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FINANCIAL INSTRUMENTS | 9 Months Ended
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Sep. 30, 2021
Investments, All Other Investments [Abstract] |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS 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, 2021, and December 31, 2020 (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, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash | $ | 534.5 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 534.5 |  |  | $ | 534.5 |  |  | $ | — |  |  | $ | — |
Level 1: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds | 812.2 |  |  | — |  |  | — |  |  | — |  |  | 812.2 |  |  | 812.2 |  |  | — |  |  | — |
U.S. treasuries | 3,250.7 |  |  | 10.6 |  |  | (2.8) |  |  | — |  |  | 3,258.5 |  |  | — |  |  | 1,104.6 |  |  | 2,153.9 |
Subtotal | 4,062.9 |  |  | 10.6 |  |  | (2.8) |  |  | — |  |  | 4,070.7 |  |  | 812.2 |  |  | 1,104.6 |  |  | 2,153.9 |
Level 2: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial paper | 632.7 |  |  | — |  |  | — |  |  | — |  |  | 632.7 |  |  | — |  |  | 632.7 |  |  | — |
Corporate debt securities | 2,262.4 |  |  | 5.3 |  |  | (2.0) |  |  | — |  |  | 2,265.7 |  |  | — |  |  | 794.4 |  |  | 1,471.3 |
U.S. government agencies | 538.3 |  |  | 0.5 |  |  | (0.5) |  |  | — |  |  | 538.3 |  |  | — |  |  | 150.8 |  |  | 387.5 |
Municipal securities | 176.8 |  |  | 1.2 |  |  | (0.2) |  |  | — |  |  | 177.8 |  |  | — |  |  | 59.0 |  |  | 118.8 |
Subtotal | 3,610.2 |  |  | 7.0 |  |  | (2.7) |  |  | — |  |  | 3,614.5 |  |  | — |  |  | 1,636.9 |  |  | 1,977.6 |
Total assets measured at fair value | $ | 8,207.6 |  |  | $ | 17.6 |  |  | $ | (5.5) |  |  | $ | — |  |  | $ | 8,219.7 |  |  | $ | 1,346.7 |  |  | $ | 2,741.5 |  |  | $ | 4,131.5 |
|  |  |  |  |  |  |  |  |  |  | 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
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash | $ | 644.3 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 644.3 |  |  | $ | 644.3 |  |  | $ | — |  |  | $ | — |
Level 1: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds | 625.8 |  |  | — |  |  | — |  |  | — |  |  | 625.8 |  |  | 625.8 |  |  | — |  |  | — |
U.S. treasuries | 2,626.8 |  |  | 23.0 |  |  | — |  |  | — |  |  | 2,649.8 |  |  | 212.5 |  |  | 1,567.9 |  |  | 869.4 |
Subtotal | 3,252.6 |  |  | 23.0 |  |  | — |  |  | — |  |  | 3,275.6 |  |  | 838.3 |  |  | 1,567.9 |  |  | 869.4 |
Level 2: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial paper | 671.3 |  |  | — |  |  | — |  |  | — |  |  | 671.3 |  |  | 64.1 |  |  | 607.2 |  |  | — |
Corporate debt securities | 1,425.4 |  |  | 11.9 |  |  | (0.2) |  |  | — |  |  | 1,437.1 |  |  | 3.4 |  |  | 1,036.5 |  |  | 397.2 |
U.S. government agencies | 716.5 |  |  | 2.5 |  |  | — |  |  | — |  |  | 719.0 |  |  | 72.5 |  |  | 233.6 |  |  | 412.9 |
Municipal securities | 119.8 |  |  | 2.0 |  |  | — |  |  | — |  |  | 121.8 |  |  | — |  |  | 43.6 |  |  | 78.2 |
Subtotal | 2,933.0 |  |  | 16.4 |  |  | (0.2) |  |  | — |  |  | 2,949.2 |  |  | 140.0 |  |  | 1,920.9 |  |  | 888.3 |
Total assets measured at fair value | $ | 6,829.9 |  |  | $ | 39.4 |  |  | $ | (0.2) |  |  | $ | — |  |  | $ | 6,869.1 |  |  | $ | 1,622.6 |  |  | $ | 3,488.8 |  |  | $ | 1,757.7 |
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, 2021 (in millions):
| Amortized Cost |  | Fair Value
Mature in less than one year | $ | 2,735.3 |  |  | $ | 2,741.5 |
Mature in one to five years | 4,125.6 |  |  | 4,131.5 |
Total | $ | 6,860.9 |  |  | $ | 6,873.0 |
