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Financial Instruments
3 Months Ended
Mar. 31, 2017
Financial Instruments Disclosure [Abstract]  
Financial Instruments

4.

Financial Instruments

Our financial assets are measured at fair value on a recurring basis using the following hierarchy to prioritize valuation inputs, in accordance with applicable GAAP:

 

Level 1:

  

Quoted prices in active markets for identical assets or liabilities that we have the ability to access

 

Level 2:

  

 

Observable market based inputs or unobservable inputs that are corroborated by market data such as quoted prices, interest rates and yield curves

 

Level 3:

  

 

Inputs that are unobservable data points that are not corroborated by market data

We review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. We recognize transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs. There have been no transfers between Level 1, Level 2, and Level 3 in any periods presented.

Financial assets and liabilities are considered Level 2 when their fair values are determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities. In addition, Level 2 financial instruments are valued using comparisons to like-kind financial instruments and models that use readily observable market data as their basis. U.S. Treasury, government agency and corporate debt obligations, and commercial paper and asset-backed securities are valued primarily using market prices of comparable securities, bid/ask quotes, interest rate yields and prepayment spreads and are included in Level 2.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. We have no Level 3 financial assets or liabilities.

The following tables summarize the estimated fair value and related valuation input hierarchy of our available-for-sale securities as of each period end:

 

 

 

 

 

Total

 

 

Total

 

 

Total

 

 

Total

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

As of March 31, 2017:

 

Input Level

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

Money market funds

 

Level 1

 

$

46,617

 

 

$

 

 

$

 

 

$

46,617

 

U.S. Treasury obligations

 

Level 2

 

 

54,363

 

 

 

1

 

 

 

(37

)

 

 

54,327

 

Government agency obligations

 

Level 2

 

 

12,343

 

 

 

2

 

 

 

(4

)

 

 

12,341

 

Corporate debt obligations

 

Level 2

 

 

104,168

 

 

 

9

 

 

 

(106

)

 

 

104,071

 

Commercial paper

 

Level 2

 

 

798

 

 

 

 

 

 

 

 

 

798

 

Asset-backed securities

 

Level 2

 

 

12,390

 

 

 

 

 

 

(17

)

 

 

12,373

 

Total available-for-sale securities

 

 

 

 

230,679

 

 

 

12

 

 

 

(164

)

 

 

230,527

 

Less amounts classified as cash equivalents

 

 

 

 

(62,315

)

 

 

 

 

 

4

 

 

 

(62,311

)

Amounts classified as short-term securities

 

 

 

$

168,364

 

 

$

12

 

 

$

(160

)

 

$

168,216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

Total

 

 

Total

 

 

Total

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

As of December 31, 2016:

 

Input Level

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

Money market funds

 

Level 1

 

$

28,816

 

 

$

 

 

$

 

 

$

28,816

 

U.S. Treasury obligations

 

Level 2

 

 

65,403

 

 

 

3

 

 

 

(21

)

 

 

65,385

 

Government agency obligations

 

Level 2

 

 

23,860

 

 

 

5

 

 

 

(5

)

 

 

23,860

 

Corporate debt obligations

 

Level 2

 

 

113,649

 

 

 

8

 

 

 

(172

)

 

 

113,485

 

Commercial paper

 

Level 2

 

 

699

 

 

 

 

 

 

 

 

 

699

 

Asset-backed securities

 

Level 2

 

 

13,414

 

 

 

4

 

 

 

(6

)

 

 

13,412

 

Total available-for-sale securities

 

 

 

 

245,841

 

 

 

20

 

 

 

(204

)

 

 

245,657

 

Less amounts classified as cash equivalents

 

 

 

 

(37,944

)

 

 

 

 

 

1

 

 

 

(37,943

)

Amounts classified as short-term securities

 

 

 

$

207,897

 

 

$

20

 

 

$

(203

)

 

$

207,714

 

 

The amortized cost and fair value of our available-for-sale securities by contractual maturity were as follows:

 

 

As of March 31, 2017

 

 

As of December 31, 2016

 

 

Amortized

 

 

Estimated

 

 

Amortized

 

 

Estimated

 

 

Cost

 

 

Fair Value

 

 

Cost

 

 

Fair Value

 

 

(in thousands)

 

 

(in thousands)

 

Maturing within one year

$

194,903

 

 

$

194,823

 

 

$

198,022

 

 

$

197,956

 

Maturing in one to five years

 

35,776

 

 

 

35,704

 

 

 

47,819

 

 

 

47,701

 

Total available-for-sale securities

$

230,679

 

 

$

230,527

 

 

$

245,841

 

 

$

245,657

 

 

As of March 31, 2017, certain available-for-sale securities had been in a continuous unrealized loss position, each for less than twelve months. As of this date, no significant facts or circumstances were present to indicate a deterioration in the creditworthiness of the respective issuers, and the Company has no requirement or intention to sell these securities before maturity or recovery of their amortized cost basis. During the three months ended March 31, 2017 and 2016, we did not recognize any other-than-temporary impairment loss.

In addition, restricted cash collateralized by money market funds is a financial asset measured at fair value and is a Level 1 financial instrument under the fair value hierarchy. As of March 31, 2017 and December 31, 2016, restricted cash was $1.4 million and $0.2 million, respectively.