FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability. The three levels of the fair value hierarchy are:


•	Level 1: Observable inputs obtained from independent sources, such as quoted prices for identical assets and liabilities in active markets.

•

Level 2: Other inputs, which are observable directly or indirectly, such as 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 that are derived principally from or corroborated by observable market data. The fair values of the Company's Level 2 financial assets are primarily obtained from observable market prices for identical underlying securities that may not be actively traded. Certain of these securities may have different market prices from multiple market data sources, in which case an average market price is used.


•	Level 3: Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the assets or liabilities. See below for a discussion of fair value measurements made using Level 3 inputs.

The following tables present the Company's financial instruments that are measured at fair value on a recurring basis:



	June 30, 2015
	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total Fair Value Measurements
	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	207,014	$	—	$	—		$	207,014
Commercial paper	—		76,789		—			76,789
Time deposits	—		32,457		—			32,457
Marketable securities:
Corporate debt securities	—		232,917		—			232,917
Equity security	606		—		—			606
Long-term investments:
Auction rate security	—		—		6,630			6,630
Marketable equity security	11,388		—		—			11,388
Total	$	219,008	$	342,163	$	6,630		$	567,801

Liabilities:
Contingent consideration arrangements	$	—	$	—	$	(31,858	)	$	(31,858	)



	December 31, 2014
	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total Fair Value Measurements
	(In thousands)
Assets:
Cash equivalents:
Money market funds	$	174,720	$	—	$	—		$	174,720
Commercial paper	—		388,801		—			388,801
Time deposits	—		42,914		—			42,914
Marketable securities:
Corporate debt securities	—		159,197		—			159,197
Equity security	1,451		—		—			1,451
Long-term investments:
Auction rate security	—		—		6,070			6,070
Marketable equity security	7,410		—		—			7,410
Total	$	183,581	$	590,912	$	6,070		$	780,563

Liabilities:
Contingent consideration arrangements	$	—	$	—	$	(30,140	)	$	(30,140	)

The following tables present the changes in the Company's financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3):



	Three Months Ended June 30,
	2015					2014
	Auction Rate Security		Contingent Consideration Arrangements			Auction Rate Security		Contingent Consideration Arrangements
	(In thousands)
Balance at April 1	$	6,190	$	(20,964	)	$	9,150	$	(48,758	)
Total net gains (losses):
Included in earnings:
Fair value adjustments	—		9,950			—		(527		)
Foreign currency exchange losses	—		(4		)	—		—
Included in other comprehensive income (loss)	440		384			100		499
Fair value at date of acquisition	—		(26,749		)	—		—
Settlements	—		5,525			—		7,389
Balance at June 30	$	6,630	$	(31,858	)	$	9,250	$	(41,397	)



	Six Months Ended June 30,
	2015					2014
	Auction Rate Security		Contingent Consideration Arrangements			Auction Rate Security		Contingent Consideration Arrangements
	(In thousands)
Balance at January 1	$	6,070	$	(30,140	)	$	8,920	$	(45,828	)
Total net gains (losses):
Included in earnings:
Fair value adjustments	—		16,946			—		(500		)
Foreign currency exchange gains	—		626			—		—
Included in other comprehensive income (loss)	560		2,117			330		136
Fair value at date of acquisition	—		(27,112		)	—		(2,835		)
Settlements	—		5,705			—		7,630
Balance at June 30	$	6,630	$	(31,858	)	$	9,250	$	(41,397	)

Auction rate security

The Company's auction rate security is valued by discounting the estimated future cash flow streams of the security over the life of the security. Credit spreads and other risk factors are also considered in establishing fair value. The cost basis of the auction rate security is $10.0 million, with gross unrealized losses of $3.4 million and $3.9 million at June 30, 2015 and December 31, 2014, respectively. The unrealized losses are included in "Accumulated other comprehensive loss" in the accompanying consolidated balance sheet. At June 30, 2015, the auction rate security is rated BBB- and matures in 2035. The Company does not consider the auction rate security to be other-than-temporarily impaired at June 30, 2015, due to its credit rating and because the Company does not intend to sell this security, and it is not more likely than not that the Company will be required to sell this security, before the recovery of its amortized cost basis, which may be maturity.

