FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2011

NOTE 5-FINANCIAL INSTRUMENTS

Investments in Debt and Equity Securities

The following is a summary of available-for-sale securities as of December 31, 2011 (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
U.S. government obligations and agency securities*	$	19,421	$	177	$	-		$	19,598
U.S. corporate debt*		24,942		259		(101	)		25,100
Non-U.S. government obligations and agency securities		2,805		6		(1	)		2,810
Non-U.S. corporate debt and equity securities		15,157		41		(268	)		14,930
Total available-for-sale securities	$	62,325	$	483	$	(370	)	$	62,438
Amounts mature in:
Less than one year								$	7,937
One to two years									25,785
More than two years									28,716
Total available-for-sale securities								$	62,438

* As of December 31, 2011, the Company had no investments in mortgage-backed securities in its portfolio.

The following is a summary of available-for-sale securities as of December 31, 2010 (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
U.S. government obligations and agency securities*	$	52,047	$	85	$	(76	)	$	52,056
U.S. corporate debt*		103,601		275		(684	)		103,192
U.S. and Non-U.S. money markets		3,642		-		(8	)		3,634
Non-U.S. government obligations and agency securities		8,155		24		(73	)		8,106
Non-U.S. corporate debt and equity securities		40,724		48		(243	)		40,529
Total securities	$	208,169	$	432	$	(1,084	)	$	207,517
Amounts included in:
Cash equivalents								$	6,103
Available-for-sale securities									201,414
Total securities								$	207,517
Amounts mature in:
Less than one year								$	73,326
One to two years									45,690
More than two years									88,501
Total available-for-sale securities								$	207,517

* As of December 31, 2010, approximately 4% of the Company's total portfolio was in mortgage-backed investments.

Realized gains for the years ended December 31, 2011 and 2010 were $0.6 million and $0.8 million, respectively. For the years ended December 31, 2011 and 2010, realized losses were $1.6 million and $0.3 million, respectively. Realized gains and losses are included in interest income and other, net in the Company's Consolidated Statements of Operations. The gross unrealized losses as of December 31, 2010 were primarily related to a mortgage-backed security with a carrying value of $0.6 million that was impacted by the weakening of the global economy caused by a lack of liquidity in the credit markets which had not fully recovered. The mortgage-backed security was sold in 2011 for a realized loss of $0.3 million. During the year ended December 31, 2011, an equity security that experienced a decline in fair value was deemed other-than-temporarily impaired and impairment charges totaling $0.8 million was recorded. No significant facts or circumstances have arisen to indicate that there has been any deterioration in the creditworthiness of the issuers of the Company's other securities.

Non-Marketable Securities

As of December 31, 2011 and 2010, the carrying amounts of the Company's non-marketable securities, totaling $5.0 million and $6.8 million, respectively, equaled their estimated fair values. Their estimated fair values were based on liquidation and net realizable values. During the year ended December 31, 2011, the Company recorded impairment charges on its non-marketable securities totaling $1.3 million primarily related to its limited partnership investment fund. During the year ended December 31, 2010, the Company recorded impairment charges on its non-marketable securities totaling $5.6 million, primarily due to declines in the estimated fair values of two of its investments in private biotechnology companies that were determined to be other-than-temporary as a result of the respective price per share paid by investors in the most recent round of financing for each company which, in each case, was significantly lower than the carrying value of the Company's investment. Net investment losses are included in interest income and other, net in the Company's Consolidated Statements of Operations. Depending on market conditions, the Company may incur additional charges on this investment portfolio in the future.

Derivative Financial Instruments

The Company derives a portion of its revenues in foreign currencies, predominantly in Europe and Japan, as part of its ongoing business operations. In addition, a portion of its assets are held in the nonfunctional currencies of its subsidiaries. The Company enters into foreign currency forward contracts to manage a portion of the volatility related to transactions that are denominated in foreign currencies. The Company's foreign currency forward contracts are entered into for periods consistent with the related underlying exposures and do not constitute positions that are independent of those exposures. The Company's accounting policies for these instruments are based on whether the instruments are classified as designated or non-designated hedging instruments. The Company records all derivatives on the Company's Consolidated Balance Sheets at fair value. The effective portions of designated cash flow hedges are recorded in OCI until the hedged item is recognized in operations. As of December 31, 2011, the Company's existing foreign currency forward exchange contracts mature within 12 months. The deferred amount related to the Company's derivatives currently recorded in OCI and expected to be recognized into earnings over the next 12 months is a net gain of $0.8 million. Derivatives that are not designated as hedging instruments and the ineffective portions of cash flow hedges are adjusted to fair value through earnings.

Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in other comprehensive income (loss) associated with such derivative instruments are reclassified immediately into operations through other income and expense. Any subsequent changes in fair value of such derivative instruments are reflected in other income and expense unless they are re-designated as hedges of other transactions. The Company did not recognize any net gains or losses related to the loss of hedge designation on discontinued cash flow hedges during 2011.

As of December 31, 2011, the total notional values of the Company's foreign currency forward contracts that mature within 12 months are as follows (in thousands):

	Contracts
	Qualifying
	as Hedges
December 31, 2011:
Euro	$	11,851
Japanese yen		7,008
British pound		4,459
Total	$	23,318

As of December 31, 2010, the Company did not have any unsettled foreign currency contracts in place.

As a result of the use of derivative instruments, the Company is exposed to the risk that the counterparties may be unable to meet the terms of the agreements. To mitigate the risk, only contracts with carefully selected highly-rated major financial institutions are entered into. In the event of non-performance by these counterparties, the asset position carrying values of the financial instruments represent the maximum amount of loss that can be incurred, however, no losses as a result of counterparty defaults are expected. The Company does not require and is not required to pledge collateral for these financial instruments. The Company does not enter into foreign currency forward contracts for trading or speculative purposes and is not party to any leveraged derivative instruments.

The following table shows the Company's foreign currency derivatives measured at fair value as reflected on the Company's Consolidated Balance Sheets as of December 31, 2011 (in thousands):

Fair Value of

Derivatives Not

Derivatives

Qualifying or

Balance Sheet

Designated as

Total

Location

Hedge Instruments

Fair Value

December 31, 2011:

Derivative assets:

Foreign exchange contracts

Other current assets

940

Derivative liabilities:

Foreign exchange contracts

Accrued expenses

217

The Company did not have any foreign currency derivatives as of December 31, 2010.

The following table shows the pre-tax effect of the Company's derivative instruments on OCI for the years ended December 31, 2011 and 2010 (in thousands):

	Amount of Gain (Loss) Recognized
	in OCI (Effective Portion)
	Year Ended December 31,
	2011		2010
Derivatives designated as cash flow hedges
Foreign exchange contracts	$	826	$	-

There were no amounts classified from OCI into operations during the year ended December 31, 2011.

The following table shows the pre-tax effect of the Company's derivative instruments on the Company's Consolidated Statements of Operations for the years ended December 31, 2011 and 2010 (in thousands):

	Amount of Gain (Loss) Recognized
	in Statements of Operations
	(Amount Excluded from
	Effectiveness Testing)
	Year Ended December 31,					Location of Gain (Loss) Recognized
	2011			2010		in Statements of Operations
Derivatives designated as cash flow hedges
Foreign exchange contracts	$	(103	)	$	-	Interest Income and Other, Net
Derivatives not designated as hedging instruments
Foreign exchange contracts		(1,720	)		957	Interest Income and Other, Net