Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 6 Fair Value Measurements

Items Measured at Fair Value on a Recurring Basis

The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands).

	Fair Value Measurements as of								Amortized Cost as of
	June 30, 2016								June 30, 2016
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Cash	$	21,546	$	—	$	—	$	21,546	$	21,546
Money market funds	5,290		—		—		5,290		5,290
Corporate notes and bonds	—		9,297		—		9,297		9,297
Total cash and cash equivalents	26,836		9,297		—		36,133		36,133
Short-term investments:
Corporate notes and bonds	—		42,656		—		42,656		42,638
Total short-term investments	—		42,656		—		42,656		42,638
Restricted cash equivalents and investments	—		3,000		—		3,000		3,000
Equity investment in publicly traded securities	1,920		—		—		1,920		362
Warrant issued by Rhapsody (included in Other assets)	—		—		971		971		—
Total	$	28,756	$	54,953	$	971	$	84,680	$	82,133

	Fair Value Measurements as of								Amortized Cost as of
	December 31, 2015								December 31, 2015
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents:
Cash	$	23,152	$	—	$	—	$	23,152	$	23,152
Money market funds	5,061		—		—		5,061		5,061
Corporate notes and bonds	—		19,102		—		19,102		19,102
Total cash and cash equivalents	28,213		19,102		—		47,315		47,315
Short-term investments:
Corporate notes and bonds	—		51,814		—		51,814		51,862
Total short-term investments	—		51,814		—		51,814		51,862
Restricted cash equivalents and investments	—		2,890		—		2,890		2,890
Equity investment in publicly traded securities	1,721		—		—		1,721		362
Warrant issued by Rhapsody (included in Other assets)	—		—		1,053		1,053		—
Total	$	29,934	$	73,806	$	1,053	$	104,793	$	102,429

Restricted cash equivalents and investments as of June 30, 2016 and December 31, 2015 relate to cash pledged as collateral against letters of credit in connection with lease agreements.

Realized gains or losses on sales of short-term investment securities for the quarters and six months ended June 30, 2016 and 2015 were not significant. Gross unrealized gains and gross unrealized losses on short-term investment securities as of June 30, 2016 and December 31, 2015 were also not significant.

Investments with remaining contractual maturities of five years or less are classified as short-term because the investments are marketable and highly liquid, and we have the ability to utilize them for current operations. Contractual maturities of short-term investments as of June 30, 2016 (in thousands):

	Estimated Fair Value
Within one year	$	39,751
Between one year and five years	2,905
Total short-term investments	$	42,656

Our equity investment in a publicly traded company as of June 30, 2016 and December 31, 2015 consisted of J-Stream Inc., a Japanese media services company. This equity investment is accounted for as available for sale. During the quarter and six months ended June 30, 2015, we sold a portion of J-Stream shares we held, resulting in cash proceeds of $0.1 million and $0.5 million, respectively and pre-tax gains of $0.1 million and $0.4 million, respectively.

In February 2015, Rhapsody issued warrants to purchase Rhapsody common shares to each of RealNetworks and Rhapsody's one other 43% stockholder. The warrants were issued as compensation for past services provided by RealNetworks and the other 43% stockholder, and both warrants covered the same number of underlying shares. The exercise price of the warrants was equal to the fair value of the underlying shares on the issuance date, and we used the Black-Scholes option-pricing model to calculate the fair value of the warrant, using an expected term of 5 years and expected volatility of 55%. On the date of issuance, we recognized and recorded the $1.2 million fair value of the warrant issued to RealNetworks within other assets in the unaudited condensed consolidated balance sheets, and as an expense reduction within General and administrative expense in the unaudited condensed consolidated statements of operations. The warrants are free-standing derivatives and as such their fair value is determined each quarter using updated inputs in the Black-Scholes option-pricing model. During the six months ended June 30, 2016, the decrease in the fair value of the warrants from December 31, 2015 was insignificant.

Items Measured at Fair Value on a Non-recurring Basis

Certain of our assets and liabilities are measured at estimated fair value on a non-recurring basis, using Level 3 inputs. These instruments are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). During the six months ended June 30, 2016 and 2015, we did not record any impairments on those assets required to be measured at fair value on a non-recurring basis.

See Note 12, Lease Exit and Related Charges, for a discussion of the losses related to reductions in the use of RealNetworks' office space, which were recorded at the estimated fair value of remaining lease obligations, less expected sub-lease income.