Contingent Consideration Arrangements

As of June 30, 2015, there are nine contingent consideration arrangements related to business acquisitions. Eight of the contingent consideration arrangements have limits as to the maximum amount that can be paid; the maximum contingent payments related to these arrangements is $240.7 million and the fair value of these arrangements at June 30, 2015 is $31.4 million. The fair value of the one contingent consideration arrangement without a limit on the maximum amount is $0.5 million at June 30, 2015. The contingent consideration arrangements are generally based upon earnings performance and/or operating metrics such as monthly active users. The Company typically determines the fair value of the contingent consideration arrangements by using a probability-weighted analysis to determine the amount of the gross liability, and, if the arrangement is long-term in nature, applying a discount rate that captures the risks associated with the obligation. The number of scenarios in the probability-weighted analyses can vary; generally, more scenarios are prepared for longer duration and more complex arrangements. The contingent consideration arrangements fair values at June 30, 2015 reflect discount rates ranging from 12-25%.

The fair values of the contingent consideration arrangements are sensitive to changes in the forecasts of earnings and/or the relevant operating metrics and changes in discount rates. The Company remeasures the fair value of the contingent consideration arrangements each reporting period, and changes are recognized in “General and administrative expense” in the accompanying consolidated statement of operations. The contingent consideration arrangement liability at June 30, 2015 includes a current portion of $2.8 million and non-current portion of $29.1 million, which are included in “Accrued expenses and other current liabilities” and “Other long-term liabilities,” respectively, in the accompanying consolidated balance sheet.

Assets measured at fair value on a nonrecurring basis

The Company's non-financial assets, such as goodwill, intangible assets and property and equipment, as well as equity and cost method investments, are adjusted to fair value only when an impairment charge is recognized. Such fair value measurements are based predominantly on Level 3 inputs.

Cost method investments

At June 30, 2015 and December 31, 2014, the carrying values of the Company's investments accounted for under the cost method totaled $103.3 million and $90.9 million, respectively, and are included in "Long-term investments" in the accompanying consolidated balance sheet. The Company evaluates each cost method investment for impairment on a quarterly basis and recognizes an impairment loss if a decline in value is determined to be other-than-temporary. If the Company has not identified events or changes in circumstances that may have a significant adverse effect on the fair value of a cost method investment, then the fair value of such cost method investment is not estimated, as it is impracticable to do so.

In the second quarter of 2014, the Company recorded $64.2 million of other-than-temporary impairment charges for certain cost method investments as a result of our assessment of the near-term prospects and financial condition of the investees. This charge is included in "Other (expense) income, net" in the accompanying consolidated statement of operations.

Equity method investments

In the second quarter of 2014, the Company recorded a $4.2 million other-than-temporary impairment charge on an equity method investment following the sale of a majority of the investee's assets. This charge is included in "Other (expense) income, net" in the accompanying consolidated statement of operations.

Long-term marketable equity securities

The cost basis of the Company's long-term marketable equity security at June 30, 2015 and December 31, 2014 is $8.7 million, with a gross unrealized gain of $2.7 million and loss of $1.2 million at June 30, 2015 and December 31, 2014, respectively. The gross unrealized gain at June 30, 2015 and gross unrealized loss at December 31, 2014 are included in "Accumulated other comprehensive loss" in the accompanying consolidated balance sheet.

Financial instruments measured at fair value only for disclosure purposes

The following table presents the carrying value and the fair value of financial instruments measured at fair value only for disclosure purposes:



	June 30, 2015						December 31, 2014
	Carrying Value			Fair Value			Carrying Value			Fair Value
	(In thousands)
Current portion of long-term debt	$	(80,000	)	$	(80,000	)	$	—		$	—
Long-term debt, net of current portion	(1,000,000		)	(1,025,345		)	(1,080,000		)	(1,099,813		)

The fair value of long-term debt is estimated using market prices or indices for similar liabilities and taking into consideration other factors such as credit quality and maturity, which are Level 3 inputs.