8. Financial Instruments

Cash, Cash Equivalents and Investments

Cash and cash equivalents, short-term investments and long-term investments consist of:


	December 31, 2016
	Amortized Cost		Unrealized Holding Gains		Unrealized Holding Losses		Fair Value
	(in thousands)
Cash and cash equivalents:
Cash	$	18,726	$	—	$	—	$	18,726
Money market funds		8,317		—		—		8,317

Total cash and cash equivalents	$	27,043	$	—	$	—	$	27,043
Short-term investments:
Commercial paper	$	1,992	$	—	$	1	$	1,991
Corporate bonds and medium-term notes		8,586		—		6		8,580
Municipal bonds		600		—		—		600
U.S. treasury and agency securities		6,432		—		1		6,431

Total short-term investments	$	17,610	$	—	$	8	$	17,602
Long-term investments:
Corporate bonds and medium-term notes	$	2,510	$	—	$	11	$	2,499
Municipal bonds		500		—		4		496
U.S. treasury and agency securities		597		1		—		598

Total long-term investments	$	3,607	$	1	$	15	$	3,593

Total cash, cash equivalents, and investments	$	48,260	$	1	$	23	$	48,238


	January 2, 2016
	Amortized Cost		Unrealized Holding Gains		Unrealized Holding Losses		Fair Value
	(in thousands)
Cash and cash equivalents:
Cash	$	6,208	$	—	$	—	$	6,208
Money market funds		7,538		—		—		7,538

Total cash and cash equivalents	$	13,746	$	—	$	—	$	13,746
Short-term investments:
Corporate bonds and medium-term notes	$	9,978	$	—	$	7	$	9,971
Municipal bonds		4,238		—		—		4,238
U.S. treasury and agency securities		8,999		—		—		8,999

Total short-term investments	$	23,215	$	—	$	7	$	23,208
Long-term investments:
Corporate bonds and medium-term notes	$	6,212	$	—	$	23	$	6,189
U.S. treasury and agency securities		3,494		—		10		3,484

Total long-term investments	$	9,706	$	—	$	33	$	9,673

Total cash, cash equivalents, and investments	$	46,667	$	—	$	40	$	46,627

The contractual maturities of available-for-sale securities at December 31, 2016 are presented in the following table.


	Amortized Cost		Fair Value
	(in thousands)
Due in one year or less	$	25,927	$	25,919
Due after one through two years		3,607		3,593

	$	29,534	$	29,512

The following table provides the fair market value of Intevac’s investments with unrealized losses that are not deemed to be other-than temporarily impaired as of December 31, 2016.


	December 31, 2016
	In Loss Position for Less than 12 Months				In Loss Position for Greater than 12 Months
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(in thousands)
Commercial paper	$	1,494	$	1	$	—	$	—
Corporate bonds and medium-term notes		9,478		17		—		—
Municipal bonds		1,096		4		—		—
U.S. treasury and agency securities		2,932		1		—		—

	$	15,000	$	23	$	—	$	—

All prices for the fixed maturity securities including U.S. treasury and agency securities, commercial paper, corporate bonds and municipal bonds are received from independent pricing services utilized by Intevac’s outside investment manager. This investment manager performs a review of the pricing methodologies and inputs utilized by the independent pricing services for each asset type priced by the vendor. In addition, on at least an annual basis, the investment manager conducts due diligence visits and interviews with each pricing vendor to verify the inputs utilized for each asset class. The due diligence visits include a review of the procedures performed by each vendor to ensure that pricing evaluations are representative of the price that would be received to sell a security in an orderly transaction. Any pricing where the input is based solely on a broker price is deemed to be a Level 3 price. Intevac uses the pricing data obtained from its outside investment manager as the primary input to make its assessments and determinations as to the ultimate valuation of the above-mentioned securities and has not made, during the periods presented, any material adjustments to such inputs.

The following table represents the fair value hierarchy of Intevac’s available-for-sale securities measured at fair value on a recurring basis as of December 31, 2016.


	Fair Value Measurements at December 31, 2016
	Total		Level 1		Level 2
	(in thousands)
Recurring fair value measurements:
Available-for-sale securities
Money market funds	$	8,317	$	8,317	$	—
U.S. treasury and agency securities		7,029		4,097		2,932
Commercial paper		1,991		—		1,991
Corporate bonds and medium-term notes		11,079		—		11,079
Municipal bonds		1,096		—		1,096

Total recurring fair value measurements	$	29,512	$	12,414	$	17,098

Derivatives

The Company uses foreign currency forward contracts to mitigate variability in gains and losses generated from the re-measurement of certain monetary assets and liabilities denominated in foreign currencies and to offset certain operational exposures from the impact of changes in foreign currency exchange rates. These derivatives are carried at fair value with changes recorded in interest income and other, net in the consolidated statements of operations. Changes in the fair value of these derivatives are largely offset by re-measurement of the underlying assets and liabilities. Cash flows from such derivatives are classified as operating activities. The derivatives have maturities of approximately 30 days.

The following table summarizes the Company’s outstanding derivative instruments on a gross basis as recorded in its consolidated balance sheets as of December 31, 2016 and January 2, 2016:


	Notional Amounts				Derivative Assets								Derivative Liabilities
Derivative Instrument	December 31, 2016		January 2, 2016		December 31, 2016				January 2, 2016				December 31, 2016				January 2, 2016
					Balance Sheet Line		Fair Value		Balance Sheet Line		Fair Value		Balance Sheet Line		Fair Value		Balance Sheet Line		Fair Value
	(In thousands)
Undesignated Hedges:
Forward Foreign Currency Contracts	$	1,146	$	924		^(a)	$	—		^(a)	$	1		^(b)	$	8		^(b)	$	4

Total Hedges	$	1,146	$	924			$	—			$	1			$	8			$	4

(a)	Prepaid expenses and other current assets

(b)	Other accrued liabilities