Fair Value of Financial Instruments (Tables)

3 Months Ended

Apr. 01, 2017

Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a recurring basis

	Fair Value Measurements at April 1, 2017 Using
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	85,090	$	—	$	—	$	85,090
Certificates of deposit	—		32,183		—		32,183
Commercial paper	—		30,582		—		30,582
Municipal bonds	—		6,034		—		6,034
Corporate bonds	—		1,498		—		1,498
Total cash equivalents	$	85,090	$	70,297	$	—	$	155,387
Short-term investments:
Variable-rate demand notes	$	—	$	117,770	$	—	$	117,770
Corporate bonds	—		108,828		—		108,828
Municipal bonds	—		78,555		—		78,555
U.S. government bonds	50,437		—		—		50,437
Asset-backed securities	—		25,519		—		25,519
Agency bonds	—		7,482		—		7,482
Commercial paper	—		6,239		—		6,239
International government bonds	—		1,497		—		1,497
Total short-term investments	$	50,437	$	345,890	$	—	$	396,327
Long-term investments:
Auction rate securities	$	—	$	—	$	5,257	$	5,257
Total long-term investments	$	—	$	—	$	5,257	$	5,257
Total	$	135,527	$	416,187	$	5,257	$	556,971
Liabilities:
Other non-current liabilities:
Contingent consideration	$	—	$	—	$	3,829	$	3,829
Total	$	—	$	—	$	3,829	$	3,829

	Fair Value Measurements at December 31, 2016 Using
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash equivalents:
Money market funds	$	69,432	$	—	$	—	$	69,432
Certificates of deposit	—		7,153		—		7,153
Municipal bonds	—		3,904		—		3,904
Total cash equivalents	$	69,432	$	11,057	$	—	$	80,489
Short-term investments:
Municipal bonds	$	—	$	79,702	$	—	$	79,702
Corporate bonds	—		31,036		—		31,036
Variable-rate demand notes	—		16,400		—		16,400
U.S. government bonds	12,416		—		—		12,416
Asset-backed securities	—		8,173		—		8,173
Commercial paper	—		5,233		—		5,233
International government bonds	—		1,001		—		1,001
Total short-term investments	$	12,416	$	141,545	$	—	$	153,961
Long-term investments:
Auction rate securities	$	—	$	—	$	5,196	$	5,196
Total long-term investments	$	—	$	—	$	5,196	$	5,196
Other assets, net:
Derivative instruments	$	—	$	1,808	$	—	$	1,808
Total	$	—	$	1,808	$	—	$	1,808
Total	$	81,848	$	154,410	$	5,196	$	241,454

Summarization of contractual underlying maturities of available-for-sale investments

The following summarizes the contractual underlying maturities of the Company’s available-for-sale investments at April 1, 2017 (in thousands):

	Cost		Fair Value
Due in one year or less	$	291,314	$	291,287
Due after one year through ten years	149,197		149,157
Due after ten years	117,270		116,527
	$	557,781	$	556,971

Schedule of available-for-sale investments in continuous unrealized loss position by length of time

The available-for-sale investments that were in a continuous unrealized loss position, aggregated by length of time that individual securities have been in a continuous loss position, were as follows (in thousands):

	Less Than 12 Months					12 Months or Greater					Total
As of April 1, 2017	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Corporate bonds	$	45,299	$	(145	)	$	—	$	—		$	45,299	$	(145	)
Municipal bonds	38,781		(42		)	—		—			38,781		(42		)
U.S. government bonds	28,251		(23		)	—		—			28,251		(23		)
Asset-backed securities	17,478		(22		)	—		—			17,478		(22		)
Auction rate securities	—		—			5,257		(742		)	5,257		(742		)
Agency bonds	3,498		(1		)	—		—			3,498		(1		)
International government bonds	1,497		(2		)	—		—			1,497		(2		)
	$	134,804	$	(235	)	$	5,257	$	(742	)	$	140,061	$	(977	)

	Less Than 12 Months					12 Months or Greater					Total
As of December 31, 2016	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Municipal bonds	$	69,379	$	(140	)	$	—	$	—		$	69,379	$	(140	)
Corporate bonds	18,561		(128		)	—		—			18,561		(128		)
U.S. government bonds	10,364		(16		)	—		—			10,364		(16		)
Auction rate securities	—		—			5,196		(804		)	5,196		(804		)
Asset-backed securities	3,176		(4		)	—		—			3,176		(4		)
	$	101,480	$	(288	)	$	5,196	$	(804	)	$	106,676	$	(1,092	)

Summary of quantitative information about level 3 asset fair value measurements

Auction rate securities

Fair Value at April 1, 2017 (000s)		Valuation Technique	Unobservable Input	Weighted Average
$	5,257	Discounted cash flow	Estimated yield	0.9%
			Expected holding period	10 years
			Estimated discount rate	3.56%

Contingent consideration

Fair Value at April 1, 2017 (000s)		Valuation Technique	Unobservable Input	Weighted Average
$	3,829	Discounted cash flow	Expected term	9 months
			Estimated discount rate	12.0%

Summary of activity in Level 3 financial instruments

The following summarizes the activity in Level 3 financial instruments for the three months ended April 1, 2017 (in thousands):

Assets

Auction Rate Securities	Three Months Ended
Beginning balance	$	5,196
Gain included in other comprehensive loss	61
Balance at April 1, 2017	$	5,257

Liabilities

Contingent Consideration (1)	Three Months Ended
Beginning balance	$	—
Issues	3,829
Balance at April 1, 2017	$	3,829

(1) In connection with the acquisition of Zentri, the Company recorded contingent consideration based upon the expected achievement of a milestone goal. Changes to the fair value of contingent consideration due to changes in assumptions used in preparing the valuation model are recorded in selling, general and administrative expenses in the Consolidated Statement of Income.