Fair Value Measurements

3 Months Ended

Mar. 31, 2019

The fair value hierarchy established by ASC 820, “Fair Value Measurement,” prioritizes the use of inputs used in valuation techniques into the following three levels:


•	Level 1 — quoted prices in active markets for identical assets and liabilities


•	Level 2 — inputs other than quoted prices in active markets for identical assets and liabilities that are observable, either directly or indirectly


•	Level 3 — unobservable inputs

The company measures and reports assets and liabilities at fair value utilizing pricing information received from third parties. The company performs procedures to verify the reasonableness of pricing information received for significant assets and liabilities classified as Level 2.

The following table presents, for each of the fair value hierarchy levels required under ASC 820-10, the company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018:



	March 31, 2019								December 31, 2018
	Fair Value Hierarchy								Fair Value Hierarchy
(in thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Deferred compensation trusts⁽¹⁾	$	28,728	$	28,728	$	—	$	—	$	26,690	$	26,690	$	—	$	—
Derivative assets⁽²⁾
Foreign currency contracts	12,965		—		12,965		—		17,346		—		17,346		—

Liabilities:
Derivative liabilities⁽²⁾
Foreign currency contracts	$	10,200	$	—	$	10,200	$	—	$	18,342	$	—	$	18,342	$	—

_________________________________________________________


(1)	Consists of registered money market funds and an equity index fund valued at fair value. These investments, which are trading securities, represent the net asset value of the shares of such funds as of the close of business at the end of the period based on the last trade or official close of an active market or exchange.


(2)	See Note 9 for the classification of foreign currency contracts on the Condensed Consolidated Balance Sheet. Foreign currency contracts are estimated using standard pricing models with market-based inputs, which take into account the present value of estimated future cash flows.

During the three months ended March 31, 2018, proceeds from sales and maturities of available-for-sale securities were $175 million. There were no sales or maturities of available-for-sale securities during the three months ended March 31, 2019.

The carrying values and estimated fair values of the company’s financial instruments that are not required to be measured at fair value in the Condensed Consolidated Balance Sheet are as follows:



		March 31, 2019				December 31, 2018
(in thousands)	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Cash⁽¹⁾	Level 1	$	1,036,957	$	1,036,957	$	1,091,868	$	1,091,868
Cash equivalents⁽²⁾	Level 2	768,820		768,820		672,878		672,878
Marketable securities, current⁽³⁾	Level 2	98,733		98,733		214,828		214,828
Notes receivable, including noncurrent portion⁽⁴⁾	Level 3	34,139		34,139		32,645		32,645
Liabilities:
1.750% Senior Notes⁽⁵⁾	Level 2	$	558,564	$	588,216	$	569,372	$	589,864
3.5% Senior Notes⁽⁵⁾	Level 2	494,520		501,890		494,280		484,790
4.250% Senior Notes⁽⁵⁾	Level 2	594,029		601,230		593,871		583,200
Other borrowings, including noncurrent portion⁽⁶⁾	Level 2	39,736		39,736		30,929		30,929

_________________________________________________________


(1)	Cash consists of bank deposits. Carrying amounts approximate fair value.


(2)	Cash equivalents consist of held-to-maturity time deposits with maturities of three months or less at the date of purchase. The carrying amounts of these time deposits approximate fair value because of the short-term maturity of these instruments.


(3)	Marketable securities, current consist of held-to-maturity time deposits with original maturities greater than three months that will mature within one year. The carrying amounts of these time deposits approximate fair value because of the short-term maturity of these instruments. Amortized cost is not materially different from the fair value.


(4)	Notes receivable are carried at net realizable value which approximates fair value. Factors considered by the company in determining the fair value include the credit worthiness of the borrower, current interest rates, the term of the note and any collateral pledged as security. Notes receivable are periodically assessed for impairment.


(5)	The fair value of the 1.750% Senior Notes, 3.5% Senior Notes and 4.250% Senior Notes was estimated based on quoted market prices for similar issues.


(6)	Other borrowings primarily represent bank loans and other financing arrangements which mature within one year. The carrying amount of borrowings under these arrangements approximates fair value because of the short-term maturity.

- 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.

+ References + Details