Fair Value Of Financial Instruments

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Of Financial Instruments

Fair Value of Financial Instruments

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 and December 31, 2011:

			Fair Value Measurement Using
	Total Fair Value		Level 1		Level 2		Level 3
	(In thousands)
As of December 31, 2012
Assets:
Investments in money market funds	$	38,054	$	38,054	$	—	$	—
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	1,452,358		1,419,280		33,078		—
Equity securities of public company	3,341		—		3,341		—
Foreign currency forward contracts (1)	71		—		71		—
Total	$	1,493,824	$	1,457,334	$	36,490	$	—
Liabilities:
Contingent interest derivative on Convertible Debentures	$	11,203	$	—	$	—	$	11,203
Foreign currency forward contracts (2)	765		—		765		—
Total	$	11,968	$	—	$	765	$	11,203
As of December 31, 2011:
Assets:
Investments in money market funds	$	132,145	$	132,145	$	—	$	—
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	32,860		—		32,860		—
Foreign currency forward contracts (1)	49		—		49		—
Total	$	165,054	$	132,145	$	32,909	$	—
Liabilities:
Contingent interest derivative on Convertible Debentures	$	11,625	$	—	$	—	$	11,625
Foreign currency forward contracts (2)	444		—		444		—
Total	$	12,069	$	—	$	444	$	11,625

(1) Included in Prepaid expenses and other current assets

(2) Included in Accounts payable and accrued liabilities

The fair value of the Company’s investments in money market funds approximates their face value. Such instruments are classified as Level 1 and are included in Cash and cash equivalents.

The fair value of the debt securities consisting of U.S. Treasury bills is based on their quoted market prices and are classified as Level 1. The fair value of the Company’s investments in other debt securities are obtained using the weighted average price of available market prices for the underlying securities from various industry standard data providers, large financial institutions and other third-party sources and are classified as Level 2. Debt securities purchased with original maturities in excess of three months are included in Marketable securities.

The equity securities of a public company held by the Company at December 31, 2012 relate to a former cost method investment that the Company had previously written off. Beginning in September 2012, the equity securities held by the Company became publicly traded but are subject to a holding period which will expire in March 2013. The fair value of the investment is based on the quoted market price at the end of the period, adjusted for an estimate of the value of the remaining three month restriction. As most of the significant inputs in the fair value are observable, the investment is classified as Level 2.

The fair value of the Company’s foreign currency forward contracts is based on foreign currency rates quoted by banks or foreign currency dealers and other public data sources.

The Company utilizes a valuation model to estimate the fair value of the contingent interest derivative on the Convertible Debentures. The inputs to the model include stock price, bond price, risk adjusted interest rates, volatility, and credit spread observations. As several significant inputs are not observable, the overall fair value measurement of the derivative is classified as Level 3. The volatility and credit spread assumptions used in the calculation are the most significant unobservable inputs. As of December 31, 2012, the valuation of the contingent interest derivative assumed a volatility rate of approximately 30%. A hypothetical 5% increase or decrease in the volatility rate would not significantly change the fair value of the contingent interest derivative. The credit spread assumed in the valuation was approximately 3% at December 31, 2012. A hypothetical 1% increase or decrease in the credit spread would not significantly change the fair value of the contingent interest derivative.

The following table summarizes the change in the fair value of the Company’s contingent interest derivative on Convertible Debentures during the year ended December 31, 2012 and 2011:

	Year Ended December 31,
	2012			2011
	(In thousands)
Beginning balance	$	11,625		$	10,500
Unrealized (gain) loss on contingent interest derivative on Convertible Debentures	(422		)	1,125
Ending balance	$	11,203		$	11,625

Other

The Company’s other financial instruments include cash, accounts receivable, restricted cash, accounts payable, and long-term debt. As of December 31, 2012, the carrying value of these financial instruments approximated their fair value. The fair value of the Company’s Convertible Debentures as of December 31, 2012, is $1.6 billion, and is based on available market information from public data sources. The fair value measurement of the Company’s Convertible Debentures is classified as Level 2.