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Fair Value of Financial Instruments
9 Months Ended
Sep. 30, 2015
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

3. Fair Value of Financial Instruments

The Company measures certain financial assets at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

 

·

Level 1 — Quoted prices in active markets for identical assets or liabilities.

 

·

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

 

·

Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

The following table details the fair value measurements within the fair value hierarchy of the Company’s financial assets and liabilities at September 30, 2015 and December 31, 2014.

 

 

 

September 30, 2015

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

(in thousands)

 

Money market funds

 

$

32,404

 

 

$

 

 

$

 

 

$

32,404

 

Commercial paper

 

 

 

 

 

8,993

 

 

 

 

 

 

8,993

 

Corporate bonds

 

 

 

 

 

73,195

 

 

 

 

 

 

73,195

 

U.S. government agency obligations

 

 

 

 

 

7,007

 

 

 

 

 

 

7,007

 

Total

 

$

32,404

 

 

$

89,195

 

 

$

 

 

$

121,599

 

 

 

 

December 31, 2014

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

(in thousands)

 

Money market funds

 

$

100,000

 

 

$

 

 

$

 

 

$

100,000

 

Total

 

$

100,000

 

 

$

 

 

$

 

 

$

100,000

 

 

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents. The fair value of the Company’s investments in certain money market funds is their face value and such instruments are classified as Level 1 and are included in cash and cash equivalents on the consolidated balance sheets.

Certain holdings classified as commercial paper and corporate bonds above had original maturities to the Company of less than 90 days, and therefore have been included within cash and cash equivalents within the consolidated balance sheets.

For certain other financial instruments, including accounts receivable, accounts payable and other current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these balances.

The following tables summarize the composition of our short- and long-term investments at September 30, 2015. The Company did not have any investments at December 31, 2014.

 

 

 

September 30, 2015

 

 

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

(Losses)

 

 

Aggregate

Fair Value

 

 

 

(in thousands)

 

Commercial paper

 

$

8,992

 

 

$

1

 

 

$

 

 

$

8,993

 

Corporate bonds

 

 

73,434

 

 

 

 

 

 

(239

)

 

 

73,195

 

U.S. government agency obligations

 

 

7,006

 

 

 

1

 

 

 

 

 

 

7,007

 

Total

 

$

89,432

 

 

$

2

 

 

$

(239

)

 

$

89,195

 

 

For all of our securities for which the amortized cost basis was greater than the fair value at September 30, 2015, the Company has concluded that there is no plan to sell the security nor is it more likely than not that the Company would be required to sell the security before its anticipated recovery. In making the determination as to whether the unrealized loss is other-than-temporary, the Company considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating and the time to maturity.

Contractual Maturities

The contractual maturities of short-term and long-term investments held at September 30, 2015 are as follows:

 

 

 

September 30, 2015

 

 

 

Amortized

Cost Basis

 

 

Aggregate

Fair Value

 

 

 

( in thousands)

 

Due within one year

 

$

45,720

 

 

$

45,697

 

Due after 1 year through 2 years

 

 

43,712

 

 

 

43,498

 

Total

 

$

89,432

 

 

$

89,195