XML 24 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
Fair Value Measurements
 9 Months Ended
Sep. 30, 2017
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 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 are based on readily observable market data. Our Level 3 liabilities represent milestone payments for acquisitions recorded at fair value calculated using either the Black-Scholes option pricing model or a discounted cash flow technique. Significant unobservable inputs were used in our probability assessments and were appropriately discounted considering the uncertainties associated with the obligation. We estimate that substantially all triggering events will occur. 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
 
2017
2016
Cash and cash equivalents
$
2,592

$
3,316

Trading marketable securities
114

94

Level 1 - Assets
$
2,706

$
3,410

Available-for-sale marketable securities:
 
 
Corporate and asset-backed debt securities
$
33

$
25

United States agency debt securities
19

9

United States Treasury debt securities
24

16

Certificates of deposit
21

18

Total available-for-sale marketable securities
$
97

$
68

Foreign currency exchange forward contracts
38

45

Interest rate swap asset
50

57

Level 2 - Assets
$
185

$
170

Total assets measured at fair value
$
2,891

$
3,580

 
 
 
Deferred compensation arrangements
$
114

$
94

Level 1 - Liabilities
$
114

$
94

Foreign currency exchange forward contracts
$
41

$
18

Level 2 - Liabilities
$
41

$
18

Contingent consideration:
 
 
Beginning
$
86

$
56

Additions
5

49

Change in estimate
(2
)
(7
)
Settlements
(56
)
(12
)
Ending
$
33

$
86

Level 3 - Liabilities
$
33

$
86

Total liabilities measured at fair value
$
188

$
198


There were no significant transfers into or out of any level in 2017.
Fair Value of Available for Sale Securities by Maturity
 
September 2017
December 2016
Due in one year or less
$
50

$
36

Due after one year through three years
$
47

$
32


On September 30, 2017 the aggregate difference between the cost and fair value of available-for-sale marketable securities was nominal. Interest and marketable securities income was $15 and $7 in the three months and $38 and $19 in the nine months 2017 and 2016, which was recorded 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, 2017. 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, and the losses were nominal.
Securities in a Continuous Unrealized Loss Position
 
Number of Investments
Fair Value
Corporate and asset-backed
25
$
9

United States agency
15
18

United States Treasury
16
24

Certificates of deposit
6
3

Total
62
$
54