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.


	September 30, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities
Money market funds	$	24,250	$	164,584	$	—	$	188,834
Equity securities	—		14,426		—		14,426
Commingled fixed income securities	1,509		7,784		—		9,293
Government and related securities	8,665		18,249		—		26,914
Corporate debt securities	—		51,081		—		51,081
Mortgage-backed / asset-backed securities	—		128,606		—		128,606
Derivatives
Interest rate swap	—		15,966		—		15,966
Foreign exchange contracts	—		7,302		—		7,302
Total assets	$	34,424	$	407,998	$	—	$	442,422
Liabilities:
Derivatives

Foreign exchange contracts	$	—	$	(2,810)	$	—	$	(2,810)
Total liabilities	$	—	$	(2,810)	$	—	$	(2,810)


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Investment securities
Money market funds	$	88,705	$	338,043	$	—	$	426,748
Equity securities	—		29,356		—		29,356
Commingled fixed income securities	1,692		16,815		—		18,507
Government and related securities	9,790		25,439		—		35,229
Corporate debt securities	—		65,167		—		65,167
Mortgage-backed / asset-backed securities	—		172,018		—		172,018
Derivatives
Interest rate swap	—		3,103		—		3,103
Foreign exchange contracts	—		2,474		—		2,474
Total assets	$	100,187	$	652,415	$	—	$	752,602
Liabilities:
Derivatives

Foreign exchange contracts	$	—	$	(304)	$	—	$	(304)
Total liabilities	$	—	$	(304)	$	—	$	(304)

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 when unadjusted quoted prices in active markets are available. 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. 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.

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 nine months ended September 30, 2022.


	September 30, 2022
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Government and related securities	$	35,855	$	12	$	(8,953)	$	26,914
Corporate debt securities	66,657		—		(15,576)		51,081
Commingled fixed income securities	1,742		—		(233)		1,509
Mortgage-backed / asset-backed securities	159,475		—		(30,869)		128,606
Total	$	263,729	$	12	$	(55,631)	$	208,110


	December 31, 2021
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Government and related securities	$	36,160	$	81	$	(1,012)	$	35,229
Corporate debt securities	67,906		259		(2,998)		65,167
Commingled fixed income securities	1,725		—		(33)		1,692
Mortgage-backed / asset-backed securities	176,559		144		(4,685)		172,018
Total	$	282,350	$	484	$	(8,728)	$	274,106


	September 30, 2022				December 31, 2021
	Fair Value		Gross unrealized losses		Fair Value		Gross unrealized losses
Greater than 12 continuous months
Government and related securities	$	16,937	$	2,930	$	16,018	$	579
Corporate debt securities	47,386		15,261		51,385		2,658
Commingled fixed income securities	—		—		—		—
Mortgage-backed / asset-backed securities	115,616		29,384		135,441		4,057
Total	$	179,939	$	47,575	$	202,844	$	7,294

Less than 12 continuous months
Government and related securities	$	9,530	$	6,023	$	15,438	$	433
Corporate debt securities	3,686		315		8,859		339
Commingled fixed income securities	1,509		233		1,692		33
Mortgage-backed / asset-backed securities	12,990		1,485		30,754		629
Total	$	27,715	$	8,056	$	56,743	$	1,434

At September 30, 2022, 99% of the securities 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. 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 expect to receive the stated principal and interest at maturity.


	Amortized cost		Estimated fair value
Within 1 year	$	2,295	$	2,058
After 1 year through 5 years	15,812		14,116
After 5 years through 10 years	72,928		57,703
After 10 years	172,694		134,233
Total	$	263,729	$	208,110

The actual maturities may not coincide with the scheduled maturities as certain securities contain early redemption features and/or allow for the prepayment of obligations.

In October 2022, we invested $10 million in Ambi Robotics Inc., a robotics solutions company, via a SAFE arrangement. The SAFE investment provides us the right to participate in future equity offerings by Ambi Robotics Inc. The investment will be carried at cost and the carrying value of the investment could be increased or decreased based on future observable transactions by Ambi Robotics Inc.

In the normal course of business, we are exposed to the impact of changes in foreign currency exchange rates and interest rates. We limit these risks by following established risk management policies and procedures, including the use of derivatives. We use derivative instruments to limit the effects of currency exchange rate fluctuations on financial results and manage the cost of debt. We do not use derivatives for trading or speculative purposes. Derivative instruments are recorded at fair value and the accounting for changes in 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 anticipated inventory purchases 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. At both September 30, 2022 and December 31, 2021, outstanding contracts associated with these anticipated transactions had a notional value of $1 million. Amounts included in AOCL at September 30, 2022 will be recognized in earnings within the next 12 months. No amount of ineffectiveness was recorded in earnings for these designated cash flow hedges.

We have interest rate swap agreements with an aggregate notional value of $200 million that are designated 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	September 30, 2022		December 31, 2021
Derivatives designated as hedging instruments
Foreign exchange contracts	Other current assets and prepayments	$	125	$	21
	Accounts payable and accrued liabilities	—		(10)

Interest rate swaps	Other assets	15,966		3,103

Derivatives not designated as hedging instruments
Foreign exchange contracts	Other current assets and prepayments	7,177		2,453
	Accounts payable and accrued liabilities	(2,810)		(294)

	Total derivative assets	$	23,268	$	5,577
	Total derivative liabilities	(2,810)		(304)
	Total net derivative asset	$	20,458	$	5,273


	Three Months Ended September 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	2022		2021			2022		2021
Foreign exchange contracts	$	134	$	41	Revenue	$	—	$	45
					Cost of sales	80		(21)
Interest rate swap	3,936		186		Interest expense	137		—
	$	4,070	$	227		$	217	$	24

	Nine Months Ended September 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	2022		2021			2022		2021
Foreign exchange contracts	$	257	$	215	Revenue	$	—	$	289
					Cost of sales	143		(126)
Interest rate swap	12,863		2,794		Interest expense	412		—
	$	13,120	$	3,009		$	555	$	163

We also enter into foreign exchange contracts to minimize the impact on earnings from the revaluation of short-term intercompany loans and related interest denominated in a foreign currency. These foreign exchange contracts are not designated as hedging instruments. Accordingly, the revaluation of intercompany loans and interest and the change in fair value of these derivatives are recorded in earnings. All outstanding contracts at September 30, 2022 mature within 3 months.

The impact on earnings from the change in fair value of these foreign exchange contracts, exclusive of the corresponding impact on earnings from the revaluation of the intercompany loans and related interest, was as follows:


		Three Months Ended September 30,
		Derivative Gain (Loss) Recognized in Earnings
Derivatives Instrument	Location of Derivative Gain (Loss)	2022		2021
Foreign exchange contracts	Selling, general and administrative expense	$	(24,116)	$	(5,592)

		Nine Months Ended September 30,
		Derivative Gain (Loss) Recognized in Earnings
Derivatives Instrument	Location of Derivative Gain (Loss)	2022		2021
Foreign exchange contracts	Selling, general and administrative expense	$	(45,299)	$	(4,524)

Our financial instruments include cash and cash equivalents, available-for-sale and held-to-maturity investment securities, accounts receivable, loan receivables, derivative instruments, accounts payable and debt. The carrying value of cash and cash equivalents, held-to-maturity investment securities, accounts receivable, loans receivable, and accounts payable approximate fair value. The fair value of available-for-sale investment securities and derivative instruments are presented above. 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 were classified as Level 2 in the fair value hierarchy. The carrying value and estimated fair value of debt was as follows: