Fair Values

Pursuant to ASC 820, the inputs used to derive the fair value of assets and liabilities are analyzed and assigned a level I, II or III priority, with level I being the highest and level III being the lowest in the hierarchy. Level I inputs are quoted prices in active markets for identical assets or liabilities. Level II inputs are quoted prices for similar assets or liabilities in active markets: quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets. Level III inputs are based on valuations derived from valuation techniques in which one or more significant inputs are unobservable.

The following table provides a summary of the company’s assets and liabilities that are measured on a recurring basis (in thousands):



	Basis for Fair Value Measurements at Reporting Date
	Quoted Prices in Active Markets for Identical Assets / (Liabilities)	Significant Other Observable Inputs			Significant Other Unobservable Inputs
	Level I	Level II			Level III
September 30, 2017
Forward exchange contracts—net	—	$	(627	)	—
Convertible 2021 debt conversion liability	—	(47,557		)	—
Convertible 2021 note hedge asset	—	41,619			—
Convertible 2022 debt conversion liability	—	(47,738		)	—
Convertible 2022 note hedge asset	—	41,660			—
December 31, 2016
Forward exchange contracts—net	—	$	971		—
Convertible 2021 debt conversion liability	—	(30,708		)	—
Convertible 2021 note hedge asset	—	25,471			—

The carrying values and fair values of the company’s financial instruments are as follows (in thousands):



	September 30, 2017						December 31, 2016
	Carrying Value			Fair Value			Carrying Value			Fair Value
Cash and cash equivalents	$	155,964		$	155,964		$	124,234		$	124,234
Other investments	103			103			108			108
Installment receivables, net of reserves	2,070			2,070			1,834			1,834
Long-term debt (including current maturities of long-term debt) *	(240,852		)	(280,370		)	(161,349		)	(164,900		)
Convertible 2021 debt conversion liability in Other Long-Term Obligations	(47,557		)	(47,557		)	(30,708		)	(30,708		)
Convertible 2021 note hedge in Other Long-Term Assets	41,619			41,619			25,471			25,471
Convertible 2022 debt conversion liability in Other Long-Term Obligations	(47,738		)	(47,738		)	—			—
Convertible 2022 note hedge in Other Long-Term Assets	41,660			41,660			—			—
Forward contracts in Other Current Assets	1,238			1,238			2,754			2,754
Forward contracts in Accrued Expenses	(1,865		)	(1,865		)	(1,783		)	(1,783		)

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* The company's long-term debt is shown net of discount and fees associated with the Convertible Senior Notes due 2021 and 2022 on the company's condensed consolidated balance sheet. Accordingly, the fair values of the Convertible Senior Notes due 2021 and 2022 are included in the long-term debt presented in this table is also shown net of the discount and fees.

The company, in estimating its fair value disclosures for financial instruments, used the following methods and assumptions:

Cash, cash equivalents: The carrying value reported in the balance sheet for cash, cash equivalents equals its fair value.

Other investments: The company has made other investments in a limited partnership, which is accounted for using the cost method, adjusted for any estimated declines in value. These investments were acquired in private placements and there is no quoted market price or stated rate of return. The company does not have the ability to easily sell the investment. The company completes an evaluation of the residual value related to such investments in the fourth quarter each year.

Installment receivables: The carrying value reported in the balance sheet for installment receivables approximates its fair value. The interest rates associated with these receivables have not varied significantly since inception. Management believes that after consideration of the credit risk, the net book value of the installment receivables approximates market value.

Long-term debt: Fair value for the company’s convertible debt is based on quoted market-based estimates as of the end of the period, while the revolving credit facility fair value is based upon an estimate of the market for similar borrowing arrangements. The fair values are deemed to be categorized as Level 2 in the fair value hierarchy.

Convertible debt derivatives: The fair values for the convertible debt conversion liability and note hedge derivatives are based on valuation models in which all the significant inputs are observable in active markets.

Forward contracts: The company operates internationally, and as a result, is exposed to foreign currency fluctuations. Specifically, the exposure includes intercompany loans and third-party sales or payments. In an attempt to reduce this exposure, foreign currency forward contracts are utilized and accounted for as hedging instruments. The forward contracts are used to hedge the following currencies: AUD, CAD, CHF, CNY, DKK, EUR, GBP, MXP, NOK, NZD, SEK and USD. The company does not use derivative financial instruments for speculative purposes. Fair values for the company’s foreign exchange forward contracts are based on quoted market prices for contracts with similar maturities. The company’s forward contracts are included in Other Current Assets or Accrued Expenses in the Consolidated Balance Sheets.