The Company invests in equity instruments of privately-held, information technology companies for business and strategic purposes. These investments are included in long-term investments and are accounted for under the cost method when ownership is less than 20%. For these non-quoted investments, the Company’s policy is to regularly review the assumptions underlying the operating performance and cash flow forecasts in assessing the carrying values. When the Company determines that a decline in fair value below the cost basis is other than temporary, the related investment is written down to fair value.

Securities Held-to-Maturity and Available-for-Sale

Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Debt securities are classified as held-to-maturity when the Company has the positive intent and the ability to hold the securities until maturity. Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization, as well as any interest on the securities, is included in interest income.

Marketable equity securities and debt securities not classified as held-to-maturity are classified as availablefor-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported as a component of other comprehensive income (loss). The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in interest income. Realized gains and losses and declines in value judged to be other-than-temporary on availablefor-sale securities are included in other income (expense), net. The cost of securities sold is based on the specific identification method. Interest on securities classified as available-for-sale is included in interest income. The Company realized gross gains of approximately $3.7 million and $8.5 million on the sale of availablefor-sale marketable securities during 1999 and 1997, respectively. During 1997 the Company realized gross losses of approximately $1.2 million on the sale of available-for-sale equity securities. Realized losses during 1999 were not significant. Realized gains and losses were not significant in 1998.

Fair Value of Financial Instruments

Fair values of cash, cash equivalents, short and long term investments and foreign currency forward contracts are based on quoted market prices.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.