Fair Value Measurements

6 Months Ended

Jun. 30, 2019

3. Fair Value Measurements

Assets and liabilities recorded at fair value on a recurring basis in the accompanying condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. We use a fair value hierarchy to measure fair value, maximizing the use of observable inputs and minimizing the use of unobservable inputs. The three-tiers of the fair value hierarchy are as follows:

Level I - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level II - Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level III - Unobservable inputs that are supported by little or no market data for the related assets or liabilities and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

We measure and report our cash equivalents, restricted cash, and available-for-sale marketable securities at fair value on a recurring basis. The following tables summarize the amortized costs, unrealized gains and losses and fair value of these financial assets by significant investment category and their level within the fair value hierarchy (in thousands):



	June 30, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Level I		Level II		Level III
Financial Assets:
Cash Equivalents:
Money market funds	$	518,039	$	—	$	—		$	518,039	$	518,039	$	—	$	—
Agency securities	3,992		—		—			3,992		—		3,992		—
U.S. government notes	3,996		—		—			3,996		3,996		—		—
	526,027		—		—			526,027		522,035		3,992		—
Marketable Securities:
Corporate bonds	658,913		2,863		(33		)	661,743		—		661,743		—
U.S. government notes	342,004		834		(11		)	342,827		342,827		—		—
Agency securities	269,193		864		(28		)	270,029		—		270,029		—
Commercial paper	35,790		—		—			35,790		—		35,790		—
Certificates of deposits ⁽¹⁾	3,000		—		—			3,000		—		3,000		—
	1,308,900		4,561		(72		)	1,313,389		342,827		970,562		—
Other Assets:
Money market funds - restricted	4,222		—		—			4,222		4,222		—		—
Total Financial Assets	$	1,839,149	$	4,561	$	(72	)	$	1,843,638	$	869,084	$	974,554	$	—



	December 31, 2018
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Level I		Level II		Level III
Financial Assets:
Cash Equivalents:
Money market funds	$	322,080	$	—	$	—		$	322,080	$	322,080	$	—	$	—
Marketable Securities:
Corporate bonds	660,353		264		(1,399		)	659,218		—		659,218		—
U.S. government notes	308,946		118		(286		)	308,778		308,778		—		—
Agency securities	273,993		240		(511		)	273,722		—		273,722		—
Commercial paper	59,479		—		—			59,479		—		59,479		—
Certificates of deposits ⁽¹⁾	5,000		—		—			5,000		—		5,000		—
	1,307,771		622		(2,196		)	1,306,197		308,778		997,419		—
Other Assets:
Money market funds - restricted	4,214		—		—			4,214		4,214		—		—
Total Financial Assets	$	1,634,065	$	622	$	(2,196	)	$	1,632,491	$	635,072	$	997,419	$	—

______________________

(1) As of June 30, 2019 and December 31, 2018, all of our certificates of deposits were domestic deposits.

We did not realize any other-than-temporary losses on our marketable securities for the three and six months ended June 30, 2019 and 2018. As of June 30, 2019 and December 31, 2018, total unrealized losses of our marketable securities that had been in a continuous unrealized loss position were immaterial. We invest in marketable securities that have maximum maturities of up to two years and are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these marketable securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those marketable securities purchased at a time with lower interest rates show a mark-to-market unrealized loss. We expect to realize the full value of these investments upon maturity or sale and therefore, we do not consider any of our marketable securities to be other-than-temporarily impaired as of June 30, 2019.

As of June 30, 2019, the contractual maturities of our investments did not exceed 24 months. The fair values of available-for-sale marketable securities, by remaining contractual maturity, are as follows (in thousands):



	June 30, 2019
Due in 1 year or less	$	932,285
Due in 1 year through 2 years	381,104
Total marketable securities	$	1,313,389

The weighted-average remaining duration of our current marketable securities is approximately 0.8 years as of June 30, 2019. As we view these securities as available to support current operations, we classify securities with maturities beyond 12 months as current assets under the caption marketable securities in the accompanying unaudited condensed consolidated balance sheets.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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