NOTE 5 — Fair Value Measurements

Financial assets measured at fair value on a recurring basis as of December 31, 2017 are classified using the fair value hierarchy in the table below:



	Total		Level 1		Level 2
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	15,873	$	15,873	$	—
Time deposits	552,297		—		552,297
Derivatives:
Foreign currency forward contracts	6,141		—		6,141
Investments:
Time deposits	468,508		—		468,508
Marketable equity securities	263,550		263,550		—
Total assets	$	1,306,369	$	279,423	$	1,026,946

Financial assets measured at fair value on a recurring basis as of December 31, 2016 are classified using the fair value hierarchy in the table below:



	Total		Level 1		Level 2
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	113,955	$	113,955	$	—
Time deposits	299,585		—		299,585
Investments:
Time deposits	24,576		—		24,576
Corporate debt securities	64,227		—		64,227
Total assets	$	502,343	$	113,955	$	388,388

Liabilities
Derivatives:
Foreign currency forward contracts	$	4,402	$	—	$	4,402

We classify our cash equivalents and investments within Level 1 and Level 2 as we value our cash equivalents and investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Valuation of the foreign currency forward contracts is based on foreign currency exchange rates in active markets, a Level 2 input.

As of December 31, 2017 and 2016, our cash and 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.

We periodically invest in investment grade corporate debt securities, all of which are classified as available for sale. As of December 31, 2017, we had no short-term or long-term available for sale investments. As of December 31, 2016, we had $48 million of short-term and $16 million of long-term available for sale investments and 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.

On September 20, 2017, Despegar completed its initial public offering and, therefore we designated our previous cost method investment in Despegar as available for sale. As of December 31, 2017, the cost basis was $273 million and related gross unrealized loss was $9 million.

We also hold 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 investments.

We use foreign currency forward contracts to economically hedge certain merchant revenue exposures, foreign denominated liabilities related to certain of our loyalty programs and our other foreign currency-denominated operating liabilities. As of December 31, 2017, we were party to outstanding forward contracts hedging our liability exposures with a total net notional value of $2.6 billion. We had a net forward asset of $6 million recorded in prepaid expenses and other current assets as of December 31, 2017 and a net forward liability of $4 million recorded in accrued expenses and other current liabilities as of December 31, 2016. We recorded $17 million, $(66) million and $46 million in net gains (losses) from foreign currency forward contracts in 2017, 2016 and 2015.

Assets Measured at Fair Value on a Non-recurring Basis

Our non-financial assets, such as goodwill, intangible assets and property and equipment, as well as equity and cost method investments, are adjusted to fair value only when an impairment charge is recognized or the underlying investment is sold. Such fair value measurements are based predominately on Level 3 inputs.

Intangible Assets. During 2016, we recognized intangible impairment charges of $35 million, of which $2 million was recorded during the third quarter of 2016 and $33 million was recorded in conjunction with the annual impairment of goodwill and intangible assets on October 1, 2016. These impairment charges were related to indefinite-lived trade names within our Core OTA segment and resulted from changes in estimated future revenues of the related brands. The assets, classified as Level 3 measurements, were written down to $76 million based on a valuation using the relief-from-royalty method, which includes unobservable inputs, including royalty rates and projected revenues. In addition, we recognized impairment charges of $7 million during 2015.

Cost Method Investments. As of December 31, 2017 and 2016, we had $371 million and $323 million of cost method investments. During 2017, we recorded $14 million in net losses related to certain cost method investments, which included $6 million in other-than-temporary impairments as well as a loss recognized on the liquidation of an investment of $9 million. As a result of these impairments and subsequent liquidation, we have no remaining fair value related to these cost investments as of December 31, 2017. In addition, during 2016, we recognized other-than-temporary investment impairments of $12 million related to two cost investments, the remaining fair value of which was less than $1 million as of December 31, 2016.