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 market prices for identical assets and liabilities in active markets.

•

Level 2: Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market 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:



	March 31, 2018
	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	$	762,064	$	—	$	—		$	762,064
Time deposits	—		85,038		—			85,038
Treasury discount notes	149,908		—		—			149,908
Commercial paper	—		217,342		—			217,342
Certificates of deposit	—		4,797		—			4,797
Marketable securities:
Commercial paper	—		4,990		—			4,990
Equity security with a readily determinable fair value	640		—		$	—		640
Total	$	912,612	$	312,167	$	—		$	1,224,779

Liabilities:
Contingent consideration arrangements	$	—	$	—	$	(1,965	)	$	(1,965	)



	December 31, 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	$	780,425	$	—	$	—		$	780,425
Time deposits	—		60,000		—			60,000
Treasury discount notes	100,457		—		—			100,457
Commercial paper	—		215,325		—			215,325
Certificates of deposit	—		6,195		—			6,195
Marketable securities:
Commercial paper	—		4,995		—			4,995
Total	$	880,882	$	286,515	$	—		$	1,167,397

Liabilities:
Contingent consideration arrangements	$	—	$	—	$	(2,647	)	$	(2,647	)

The following table presents 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 March 31,
	2018			2017
	(In thousands)
Balance at January 1	$	(2,647	)	$	(33,871	)
Total net losses:
Included in earnings:
Fair value adjustments	(156		)	(1,891		)
Included in other comprehensive loss	(110		)	(1,059		)
Settlements	948			15,000
Balance at March 31	$	(1,965	)	$	(21,821	)

Contingent Consideration Arrangements

As of March 31, 2018, there are three contingent consideration arrangements related to business acquisitions. Two 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 $32.1 million and the gross fair value of these arrangements, before the unamortized discount, at March 31, 2018 is $2.1 million. No payment is expected for the one contingent consideration arrangement without a limit on the maximum earnout.

The contingent consideration arrangements are based upon earnings performance and/or operating metrics. The Company generally determines the fair value of the contingent consideration arrangements by using probability-weighted analyses to determine the amounts of the gross liability, and, because the arrangements were 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 fair values of the contingent consideration arrangements at both March 31, 2018 and December 31, 2017 reflect discount rates of 12%.

The fair value of contingent consideration arrangements is 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 March 31, 2018 and December 31, 2017 includes a current portion of $2.0 million and $0.6 million, respectively, and non-current portion of $2.0 million at December 31, 2017, which are included in “Accrued expenses and other current liabilities” and “Other long-term liabilities,” respectively, in the accompanying consolidated balance sheet. At March 31, 2018, there is no non-current portion of the contingent consideration arrangement liability.

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 method investments, are adjusted to fair value only when an impairment charge is recognized. Equity securities without readily determinable fair values are adjusted to fair value for observable price changes in orderly transactions for an identical or similar investment of the same issuer. Such fair value measurements are based predominantly on Level 3 inputs.

Equity securities without readily determinable fair values

At March 31, 2018 and December 31, 2017, the carrying values of the Company's investments in equity securities without readily determinable fair values totaled $81.0 million and $63.4 million, respectively, and are included in "Long-term investments" in the accompanying consolidated balance sheet. The Company exercises reasonable effort to determine whether any observable price changes in orderly transactions for identical or similar investments in the same issuer have occurred. A similar investment will be considered identical or similar if it has identical or similar rights and obligations to the equity investments held by the Company. If such an orderly transaction has occurred, the Company will adjust the value of the equity investment in accordance with ASC 321, Investments — Equity Securities. During the three months ended March 31, 2018, the Company did not identify any transactions that resulted in adjustment to the carrying value of its equity securities without readily determinable fair values.

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:



	March 31, 2018						December 31, 2017
	Carrying Value			Fair Value			Carrying Value			Fair Value
	(In thousands)
Current portion of long-term debt	$	(14,120	)	$	(14,199	)	$	(13,750	)	$	(13,802	)
Long-term debt, net	(1,980,579		)	(2,211,769		)	(1,979,469		)	(2,168,108		)

The fair value of long-term debt, including the current portion, is estimated using observable market prices or indices for similar liabilities, which are Level 2 inputs.