FAIR VALUE

Inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Cadence’s market assumptions. These two types of inputs have created the following fair value hierarchy:


•	Level 1 – Quoted prices for identical instruments in active markets;


•	Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and


•	Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

This hierarchy requires Cadence to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. Cadence recognizes transfers between levels of the hierarchy based on the fair values of the respective financial instruments at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during fiscal 2018.

The valuation techniques used to determine the fair value of Cadence’s 2024 Notes are classified within Level 2 of the fair value hierarchy. For additional information relating to our debt arrangements, see Note 3 in the notes to consolidated financial statements.

On a quarterly basis, Cadence measures at fair value certain financial assets and liabilities. The fair value of financial assets and liabilities was determined using the following levels of inputs as of December 29, 2018 and December 30, 2017:



	Fair Value Measurements as of December 29, 2018:
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	327,841	$	327,841	$	—	$	—
Marketable equity securities	3,887		3,887		—		—
Securities held in NQDC trust	27,767		27,767		—		—
Foreign currency exchange contracts	101		—		101		—
Total Assets	$	359,596	$	359,495	$	101	$	—

As of December 29, 2018, Cadence did not have any financial liabilities requiring a recurring fair value measurement.



	Fair Value Measurements as of December 30, 2017:
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Cash equivalents:
Money market funds	$	503,934	$	503,934	$	—	$	—
Marketable equity securities	4,455		4,455		—		—
Securities held in NQDC trust	31,473		31,473		—		—
Foreign currency exchange contracts	2,937		—		2,937		—
Total Assets	$	542,799	$	539,862	$	2,937	$	—

As of December 30, 2017, Cadence did not have any financial liabilities requiring a recurring fair value measurement.