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 for the three and nine months ended September 30, 2021, and not significant and $8.3 million for the three and nine months ended September 30, 2020, respectively. Gross realized losses recognized on the sale of investments were not material for any of the periods presented. The Company’s investment portfolio at any point in time contains available-for-sale debt securities including investments in U.S. treasury and U.S. government agency securities, taxable and tax-exempt municipal notes, corporate notes and bonds, commercial paper, non-U.S. government agency securities, cash deposits, and money market funds. The Company segments its portfolio based on the underlying risk profiles of the securities and have a zero-loss expectation for U.S. treasury and U.S. government agency securities. The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions. For the nine months ended September 30, 2021, the credit losses related to available-for-sales debt securities were not significant. 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, 2020 Carrying Value |  | Changes in Fair Value (1) |  | Sales/Purchases/Other (2) |  | September 30, 2021 Carrying Value |  | Prepaids and other current assets |  | Intangible and other assets, net
Equity investments with readily determinable value (Level 1) | $ | 60.1 |  |  | $ | (0.9) |  |  | $ | (15.4) |  |  | $ | 43.8 |  |  | $ | 43.8 |  |  | $ | — |
Equity investments without readily determinable value (Level 2) | $ | 30.2 |  |  | $ | 34.5 |  |  | $ | (52.2) |  |  | $ | 12.5 |  |  | $ | — |  |  | $ | 12.5 |
(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 $34.5 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 (Level 2). A total of $34.2 million of this increase in fair value was related to an equity investment in preferred shares of Broncus Medical, Inc. (“Broncus”). There were no decreases in fair value reflected in net income due to impairments. In September 2021, Broncus completed its initial public offering (“IPO”). Upon completion of its IPO, the Company’s preferred shares were converted to common shares, which have a readily determinable value (Level 1). The Company is restricted from selling these shares for a period of six months. Subsequent to the IPO, the Company recognized a $12.3 million decrease in fair value from this investment. As such, for the nine months ended September 30, 2021, the Company has recognized a net gain of $21.9 million related to Broncus, comprised of the $34.2 million gain reflected in changes in fair value for Level 2 equity investments, offset by the $12.3 million loss reflected in changes in fair value for Level 1 equity investments, both of which were reflected in Interest and other income, net. In January 2021, the Company sold all of its shares of Teladoc Health, Inc. (“Teladoc”), a publicly traded company, for $71.5 million and recognized a gain of $11.4 million, which was reflected in Interest and other income, net. This gain was offset by a $7.5 million loss recognized upon the settlement of a corresponding derivative collar contract. 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,
| 2021 |  | 2020 |  | 2021 |  | 2020
Recognized gains/(losses) in Interest and other income, net | $ | 4.4 |  |  | $ | (5.0) |  |  | $ | 11.8 |  |  | $ | (3.2) |
Foreign exchange gains/(losses) related to balance sheet re-measurement | $ | (6.4) |  |  | $ | 5.9 |  |  | $ | (12.4) |  |  | $ | (1.1) |
Additionally, in January 2021, the Company settled a collar contract previously entered into to hedge its equity investment in Teladoc Health, Inc. For the nine months ended September 30, 2021, a loss of $7.5 million was recognized in Interest and other income, net. 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, 2021 |  | December 31, 2020 |  | September 30, 2021 |  | December 31, 2020
Notional amounts: |  |  |  |  |  |  |
Forward contracts | $ | 203.7 |  |  | $ | 154.3 |  |  | $ | 285.8 |  |  | $ | 309.8 |
Gross fair value recorded in: |  |  |  |  |  |  |
Prepaids and other current assets | $ | 6.8 |  |  | $ | 0.9 |  |  | $ | 5.8 |  |  | $ | 0.7 |
Other accrued liabilities | $ | 0.9 |  |  | $ | 4.3 |  |  | $ | 0.7 |  |  | $ | 5.4 |

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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