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Cash, Cash Equivalents and Investments
12 Months Ended
Dec. 31, 2021
Cash, Cash Equivalents and Investments  
Cash, Cash Equivalents and Investments

Note 2. Cash, Cash Equivalents and Investments

Our cash and cash equivalents consist of cash and instruments with original maturities of less than three months. Our investments consist of instruments with original maturities of more than three months. As of December 31, 2021 and 2020, our cash, cash equivalents and debt investments are classified as follows (in thousands):

December 31, 2021

December 31, 2020

 

    

    

Gross

    

Gross

    

    

    

Gross

    

Gross

    

 

Amortized

Unrealized

Unrealized

Fair

Amortized

Unrealized

Unrealized

Fair

 

    

Cost

    

Gain

    

(Loss)

    

Value

    

Cost

    

Gain

    

(Loss)

    

Value

 

Classified as:

Cash

$

36,763

$

$

$

36,763

$

72,602

$

$

$

72,602

Cash equivalents:

Certificates of deposit 1

Total cash and cash equivalents

 

36,763

 

 

 

36,763

 

72,602

 

 

 

72,602

Investments (available-for-sale):

Certificates of deposit 2

 

6,680

 

(19)

 

6,661

 

2,880

 

5

 

2,885

Corporate bonds

 

8,380

 

 

(46)

 

8,334

 

3,083

 

 

(2)

 

3,081

Total investments

 

15,060

 

 

(65)

 

14,995

 

5,963

 

5

 

(2)

 

5,966

Total cash, cash equivalents and investments

$

51,823

$

$

(65)

$

51,758

$

78,565

$

5

$

(2)

$

78,568

Contractual maturities on investments:

Due within 1 year 3

$

5,424

$

5,419

$

240

$

240

Due after 1 through 5 years 4

 

9,636

 

9,576

 

5,723

 

5,726

$

15,060

$

14,995

$

5,963

$

5,966

1.Certificate of deposit with original maturities of less than three months.
2.Certificate of deposit with original maturities of more than three months.
3.Classified as “Short-term investments” in our consolidated balance sheets.
4.Classified as “Long-term investments” in our consolidated balance sheets.

We manage our debt investments as a single portfolio of highly marketable securities that is intended to be available to meet our current cash requirements. Certificates of deposit and corporate bonds are typically held until maturity.

Historically, the gross unrealized losses related to our portfolio of available-for-sale debt securities were immaterial, and primarily due to normal market fluctuations and not due to increased credit risk or other valuation concerns. Gross unrealized losses on our available-for-sale debt securities as of December 31, 2021 was $65,000, and historically, such gross unrealized losses have been temporary in nature and we believe that it is probable the principal and interest will be collected in accordance with the contractual terms. We review our debt investment portfolio at least quarterly, or when there are changes in credit risks or other potential valuation concerns, to identify and evaluate whether an allowance for credit losses or impairment would be necessary. Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality, and our ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value.

A portion of our debt investments would generate a loss if we sold them on December 31, 2021.

The following table summarizes the fair value and gross unrealized losses related to available-for-sale debt securities, aggregated by investment category and length of time that individual debt securities have been in a continuous unrealized loss position as of December 31, 2021 (in thousands):

In Loss Position

In Loss Position

Total In

 

< 12 months

> 12 months

Loss Position

 

Gross

Gross

Gross

 

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

 

As of December 31, 2021

    

Value

    

(Losses)

    

Value

    

(Losses)

    

Value

    

(Losses)

 

Investments:

Certificates of deposit

$

6,181

$

(19)

$

$

$

6,181

$

(19)

Corporate bonds

 

5,970

 

(42)

 

2,013

 

(4)

 

7,983

(46)

Total in loss position

$

12,151

$

(61)

$

2,013

$

(4)

$

14,164

$

(65)

The following table summarizes the fair value and gross unrealized losses related to available-for-sale debt securities, aggregated by investment category and length of time that individual debt securities have been in a continuous unrealized loss position as of December 31, 2020 (in thousands):

In Loss Position

In Loss Position

Total In

 

< 12 months

> 12 months

Loss Position

 

    

    

    

Gross

    

    

    

Gross

    

    

    

Gross

 

