Assets and Liabilities Measured at Fair Value

3 Months Ended

Mar. 31, 2017

Assets and Liabilities Measured at Fair Value

Assets and Liabilities Measured at Fair Value

(4) Assets and Liabilities Measured at Fair Value

For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have any recurring assets or liabilities measured at fair value that would be considered Level 3.

The Company’s assets and liabilities measured at fair value are as follows:

	March 31, 2017				December 31, 2016
			Quoted prices	Significant other		Quoted prices	Significant other
			in active markets	observable		in active markets	observable
			for identical assets	inputs		for identical assets	inputs
Description	Total		(Level 1)	(Level 2)	Total	(Level 1)	(Level 2)
	amounts in millions
Cash equivalents	$	516	197	319	464	164	300
Foreign currency forward contracts	$	(2)	—	(2)	(4)	—	(4)
Time deposits	$	812	—	812	25	—	25
Available for sale securities	$	57	—	57	64	—	64

Cash equivalents are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs and are accordingly classified within Level 1 or Level 2. As of March 31, 2017, cash equivalents consisted primarily of prime institutional money market funds with maturities of three months or less, time deposits as well as bank account balances.

Valuation of the foreign currency forward contracts is based on foreign currency exchange rates in active markets, a Level 2 input. Expedia uses foreign currency forward contracts to economically hedge certain merchant revenue exposures, foreign denominated liabilities related to certain of its loyalty programs and its other foreign currency-denominated operating liabilities. Foreign currency forward contracts are typically short-term and are included in the Other current liabilities line item as of March 31, 2017 and December 31, 2016 in the Company’s condensed consolidated balance sheets. As of March 31, 2017, Expedia was party to outstanding forward contracts hedging its liability exposures with a total net notional value of $1.9 billion. Net losses from foreign currency forward contracts were $4 million for the three months ended March 31, 2017. Net losses from foreign currency forward contracts are included in the Other, net line in the Company’s condensed consolidated statement of operations.

Expedia holds time deposit investments with financial institutions. Time deposits with original maturities of less than three months are classified as cash equivalents and those with remaining maturities of less than one year are classified within Short-term marketable securities. Additionally, Expedia has approximately $6 million time deposits classified as restricted cash for certain traveler deposits which are included in Other current assets.  

Corporate debt securities are investment grade, all of which are classified as available for sale. As of March 31, 2017, Expedia had approximately $46 million of short-term available for sale securities, classified in Other current assets and approximately $12 million of long-term available for sale investments, classified in Other assets. As of December 31, 2016, Expedia had approximately $48 million of short-term available for sale securities, classified in Other current assets and approximately $16 million of long-term available for sale investments, classified in Other assets. As of March 31, 2017 and December 31, 2016, the amortized cost basis of the investments approximated their fair value with both gross unrealized gains and gross unrealized losses of less than $1 million.