value of our 6.875% Senior Notes was determined through market, observable, and corroborated sources. For additional information related to our debt instruments, please read Note 11, Indebtedness to these condensed consolidated financial statements.

Contingent Consideration Obligations

The following table provides a roll-forward of the fair values of our contingent consideration obligations that are Level 3 measurements:



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(In millions)	2013			2012			2013			2012
Fair value, beginning of period	$	293.7		$	269.9		$	293.9		$	151.0
Additions	—			4.6			—			122.2
Changes in fair value	(5.2		)	12.9			(2.9		)	14.1
Payments	(7.5		)	(6.5		)	(10.0		)	(6.5		)
Fair value, end of period	$	281.0		$	280.9		$	281.0		$	280.9

As of June 30, 2013 and December 31, 2012, approximately $253.1 million and $271.5 million, respectively, of the fair value of our total contingent consideration obligations were reflected as components of other long-term liabilities within our condensed consolidated balance sheets with the remaining balances reflected as a component of accrued expenses and other.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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