We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. An entity is required to classify certain assets and liabilities measured at fair value based on the following fair value hierarchy that prioritizes the inputs used to measure fair value:

Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity, may be derived from internally developed methodologies based on management’s best estimate of fair value and that are significant to the fair value of the asset or liability.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect its placement within the fair value hierarchy. The following tables show, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a recurring basis.


	June 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities
Money market funds	$	49,696	$	362,892	$	—	$	412,588
Equity securities	—		30,115		—		30,115
Commingled fixed income securities	1,706		19,325		—		21,031
Government and related securities	26,052		25,974		—		52,026
Corporate debt securities	—		67,674		—		67,674
Mortgage-backed / asset-backed securities	—		206,520		—		206,520
Derivatives
Interest rate swap	—		445		—		445
Foreign exchange contracts	—		438		—		438
Total assets	$	77,454	$	713,383	$	—	$	790,837
Liabilities:
Derivatives

Foreign exchange contracts	$	—	$	(1,722)	$	—	$	(1,722)
Total liabilities	$	—	$	(1,722)	$	—	$	(1,722)


	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities
Money market funds	$	73,228	$	434,791	$	—	$	508,019
Equity securities	—		26,583		—		26,583
Commingled fixed income securities	1,722		19,669		—		21,391
Government and related securities	16,776		16,757		—		33,533
Corporate debt securities	—		71,433		—		71,433
Mortgage-backed / asset-backed securities	—		220,678		—		220,678
Derivatives

Foreign exchange contracts	—		3,776		—		3,776
Total assets	$	91,726	$	793,687	$	—	$	885,413
Liabilities:
Derivatives
Interest rate swap	$	—	$	(2,163)	$	—	$	(2,163)
Foreign exchange contracts	—		(1,960)		—		(1,960)
Total liabilities	$	—	$	(4,123)	$	—	$	(4,123)

The valuation of investment securities is based on the market approach using inputs that are observable, or can be corroborated by observable data, in an active marketplace. The following information relates to our classification within the fair value hierarchy:

•Money Market Funds: Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid, low risk securities. Money market funds are principally used for overnight deposits and are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.

•Commingled Fixed Income Securities: Commingled fixed income securities are comprised of mutual funds that invest in a variety of fixed income securities, including securities of the U.S. government and its agencies, corporate debt, mortgage-backed securities and asset-backed securities. Fair value is based on the value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding, as reported by the fund manager. These mutual funds are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.

•Government and Related Securities: Debt securities are classified as Level 1 where active, high volume trades for identical securities exist. Valuation adjustments are not applied to these securities. Debt securities are classified as Level 2 where fair value is determined using quoted market prices for similar securities or benchmarking model derived prices to quoted market prices and trade data for identical or comparable securities.

•Corporate Debt Securities: Corporate debt securities are valued using recently executed comparable transactions, market price quotations or bond spreads for the same maturity as the security. These securities are classified as Level 2.

•Mortgage-Backed Securities / Asset-Backed Securities: These securities are valued based on external pricing indices or external price/spread data. These securities are classified as Level 2.

•Foreign Exchange Contracts: The valuation of foreign exchange derivatives is based on the market approach using observable market inputs, such as foreign currency spot and forward rates and yield curves. We have not seen a material change in the creditworthiness of those banks acting as derivative counterparties. These securities are classified as Level 2.

•Interest Rate Swaps: The valuation of interest rate swaps is based on an income approach using inputs that are observable or that can be derived from, or corroborated by, observable market data. These securities are classified as Level 2.

Available-for-sale securities are predominantly held at the Pitney Bowes Bank. Investment securities classified as available-for-sale are recorded at fair value with changes in fair value due to market conditions (i.e., interest rates) recorded in accumulated other comprehensive loss (AOCL), and changes in fair value due to credit conditions recorded in earnings. There were no unrealized losses due to credit losses charged to earnings through the six months ended June 30, 2021.


	June 30, 2021
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Government and related securities	$	51,055	$	107	$	(636)	$	50,526
Corporate debt securities	69,475		357		(2,158)		67,674
Commingled fixed income securities	1,716		—		(10)		1,706
Mortgage-backed / asset-backed securities	210,012		247		(3,739)		206,520
Total	$	332,258	$	711	$	(6,543)	$	326,426


	December 31, 2020
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Government and related securities	$	31,882	$	157	$	(78)	$	31,961
Corporate debt securities	71,174		614		(355)		71,433
Commingled fixed income securities	1,706		16		—		1,722
Mortgage-backed / asset-backed securities	220,659		734		(715)		220,678
Total	$	325,421	$	1,521	$	(1,148)	$	325,794


	June 30, 2021				December 31, 2020
	Fair Value		Gross unrealized losses		Fair Value		Gross unrealized losses
Less than 12 continuous months	$	287,161	$	6,483	$	132,267	$	1,072
Greater than 12 continuous months	2,016		60		2,369		76
Total	$	289,177	$	6,543	$	134,636	$	1,148

At June 30, 2021, 33% of the securities in the investment portfolio were in a loss position. We believe our allowance for credit losses on available-for-sale investment securities is adequate as our investments are primarily in highly liquid U.S. government and agency securities, high grade corporate bonds and municipal bonds. The majority of our mortgage-backed securities are either guaranteed or supported by the U.S. Government. We have not recognized an impairment on investment securities in an unrealized loss position because we have the ability and intent to hold these securities until recovery of the unrealized losses or we receive the stated principal and interest at maturity.


