Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

A summary of assets and liabilities measured at fair value on a recurring basis and as reported in the Condensed Consolidated Balance Sheets were as follows (in millions):



	Fair Value Measurements at September 30, 2016 Using:
	Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs			Significant Other Unobservable Remaining Inputs
	(Level 1)		(Level 2)			(Level 3)		Total
Assets measured at fair value:
Available-for-sale securities:
Asset-backed securities	$	—	$	327.4		$	—	$	327.4
Certificates of deposit	—		49.9			—		49.9
Commercial paper	—		52.4			—		52.4
Corporate debt securities	—		867.3			—		867.3
Foreign government debt securities	—		38.5			—		38.5
Government-sponsored enterprise obligations	—		127.4			—		127.4
Money market funds⁽¹⁾	413.0		—			—		413.0
Mutual funds⁽²⁾	8.1		—			—		8.1
Publicly-traded equity securities	5.3		—			—		5.3
U.S. government securities	320.9		11.0			—		331.9
Total available-for-sale securities	747.3		1,473.9			—		2,221.2
Trading securities in mutual funds⁽³⁾	20.5		—			—		20.5
Privately-held debt and redeemable preferred stock securities						43.7		43.7
Derivative assets:
Foreign exchange contracts	—		2.7			—		2.7
Total assets measured at fair value	$	767.8	$	1,476.6		$	43.7	$	2,288.1
Liabilities measured at fair value:
Derivative liabilities:
Foreign exchange contracts	$	—	$	(0.9	)	$	—	$	(0.9	)
Total liabilities measured at fair value	$	—	$	(0.9	)	$	—	$	(0.9	)

Total assets measured at fair value, reported as:
Cash equivalents	$	370.0	$	9.0		$	—	$	379.0
Restricted investments	71.6		—			—		71.6
Short-term investments	173.1		459.6			—		632.7
Long-term investments	153.1		1,005.3			—		1,158.4
Prepaid expenses and other current assets	—		2.7			—		2.7
Other long-term assets	—		—			43.7		43.7
Total assets measured at fair value	$	767.8	$	1,476.6		$	43.7	$	2,288.1

Total liabilities measured at fair value, reported as:
Other accrued liabilities	$	—	$	(0.9	)	$	—	$	(0.9	)
Total liabilities measured at fair value	$	—	$	(0.9	)	$	—	$	(0.9	)

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⁽¹⁾	Balance includes $43.0 million of restricted investments measured at fair value related to the Company's D&O Trust and acquisition-related escrows.


⁽²⁾	Balance relates to restricted investments measured at fair value related to the Company's India Gratuity Trust.


⁽³⁾	Balance relates to restricted investments measured at fair value related to the Company's NQDC plan assets.



	Fair Value Measurements at December 31, 2015 Using:
	Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs			Significant Other Unobservable Remaining Inputs
	(Level 1)		(Level 2)			(Level 3)		Total
Assets measured at fair value:
Available-for-sale securities:
Asset-backed securities	$	—	$	311.7		$	—	$	311.7
Certificates of deposit	—		9.6			—		9.6
Commercial paper	—		17.7			—		17.7
Corporate debt securities	—		911.4			—		911.4
Foreign government debt securities	—		16.5			—		16.5
Government-sponsored enterprise obligations	—		203.7			—		203.7
Money market funds⁽¹⁾	29.7		—			—		29.7
Mutual funds⁽²⁾	6.2		—			—		6.2
Publicly-traded equity securities	8.8		—			—		8.8
U.S. government securities	247.3		30.3			—		277.6
Total available-for-sale securities	292.0		1,500.9			—		1,792.9
Trading securities in mutual funds⁽³⁾	17.7		—			—		17.7
Privately-held debt and redeemable preferred stock securities	—		—			60.2		60.2
Derivative assets:
Foreign exchange contracts	—		0.4			—		0.4
Total assets measured at fair value	$	309.7	$	1,501.3		$	60.2	$	1,871.2
Liabilities measured at fair value:
Derivative liabilities:
Foreign exchange contracts	$	—	$	(1.3	)	$	—	$	(1.3	)
Total liabilities measured at fair value	$	—	$	(1.3	)	$	—	$	(1.3	)

