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Fair Value Measurements
 9 Months Ended
Sep. 30, 2016
Fair Value Disclosures [Abstract]  
Fair Value Measurements
FAIR VALUE MEASUREMENTS
Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:
Level 1
Quoted market prices in active markets for identical assets or liabilities
Level 2
Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3
Unobservable inputs reflecting our assumptions or external inputs from active markets
When applying the fair value principles in the valuation of assets and liabilities, we are required to maximize the use of quoted market prices and minimize the use of unobservable inputs. We calculate the fair value of our Level 1 and Level 2 instruments based on the exchange traded price of identical or similar instruments, where available, or based on other observable inputs taking into account our credit risk and that of our counterparties. Foreign currency exchange contracts and interest rate hedges are included in Level 2, as we use inputs other than quoted prices that are observable for the asset or liability. The Level 2 derivative instruments are primarily valued using standard calculations and models that use readily observable market data as their basis. Our Level 3 liabilities represent milestone payments for acquisitions. For certain Level 3 liabilities, the Black-Scholes option pricing model was used to value the liabilities, while the fair value of other liabilities was estimated using a discounted cash flow technique. Significant unobservable inputs to this technique included our probability assessments related to the occurrence of certain events, appropriately discounted considering the uncertainties associated with the obligation. We remeasure the fair value of our assets and liabilities each reporting period. We record the changes in fair value within selling, general and administrative expense and the changes in the time value of money within other income (expense), net.
Assets and Liabilities Measured at Fair Value
 
September
December
 
2016
2015
Cash and cash equivalents
$
2,953

$
3,379

Trading marketable securities
91

82

Level 1 - Assets
$
3,044

$
3,461

Available-for-sale marketable securities:
 
 
Corporate and asset-backed debt securities
$
26

$
214

Foreign government debt securities
—

96

United States agency debt securities
11

120

United States treasury debt securities
14

264

Certificates of deposit
18

8

Total available-for-sale marketable securities
$
69

$
702

Foreign currency exchange forward contracts
12

69

Interest rate swap asset
39

15

Level 2 - Assets
$
120

$
786

Total assets measured at fair value
$
3,164

$
4,247

 
 
 
Deferred compensation arrangements
$
91

$
82

Level 1 - Liabilities
$
91

$
82

Foreign currency exchange forward contracts
$
33

$
10

Interest rate swap liability
—

4

Level 2 - Liabilities
$
33

$
14

Contingent consideration:
 
 
Beginning balance
$
56

$
48

Additions
49

11

Losses included in earnings
(5
)
—

Settlements
(3
)
(3
)
Balance at the end of the period
$
97

$
56

Level 3 - Liabilities
$
97

$
56

Total liabilities measured at fair value
$
221

$
152


There were no significant transfers into or out of any level between December 31, 2015 and September 30, 2016.
Fair Value of Available for Sale Securities by Maturity
 
September
December
 
2016
2015
Due in one year or less
$
42

$
588

Due after one year through three years
$
27

$
114


On September 30, 2016 the aggregate difference between the cost and fair value of available-for-sale marketable securities was nominal. The total of interest and marketable securities income was $7 and $1 in the three months 2016 and 2015 and $19 and $12 in the nine months 2016 and 2015. We record interest and marketable securities income in other income (expense), net.
Less than 1% of our investments in available-for-sale marketable securities had a credit quality rating of less than A2 (Moody's), A (Standard & Poor's) and A (Fitch). We do not plan to sell the investments, and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. We do not consider these investments to be other-than-temporarily impaired on September 30, 2016. Substantially all our investments with unrealized losses that were not deemed to be other-than-temporarily impaired were in a continuous unrealized loss position for less than twelve months.
Securities in a Continuous Unrealized Loss Position
 
Number of Investments
Fair Value
Corporate and asset-backed debt securities
6
$
3

United States agency debt securities
1
1

United States treasury debt securities
1
2

Certificates of deposit
13
7

Total
21
$
13