FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES

6 Months Ended

Jun. 30, 2016

FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES

FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES

5.FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES

ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. ASC 820 defines fair value as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three levels of inputs required by the standard that the Company uses to measure fair value are summarized below.

· Level 1: Quoted prices in active markets for identical assets or liabilities.

· 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 related 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.

ASC 820 requires the use of observable market inputs (quoted market prices) when measuring fair value and requires a Level 1 quoted price to be used to measure fair value whenever possible.

The following tables present the Company’s held-to-maturity investments at amortized cost and the fair value of the Company’s financial assets and liabilities that are recorded at fair value on a recurring basis, segregated among the appropriate levels within the fair value hierarchy at:

June 30, 2016	Level 1		Level 2			Level 3		Total
Cash	$	271,234	$	-		$	-	$	271,234
Money market funds	163,023		-			-		163,023
Certificates of deposit	-		-			-		-
Commercial paper	-		-			-		-
U.S. Treasuries	-		-			-		-
Municipal securities	-		44,831			-		44,831
U.S. government agency securities	-		-			-		-
Foreign currency derivatives	-		(722		)	-		(722		)
Total	$	434,257	$	44,109		$	-	$	478,366
Amounts included in:
Cash and cash equivalents	$	434,257	$	512		$	-	$	434,769
Short-term investments	-		44,319			-		44,319
Accounts receivable, net	-		184			-		184
Investments	-		-			-		-
Accrued liabilities	-		(906		)	-		(906		)
Total	$	434,257	$	44,109		$	-	$	478,366
December 31, 2015	Level 1		Level 2			Level 3		Total
Cash	$	255,723	$	-		$	-	$	255,723
Money market funds	664,005		-			-		664,005
Certificates of deposit	-		85,007			-		85,007
Commercial paper	-		430,605			-		430,605
U.S. Treasuries	-		260,035			-		260,035
Municipal securities	-		731,744			-		731,744
U.S. government agency securities	-		508,256			-		508,256
Foreign currency derivatives	-		(217		)	-		(217		)
Total	$	919,728	$	2,015,430		$	-	$	2,935,158
Amounts included in:
Cash and cash equivalents	$	919,728	$	1,255,689		$	-	$	2,175,417
Short-term investments	-		744,610			-		744,610
Accounts receivable, net	-		371			-		371
Investments	-		15,348			-		15,348
Accrued liabilities	-		(588		)	-		(588		)
Total	$	919,728	$	2,015,430		$	-	$	2,935,158

All of the Company’s short-term investments are classified within Level 1 or Level 2 of the fair value hierarchy. The Company’s valuation of its Level 1 investments, which include money market funds, is based on quoted market prices in active markets for identical securities. The Company’s valuation of its Level 2 investments, which include municipal securities at June 30, 2016 and commercial paper, U.S. Treasuries, certificates of deposit, municipal securities and U.S. government agency securities at December 31, 2015, is based on other observable inputs, specifically a market approach which utilizes valuation models, pricing systems, mathematical tools and other relevant information for the same or similar securities. The Company’s valuation of its Level 2 foreign exchange contracts is based on quoted market prices of the same or similar instruments, adjusted for counterparty risk. There were no transfers between Level 1 and Level 2 measurements during the six-months ended June 30, 2016 or the year ended December 31, 2015, and there were no changes in the Company’s valuation techniques.