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Fair Value of Financial Instruments | 9 Months Ended
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Sep. 30, 2013
Fair Value of Financial Instruments |
Fair Value of Financial Instruments | (7) The fair value hierarchy established by ASC 820, “Fair Value Measurement,” prioritizes the use of inputs used in valuation techniques into the following three levels: · Level 1 – quoted prices in active markets for identical assets and liabilities · Level 2 – inputs other than quoted prices in active markets for identical assets and liabilities that are observable, either directly or indirectly · Level 3 – unobservable inputs The following table presents, for each of the fair value hierarchy levels required under ASC 820-10, the company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2013 and December 31, 2012:
|  | September 30, 2013 |  | December 31, 2012 |
|  | Fair Value Hierarchy |  | Fair Value Hierarchy |
(in thousands) |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |
Assets(1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 19,114 |  | $ | 19,114 | (2) | $ | — |  | $ | — |  | $ | 14,457 |  | $ | 14,457 | (2) | $ | — |  | $ | — |
Marketable securities, current |  | 135,098 |  | — |  | 135,098 | (3) | — |  | 102,439 |  | — |  | 102,439 | (3) |  |
Deferred compensation trusts |  | 81,350 |  | 81,350 | (4) | — |  | — |  | 80,842 |  | 80,842 | (4) | — |  | — |
Marketable securities, noncurrent |  | 281,999 |  | — |  | 281,999 | (5) | — |  | 318,355 |  | — |  | 318,355 | (5) | — |
Derivative assets(6) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | 219 |  | — |  | 219 |  | — |  | 95 |  | — |  | 95 |  | — |
Foreign currency contracts |  | 805 |  | — |  | 805 |  | — |  | 640 |  | — |  | 640 |  | — |
Liabilities(1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative liabilities(6) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts |  | $ | 290 |  | $ | — |  | $ | 290 |  | $ | — |  | $ | 28 |  | $ | — |  | $ | 28 |  | $ | — |
Foreign currency contracts |  | 3,344 |  | — |  | 3,344 |  | — |  | 2,151 |  | — |  | 2,151 |  | — |
(1) The company measures and reports assets and liabilities at fair value utilizing pricing information received from third parties. The company performs procedures to verify the reasonableness of pricing information received for significant assets and liabilities classified as Level 2. (2) Consists primarily of registered money market funds valued at fair value. These investments represent the net asset value of the shares of such funds as of the close of business at the end of the period. (3) Consists of investments in U.S. agency securities, U.S. Treasury securities, corporate debt securities, commercial paper and other debt securities with maturities of less than one year that are valued based on pricing models, which are determined from a compilation of primarily observable market information, broker quotes in non-active markets or similar assets. (4) Consists primarily of registered money market funds and an equity index fund valued at fair value. These investments, which are trading securities, represent the net asset value of the shares of such funds as of the close of business at the end of the period. (5) Consists of investments in U.S. agency securities, U.S. Treasury securities, corporate debt securities and other debt securities with maturities ranging from one year to three years that are valued based on pricing models, which are determined from a compilation of primarily observable market information, broker quotes in non-active markets or similar assets. (6) See Note 8 for the classification of commodity contracts and foreign currency contracts on the Condensed Consolidated Balance Sheet. Commodity contracts and foreign currency contracts are estimated using standard pricing models with market-based inputs, which take into account the present value of estimated future cash flows. All of the company’s financial instruments carried at fair value are included in the table above. All of the above financial instruments are available-for-sale securities except for those held in the deferred compensation trusts (which are trading securities) and derivative assets and liabilities. The company has determined that there was no other-than-temporary impairment of available-for-sale securities with unrealized losses, and the company expects to recover the entire cost basis of the securities. The available-for-sale securities are made up of