FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2013

NOTE 6—FAIR VALUE MEASUREMENTS

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


	Total at June 30, 2013		Level 1		Level 2		Level 3
	(Unaudited)
	(In thousands)
Mutual funds⁽¹⁾	$	2,058	$	—	$	2,058	$	—
Commercial paper		9,893		—		9,893		—
Asset-backed securities and collateralized mortgage obligations⁽²⁾		8,092		—		2,190		5,902
Corporate notes and bonds⁽³⁾		1,001		—		1,001		—

Total	$	21,044	$	—	$	15,142	$	5,902


	Total at December 31, 2012		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

(1)	Various U.S. equities and other investments managed under mutual funds

(2)	Asset-backed and mortgage-backed securities with maturities of up to 26 years

(3)	Corporate notes and bonds with maturities of three years or less

Our Level 2 investments consist primarily of commercial paper, corporate notes and bonds, 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 three months and six months ended June 30, 2013 and June 30, 2012:


	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Unaudited) (In thousands)
Balance at beginning of period	$	6,157		$	6,177		$	6,343		$	6,030
Total realized and unrealized gains		18			456			228			898
Principal repayments		(273	)		(295	)		(669	)		(590	)

Balance at end of period	$	5,902		$	6,338		$	5,902		$	6,338

Unrealized Losses on Investments

Our net unrealized loss on investments was $1.9 million and $2.4 million at June 30, 2013 and December 31, 2012, respectively. The investments in an unrealized loss position for twelve months or longer are asset-backed and mortgage-backed obligations. These investments have generally shown a positive trend and continue to perform, and we currently do not have the intent to sell these securities before their anticipated recovery. Based on our analysis of these investments, we believe that none of our available-for-sale securities were other than temporarily impaired as of June 30, 2013. The amount of investments in an unrealized loss position for less than twelve months was not significant for either of the periods presented. The following is a summary of our available-for-sale securities:


	Twelve Months or Greater
	Fair Value		Unrealized Losses
	(Unaudited) (In thousands)
June 30, 2013
Mutual funds	$	2,058	$	—
Commercial paper		9,893		—
Asset-backed securities and collateralized mortgage obligations		8,092		(1,659	)
Corporate notes and bonds		1,001		—

Total	$	21,044	$	(1,659	)


	Twelve Months or Greater
	Fair Value		Unrealized Losses
	(Unaudited) (In thousands)
December 31, 2012
Mutual funds	$	2,023	$	—
Commercial paper		29,737		—
Asset-backed securities and collateralized mortgage obligations		8,477		(2,376	)
Corporate notes and bonds		5,755		—

Total	$	45,992	$	(2,376	)

Other Financial Instruments

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

Cash and restricted cash and cash equivalents. The carrying amounts that we have reported in the accompanying condensed consolidated balance sheets for cash, cash equivalents and restricted cash and cash equivalents approximate their fair values and are classified as Level 1 within the fair value hierarchy.

Short-term and long-term debt. The fair value of debt instruments is classified as Level 2 within the fair value hierarchy and is valued using a market approach based on quoted prices for similar instruments traded in active markets. Where quoted prices are not available, the income approach is used to value these instruments based 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.

Forward contracts. The fair value of forward contracts is classified as Level 2 within the fair value hierarchy and is valued using observable market parameters for similar instruments traded in active markets. Where quoted prices are not available, the income approach is used to value these forward contracts, which discounts future cash flows based on current market expectations and credit risk.

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


	June 30, 2013						December 31, 2012
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
	(Unaudited)
	(In thousands)
Balance Sheet Instruments
Cash and cash equivalents	$	427,711		$	427,711		$	640,147		$	640,147
Restricted cash and cash equivalents	$	24,486		$	24,486		$	18,116		$	18,116
Investments	$	21,044		$	21,044		$	45,992		$	45,992
Debt	$	(95,635	)	$	(98,640	)	$	(102,708	)	$	(106,324	)
Forward contracts	$	(42,892	)	$	(42,892	)	$	21,434		$	21,434

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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