Fair Value Measurements

Under applicable accounting guidance, fair value is defined 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. Applicable accounting guidance also establishes a valuation hierarchy for inputs in measuring fair value that maximizes the use of observable inputs (inputs market participants would use based on market data obtained from sources independent of the Company) and minimizes the use of unobservable inputs (inputs that reflect the Company’s assumptions based upon the best information available in the circumstances) by requiring that the most observable inputs be used when available. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the assets or liabilities, either directly or indirectly. Level 3 inputs are unobservable inputs for the assets or liabilities. Categorization within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. See "— Note 2 — Summary of Significant Accounting Policies" for additional disclosures regarding derivatives.

The Company currently uses foreign currency forward contracts as effective economic hedges to manage a portion of its foreign currency exposure. Foreign currency forward contracts involve the purchase and sale of a designated currency at an agreed upon rate for settlement on a specified date. The aggregate notional value of these foreign currency contracts was $427 million and $673 million as of December 31, 2016 and 2015, respectively. As these derivatives have not been designated and/or do not qualify for hedge accounting, the changes in fair value are recognized as other income (expense) in the accompanying consolidated statements of operations.

In January 2017, the Company entered into additional foreign currency forward contracts with an aggregate notional value of $140 million.

The following table provides the assets carried at fair value (in millions):



			Fair Value Measurements Using:
	Total Carrying Value		Quoted Market Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
As of December 31, 2016
Assets
Cash equivalents⁽¹⁾	$	931	$	931	$	—	$	—
Forward contracts⁽²⁾	$	12	$	—	$	12	$	—
As of December 31, 2015
Assets
Cash equivalents⁽¹⁾	$	905	$	905	$	—	$	—
Forward contracts⁽²⁾	$	4	$	—	$	4	$	—
Interest rate caps⁽³⁾	$	—	$	—	$	—	$	—

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(1)	The Company has short-term investments classified as cash equivalents as the original maturities are less than 90 days.

(2)

As of December 31, 2016 and 2015, the Company had 18 and 19 foreign currency forward contracts, respectively, with fair values based on recently reported market transactions of forward rates. Assets were included in prepaid expenses and other and liabilities were included in other accrued liabilities in the accompanying consolidated balance sheets. For the years ended December 31, 2016 and 2015, the Company recorded gains of $10 million and $4 million, respectively, related to the change in fair value of the forward contracts.


(3)	As of December 31, 2016, the Company had no interest rate cap agreements. As of December 31, 2015, the Company had one interest rate cap agreement with a nominal aggregate fair value based on recently reported market transactions of interest rates, which was recorded in prepaid expenses and other in the accompanying consolidated balance sheets.