INVESTMENTS AND FAIR VALUE MEASUREMENTS

The Company’s recurring financial assets and liabilities subject to fair value measurements were as follows:



	Fair Value Measurements as of September 30, 2017
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Assets:
Money market funds ⁽¹⁾	$	254,920	$	254,920	$	—	$	—

Commercial paper ⁽¹⁾	42,662		—		42,662		—

Certificates of deposit ⁽²⁾	2,493		—		2,493		—

Bonds ⁽²⁾	4,240		4,240		—		—

Investment securities available for sale
Equity securities	48,088		48,088		—		—
Mutual funds invested in fixed income securities	21,023		21,023		—		—
Fixed income securities
U.S. government securities	28,696		—		28,696		—
Corporate securities	40,372		—		40,372		—
U.S. government and federal agency	5,089		—		5,089		—
Commercial mortgage-backed securities	433		—		433		—
Commercial paper	7,976		—		7,976		—
Index-linked U.S. bonds	2,314		—		2,314		—
Foreign fixed-income securities	654		—		654		—
Total fixed income securities	85,534		—		85,534		—

Total investment securities available for sale	154,645		69,111		85,534		—

Total	$	458,960	$	328,271	$	130,689	$	—

Liabilities:
Fair value of derivatives embedded within convertible debt	$	86,190	$	—	$	—	$	86,190


Nonrecurring fair value measurements
Long-term investments ⁽³⁾	$	4,475					$	4,475	$	(525	)
	$	4,475					$	4,475	$	(525	)


(1)	Amounts included in cash and cash equivalents on the condensed consolidated balance sheet.


(2)	Amounts included in current restricted assets and restricted assets on the condensed consolidated balance sheet.


(3)	Long-term investments with a carrying amount of $5,000 were written down to their fair value of $4,475, resulting in an impairment charge of $525, which was included in earnings.



	Fair Value Measurements as of December 31, 2016
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Assets:
Money market funds ⁽¹⁾	$	248,552	$	248,552	$	—	$	—

Commercial paper ⁽¹⁾	41,247		—		41,247		—

Certificates of deposit ⁽²⁾	2,982		—		2,982		—

Bonds ⁽²⁾	4,240		4,240		—		—

Investment securities available for sale
Equity securities	50,843		50,843		—		—
Mutual funds invested in fixed income securities	20,582		20,582		—		—
Fixed income securities
U.S. government securities	30,642		—		30,642		—
Corporate securities	36,687		—		36,687		—
U.S. government and federal agency	6,500		—		6,500		—
Commercial mortgage-backed securities	1,398		—		1,398		—
Commercial paper	8,980		—		8,980		—
Index-linked U.S. bonds	770		—		770		—
Foreign fixed income securities	501		—		501		—
Total fixed income securities	85,478		—		85,478		—

Total investment securities available for sale	156,903		71,425		85,478		—

Total	$	453,924	$	324,217	$	129,707	$	—

Liabilities:
Fair value of derivatives embedded within convertible debt	$	112,332	$	—	$	—	$	112,332


Nonrecurring fair value measurements
Long-term investments ⁽³⁾	$	6,396					$	6,396	$	(1,203	)
	$	6,396					$	6,396	$	(1,203	)


(1)	Amounts included in cash and cash equivalents on the condensed consolidated balance sheet.


(2)	Amounts included in current restricted assets and restricted assets on the condensed consolidated balance sheet.


(3)	Long-term investments with a carrying amount of $7,599 were written down to their fair value of $6,396, resulting in an impairment charge of $1,203, which was included in earnings.

The fair value of the Level 2 certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is the rate offered by the financial institution. The fair value of investment securities available for sale included in Level 1 are based on quoted market prices from various stock exchanges. The Level 2 investment securities available for sale are based on quoted market prices of securities that are thinly traded, quoted prices for identical or similar assets in markets that are not active or inputs other than quoted prices such as interest rates and yield curves.

The fair value of derivatives embedded within convertible debt was derived using a valuation model. These derivatives have been classified as Level 3. The valuation model assumes future dividend payments by the Company and utilizes interest rates and credit spreads based upon the implied credit spread of the 5.5% Convertible Notes due 2020 to determine the fair value of the derivatives embedded within the convertible debt. The changes in fair value of derivatives embedded within convertible debt are presented on the consolidated statements of operations.

The value of the embedded derivatives is contingent on changes in implied interest rates of the convertible debt, the Company’s stock price, stock volatility as well as projections of future cash and stock dividends over the term of the debt. The interest rate component of the value of the embedded derivative is computed by calculating an equivalent non-convertible, unsecured and subordinated borrowing cost. This rate is determined by calculating the implied rate on the Company’s 2020 Convertible Notes when removing the embedded option value within the convertible security. This rate is based upon market observable inputs and influenced by the Company’s stock price, convertible bond trading price, risk-free interest rates and stock volatility.

The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at September 30, 2017:



	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	September 30, 2017		Valuation Technique	Unobservable Input	Range (Actual)

Fair value of derivatives embedded within convertible debt	$	86,190	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	20.47
				Convertible trading price (as a percentage of par value)	114.13		%
				Volatility	18.04		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	3.0% - 4.0% (3.5%)

The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at December 31, 2016:



	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2016		Valuation Technique	Unobservable Input	Range (Actual)

Fair value of derivatives embedded within convertible debt	$	112,332	Discounted cash flow	Assumed annual stock dividend	5		%
				Assumed annual cash dividend	$	1.60
				Stock price	$	22.74
				Convertible trading price (as a percentage of par value)	114.69		%
				Volatility	19.47		%
				Risk-free rate	Term structure of US Treasury Securities
				Implied credit spread	4.5% - 5.5% (5.0%)