FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2020

Investments, All Other Investments [Abstract]

Cash, Cash Equivalents, and Investments

The following tables summarize the Company’s cash and available-for-sale marketable securities’ amortized cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category reported as cash and cash equivalents, short-term investments, or long-term investments as of September 30, 2020, and December 31, 2019 (in millions):


											Reported as:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Loss		Fair Value		Cash and Cash Equivalents		Short- term Investments		Long- term Investments
September 30, 2020
Cash	$	508.7	$	—	$	—	$	—	$	508.7	$	508.7	$	—	$	—
Level 1:
Money market funds	745.5		—		—		—		745.5		745.5		—		—
U.S. treasuries	2,337.5		28.9		—		—		2,366.4		108.5		1,405.2		852.7
Subtotal	3,083.0		28.9		—		—		3,111.9		854.0		1,405.2		852.7
Level 2:
Commercial paper	554.1		—		—		—		554.1		5.0		549.1		—
Corporate debt securities	1,514.8		15.1		(0.2)		—		1,529.7		2.9		1,135.0		391.8
U.S. government agencies	550.2		3.0		—		—		553.2		—		228.0		325.2
Non-U.S. government securities	9.5		—		—		—		9.5		—		4.5		5.0
Municipal securities	92.1		2.2		—		—		94.3		—		25.8		68.5
Subtotal	2,720.7		20.3		(0.2)		—		2,740.8		7.9		1,942.4		790.5



Total assets measured at fair value	$	6,312.4	$	49.2	$	(0.2)	$	—	$	6,361.4	$	1,370.6	$	3,347.6	$	1,643.2


									Reported as:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Short- term Investments		Long- term Investments
December 31, 2019
Cash	$	413.1	$	—	$	—	$	413.1	$	413.1	$	—	$	—
Level 1:
Money market funds	726.8		—		—		726.8		726.8		—		—
U.S. treasuries	1,935.8		9.7		(0.4)		1,945.1		—		890.8		1,054.3
Subtotal	2,662.6		9.7		(0.4)		2,671.9		726.8		890.8		1,054.3
Level 2:
Commercial paper	165.1		—		—		165.1		25.5		139.6		—
Corporate debt securities	2,096.1		16.8		(0.2)		2,112.7		—		798.5		1,314.2
U.S. government agencies	418.3		1.1		(0.2)		419.2		—		209.6		209.6
Non-U.S. government securities	4.5		—		—		4.5		—		4.5		—
Municipal securities	58.4		0.3		—		58.7		2.2		11.1		45.4
Subtotal	2,742.4		18.2		(0.4)		2,760.2		27.7		1,163.3		1,569.2



Total assets measured at fair value	$	5,818.1	$	27.9	$	(0.8)	$	5,845.2	$	1,167.6	$	2,054.1	$	2,623.5

The following table summarizes the contractual maturities of the Company’s cash equivalents and available-for-sale investments (excluding cash and money market funds), as of September 30, 2020 (in millions):


	Amortized Cost		Fair Value
Mature in less than one year	$	3,452.0	$	3,464.0
Mature in one to five years	1,606.2		1,643.2

Total	$	5,058.2	$	5,107.2

Actual maturities may differ from contractual maturities, because certain borrowers have the right to call or prepay certain obligations. Gross realized gains recognized on the sale of investments were not material and $8.3 million for the three and nine months ended September 30, 2020, respectively, and not material for the prior year comparative periods. Gross realized losses recognized on the sale of investments were not material for the periods presented.

Equity Investments

The Company holds equity investments with readily determinable fair values and equity investments without readily determinable fair values. The Company generally recognizes equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The following table is a summary of the activity related to equity investments (in millions):


									Reported as:
	December 31, 2019 Carrying Value		Changes in Fair Value ⁽¹⁾		Sales/Purchases/Others ⁽²⁾		September 30, 2020 Carrying Value		Prepaids and other current assets		Intangible and other assets, net
Equity investments with readily determinable value (Level 1)	$	—	$	6.1	$	59.8	$	65.9	$	65.9	$	—
Equity investments without readily determinable value (Level 2)	$	24.6	$	61.5	$	(58.2)	$	27.9	$	—	$	27.9

⁽¹⁾ Recorded in Interest and other income, net.
⁽²⁾Other includes conversion of certain equity investments without readily determinable value to equity investments with readily determinable value.

The Company recognized a $61.5 million increase in fair value, which was reflected in Interest and other income, net, due to changes in observable prices for certain equity investments that had been held at cost, because they lacked readily determinable market values. A total of $44.8 million of this increase in fair value was related to an equity investment in preferred shares of InTouch Technologies, Inc. ("InTouch"), an entity that was acquired by Teladoc Health, Inc. ("Teladoc"), a publicly traded company, on July 1, 2020. Upon acquisition, the Company's shares were converted to shares in Teladoc, which have a readily determinable value. The Company is restricted from selling these shares for a period of six months. There were no decreases in fair value reflected in net income due to impairments.

Foreign Currency Derivatives

The objective of the Company’s hedging program is to mitigate the impact of changes in currency exchange rates on net cash flow from foreign currency-denominated sales, expenses, intercompany balances, and other monetary assets or liabilities denominated in currencies other than the U.S. dollar (“USD”). The terms of the Company’s derivative contracts are generally twelve months or shorter. The derivative assets and liabilities are measured using Level 2 fair value inputs.

Cash Flow Hedges

The Company enters into currency forward contracts as cash flow hedges to hedge certain forecasted revenue transactions denominated in currencies other than the USD, primarily the Euro (“EUR”), the British Pound (“GBP”), the Japanese Yen (“JPY”), and the Korean Won (“KRW”). The Company also enters into currency forward contracts as cash flow hedges to hedge certain forecasted expense transactions denominated in EUR and the Swiss Franc (“CHF”).

For these derivatives, the Company reports the unrealized after-tax gain or loss from the hedge as a component of accumulated other comprehensive income/(loss) in stockholders’ equity and reclassifies the amount into earnings in the same period in which the hedged transaction affects earnings. The amounts reclassified to revenue and expenses related to the hedged transactions and the ineffective portions of cash flow hedges were not material for the periods presented.

Other Derivatives Not Designated as Hedging Instruments

Other derivatives not designated as hedging instruments consist primarily of forward contracts that the Company uses to hedge intercompany balances and other monetary assets or liabilities denominated in currencies other than the USD, primarily the EUR, GBP, JPY, KRW, CHF, Indian Rupee ("INR"), Mexican Peso ("MXN"), Chinese Yuan ("CNY"), and New Taiwan Dollar ("TWD").

These derivative instruments are used to hedge against balance sheet foreign currency exposures. The related gains and losses were as follows (in millions):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
Recognized gains/(losses) in interest and other income, net	$	(5.0)	$	4.2	$	(3.2)	$	5.7
Foreign exchange gains/(losses) related to balance sheet re-measurement	$	5.9	$	(3.8)	$	(1.1)	$	(3.5)

The notional amounts for derivative instruments provide one measure of the transaction volume. Total gross notional amounts (in USD) for outstanding derivatives and the aggregate gross fair value at the end of each period were as follows (in millions):


	Derivatives Designated as Hedging Instruments						Derivatives Not Designated as Hedging Instruments
	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Notional amounts:
Forward contracts	$	144.0	$	154.5	$	260.9	$	227.2
Gross fair value recorded in:
Prepaids and other current assets	$	0.9	$	1.3	$	0.9	$	2.2
Other accrued liabilities	$	1.8	$	0.5	$	1.3	$	0.7