Fair Value Measurements

12 Months Ended

Dec. 31, 2016

FASB literature regarding fair value measurements for certain assets and liabilities establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of "observable inputs" and minimize the use of "unobservable inputs." The three levels of inputs used to measure fair value are as follows:


•	Level 1—Quoted prices in active markets for identical assets or liabilities;


•	Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or other inputs that are observable or can be corroborated by observable market data; and


•	Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Fair Value Measurements on a Recurring Basis

The table below segregates all of our financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date, generally including money market funds, treasury bills, available-for-sale and derivative financial instruments, and other investments (amounts in millions):



			Fair Value Measurements at December 31, 2016 Using
	As of December 31, 2016		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Balance Sheet Classification
	As of December 31, 2016		(Level 1)		(Level 2)		(Level 3)		Balance Sheet Classification
Financial Assets:
Recurring fair value measurements:
Money market funds	$	2,921	$	2,921	$	—	$	—	Cash and cash equivalents
Foreign government treasury bills	38		38		—		—		Cash and cash equivalents
Foreign currency forward contracts designated as hedges	22		—		22		—		Other current assets
Auction rate securities ("ARS")	9		—		—		9		Other assets
Total recurring fair value measurements	$	2,990	$	2,959	$	22	$	9



				Fair Value Measurements at December 31, 2015 Using
	As of December 31, 2015			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs		Balance Sheet Classification
	As of December 31, 2015			(Level 1)		(Level 2)			(Level 3)		Balance Sheet Classification
Financial Assets:
Recurring fair value measurements:
Money market funds	$	1,613		$	1,613	$	—		$	—	Cash and cash equivalents
Foreign government treasury bills	34			34		—			—		Cash and cash equivalents
Foreign currency forward contracts not designated as hedges	11			—		11			—		Other current assets
ARS	9			—		—			9		Other assets
Total recurring fair value measurements	$	1,667		$	1,647	$	11		$	9

Financial Liabilities:
Foreign currency forward contracts designated as hedges	$	(4	)	$	—	$	(4	)	$	—	Accrued expenses and other liabilities

ARS represented the only level 3 investment held by the Company. The fair value of these investments has been unchanged for the years ended December 31, 2016, 2015, and 2014.

Foreign Currency Forward Contracts

Foreign Currency Forward Contracts Not Designated as Hedges

At December 31, 2016, we did not have any outstanding foreign currency forward contracts not designated as hedges.

At December 31, 2015, the gross notional amount of outstanding foreign currency forward contracts not designated as hedges was approximately $489 million. During the year ended December 31, 2015, we reclassified $8 million of unrealized gains out of "Accumulated other comprehensive income (loss)" and into earnings due to dedesignating $250 million notional euro to U.S. dollar cash flow hedges when it was determined the hedged transaction would not occur. As a result of the dedesignation, we entered into offsetting foreign currency forward contracts. The fair value of these foreign currency forward contracts was $11 million as of December 31, 2015, and recorded in “Other current assets” in our consolidated balance sheet.

For the years ended December 31, 2016, 2015, and 2014, pre-tax net gains associated with these forward contracts were recorded in “General and administrative expenses” and were not material.

Foreign Currency Forward Contracts Designated as Hedges ("Cash Flow Hedges")

At December 31, 2016, the gross notional amount of outstanding Cash Flow Hedges was approximately $346 million. The fair value of these contracts was $22 million of net unrealized gains with remaining maturities of 12 months or less. Additionally, at December 31, 2016, we had $7 million of net realized but unrecognized gains recorded within "Accumulated other comprehensive income (loss)" associated with contracts that settled during the year but were deferred and will be amortized into earnings along with the associated hedged revenues. Such amounts will be reclassified into earnings within the next twelve months.

At December 31, 2015, the gross notional amount of all outstanding Cash Flow Hedges was approximately $381 million. The fair value of these contracts was $4 million of net unrealized losses as of December 31, 2015.

During the years ended December 31, 2016 and 2015, there was no ineffectiveness relating to our Cash Flow Hedges. During the years ended December 31, 2016 and 2015, the amount of pre-tax net realized gains associated with these contracts that were reclassified out of "Accumulated other comprehensive income (loss)" and into earnings was not material.

Fair Value Measurements on a Non-Recurring Basis

We measure the fair value of certain assets on a non-recurring basis, generally annually or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

For the years ended December 31, 2016, 2015, and 2014, there were no impairment charges related to assets that are measured on a non-recurring basis.

- 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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