Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v3.10.0.1
Fair Value Measurements
3 Months Ended
Sep. 30, 2018
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS
NOTE 3 – FAIR VALUE MEASUREMENTS
The Company’s financial assets and liabilities are measured and recorded at fair value, except for its debt and certain equity investments in privately-held companies. Prior to July 1, 2018, the equity investments were generally accounted for under the cost method of accounting and were periodically assessed for other-than-temporary impairment when an event or circumstance indicated that an other-than-temporary decline in value may have occurred. Effective July 1, 2018, equity investments without a readily available fair value are accounted for using the measurement alternative. The measurement alternative is calculated as cost minus impairment, if any, plus or minus changes resulting from observable price changes.
The Company’s non-financial assets, such as goodwill, intangible assets, and land, property and equipment, are recorded at cost and are assessed for impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred.
Fair Value of Financial Instruments. The Company has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. The fair value of the Company’s cash equivalents, accounts receivable, accounts payable and other current assets and liabilities approximate their carrying amounts due to the relatively short maturity of these items.
Fair Value Hierarchy. The authoritative guidance for fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1
  
Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
 
 
 
Level 2
  
Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
 
 
 
Level 3
  
Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
As of September 30, 2018, the types of instruments valued based on quoted market prices in active markets included money market funds, certain U.S. Treasury securities and U.S. Government agency securities. Such instruments are generally classified within Level 1 of the fair value hierarchy. The types of instruments valued based on other observable inputs included corporate debt securities, sovereign securities, certain U.S. Treasury securities and U.S. Government agency securities. The market inputs used to value these instruments generally consist of market yields, reported trades and broker/dealer quotes. Such instruments are generally classified within Level 2 of the fair value hierarchy.
The principal market in which the Company executes its foreign currency contracts is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants generally are large financial institutions. The Company’s foreign currency contracts’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.
The fair value of contingent consideration payable, which relates to the acquisitions of privately-held companies, was classified as Level 3 and estimated using significant inputs that were not observable in the market.
Financial assets (excluding cash held in operating accounts and time deposits) and liabilities measured at fair value on a recurring basis, as of the date indicated below, were presented on the Company’s Condensed Consolidated Balance Sheet as follows:
As of September 30, 2018 (In thousands)
Total
 
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Little or no market activity
Inputs
(Level 3)
Assets
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
U.S. Treasury securities
$
17,357

 
$

 
$
17,357

 
$

Money market funds and other
1,118,051

 
1,118,051

 

 

U.S. Government agency securities
22,354

 

 
22,354

 

Marketable securities:
 
 
 
 
 
 
 
Corporate debt securities
595,096

 

 
595,096

 

U.S. Government agency securities
245,228

 
245,228

 

 

Sovereign securities
17,205

 

 
17,205

 

U.S. Treasury securities
271,554

 
271,554

 

 

Total cash equivalents and marketable securities(1)
2,286,845

 
1,634,833

 
652,012

 

Other current assets:
 
 
 
 
 
 
 
Derivative assets
9,988

 

 
9,988

 

Other non-current assets:
 
 
 
 
 
 
 
Executive Deferred Savings Plan
203,370

 
146,388

 
56,982

 

Total financial assets(1)
$
2,500,203

 
$
1,781,221

 
$
718,982

 
$

Liabilities
 
 
 
 
 
 
 
Other current liabilities:
 
 
 
 
 
 
 
Derivative liabilities
$
(1,393
)
 
$

 
$
(1,393
)
 
$

Contingent consideration payable

(3,102
)
 

 

 
(3,102
)
Total financial liabilities
$
(4,495
)
 
$

 
$
(1,393
)
 
$
(3,102
)
________________
(1) Excludes cash of $467.6 million held in operating accounts and time deposits of $25.8 million as of September 30, 2018.

Financial assets (excluding cash held in operating accounts and time deposits) and liabilities measured at fair value on a recurring basis, as of the date indicated below, were presented on the Company’s Condensed Consolidated Balance Sheet as follows:  
As of June 30, 2018 (In thousands)
Total
 
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
 
Significant Other
Observable Inputs
(Level 2)
Assets
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
U.S. Treasury securities
$
1,996

 
$

 
$
1,996

Corporate debt securities
4,995

 

 
4,995

Money market funds and other
863,115

 
863,115

 

U.S. Government agency securities
7,675

 

 
7,675

Marketable securities:
 
 
 
 
 
Corporate debt securities
735,408

 

 
735,408

Sovereign securities
17,142

 

 
17,142

U.S. Government agency securities
316,022

 
299,501

 
16,521

U.S. Treasury securities
405,654

 
364,574

 
41,080

Total cash equivalents and marketable securities(1)
2,352,007

 
1,527,190

 
824,817

Other current assets:
 
 
 
 
 
Derivative assets
5,385

 

 
5,385

Other non-current assets:
 
 
 
 
 
Executive Deferred Savings Plan
197,213

 
143,580

 
53,633

Total financial assets(1)
$
2,554,605

 
$
1,670,770

 
$
883,835

Liabilities
 
 
 
 
 
Other current liabilities:
 
 
 
 
 
Derivative liabilities
$
(6,828
)
 
$

 
$
(6,828
)
Total financial liabilities
$
(6,828
)
 
$

 
$
(6,828
)
________________
(1) Excludes cash of $473.8 million held in operating accounts and time deposits of $54.5 million as of June 30, 2018.
There were no transfers between Level 1 and Level 2 fair value measurements during the three months ended September 30, 2018. The Company generally did not have any assets or liabilities measured at fair value on a recurring basis within Level 3 fair value measurements as of June 30, 2018.