Financial Instruments

6 Months Ended

Jun. 30, 2020

Financial Instruments

Financial Instruments

5. Financial Instruments

The Company elected to invest a portion of its cash assets in conservative, income earning, and liquid investments. Cash equivalents and investments, all of which are classified as available-for-sale securities, consisted of the following:

	June 30, 2020								December 31, 2019
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Estimated Fair Value
	(in thousands)
Money market deposits	$	28,795	$	—	$	—	$	28,795	$	22,477	$	—	$	—	$	22,477
U.S. Treasury securities (1)		399,622		4,820		(26)		404,416		292,506		731		(80)		293,157
Municipal securities		88,460		981		(5)		89,436		85,638		277		(7)		85,908
Total	$	516,877	$	5,801	$	(31)	$	522,647	$	400,621	$	1,008	$	(87)	$	401,542
Classified as:						—
Cash equivalents (2)							$	28,795							$	22,477
Short-term investments								493,852								379,065
Total							$	522,647							$	401,542

(1) Per the Company’s investment policy, all U.S. Treasury securities are classified as short-term investments irrespective of holding period.  

(2) Includes cash sweep accounts and U.S. Treasury money market mutual funds.

The Company invests in U.S. Treasuries, U.S. agency and high quality municipal bonds which mature at par value and are all paying their coupons on schedule. The Company has therefore concluded there is currently no other than temporary impairment of its investments and will continue to recognize unrealized gains and losses in other comprehensive income (loss). During the six months ended June 30, 2020, the Company sold $11.5 million of investments. There were no sales of investments during the six months ended June 30, 2019. During the six months ended June 30, 2020, the amount of gross realized gains and realized losses upon sales of investments were insignificant. The Company uses the specific investment identification method to calculate realized gains and losses and amounts reclassified out of other comprehensive income to net income. As of June 30, 2020, the Company had 9 investments in an unrealized loss position in its portfolio. An allowance for credit losses was not necessary for the second quarter of 2020 since the fair market value for a majority of the available-for-sale securities increased as a result of a significant average yield rate decrease for similar securities as of June 30, 2020.

In accordance with the adoption of ASU 2016-13 (Topic 326), the Company has assessed the unrealized loss position for available-for-sale debt securities for which an allowance for credit losses has not been recorded. The fair value for investment securities at an unrealized loss position as of June 30, 2020 was $117.8 million. The aggregate amount of unrealized losses of these securities were not significant, and the impact of the securities in a continuous loss position to the condensed consolidated statements of operations and comprehensive loss were not material as of June 30, 2020.

The following table summarizes the Company’s portfolio of available-for-sale securities by contractual maturity as of June 30, 2020:

	June 30, 2020
	Amortized Cost		Fair Value
(in thousands)
Less than one year	$	264,713	$	265,534
Greater than one year but less than five years		223,369		228,318
Total	$	488,082	$	493,852