	Amortized cost		Estimated fair value
Within 1 year	$	13,147	$	13,149
After 1 year through 5 years	21,318		21,261
After 5 years through 10 years	60,188		58,612
After 10 years	237,605		233,404
Total	$	332,258	$	326,426

Held-to-maturity securities at June 30, 2021 were not material and at December 31, 2020 include $75 million of short-term, highly liquid time deposits. Due to the short-term nature of these securities, the carrying value approximated fair value.

In the normal course of business, we are exposed to the impact of changes in foreign currency exchange rates and interest rates. We mitigate these exposures by following established risk management policies and procedures, including the use of derivatives. We use derivative instruments to limit the effects of exchange rate fluctuations on financial results and manage the cost of debt. We do not use derivatives for trading or speculative purposes. We record derivative instruments at fair value and the accounting for changes in the fair value depends on the intended use of the derivative, the resulting designation and the effectiveness of the instrument in offsetting the risk exposure it is designed to hedge.

We enter into foreign exchange contracts to mitigate the currency risk associated with the anticipated purchase of inventory between affiliates and from third parties. These contracts are designated as cash flow hedges. The effective portion of the gain or loss on cash flow hedges is included in AOCL in the period that the change in fair value occurs and is reclassified to earnings in the period that the hedged item is recorded in earnings. No amount of ineffectiveness was recorded in earnings for these designated cash flow hedges. At June 30, 2021 and December 31, 2020, we had outstanding contracts associated with these anticipated transactions with notional amounts of less than $1 million and $8 million, respectively. Amounts included in AOCL at June 30, 2021 will be recognized in earnings within the next 12 months.

In May 2021, we terminated our $500 million aggregate notional amount of interest rate swap agreements. We received $2 million that was recorded in AOCL and will be recognized ratably in income through 2024. We concurrently entered into new interest rate swap agreements with an aggregate notional amount of $200 million and designated these instruments as cash flow hedges. The fair value of the interest rate swaps is recorded as a derivative asset or liability at the end of each reporting period with the change in fair value reflected in AOCL.


Designation of Derivatives	Balance Sheet Location	June 30, 2021		December 31, 2020
Derivatives designated as hedging instruments
Foreign exchange contracts	Other current assets and prepayments	$	60	$	96
	Accounts payable and accrued liabilities	(41)		(112)

Interest rate swaps	Other assets (Other noncurrent liabilities)	445		(2,163)

Derivatives not designated as hedging instruments
Foreign exchange contracts	Other current assets and prepayments	378		3,680
	Accounts payable and accrued liabilities	(1,681)		(1,848)

	Total derivative assets	$	883	$	3,776
	Total derivative liabilities	(1,722)		(4,123)
	Total net derivative liability	$	(839)	$	(347)


	Three Months Ended June 30,
	Derivative Gain (Loss) Recognized in AOCL (Effective Portion)				Location of Gain (Loss) (Effective Portion)	Gain (Loss) Reclassified from AOCL to Earnings (Effective Portion)
Derivative Instrument	2021		2020			2021		2020
Foreign exchange contracts	$	(54)	$	(121)	Revenue	$	118	$	(64)
					Cost of sales	(47)		32
Interest rate swap	(3,672)		(1,605)		Interest expense	—		—
	$	(3,726)	$	(1,726)		$	71	$	(32)

	Six Months Ended June 30,
	Derivative Gain (Loss) Recognized in AOCI (Effective Portion)				Location of Gain (Loss) (Effective Portion)	Gain (Loss) Reclassified from AOCI to Earnings (Effective Portion)
Derivative Instrument	2021		2020			2021		2020
Foreign exchange contracts	$	174	$	(281)	Revenue	$	244	$	(3)
					Cost of sales	(105)		42
Interest rate swap	2,608		(1,605)		Interest expense	—		—
	$	2,782	$	(1,886)		$	139	$	39

We enter into foreign exchange contracts to minimize the impact of exchange rate fluctuations on short-term intercompany loans and related interest that are denominated in a foreign currency. The revaluation of intercompany loans and interest and the corresponding mark-to-market adjustment on derivatives are recorded in earnings. All outstanding contracts at June 30, 2021 mature within 12 months.


		Three Months Ended June 30,
		Derivative Gain (Loss) Recognized in Earnings
Derivatives Instrument	Location of Derivative Gain (Loss)	2021		2020
Foreign exchange contracts	Selling, general and administrative expense	$	514	$	1,200

		Six Months Ended June 30,
		Derivative Gain (Loss) Recognized in Earnings
Derivatives Instrument	Location of Derivative Gain (Loss)	2021		2020
Foreign exchange contracts	Selling, general and administrative expense	$	1,067	$	(3,667)

Financial instruments not reported at fair value on a recurring basis include cash and cash equivalents, accounts receivable, loan receivables, accounts payable and debt. The carrying value for cash and cash equivalents, accounts receivable, loans receivable and accounts payable approximate fair value. The fair value of debt is estimated based on recently executed transactions and market price quotations. The inputs used to determine the fair value of debt are classified as Level 2 in the fair value hierarchy. The carrying value and estimated fair value of debt was as follows: