FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2012

FAIR VALUE MEASUREMENTS

19. FAIR VALUE MEASUREMENTS

The Company follows the guidance for fair value measurements and fair value option for financial assets and liabilities, which primarily relate to the Company’s investments and forward contracts and for nonfinancial assets and liabilities.

This standard includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions.

The fair value hierarchy consists of the following three levels:

• Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

• Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table summarizes our financial assets measured at fair value on a recurring basis as of December 31, 2012:

	(In millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-Available for Sale Securities	$	60.6	$	—	$	—	$	60.6
Term Deposits		—		266.1				266.1
Total Assets measured at fair value	$	60.6	$	266.1	$	—	$	326.7

The following table summarizes our financial assets measured at fair value on a recurring basis as of December 31, 2011:

	(In millions)
	Level 1		Level 2			Level 3		Total
Cash & Cash Equivalents
Money Market Funds	$	17.6	$	—		$	—	$	17.6
Short Term Investments-Available for Sale Securities		25.0		—			—		25.0
Term Deposits				190.8					190.8
Fair value of foreign exchange forward contracts		—		(2.6	)		—		(2.6	)
Total Assets measured at fair value	$	42.6	$	188.2		$	—	$	230.8

The value of each foreign exchange forward contract, at the end of each reporting period is calculated by using the forward contract rates published by Foreign Exchange Dealers’ Association of India (F.E.D.A.I). The difference between the current market forward price and the contracted forward price for each foreign exchange contract is calculated which then is applied to each outstanding contract. The market forward rates include a premium or a discount and the credit risk factor. The amounts are aggregated by type of contract and maturity.

Foreign currency option contracts are valued using third party valuation models based on market observable inputs, including general interest rate, market volatilities, credit risk, cash flow projections and size of the transaction.