Note 3 - Fair Value Measurements

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Fair Value Disclosures [Text Block]

3. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy based on

three

levels of inputs, of which the

first

two

are considered observable and the last unobservable, that

may

be used to measure fair value, is as follows:

• Level  1  — Quoted prices in active markets for identical assets or liabilities.

• Level  2  — Inputs other than Level  1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices 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 assets or liabilities.

• Level  3  — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

We measure the following financial assets at fair value on a recurring basis. The fair values of these financial assets at

December

31,

2016

and

2015,

respectively, were as follows (in thousands):

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Balance at		for Identical		Observable		Unobservable
	December 31 ,		Assets		Inputs		Inputs
	2016		(Level 1)		(Level 2)		(Level 3)
Money market funds	$	11,493	$	11,493	$	—	$	—
United States corporate debt securities		12,039		—		12,039		—
Foreign corporate debt securities		14,057		—		14,057		—
United States commercial paper		8,635		—		8,635		—
Foreign commercial paper		2,993		—		2,993		—
Total	$	49,217	$	11,493	$	37,724	$	—

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Balance at		for Identical		Observable		Unobservable
	December 31 ,		Assets		Inputs		Inputs
	201 5		(Level 1)		(Level 2)		(Level 3)
Money market funds	$	67,089	$	67,089	$	—	$	—
United States corporate debt securities		28,715		—		28,715		—
Foreign corporate debt securities		4,922		—		4,922		—
United States commercial paper		7,770		—		7,770		—
Foreign commercial paper		15,579		—		15,579		—
Total	$	124,075	$	67,089	$	56,986	$	—

There were no significant transfers between level

1

and level

2

investments during the years ended

December

31,

2016

and

December

31,

2015.

As of

December

31,

2016,

short-term investments included

$37.7

million of available-for-sale securities with contractual maturities of

one

year or less. As of

December

31,

2015,

we had cash equivalents consisting of

$1.0

million of available-for-sale securities with contractual maturities of less than

three

months and short-term investments consisting of

$56.0

million of available-for-sale securities with contractual maturities of

one

year or less. The money market funds as of

December

31,

2016

and

2015

are included in cash and cash equivalents on the consolidated balance sheet.

A company

may

elect to use fair value to measure accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees and issued debt. Other eligible items include firm commitments for financial instruments that otherwise would not be recognized at inception and non-cash warranty obligations where a warrantor is permitted to pay a

third

party to provide the warranty goods or services. If the use of fair value is elected, any upfront costs and fees related to the item such as debt issuance costs must be recognized in earnings and cannot be deferred. The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to measure based on fair value. Unrealized gains and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings and any changes in fair value are recognized in earnings. We have elected to not apply the fair value option to our financial assets and liabilities.

We consider the carrying amount of cash and cash equivalents, receivables, inventory, prepaid expenses and other current assets, accounts payable and accrued liabilities to be representative of their respective fair values because of the short-term nature of those instruments.

Unrealized gains and losses associated with our investments are reported in accumulated other comprehensive loss. For the year ended

December

31,

2016,

we recorded

$23,000

in net unrealized gains associated with our short-term investments. For the year ended

December

31,

2015,

we recorded

$40,000

in net unrealized losses associated with our short-term investments.

Realized gains and losses associated with our investments, if any, are reported in the statement of comprehensive loss. There were

no

realized gains or losses for the years ended

December

31,

2016

and

2015.