Fair Value Measurements

Derivative Financial Instruments

Cash Flow Hedges

We attempt to substantially mitigate the risk that forecasted cash flows denominated in foreign currencies may be adversely affected by changes in the currency exchange rates through the use of option, forward and combination option contracts. Gains and losses related to cash flow hedges are deferred in accumulated other comprehensive loss with a corresponding asset or liability. When the hedged transaction occurs, the gains and losses in accumulated other comprehensive loss are reclassified into the Condensed Consolidated Statements of Operations in the same line as the item being hedged. The following table sets forth our cash flow hedges which are measured at fair value on a recurring basis.



	September 30, 2012							December 31, 2011
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Unobservable Inputs (Level 3)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Unobservable Inputs (Level 3)
Derivative assets
Foreign currency option contracts	$	—	$	2.1		$	—	$	—	$	2.3		$	—
Foreign currency forward contracts	—		0.3			—		—		1.1			—
Derivative liabilities
Foreign currency option contracts	—		(1.9		)	—		—		(1.4		)	—
Total	$	—	$	0.5		$	—	$	—	$	2.0		$	—

Other Hedges

We use foreign currency forward contracts to manage the foreign currency exposure related to our monetary assets and liabilities denominated in foreign currencies. We record the estimated fair value of these forward contracts within other current assets or other current liabilities in the Condensed Consolidated Balance Sheets and changes in their value are recognized in the Condensed Consolidated Statements of Operations. For the three months ended September 30, 2012 and 2011, we recorded foreign currency losses of $0.1 million and $2.7 million, respectively, in Other Expenses, net in the Condensed Consolidated Statements of Operations. These losses reflect changes in foreign exchange rates on foreign denominated assets and liabilities and are net of losses of $0.1 million and $4.2 million from the related foreign currency forward contracts for the three months ended September 30, 2012 and 2011, respectively. For the nine months ended September 30, 2012 and 2011, we recorded foreign currency losses of $1.8 million and $4.6 million, respectively, in Other Expenses, net in the Condensed Consolidated Statements of Operations. These losses reflect changes in foreign exchange rates on foreign denominated assets and liabilities and are net of losses of $0.2 million and $4.3 million from the related foreign currency forward contracts for the nine months ended September 30, 2012 and 2011, respectively.

The notional amounts and fair values of our derivative instruments recorded in other current assets and other current liabilities in the Condensed Consolidated Financial Statements were as follows:



	September 30, 2012							December 31, 2011
			Fair Value							Fair Value
(In millions)	Notional Amount		Other Current Assets		Other Current Liabilities			Notional Amount		Other Current Assets		Other Current Liabilities
Cash flow hedges designated as hedging instruments	$	160.8	$	2.4	$	(1.9	)	$	208.2	$	3.4	$	(1.4	)
Other hedges not receiving hedge accounting	51.4		—		—			32.9		—		—
Total	$	212.2	$	2.4	$	(1.9	)	$	241.1	$	3.4	$	(1.4	)

On September 30, 2012, we entered into certain hedges not receiving hedge accounting treatment. In accordance with trade date accounting, these hedges and related exposures are recorded as of September 30, 2012, but do not have a value until the subsequent day.

Goodwill

We test the carrying amount of a reporting unit's goodwill for impairment on an annual basis during the fourth quarter of each year or if an event occurs or circumstances change that would warrant impairment testing during an interim period. In evaluating whether goodwill was impaired, we compare the estimated fair value of the reporting unit to its carrying value. The fair value measurement of goodwill is based on significant inputs not observable in the market and therefore represent Level 3 measurements. See Note 6 - Intangible Assets and Goodwill for further discussion of the goodwill impairment test performed during the third quarter of 2012.

In calculating the estimated fair value, we used the income approach, a valuation technique under which we estimate future cash flows using the reporting unit's financial forecasts. Our expected cash flows are affected by various significant assumptions, including the discount rate, revenue growth, gross margin percentage, and terminal value growth rate. Our analysis utilized discounted forecasted cash flows over a 10 year period with an estimation of residual growth rates thereafter. We use our business plans and projections as the basis for expected future cash flows. A discount rate of 17.6 percent was used to reflect the relevant risks of the higher growth assumed for the Mobile Security reporting unit. The revenue growth rates in 2012 through 2014, which are forecasted to be significant as we grow this business, are important assumptions within the fair value estimations. We utilized a terminal growth rate of 3.5 percent.

Contingent Consideration

Contingent consideration recorded for earn-out payments related to our acquisitions is recorded at fair value and remeasured on a recurring basis. We use the income approach in calculating the fair value of our contingent consideration as further described under the Goodwill section above. The same relevant assumptions were used in the fair value calculation of contingent consideration as those used in the fair value calculation of goodwill. Changes in the fair value of our contingent consideration obligations are recognized as a fair value adjustment within restructuring and other in our Condensed Consolidated Statements of Operations. These fair value measurements are based on significant inputs not observable in the market and therefore represent Level 3 measurements. See Note 4 - Acquisitions for further discussion of the fair value calculation of our contingent consideration as of September 30, 2012.