Fair Value Measurements

9 Months Ended

Sep. 30, 2016

Fair Value, Assets, Liabilities and Stockholders' Equity Measured on Recurring Basis [Abstract]

The company uses a three-level classification hierarchy of fair value measurements for disclosure purposes.


•	Level 1 inputs, which are considered the most reliable evidence of fair value, consist of quoted prices (unadjusted) for identical assets or liabilities in active markets.


•	Level 2 inputs consist of observable market data, such as quoted prices for similar assets and liabilities in active markets, or inputs other than quoted prices that are directly observable.


•	Level 3 inputs consist of unobservable inputs which are derived and cannot be corroborated by market data or other entity-specific inputs.

Level 1 assets generally include U.S. Treasury securities, U.S. government agency securities, investments in publicly traded mutual funds, equity securities and corporate debt securities with quoted market prices. In general, the company uses quoted prices in active markets for identical assets to determine the fair value of marketable securities and equity investments. If quoted prices are not available to determine fair value, the company uses other inputs that are directly observable.

Assets included in level 2 generally consist of asset-backed securities. Asset-backed securities were measured at fair value based on matrix pricing using prices of similar securities with similar inputs such as maturity dates, interest rates and credit ratings.

Financial assets recorded in the consolidated balance sheet as of September 30, 2016 were classified in their entirety based on the lowest level of input that was significant to each asset's fair value measurement. There were no liabilities that were measured at fair value as of September 30, 2016. The following tables present financial instruments measured at fair value on a recurring basis:



	September 30, 2016
(in millions)	Level 1		Level 2		Level 3		Total
Assets at Fair Value:
Marketable securities:
Corporate debt securities	$	22.0	$	—	$	—	$	22.0
Mutual funds	60.9		—		—		60.9
Equity securities	0.1		—		—		0.1
Asset-backed securities	—		0.3		—		0.3
Total Marketable Securities	83.0		0.3		—		83.3
Performance bonds and guaranty fund contributions ⁽¹⁾:
U.S. Treasury securities	4,199.5		—		—		4,199.5
U.S. government agencies securities	3,682.6		—		—		3,682.6
Equity investments	369.7		—		—		369.7
Total Assets at Fair Value	$	8,334.8	$	0.3	$	—	$	8,335.1

(1) Performance bonds and guaranty fund contributions on the consolidated balance sheet at September 30, 2016 include U.S. Treasury securities and U.S. government agency securities purchased with cash collateral.

There were no transfers of assets or liabilities between level 1, level 2 and level 3 during the first nine months of 2016. There were no level 3 assets valued at fair value on a recurring basis during the first nine months of 2016. The following is a reconciliation of level 3 liabilities valued at fair value on a recurring basis during the first nine months of 2016.



(in millions)	Contingent Consideration
Fair value of liability at December 31, 2015	$	0.3
Realized and unrealized (gains) losses:
Included in other expenses	(0.3		)
Fair value of liability at September 30, 2016	$	—

In the first quarter of 2016, the company sold a datacenter and leased back a portion of the property. Under generally accepted accounting principles, the transaction has been recognized under the financing method instead of recognized as a sale-leaseback arrangement. As a result, the property and equipment legally sold will continue to be recognized on the consolidated balance sheets and was written down to a fair value of $130.0 million at March 31, 2016. In the second and third quarters of 2016, the company also recorded impairment charges totaling $5.5 million on one of its strategic investments. The fair value of the investment was estimated to be zero at September 30, 2016. Both assessments were based on qualitative indications of impairment and a quantitative analysis of undiscounted cash flows. The fair values of the datacenter and strategic investment are considered level 3 and nonrecurring. There were no other level 3 assets or liabilities valued at fair value on a nonrecurring basis during the first nine months of 2016.

The following presents the estimated fair values of long-term debt notes, which are carried at amortized cost on the consolidated balance sheets. The fair values, which are classified as level 2 under the fair value hierarchy, were estimated using quoted market prices. At September 30, 2016, the fair values were as follows:



(in millions)	Fair Value
$750.0 million fixed rate notes due September 2022, stated rate of 3.00%	$	798.8
$750.0 million fixed rate notes due March 2025, stated rate of 3.00%	789.8
$750.0 million fixed rates notes due September 2043, stated rate of 5.30%	971.5

- 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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