Note 7. Fair Value Measurements

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S GAAP establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. In order to increase consistency and comparability in fair value measurements, the FASB has established a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the measurement of its fair value. The three levels of input defined by U.S. GAAP are as follows:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available.

The following table presents the Company’s investment assets (excluding equity and cost method investments) and derivatives measured at fair value on a recurring basis as of December 31, 2017 and 2016 (in thousands):


	December 31, 2017
	Level 1		Level 2			Level 3		Total
Certificates of deposit (foreign)	$	—	$	12,809		$	—	$	12,809
Corporate bonds		—		11,065			—		11,065
Corporate obligations		—		13			—		13
Money markets		38		—			—		38
Mutual funds		79		—			—		79
Other investments		—		5,588			—		5,588
Interest rate derivatives — asset derivatives		—		10,156			—		10,156
Interest rate derivatives — liability derivatives		—		(4,024	)		—		(4,024	)
Foreign currency contracts — asset position		—		405			—		405
Foreign currency contracts — liability position		—		(8,802	)		—		(8,802	)

	December 31, 2016
	Level 1		Level 2			Level 3		Total
Certificates of deposit (foreign)	$	—	$	87,372		$	—	$	87,372
Corporate bonds		—		34,133			—		34,133
Short-term bond fund		5,046		—			—		5,046
Corporate obligations		—		3			—		3
Money markets		54		—			—		54
Mutual funds		101		—			—		101
Other investments		—		4,235			—		4,235
Interest rate derivatives — asset derivatives		—		7,860			—		7,860
Interest rate derivatives — liability derivatives		—		(9,006	)		—		(9,006	)
Foreign currency contracts — asset position		—		7,369			—		7,369
Foreign currency contracts — liability position		—		(3,671	)		—		(3,671	)

All of the Company’s short-term and long-term investments at December 31, 2017 are classified within Level 1 or Level 2 of the fair value hierarchy as they are valued using quoted market prices, market prices for similar securities, or alternative pricing sources with reasonable levels of price transparency. The types of instruments valued based on quoted market prices in active markets include the Company’s investment in money market funds, mutual funds and municipal bonds. Such instruments are generally classified within Level 1 of the fair value hierarchy. The types of instruments valued based on other observable inputs include corporate obligations and bonds, commercial paper and certificates of deposit. Such instruments are classified within Level 2 of the fair value hierarchy.

In addition to the financial instruments included in the above table, certain nonfinancial assets and liabilities are to be measured at fair value on a nonrecurring basis in accordance with applicable authoritative guidance. This includes items such as nonfinancial assets and liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods) and nonfinancial long-lived asset groups measured at fair value for an impairment assessment. In general, nonfinancial assets including goodwill, other intangible assets and property and equipment are measured at fair value when there is an indication of impairment and are recorded at fair value only when any impairment is recognized. During the fourth quarter of 2017, the Company recorded partial impairments of goodwill and indefinite-lived tradenames of $51.2 million and $3.8 million, respectively, acquired in the ActiveVideo acquisition and included as part of the Cloud TV reporting unit, of which $19.3 million is attributable to the noncontrolling interest. See Note 5 Goodwill and Intangible Assets of Notes to the Consolidated Financial Statements for further discussion.

The Company believes the principal amount of the debt as of December 31, 2017 approximated the fair value because of interest-bearing rates that are adjusted periodically, analysis of recent market conditions, prevailing interest rates, and other Company specific factors. The Company has classified the debt as a Level 2 item within the fair value hierarchy.