Total assets measured at fair value, reported as:
Cash equivalents	$	—	$	3.4		$	—	$	3.4
Restricted investments	35.9		—			—		35.9
Short-term investments	108.2		418.9			—		527.1
Long-term investments	165.6		1,078.6			—		1,244.2
Prepaid expenses and other current assets	—		0.4			—		0.4
Other long-term assets	—		—			60.2		60.2
Total assets measured at fair value	$	309.7	$	1,501.3		$	60.2	$	1,871.2

Total liabilities measured at fair value, reported as:
Other accrued liabilities	$	—	$	(1.3	)	$	—	$	(1.3	)
Total liabilities measured at fair value	$	—	$	(1.3	)	$	—	$	(1.3	)

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⁽¹⁾	Balance includes $29.7 million of restricted investments measured at fair value related to the Company's D&O Trust and acquisition-related escrows.


⁽²⁾	Balance relates to restricted investments measured at fair value related to the Company's India Gratuity Trust.


⁽³⁾	Balance relates to investments measured at fair value related to the Company's NQDC plan assets.

The Company's Level 2 available-for-sale fixed income securities are priced using quoted market prices for similar instruments or non-binding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes, or alternative pricing sources with reasonable levels of price transparency which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets. The Company's derivative instruments are classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs. The Company's policy is to recognize asset or liability transfers among Level 1, Level 2, and Level 3 at the beginning of the quarter in which a change in circumstances resulted in a transfer. During the three and nine months ended September 30, 2016, the Company had no transfers between levels of the fair value hierarchy of its assets or liabilities measured at fair value.

All of the Company's privately-held debt and redeemable preferred stock securities are classified as Level 3 assets due to the lack of observable inputs to determine fair value. The Company estimates the fair value of its privately-held debt investments on a recurring basis using an analysis of the financial condition and near-term prospects of the investee, including recent financing activities and the investee's capital structure. During the three and nine months ended September 30, 2016, the Company purchased $6.6 million and $17.1 million, respectively, related to debt securities of privately-held companies.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain of the Company's assets, including intangible assets, goodwill, and investments in privately-held companies (non-redeemable preferred stock securities and common stock), are measured at fair value on a nonrecurring basis, when they are deemed to be other-than-temporarily impaired. Investments in privately-held companies, which are normally carried at cost, are measured at fair value on a nonrecurring basis due to events and circumstances that the Company identifies as significantly impacting the fair value of investments. The Company estimates the fair value of its investments in privately-held companies using an analysis of the financial condition and near-term prospects of the investee, including recent financing activities and the investee's capital structure. Purchased intangible assets are measured at fair value primarily using discounted cash flow projections.

As of September 30, 2016, certain investments in privately-held companies with a carrying value of $6.1 million were impaired and were written-down to their fair value of $1.6 million and were classified as Level 3 assets due to lack of observable inputs to determine fair value. The impairment charges of $4.5 million were recorded to other expense, net in the Condensed Consolidated Statements of Operations. As of December 31, 2015, there were no investments in privately-held companies measured at fair value on a nonrecurring basis.

As of September 30, 2016 and December 31, 2015, the Company had no liabilities measured at fair value on a nonrecurring basis.

Assets and Liabilities Not Measured at Fair Value

The carrying amounts of the Company's accounts receivable, financing receivables, accounts payable, and other accrued liabilities approximate fair value due to their short maturities. As of September 30, 2016 and December 31, 2015, the estimated fair value of the Company's long-term debt in the Condensed Consolidated Balance Sheets was approximately $2,283.6 million and $1,946.7 million, respectively, based on observable market inputs (Level 2). The carrying value of the promissory note, issued to the Company in connection with the previously-completed sale of Junos Pulse, of $132.9 million approximates its fair value, of which $75.0 million is recorded in prepaid expenses and other current assets and the remaining balance is recorded within other long-term assets in the Condensed Consolidated Balance Sheets as of September 30, 2016. As of December 31, 2015, the carrying value of the promissory note of $132.9 million was recorded in other long-term assets in the Condensed Consolidated Balance Sheets. The promissory note is classified as a Level 3 asset due to the lack of observable inputs to determine fair value. See Note 8, Other Financial Information, for further information on the promissory note.