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Fair Value Measurements
6 Months Ended
Jun. 30, 2017
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
Due to its foreign operations, the company is exposed to the effects of foreign currency exchange rate fluctuations on the U.S. dollar, principally related to intercompany account balances. The company uses derivative financial instruments to reduce its exposure to market risks from changes in foreign currency exchange rates on such balances. The company enters into foreign exchange forward contracts, generally having maturities of three months or less, which have not been designated as hedging instruments. At June 30, 2017 and 2016, the notional amount of these contracts was $408.0 million and $473.8 million, respectively. At June 30, 2017 and 2016, the fair value of such contracts was a net gain of $7.1 million and a net loss of $17.3 million, respectively, of which $8.6 million and $1.9 million, respectively, has been recognized in “Prepaid expenses and other current assets” and $1.5 million and $19.2 million, respectively, has been recognized in “Other accrued liabilities” in the company’s consolidated balance sheets. For the six months ended June 30, 2017 and 2016, changes in the fair value of these instruments were a gain of $21.5 million and a loss of $14.1 million, respectively, which has been recognized in earnings in “Other income (expense), net” in the company’s consolidated statements of income. The fair value of these forward contracts is based on quoted prices for similar but not identical financial instruments; as such, the inputs are considered Level 2 inputs.
Financial assets with carrying values approximating fair value include cash and cash equivalents and accounts receivable. Financial liabilities with carrying values approximating fair value include accounts payable and other accrued liabilities. The carrying amounts of these financial assets and liabilities approximate fair value due to their short maturities.
The fair value of long-term debt is based on market prices (Level 2 inputs). At June 30, 2017, the fair value of the company’s senior secured notes due 2022, which were issued in April 2017, was $481.8 million. The fair value of the company’s convertible senior notes due 2021 was $318.9 million and $379.8 million at June 30, 2017 and December 31, 2016, respectively. At December 31, 2016, the fair value of the company’s senior notes due 2017, which were retired in May 2017, was $97.8 million.