Fair Value Measurements

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The applicable accounting guidance establishes a framework for measuring fair value and requires disclosure about the fair value measurements of assets and liabilities. This guidance requires the Company to classify and disclose assets and liabilities measured at fair value on a recurring basis, as well as fair value measurements of assets and liabilities measured on a nonrecurring basis in periods subsequent to initial measurement, in a three-tier fair value hierarchy as described below.

The guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability, 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 guidance describes three levels of inputs that may be used to measure fair value:

• Level 1 — Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

• Level 2 — Observable inputs other than Level 1 prices, 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. The Company primarily uses broker quotes for valuation of its short-term investments. The forward exchange contracts are classified as Level 2 because they are valued using quoted market prices and other observable data for similar instruments in an active market.

• 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.

The Company uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The fair value of the Company’s convertible notes is influenced by interest rates, the Company’s stock price and stock market volatility. The estimated fair value of the Company’s convertible notes based on a market approach was approximately $161.2 million and $123.1 million as of September 30, 2016 and December 31, 2015, respectively, and represents a Level 2 valuation. The Company’s other debts and capital leases assumed from the TVN acquisition are classified within Level 2 because these borrowings are not actively traded and the majority of them have a variable interest rate structure based upon market rates currently available to the Company for debt with similar terms and maturities. Additionally, the Company considers the carrying amount of its capital lease obligations to approximate their fair value because the weighted average interest rate used to formulate the carrying amounts approximates current market rates. The other debts and capital leases outstanding as of September 30, 2016 were $22.8 million in the aggregate. (See Note 11, “Convertible Notes, Other debts and Capital Leases” for additional information).

The Company’s liabilities for the TVN contingent consideration under the TVN Purchase Agreement were fully paid as of August 31, 2016, of which $3.5 million was paid in the second quarter of 2016 and the remaining $2.5 million was paid in the third quarter of 2016. As of September 30, 2016, there were no amounts of TVN contingent consideration which remained outstanding. The liabilities for the assumed TVN employee equity plans of approximately $2.9 million were fully paid in the second quarter of 2016 and there were no other outstanding amounts under these plans at September 30, 2016.

During the nine months endedSeptember 30, 2016, there were no nonrecurring fair value measurements of assets and liabilities subsequent to initial recognition.

The following table sets forth the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):

	Level 1		Level 2		Level 3		Total
As of September 30, 2016
Cash equivalents
Money market funds	$	6,276	$	—	$	—	$	6,276
Short-term investments
Corporate bonds	—		7,931		—		7,931
Prepaids and other current assets
Time deposit pledged for credit card facility	—		580		—		580
Derivative assets	—		232		—		232
Other assets
Long-term investment	530		—		—		530
Total assets measured and recorded at fair value	$	6,806	$	8,743	$	—	$	15,549
Accrued liabilities
Derivative liabilities	—		17		—		17
Total liabilities measured and recorded at fair value	$	—	$	17	$	—	$	17
	Level 1		Level 2		Level 3		Total
As of December 31, 2015
Cash equivalents
Money market funds	$	53,434	$	—	$	—	$	53,434
U.S. Treasury bills	24,998		—		—		24,998
Short-term investments
Corporate bonds	—		25,505		—		25,505
Commercial paper	—		1,099		—		1,099
Prepaids and other current assets
Time deposit pledged for credit card facility	—		580		—		580
Derivative assets	—		113		—		113
Other assets
Long-term investment	1,840		—		—		1,840
Total assets measured and recorded at fair value	$	80,272	$	27,297	$	—	$	107,569
Accrued liabilities
Derivative liabilities	$	—	$	371	$	—	$	371
Total liabilities measured and recorded at fair value	$	—	$	371	$	—	$	371