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FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2019

FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES

FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES

6.	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 that 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.

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

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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.

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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 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:


September 30, 2019		Level 1			Level 2			Level 3			Total
Cash		$	557,925		$	—		$	—		$	557,925
Money market funds			69,362			—			—			69,362
Certificates of deposit			—			11,533			—			11,533
Commercial paper			—			95,972			—			95,972
Variable rate demand notes			—			29,347			—			29,347
Municipal securities			—			159,884			—			159,884
U.S. government agency securities			—			80,879			—			80,879
U.S. treasuries			—			314,441			—			314,441
Foreign currency derivatives			—			30			—			30
Total		$	627,287		$	692,086		$	—		$	1,319,373
Amounts included in:
Cash and cash equivalents		$	627,287		$	90,330		$	—		$	717,617
Short-term investments			—			587,356			—			587,356
Accounts receivable, net			—			168			—			168
Investments			—			14,370			—			14,370
Accrued liabilities			—			(138)			—			(138)
Total		$	627,287		$	692,086		$	—		$	1,319,373


December 31, 2018		Level 1			Level 2			Level 3			Total
Cash		$	393,936		$	—		$	—		$	393,936
Money market funds			191,358			—			—			191,358
Certificates of deposit			—			14,075			—			14,075
Commercial paper			—			60,422			—			60,422
Variable rate demand notes			—			4,005			—			4,005
Municipal securities			—			177,118			—			177,118
U.S. government agency securities			—			39,092			—			39,092
U.S. treasuries			—			78,157			—			78,157
Foreign currency derivatives			—			(492)			—			(492)
Total		$	585,294		$	372,377		$	—		$	957,671
Amounts included in:
Cash and cash equivalents		$	585,294		$	52,219		$	—		$	637,513
Short-term investments			—			320,650			—			320,650
Accounts receivable, net			—			43			—			43
Accrued liabilities			—			(535)			—			(535)
Total		$	585,294		$	372,377		$	—		$	957,671

All of the Company’s short-term and long-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, commercial paper, certificates of deposit, VRDNs, U.S. treasuries and U.S. government agency securities, 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 currency 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 nine-months ended September 30, 2019 or during the year-ended December 31, 2018, and there were no changes in the Company’s valuation techniques.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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