the following security types as of September 30, 2013: money market funds of $19 million, U.S. agency securities of $157 million, U.S. Treasury securities of $21 million, corporate debt securities of $223 million, commercial paper of $10 million and other debt securities of $6 million. As of December 31, 2012, available-for-sale securities consisted of money market funds of $14 million, U.S. agency securities of $161 million, U.S. Treasury securities of $67 million, corporate debt securities of $184 million and other debt securities of $9 million. The amortized cost of these available-for-sale securities is not materially different than the fair value. During the three and nine months ended September 30, 2013, proceeds from the sales and maturities of available-for-sale securities were $29 million and $235 million, respectively, compared to $85 million and $434 million, respectively, for the corresponding periods of 2012. The carrying values and estimated fair values of the company’s financial instruments that are not required to be measured at fair value in the Condensed Consolidated Balance Sheet are as follows:
|  |  |  | September 30, 2013 |  | December 31, 2012 |
|  | Fair Value |  | Carrying |  | Fair |  | Carrying |  | Fair |
(in thousands) |  | Hierarchy |  | Value |  | Value |  | Value |  | Value |
Assets: |  |  |  |  |  |  |  |  |  |  |
Cash(1) |  | Level 1 |  | $ | 1,604,552 |  | $ | 1,604,552 |  | $ | 1,343,866 |  | $ | 1,343,866 |
Cash equivalents(2) |  | Level 2 |  | 913,904 |  | 913,904 |  | 796,218 |  | 796,218 |
Marketable securities, current(3) |  | Level 2 |  | 22,812 |  | 22,812 |  | 34,688 |  | 34,688 |
Notes receivable, including noncurrent portion(4) |  | Level 3 |  | 25,836 |  | 25,836 |  | 34,471 |  | 34,471 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
3.375% Senior Notes(5) |  | Level 2 |  | $ | 496,494 |  | $ | 493,992 |  | $ | 496,164 |  | $ | 527,219 |
1.5% Convertible Senior Notes(5) |  | Level 2 |  | 18,398 |  | 47,510 |  | 18,472 |  | 39,392 |
5.625% Municipal Bonds(5) |  | Level 2 |  | — |  | — |  | 17,795 |  | 17,878 |
Other borrowings(6) |  | Level 2 |  | 7,035 |  | 7,035 |  | — |  | — |
Notes payable, including noncurrent portion(7) |  | Level 3 |  | — |  | — |  | 8,566 |  | 8,566 |
(1) Cash consists of bank deposits. Carrying amounts approximate fair value. (2) Cash equivalents consist of held-to-maturity time deposits with maturities of three months or less at the date of purchase. The carrying amounts of these time deposits approximate fair value because of the short-term maturity of these instruments. (3) Marketable securities, current consist of held-to-maturity time deposits with original maturities greater than three months that will mature within one year. The carrying amounts of these time deposits approximate fair value because of the short-term maturity of these instruments. Amortized cost is not materially different from the fair value. (4) Notes receivable are carried at net realizable value which approximates fair value. Factors considered by the company in determining the fair value include the credit worthiness of the borrower, current interest rates, the term of the note and any collateral pledged as security. Notes receivable are periodically assessed for impairment. (5) The fair value of the 3.375% Senior Notes, 1.5% Convertible Senior Notes and 5.625% Municipal Bonds are estimated based on quoted market prices for similar issues. During the first nine months of 2013, the company redeemed its 5.625% Municipal Bonds at a price of 100% of their principal amount. (6) Other borrowings represent amounts outstanding under a short-term credit facility. The carrying amount of borrowings under this credit facility approximates fair value because of the short-term maturity. (7) Notes payable consist primarily of equipment loans with banks at various interest rates with maturities ranging from less than one year to four years. The carrying value of notes payable approximates fair value. Factors considered by the company in determining the fair value include the company’s current credit rating, current interest rates, the term of the note and any collateral pledged as security. During the first nine months of 2013, the company paid off the remaining balances of various notes payable that were assumed in connection with the 2012 acquisition of an equipment company.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13504-108611 + Details
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