DEBT SECURITIES

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

The Company's debt securities as of September 30, 2020 and December 31, 2019 were comprised of available-for-sale corporate and government debt securities. These securities are carried at fair value, with the unrealized gains and losses reported in accumulated other comprehensive income, unless an impairment is determined to be the result of credit-related factors or the Company intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovery. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in interest income. Realized gains and losses and declines in value that are determined to be the result of credit losses, if any, on available-for-sale securities are included in other income or expense. Unrealized losses that are determined to be credit-related are also recorded as an allowance against the amortized cost basis. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income. All available-for-sale securities are classified as current assets, even if the maturity when acquired by the Company is greater than one year due to the ability to liquidate within the next 12 months.

During the nine months ended September 30, 2020, investment activity for the Company included $223.3 million in maturities and $143.0 million in purchases, all relating to debt based marketable securities.

Debt securities consisted of the following (in thousands):


	September 30, 2020		December 31, 2019
Commercial paper	$	63,163	$	17,152
Corporate debt securities	139,548		306,436
Securities of government sponsored entities	53,075		12,500
Total debt securities	$	255,786	$	336,088

The following is a summary of short-term debt securities classified as available-for-sale as of September 30, 2020 (in thousands):


	Remaining Contractual Maturity (in years)	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Estimated Fair Value
Commercial paper	Less than 1	$	63,167	$	2	$	(6)	$	63,163
Corporate debt securities	Less than 1	91,922		619		—		92,541
Securities of government-sponsored entities	Less than 1	43,081		—		—		43,081
Total maturity less than 1 year		198,170		621		(6)		198,785
Corporate debt securities	1 to 2	46,485		522		—		47,007
Securities of government-sponsored entities	1 to 2	10,000		1		(7)		9,994
Total maturity 1 to 2 years		56,485		523		(7)		57,001
Total available-for-sale securities		$	254,655	$	1,144	$	(13)	$	255,786

The following is a summary of short-term debt securities classified as available-for-sale as of December 31, 2019 (in thousands):


	Remaining Contractual Maturity (in years)	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Estimated Fair Value
Commercial paper	Less than 1	$	17,136	$	16	$	—	$	17,152
Corporate debt securities	Less than 1	191,770		582		(10)		192,342

Total maturity less than 1 year		208,906		598		(10)		209,494
Corporate debt securities	1 to 2	113,799		351		(56)		114,094
Securities of government-sponsored entities	1 to 2	12,501		—		(1)		12,500
Total maturity 1 to 2 years		126,300		351		(57)		126,594
Total available-for-sale securities		$	335,206	$	949	$	(67)	$	336,088

The primary objective of the Company’s investment portfolio is to enhance overall returns while preserving capital and liquidity. The Company’s investment policy limits interest-bearing security investments to certain types of instruments issued by institutions with primarily investment grade credit ratings and places restrictions on maturities and concentration by asset class and issuer.

The Company reviews the available-for-sale debt securities for declines in fair value below the cost basis each quarter. For any security whose fair value is below its amortized cost basis, the Company first evaluates whether it intends to sell the impaired security, or will otherwise be more likely than not required to sell the security before recovery. If either are true, the amortized cost basis of the security is written down to its fair value at the reporting date. If neither circumstance holds true, the Company assesses whether any portion of the unrealized loss is a result of a credit loss. Any amount deemed to be attributable to credit loss is recognized in the income statement, with the amount of the loss limited to the difference between fair value and amortized cost and recorded as an allowance for credit losses. The portion of the unrealized loss related to factors other than credit losses is recognized in other comprehensive income (loss).

The following is a summary of available-for-sale debt securities in an unrealized loss position with no credit losses reported as of September 30, 2020 (in thousands):


	Less Than 12 Months				12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Commercial paper	$	58,166	$	6	$	—	$	—	$	58,166	$	6
Corporate debt securities	—		—		—		—		—		—
Securities of government-sponsored entities	43,074		7		—		—		43,074		7
Total	$	101,240	$	13	$	—	$	—	$	101,240	$	13

The following is a summary of available-for-sale debt securities in an unrealized loss position with no credit losses reported as of December 31, 2019 (in thousands):


	Less Than 12 Months				12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Commercial paper	$	—	$	—	$	—	$	—	$	—	$	—
Corporate debt securities	74,151		64		7,509		2		81,660		66
Securities of government-sponsored entities	5,000		1		—		—		5,000		1
Total	$	79,151	$	65	$	7,509	$	2	$	86,660	$	67

As of September 30, 2020 and December 31, 2019, the Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis. The Company does not believe the unrealized losses incurred during the period are due to credit-related factors. Liquidity issues that arose from economic circumstances surrounding the COVID-19 pandemic have continued to ease and unrealized losses observed in early 2020 have been substantially recovered. The credit ratings of the securities held remain of the highest quality, and while certain securities in the portfolio may be downgraded momentarily, the Federal Reserve has allowed institutions to continue to issue debt where there is need, with the government itself purchasing such securities. Moreover, the Company continues to receive payments of interest and principal as they become due, and our expectation is that those payments will continue to be received timely. Uncertainty surrounding the COVID-19 pandemic, as well as other factors unknown to us at this time, may cause actual results to differ and require adjustments to the Company’s estimates and assumptions in the future.