Fair Value Measurements

3 Months Ended

Mar. 31, 2024


3. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

We estimate the fair value of our Level 1 financial instruments, which are in active markets, using unadjusted quoted market prices for identical instruments.

We obtain the fair values for our Level 2 financial instruments, which are not in active markets, from a primary professional pricing source that uses quoted market prices for identical or comparable instruments, rather than direct observations of quoted prices in active markets. Fair values obtained from this professional pricing source can also be based on pricing models whereby all significant observable inputs, including maturity dates, issue dates, settlement dates, benchmark yields, reported trades, broker-dealer quotes, issue spreads, benchmark securities, bids, offers or other market related data, are observable or can be derived from, or corroborated by, observable market data for substantially the full term of the asset. We validate the quoted market prices provided by our primary pricing service by comparing the fair values of our Level 2 marketable securities portfolio balance provided by our primary pricing service against the fair values provided by our investment managers.

The following table summarizes financial assets that we measured at fair value on a recurring basis as of March 31, 2024, classified in accordance with the fair value hierarchy:


	Fair Value Measurements Using
(In millions)	Level 1		Level 2		Level 3		Total
Cash equivalents	$	519.2	$	13.3	$	—	$	532.5

Debt securities, available-for-sale:
U.S. government agencies (1)	—		1,431.9		—		1,431.9
Commercial paper	—		323.9		—		323.9
Corporate debt	—		290.0		—		290.0

Total debt securities, available-for-sale	—		2,045.8		—		2,045.8

Other assets (2)	18.3		—		—		18.3

Total assets measured at fair value on a recurring basis	$	537.5	$	2,059.1	$	—	$	2,596.6

(1) Includes debt obligations issued by U.S. government-sponsored enterprises or U.S. government agencies.

(2) Includes assets which are held pursuant to a deferred compensation plan for senior management, which consist mainly of mutual funds.

The following table summarizes financial assets that we measured at fair value on a recurring basis as of December 31, 2023, classified in accordance with the fair value hierarchy:


	Fair Value Measurements Using
(In millions)	Level 1		Level 2		Level 3		Total
Cash equivalents	$	315.9	$	—	$	—	$	315.9

Debt securities, available-for-sale:
U.S. government agencies (1)	—		1,612.5		—		1,612.5
Commercial paper	—		184.7		—		184.7
Corporate debt	—		360.6		—		360.6

Total debt securities, available-for-sale	—		2,157.8		—		2,157.8

Other assets (2)	15.2		—		—		15.2

Total assets measured at fair value on a recurring basis	$	331.1	$	2,157.8	$	—	$	2,488.9

(1) Includes debt obligations issued by U.S. government-sponsored enterprises or U.S. government agencies.

(2) Includes assets which are held pursuant to a deferred compensation plan for senior management, which consist mainly of mutual funds.

There were no transfers into or out of Level 3 securities during the three months ended March 31, 2024 and March 31, 2023.

Fair Value of Senior Convertible Notes

The fair value, based on trading prices (Level 1 inputs), of our senior convertible notes were as follows as of the dates indicated:


	Fair Value Measurements Using Level 1
(In millions)	March 31, 2024		December 31, 2023


Senior Convertible Notes due 2025	1,327.8		1,262.8
Senior Convertible Notes due 2028	1,341.0		1,281.8
Total fair value of outstanding senior convertible notes	$	2,668.8	$	2,544.6

See Note 5 “Debt—Senior Convertible Notes” to the consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for more information regarding the carrying values of our senior convertible notes.

Foreign Currency and Derivative Financial Instruments

We enter into foreign currency forward contracts to hedge monetary assets and liabilities denominated in foreign currencies. Our foreign currency forward contracts are not designated as hedging instruments. Therefore, changes in the fair values of these contracts are recognized in earnings, thereby offsetting the current earnings effect of the related foreign currency assets and liabilities. The duration of these contracts is generally one month. The derivative gains and losses are included in other income (expense), net in our consolidated statements of operations.

As of March 31, 2024 and December 31, 2023, the notional amounts of outstanding foreign currency forward contracts were $80.0 million and $71.0 million, respectively. The resulting impact on our consolidated financial statements from currency hedging activities was not significant for the three months ended March 31, 2024 and March 31, 2023.

Our foreign currency exposures vary but are primarily concentrated in the Australian Dollar, the British Pound, the Canadian Dollar, the Euro, and the Malaysian Ringgit. We monitor the costs and the impact of foreign currency risks upon our financial results as part of our risk management program. We do not use derivative financial instruments for speculation or trading purposes or for activities other than risk management. We do not require and are not required to pledge collateral for these financial instruments and we do not carry any master netting arrangements to mitigate the credit risk.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

In accordance with authoritative guidance, we measure certain non-financial assets and liabilities at fair value on a non-recurring basis. These measurements are usually performed using the discounted cash flow method or cost method and Level 3 inputs. These include items such as non-financial assets and liabilities initially measured at fair value in a business combination and non-financial long-lived assets measured at fair value for an impairment assessment. In general, non-financial assets, including goodwill, intangible assets, and property and equipment, are measured at fair value when there are indicators of impairment and are recorded at fair value only when an impairment is recognized.

We hold certain other investments that we do not measure at fair value on a recurring basis. The carrying values of these investments are $39.8 million as of March 31, 2024 and $38.5 million as of December 31, 2023. We include them in other assets in our consolidated balance sheets. It is impracticable for us to estimate the fair value of these investments on a recurring basis due to the fact that these entities are privately held and limited information is available. We monitor the information that becomes available from time to time and adjust the carrying values of these investments if there are identified events or changes in circumstances that have a significant effect on the fair values.

There were no significant impairment losses during the three months ended March 31, 2024 and March 31, 2023.