Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Note 3. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table provides a summary of assets and liabilities measured at fair value on a recurring basis and as reported in the Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 (in millions):


	Fair Value Measurements at September 30, 2023								Fair Value Measurements at December 31, 2022
	Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Remaining Inputs (Level 2)		Significant Other Unobservable Remaining Inputs (Level 3)		Total		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Remaining Inputs (Level 2)		Significant Other Unobservable Remaining Inputs (Level 3)		Total
Assets:
Available-for-sale debt securities:
Asset-backed and mortgage-backed securities	$	—	$	24.1	$	—	$	24.1	$	—	$	36.6	$	—	$	36.6
Corporate debt securities	—		121.4		—		121.4		—		270.4		—		270.4
Commercial paper	—		20.9		—		20.9		—		—		—		—
Foreign government debt securities	—		5.0		—		5.0		—		8.4		—		8.4
Time deposits	—		342.1		—		342.1		—		70.6		—		70.6
U.S. government agency securities	—		7.9		—		7.9		—		18.0		—		18.0
U.S. government securities	6.7		10.6		—		17.3		8.8		—		—		8.8
Privately-held debt and redeemable preferred stock securities	—		—		58.1		58.1		—		—		52.9		52.9
Total available-for-sale debt securities	6.7		532.0		58.1		596.8		8.8		404.0		52.9		465.7
Equity securities:
Money market funds	558.7		—		—		558.7		420.8		—		—		420.8
Mutual funds	35.0		—		—		35.0		28.1		—		—		28.1
Publicly-traded equity securities	7.4		—		—		7.4		7.7		—		—		7.7
Total equity securities	601.1		—		—		601.1		456.6		—		—		456.6
Derivative assets:
Foreign exchange contracts	—		2.7		—		2.7		—		1.3		—		1.3
Interest rate contracts	—		—		—		—		—		125.4		—		125.4
Total derivative assets	—		2.7		—		2.7		—		126.7		—		126.7
Total assets measured at fair value on a recurring basis	$	607.8	$	534.7	$	58.1	$	1,200.6	$	465.4	$	530.7	$	52.9	$	1,049.0
Liabilities:
Derivative liabilities:
Foreign exchange contracts	$	—	$	(24.8)	$	—	$	(24.8)	$	—	$	(37.6)	$	—	$	(37.6)
Interest rate contracts	—		(101.5)		—		(101.5)		—		(87.4)		—		(87.4)
Total derivative liabilities	—		(126.3)		—		(126.3)		—		(125.0)		—		(125.0)
Total liabilities measured at fair value on a recurring basis	$	—	$	(126.3)	$	—	$	(126.3)	$	—	$	(125.0)	$	—	$	(125.0)


	Fair Value Measurements at September 30, 2023								Fair Value Measurements at December 31, 2022
	Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Remaining Inputs (Level 2)		Significant Other Unobservable Remaining Inputs (Level 3)		Total		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Remaining Inputs (Level 2)		Significant Other Unobservable Remaining Inputs (Level 3)		Total

Total assets, reported as:
Cash equivalents	$	558.7	$	371.6	$	—	$	930.3	$	420.8	$	70.6	$	—	$	491.4
Short-term investments	9.3		124.3		—		133.6		14.6		195.7		—		210.3
Long-term investments	4.8		36.1		—		40.9		1.9		137.7		—		139.6
Prepaid expenses and other current assets	3.0		1.6		—		4.6		2.4		0.8		—		3.2
Other long-term assets	32.0		1.1		58.1		91.2		25.7		125.9		52.9		204.5
Total assets measured at fair value	$	607.8	$	534.7	$	58.1	$	1,200.6	$	465.4	$	530.7	$	52.9	$	1,049.0

Total liabilities, reported as:
Other accrued liabilities	$	—	$	(19.0)	$	—	$	(19.0)	$	—	$	(32.5)	$	—	$	(32.5)
Other long-term liabilities	—		(107.3)		—		(107.3)		—		(92.5)		—		(92.5)
Total liabilities measured at fair value on a recurring basis	$	—	$	(126.3)	$	—	$	(126.3)	$	—	$	(125.0)	$	—	$	(125.0)

The Company's Level 2 available-for-sale debt 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. During the three and nine months ended September 30, 2023, the Company had no transfers into or out of Level 3 of the fair value hierarchy of its assets or liabilities measured at fair value.

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 and redeemable preferred stock securities on a recurring basis using an analysis of the financial condition and near-term prospects of the investee, including recent valuations at the time of financing activities and the investee's capital structure. During the three and nine months ended September 30, 2023, there were no significant activities related to privately-held debt and redeemable preferred stock securities.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company's investments in equity securities without readily determinable fair value are classified as Level 3 assets due to the lack of observable inputs to determine fair value. The Company estimates the fair value of equity securities without readily determinable fair value, and investments accounted for under the equity method of accounting, on a nonrecurring 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. As of September 30, 2023, downward adjustments for equity securities without readily determinable fair value in the aggregate were $89.9 million. There have been no material upward adjustments to the equity securities without readily determinable fair value.

Certain of the Company's assets, including intangible assets and goodwill, are measured at fair value on a nonrecurring basis. Fair value adjustments are made to these assets in the period an impairment charge is recognized. For three and nine months ended September 30, 2023, the Company recognized impairment charges of $21.3 million and $26.1 million, respectively. These charges primarily relate to the Company's restructuring activities. Refer to Note 6, Restructuring Charges.

As of September 30, 2023 and December 31, 2022, the Company had no liabilities required to be 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, accounts payable, and other accrued liabilities approximate fair value due to their short maturities. As of September 30, 2023 and December 31, 2022, the estimated fair value of the Company's total outstanding debt in the Condensed Consolidated Balance Sheets was $1,468.2 million and $1,485.6 million, respectively, based on observable market inputs (Level 2).

- 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.

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