Fair Value Measurements

We measure our cash equivalents, investments and foreign exchange forward contracts at fair value. The authoritative guidance defines fair value as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The authoritative guidance also establishes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions.

The fair value hierarchy consists of the following three levels:


•	Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities.


•	Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.


•	Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table summarizes our financial assets and (liabilities) measured at fair value on a recurring basis as of March 31, 2016:



	Level 1		Level 2			Level 3		Total
	(in millions)
Cash equivalents:
Money market funds	$	260.9	$	—		$	—	$	260.9
Time deposits	—		323.0			—		323.0
Certificates of deposit and commercial paper	—		134.0			—		134.0
Total cash equivalents	260.9		457.0			—		717.9
Short-term investments:
Time deposits	—		830.3			—		830.3
Available-for-sale investment securities:
U.S. Treasury and agency debt securities	540.2		58.7			—		598.9
Corporate and other debt securities	—		394.0			—		394.0
Certificates of deposit and commercial paper	—		719.1			—		719.1
Asset-backed securities	—		241.9			—		241.9
Municipal debt securities	—		121.1			—		121.1
Total available-for-sale investment securities⁽¹⁾	540.2		1,534.8			—		2,075.0
Total short-term investments⁽¹⁾	540.2		2,365.1			—		2,905.3
Derivative financial instruments - foreign exchange forward contracts:
Other current assets	—		16.7			—		16.7
Accrued expenses and other current liabilities	—		(8.0		)	—		(8.0		)
Other noncurrent assets	—		5.9			—		5.9
Other noncurrent liabilities	—		(7.3		)	—		(7.3		)
Total	$	801.1	$	2,829.4		$	—	$	3,630.5

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(1)	Excludes mutual funds which are valued based on the net asset value, or NAV, of the fund and were $22.6 million at March 31, 2016.

The following table summarizes our financial assets and (liabilities) measured at fair value on a recurring basis as of December 31, 2015:



	Level 1		Level 2			Level 3		Total
	(in millions)
Cash equivalents:
Money market funds	$	495.9	$	—		$	—	$	495.9
Total cash equivalents	495.9		—			—		495.9
Short-term investments:
Time deposits	—		809.5			—		809.5
Available-for-sale investment securities:
U.S. Treasury and agency debt securities	463.7		63.4			—		527.1
Corporate and other debt securities	—		360.5			—		360.5
Certificates of deposit and commercial paper	—		754.0			—		754.0
Asset-backed securities	—		229.6			—		229.6
Municipal debt securities	—		121.3			—		121.3
Total available-for-sale investment securities⁽¹⁾	463.7		1,528.8			—		1,992.5
Total short-term investments⁽¹⁾	463.7		2,338.3			—		2,802.0
Derivative financial instruments - foreign exchange forward contracts:
Other current assets	—		7.6			—		7.6
Accrued expenses and other current liabilities	—		(10.9		)	—		(10.9		)
Other noncurrent assets	—		1.6			—		1.6
Other noncurrent liabilities	—		(13.5		)	—		(13.5		)
Total	$	959.6	$	2,323.1		$	—	$	3,282.7

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(1)	Excludes mutual funds which are valued based on the net asset value, or NAV, of the fund and were $22.3 million at December 31, 2015.

We measure the fair value of money market funds and U.S. Treasury securities based on quoted prices in active markets for identical assets and therefore classify these assets as Level 1. The fair value of commercial paper, certificates of deposit, U.S. government agency securities, municipal debt securities, U.S. and international corporate bonds and foreign government debt securities is measured based on relevant trade data, dealer quotes, or model-driven valuations using significant inputs derived from or corroborated by observable market data, such as yield curves and credit spreads. We measure the fair value of our asset-backed securities using model-driven valuations based on significant inputs derived from or corroborated by observable market data such as dealer quotes, available trade information, spread data, current market assumptions on prepayment speeds and defaults and historical data on deal collateral performance. The carrying value of the time deposits approximated fair value as of March 31, 2016 and December 31, 2015.

We estimate the fair value of each foreign exchange forward contract by using a present value of expected cash flows model. This model calculates the difference between the current market forward price and the contracted forward price for each foreign exchange contract and applies the difference in the rates to each outstanding contract. The market forward rates include a discount and credit risk factor. The amounts are aggregated by type of contract and maturity.

During the three months ended March 31, 2016 and the year ended December 31, 2015, there were no transfers among Level 1, Level 2, or Level 3 financial assets and liabilities.