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

 

As of December 31, 2020

Value

(Loss)

Value

(Loss)

Value

(Loss)

 

Investments:

Corporate bonds

 

2,048

 

(2)

 

 

 

2,048

(2)

Total in loss position

$

2,048

$

(2)

$

$

$

2,048

$

(2)

Investments in Privately-held Raw Material Companies

We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business (see Note 6). The investment balances for the non-consolidated companies, are accounted for under the equity method and included in “Other assets” in the consolidated balance sheets and totaled $10.2 million and $6.4 million as of December 31, 2021 and 2020, respectively. As of December 31, 2021, there were five companies accounted for under the equity method. The year ended December 31, 2019 includes an impairment charge of $1.1 million for one of our minority investments (see Note 6). We had no impairment charges during 2021 and 2020.

Fair Value Measurements

We invest primarily in money market accounts, certificates of deposit, corporate bonds and notes, and government securities. ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes three levels of inputs that may be used to measure fair value. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets of the asset or identical assets. Level 2 instrument valuations are obtained from readily-available, observable pricing sources for comparable instruments. Level 3 instrument valuations are obtained from unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. On a recurring basis, we measure certain financial assets and liabilities at fair value, primarily consisting of our short-term and long-term debt investments.

The type of instrument valued based on quoted market prices in active markets include our money market funds, which are generally classified within Level 1 of the fair value hierarchy. We classify our available-for-sale debt securities including certificates of deposit and corporate bonds as having Level 2 inputs. The valuation techniques used to measure the fair value of these financial instruments having Level 2 inputs were derived from bank statements, quoted market prices, broker or dealer statements or quotations, or alternative pricing sources with reasonable levels of price transparency. There were no changes in valuation techniques or related inputs in the year ended December 31, 2021.

There have been no transfers between fair value measurement levels during the years ended December 31, 2021 and 2020.

We place short-term foreign currency hedges that are intended to offset the potential cash exposure related to fluctuations in the exchange rate between the United States dollar and Japanese yen. We measure the fair value of these foreign currency hedges at each month end and quarter end using current exchange rates and in accordance with generally accepted accounting principles. At quarter end any foreign currency hedges not settled are netted in “Accrued liabilities” on the consolidated balance sheets and classified as Level 3 assets and liabilities. As of December 31, 2021, the net change in fair value from the placement of the hedge to settlement at each month end during the quarter had a de minimis impact to the consolidated results.

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of December 31, 2021 (in thousands):

    

    

Quoted Prices in

    

Significant

 

Active Markets of

Significant Other

Unobservable

 

Balance as of

Identical Assets

Observable Inputs

Inputs

 

    

December 31, 2021

    

(Level 1)

    

(Level 2)

    

(Level 3)

 

Assets:

Cash equivalents and investments:

Certificates of deposit

$

6,661

$

$

6,661

$

Corporate bonds

 

8,334

 

 

8,334

 

Total

$

14,995

$

$

14,995

$

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of December 31, 2020 (in thousands):

    

    

Quoted Prices in

    

Significant

 

Active Markets of

Significant Other

Unobservable

 

Balance as of

Identical Assets

Observable Inputs

Inputs

 

    

December 31, 2020

    

(Level 1)

    

(Level 2)

    

(Level 3)

 

Assets:

Cash equivalents and investments:

Certificates of deposit

$

2,885

$

$

2,885

$

Corporate bonds

 

3,081

 

 

3,081

 

Total

$

5,966

$

$

5,966

$

Items Measured at Fair Value on a Nonrecurring Basis

Certain assets that are subject to nonrecurring fair value measurements are not included in the table above. These assets include investments in privately-held companies accounted for by equity and cost method (See Note 6). For the year ended December 31, 2019, we recognized an impairment charge of $1.1 million for one of our minority investments. We received its preliminary first quarter 2019 financial results in early April 2019 as well as its projections for significant losses going forward. Such projected losses would fully deplete our asset investment balance for this company in 2019. This company in which we have a minority investment is experiencing significant disruptions due to upgrades and repairs required to comply with stronger environmental regulations in China. As a result, we determined that this asset was fully impaired and wrote the asset balance down to zero. We had no impairment charges for 2021 and 2020.