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, 2017
	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	$	794,630	$	—	$	—		$	794,630
Commercial paper	—		187,380		—			187,380
Time deposits	—		105,596		—			105,596
Treasury discount notes	49,974		—		—			49,974
Marketable securities:
Commercial paper	—		14,984		—			14,984
Total	$	844,604	$	307,960	$	—		1,152,564

Liabilities:
Contingent consideration arrangements	$	—	$	—	$	(24,829	)	$	(24,829	)



	December 31, 2016
	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	$	667,662	$	—	$	—		$	667,662
Commercial paper	—		123,640		—			123,640
Time deposits	—		79,000		—			79,000
Treasury discount notes	24,991		—		—			24,991
Marketable securities:
Commercial paper	—		49,797		—			49,797
Treasury discount notes	34,974		—		—			34,974
Corporate debt securities	—		4,571		—			4,571
Total	$	727,627	$	257,008	$	—		$	984,635

Liabilities:
Contingent consideration arrangements	$	—	$	—	$	(33,871	)	$	(33,871	)

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):



	Contingent Consideration Arrangements
	Three Months Ended June 30,
	2017			2016
	(In thousands)
Balance at April 1	$	(21,821	)	$	(37,243	)
Total net (losses) gains:
Included in earnings:
Fair value adjustments	(2,994		)	(6,801		)
Included in other comprehensive loss	(14		)	(3,375		)
Fair value at date of acquisition	—			55
Settlements	—			1,838
Balance at June 30	$	(24,829	)	$	(45,526	)



	Six Months Ended June 30,
	2017			2016
	Contingent Consideration Arrangements			Auction Rate Security			Contingent Consideration Arrangements
	(In thousands)
Balance at January 1	$	(33,871	)	$	4,050		$	(33,873	)
Total net (losses) gains:
Included in earnings:
Fair value adjustments	(4,885		)	—			(10,470		)
Included in other comprehensive (loss) income	(1,073		)	5,950			(5,281		)
Fair value at date of acquisition	—			—			1,948
Settlements	15,000			—			2,150
Proceeds from sale	—			(10,000		)	—
Balance at June 30	$	(24,829	)	$	—		$	(45,526	)

Contingent Consideration Arrangements

As of June 30, 2017, there are four contingent consideration arrangements related to business acquisitions. The maximum contingent payments related to these four arrangements are $91.2 million and the fair value of these arrangements at June 30, 2017 is $24.8 million.

The contingent consideration arrangements are generally based upon earnings performance and/or operating metrics. The Company determines the fair value of the contingent consideration arrangements by using probability-weighted analyses to determine the amounts of the gross liability, and, if the arrangement is initially long-term in nature, applying a discount rate that appropriately captures the risks associated with the obligation to determine the net amount reflected in the consolidated financial statements. The number of scenarios in the probability-weighted analyses can vary; generally, more scenarios are prepared for longer duration and more complex arrangements. The fair values of the contingent consideration arrangements at both June 30, 2017 and December 31, 2016 reflect discount rates of 12%.

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, including the accretion of the discount, if applicable, and changes are recognized in “General and administrative expense” in the accompanying consolidated statement of operations. The contingent consideration arrangement liability at June 30, 2017 and December 31, 2016 includes a current portion of $23.7 million and $33.4 million, respectively, and a non-current portion of $1.1 million and $0.4 million, respectively, 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, 2017 and December 31, 2016, the carrying values of the Company's investments accounted for under the cost method totaled $115.2 million and $116.1 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.

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, 2017						December 31, 2016
	Carrying Value			Fair Value			Carrying Value			Fair Value
	(In thousands)
Current portion of long-term debt	$	—		$	—		$	(20,000	)	$	(20,311	)
Long-term debt, net of current portion	(1,572,994		)	(1,657,758		)	(1,582,484		)	(1,657,861		)

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