INVESTMENTS

Short-term and Long-term Investments in Marketable Securities

The Company has classified its investments in marketable debt securities as available-for-sale securities. These securities are reported at estimated fair value with the aggregate unrealized gains and losses related to these investments, net of taxes, reflected as a part of "Accumulated other comprehensive income" in the Unaudited Consolidated Balance Sheets. Classification as short-term or long-term investment is based upon the maturity of the debt securities. As of March 31, 2018, the Company does not consider any of its investments to be other-than-temporarily impaired.

The Company's investments in marketable equity securities are reported at estimated fair value in the Unaudited Consolidated Balance Sheets. Pursuant to the adoption of the accounting update on financial instruments (see Note 1), for periods beginning after December 31, 2017, changes in fair value of the equity securities are recognized in net income rather than accumulated other comprehensive income. Therefore, the Company reclassified net unrealized gains of $298.7 million ($241.1 million net of tax) as of January 1, 2018 from accumulated other comprehensive income to retained earnings in the Unaudited Consolidated Balance Sheet. For the three months ended March 31, 2018, the Company recognized $54.5 million in "Net unrealized gains on marketable equity securities" in the Unaudited Consolidated Statement of Operations.

The following table summarizes, by major security type, the Company's investments as of March 31, 2018 (in thousands):



	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term investments:
Debt securities:
International government securities	$	461,389	$	56	$	(555	)	$	460,890
U.S. government securities	794,489		—		(4,064		)	790,425
Corporate debt securities	2,952,709		256		(14,565		)	2,938,400
U.S government agency securities	4,435		—		(27		)	4,408
Commercial paper	46,581		—		—			46,581
Total short-term investments	$	4,259,603	$	312	$	(19,211	)	$	4,240,704

Long-term investments:
Debt securities:
International government securities	$	786,958	$	1,760	$	(584	)	$	788,134
U.S. government securities	555,413		—		(11,525		)	543,888
Corporate debt securities	5,744,951		7,272		(71,499		)	5,680,724
U.S. government agency securities	500		—		(6		)	494
Ctrip convertible debt securities	1,275,000		136,013		—			1,411,013
Equity securities:
Ctrip equity securities	655,311		353,199		—			1,008,510
Total long-term investments	$	9,018,133	$	498,244	$	(83,614	)	$	9,432,763

The Company's investment policy seeks to preserve capital and maintain sufficient liquidity to meet operational and other needs of the business. As of March 31, 2018, the weighted-average life of the Company’s fixed income investment portfolio, excluding the Company's investment in Ctrip convertible debt securities, was approximately 1.6 years with an average credit quality of A+/A1/A+.

The Company invests in international government securities with high credit quality. As of March 31, 2018, investments in international government securities principally included debt securities issued by the governments of the Netherlands, France, Belgium, Austria and Germany.

The following table summarizes, by major security type, the Company's investments as of December 31, 2017 (in thousands):



	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term investments:
Debt securities:
International government securities	$	725,566	$	246	$	(436	)	$	725,376
U.S. government securities	996,112		5		(1,999		)	994,118
Corporate debt securities	3,067,703		449		(4,837		)	3,063,315
U.S. government agency securities	4,444		—		(30		)	4,414
Commercial paper	72,650		—		—			72,650
Total short-term investments	$	4,866,475	$	700	$	(7,302	)	$	4,859,873

Long-term investments:
Debt securities:
International government securities	$	607,000	$	1,588	$	(678	)	$	607,910
U.S. government securities	844,910		2		(10,636		)	834,276
Corporate debt securities	6,689,747		8,399		(41,722		)	6,656,424
U.S. government agency securities	500		—		(6		)	494
Ctrip convertible debt securities	1,275,000		103,100		(9,600		)	1,368,500
Equity securities:
Ctrip equity securities	655,311		299,697		(1,012		)	953,996
Total long-term investments	$	10,072,468	$	412,786	$	(63,654	)	$	10,421,600

Investments in Ctrip

On May 26, 2015 and August 7, 2014, the Company invested $250 million and $500 million, respectively, in five-year senior convertible notes issued at par value by Ctrip. On December 11, 2015, the Company invested $500 million in a Ctrip ten-year senior convertible note issued at par value, which included a put option allowing the Company, at its option, to require a prepayment in cash from Ctrip at the end of the sixth year of the note. On September 12, 2016, the Company invested $25 million in a Ctrip six-year senior convertible note issued at par value, which included a put option allowing the Company, at its option, to require prepayment in cash from Ctrip at the end of the third year of the note. The Company determined that the economic characteristics and risks of the put option are clearly and closely related to the note, and therefore were not embedded derivatives.

The Company evaluated the conversion features for all Ctrip senior convertible notes and only the conversion feature associated with the September 2016 investment met the definition of an embedded derivative (see Note 6). The Company monitors the conversion features of these notes to determine whether they meet the definition of an embedded derivative during each reporting period. The Ctrip convertible notes have been marked-to-market in accordance with the accounting guidance for available-for-sale securities. As of March 31, 2018, the Company had also invested $655.3 million in Ctrip American Depositary Shares ("ADSs").

In connection with the Company's investments in Ctrip's convertible notes, Ctrip granted the Company the right to appoint an observer to its board of directors and permission to acquire its shares (through the acquisition of Ctrip ADSs in the open market) so that combined with ADSs issuable upon conversion of the August 2014, May 2015 and September 2016 convertible notes, the Company could hold up to an aggregate of approximately 15% of Ctrip's outstanding equity plus any ADSs issuable upon the conversion of the December 2015 convertible notes. As of March 31, 2018, the Company did not have significant influence over Ctrip.

Equity Investments without Readily Determinable Fair Value

The Company held investments in equity securities of private companies, which are typically at an early stage of development, of $450.9 million at March 31, 2018 and December 31, 2017. These investments are measured at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer and are included in "Other assets" in the Company's Unaudited Consolidated Balance Sheets. There were no identified events or changes in circumstances to indicate a potential impairment with these investments as of March 31, 2018.