FAIR VALUES OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2012

FAIR VALUES OF FINANCIAL INSTRUMENTS

NOTE 7—FAIR VALUES OF FINANCIAL INSTRUMENTS

The valuation methodologies we use to measure the fair values of our derivatives and available-for-sale securities are as follows:

Derivatives

Level 2 derivative assets and liabilities primarily include over-the-counter forward contracts, largely consisting of foreign currency derivative instruments. Where applicable, the value of these derivative assets and liabilities is computed by discounting the projected future cash flow amounts to present value using market-based observable inputs, including foreign exchange forward and spot rates, interest rates and counterparty performance risk adjustments.

At December 31, 2012, we had forward contracts outstanding to purchase or sell foreign currencies with a total notional value of $1.6 billion and a total asset position fair value of $21.4 million.

Available-for-Sale Securities

The following is a summary of our available-for-sale securities measured at fair value:

	12/31/12		Level 1		Level 2		Level 3
	(In thousands)
Mutual funds	$	2,023	$	—	$	2,023	$	—
Commercial paper		29,737		—		29,737		—
Asset-backed securities and collateralized mortgage obligations		8,477		—		2,134		6,343
Corporate notes and bonds		5,755		—		5,755		—
Total	$	45,992	$	—	$	39,649	$	6,343
	12/31/11		Level 1		Level 2		Level 3
	(In thousands)
Mutual funds	$	1,923	$	—	$	1,923	$	—
U.S. Government and agency securities		123,210		—		123,210		—
Asset-backed securities and collateralized mortgage obligations		8,131		—		2,101		6,030
Corporate notes and bonds		5,742		—		5,742		—
Total	$	139,006	$	—	$	132,976	$	6,030

Our Level 2 investments consist primarily of commercial paper, asset-backed commercial paper notes backed by a pool of mortgage-backed securities and mutual funds. The fair value of our Level 2 investments was determined using a market approach which is based on quoted prices and other information for similar or identical instruments.

Our Level 3 investment consists of asset-backed commercial paper notes backed by a pool of mortgage-backed securities. The fair value of this Level 3 investment was based on the calculation of an overall weighted-average valuation, using the prices of the underlying individual securities. Individual securities in the pool were valued based on market observed prices, where available. If market prices were not available, prices of similar securities backed by similar assets were used.

Changes in Level 3 Instrument

The following is a summary of the changes in our Level 3 instrument measured on a recurring basis for the years ended December 31, 2012 and 2011:

	December 31,
	2012			2011
	(In thousands)
Balance at beginning of period	$	6,030		$	7,372
Total realized and unrealized gains		1,674			75
Principal repayments		(1,361	)		(1,417	)
Balance at end of period	$	6,343		$	6,030

Other Financial Instruments

We used the following methods and assumptions in estimating our fair value disclosures for other financial instruments:

Cash and cash equivalents and restricted cash and cash equivalents. The carrying amounts that we have reported in the accompanying consolidated balance sheets for cash and cash equivalents and restricted cash and cash equivalents approximate their fair values.

Long—and short-term debt. The fair value of debt instruments is classified as Level 2 within the fair value hierarchy. We base the fair values of these debt instruments on quoted market prices. Where quoted prices are not available, we base the fair values on the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms.

The estimated fair values of certain of our financial instruments are as follows:

	December 31, 2012						December 31, 2011
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
	(In thousands)
Balance Sheet Instruments
Cash and cash equivalents	$	640,147		$	640,147		$	570,854		$	570,854
Restricted cash and cash equivalents	$	18,116		$	18,116		$	21,962		$	21,962
Investments	$	45,992		$	45,992		$	139,006		$	139,006
Debt	$	(102,708	)	$	(106,324	)	$	(93,735	)	$	(96,187	)
Derivative contracts	$	21,434		$	21,434		$	(5,029	)	$	(5,029	)