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FAIR VALUE MEASUREMENTS | 3 Months Ended
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Mar. 31, 2018
FAIR VALUE MEASUREMENTS |
FAIR VALUE MEASUREMENTS | (5) FAIR VALUE MEASUREMENTS The Financial Accounting Standards Board has issued authoritative guidance which requires that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements are separately disclosed by level within the fair value hierarchy. The fair value hierarchy establishes and prioritizes the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three levels of the fair value hierarchy established are as follows:
Level 1 |  | Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 |  | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3 |  | Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.
Fixed-income securities and mutual funds are valued using a third-party pricing agency. The valuation is based on observable inputs including pricing for similar assets and other observable market factors. There has been no material change from period to period. The estimated fair value of the Company’s long-term debt based on a market approach was approximately $4.4 million and $4.5 million as of March 31, 2018 and December 31, 2017, respectively, and represent Level 2 measurements. When determining the estimated fair value of the Company’s long-term debt, the Company used market-based risk measurements, such as credit risk. The following table presents the Company’s fair value measurements as of March 31, 2018 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall.
|  |  |  |  | Fair Value Measurement at March 31, 2018 Using: |
|  |  |  |  | Quoted Prices |  | Significant |  |  |  |
|  |  |  |  | in Active |  | Other |  | Significant |
|  |  |  |  | Markets for |  | Observable |  | Unobservable |
|  | Fair Value at |  | Identical Assets |  | Inputs |  | Inputs |
(In thousands) |  | March 31, 2018 |  | (Level 1) |  | (Level 2) |  | (Level 3) |
Cash and cash equivalents |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and money market |  | $ | 101,103 |  | $ | 101,103 |  | $ | — |  | $ | — |
Certificates of deposit |  |  | 25,198 |  |  | — |  |  | 25,198 |  |  | — |
Commercial paper |  |  | 11,998 |  |  | — |  |  | 11,998 |  |  | — |
U.S. government agency securities |  |  | 8,398 |  |  | — |  |  | 8,398 |  |  | — |
Corporate bonds |  |  | 1,998 |  |  | — |  |  | 1,998 |  |  | — |
Available-for-sale |  |  |  |  |  |  |  |  |  |  |  |  |
Marketable securities |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  |  | 345,123 |  |  | — |  |  | 345,123 |  |  | — |
Asset backed securities |  |  | 253,547 |  |  | — |  |  | 253,547 |  |  | — |
U.S. government agency securities |  |  | 194,024 |  |  | — |  |  | 194,024 |  |  | — |
Commercial paper |  |  | 51,994 |  |  | — |  |  | 51,994 |  |  | — |
Certificates of deposit |  |  | 48,786 |  |  | — |  |  | 48,786 |  |  | — |
Total |  | $ | 1,042,169 |  | $ | 101,103 |  | $ | 941,066 |  | $ | — |
The following table presents the Company’s fair value measurements as of December 31, 2017 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall.
|  |  |  |  | Fair Value Measurement at December 31, 2017 Using: |
|  |  |  |  | Quoted Prices |  | Significant |  |  |
|  |  |  |  | in Active |  | Other |  | Significant |
|  |  |  |  | Markets for |  | Observable |  | Unobservable |
|  | Fair Value at |  | Identical Assets |  | Inputs |  | Inputs |
(In thousands) |  | December 31, 2017 |  | (Level 1) |  | (Level 2) |  | (Level 3) |
Cash and cash equivalents |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and money market |  | $ | 61,297 |  | $ | 61,297 |  | $ | — |  | $ | — |
Commercial paper |  |  | 10,995 |  |  |  |  |  | 10,995 |  |  | — |
Certificates of deposit |  |  | 1,499 |  |  |  |  |  | 1,499 |  |  | — |
U.S. government agency securities |  |  | 3,700 |  |  |  |  |  | 3,700 |  |  | — |
Available-for-sale |  |  |  |  |  |  |  |  |  |  |  |  |
Marketable securities |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  |  | 181,305 |  |  | — |  |  | 181,305 |  |  | — |
Asset backed securities |  |  | 94,515 |  |  | — |  |  | 94,515 |  |  | — |
U.S. government agency securities |  |  | 54,812 |  |  | — |  |  | 54,812 |  |  | — |
Commercial paper |  |  | 9,946 |  |  | — |  |  | 9,946 |  |  | — |
Certificates of deposit |  |  | 6,646 |  |  | — |  |  | 6,646 |  |  | — |
Total |  | $ | 424,715 |  | $ | 61,297 |  | $ | 363,418 |  | $ | — |
The Company monitors investments for other-than-temporary impairment. It was determined that unrealized gains and losses as of March 31, 2018 and December 31, 2017 are temporary in nature because the change in market value for those securities has resulted from fluctuating interest rates rather than a deterioration of the credit worthiness of the issuers. So long as the Company holds these securities to maturity, it is unlikely to experience gains or losses. In the event that the Company disposes of these securities before maturity, it is expected that realized gains or losses, if any, will be immaterial. The following table summarizes gross unrealized losses and fair values of our investments in an unrealized loss position as of March 31, 2018, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
|  |  | March 31, 2018 |
|  |  | Less than 12 months |  | 12 months or greater |  | Total |
(In thousands) |  |  | Fair Value |  |  | Gross Unrealized Loss |  |  | Fair Value |  |  | Gross Unrealized Loss |  |  | Fair Value |  |  | Gross Unrealized Loss |
Marketable securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 328,935 |  | $ | (1,073) |  | $ | — |  | $ | — |  | $ | 328,935 |  | $ | (1,073) |
Asset backed securities |  |  | 252,105 |  |  | (841) |  |  | 1,442 |  |  | (2) |  |  | 253,547 |  |  | (843) |
U.S. government agency securities |  |  | 169,071 |  |  | (237) |  |  | 24,953 |  |  | (46) |  |  | 194,024 |  |  | (283) |
Commercial paper |  |  | 51,425 |  |  | (21) |  |  | — |  |  | — |  |  | 51,425 |  |  | (21) |
Certificates of deposit |  |  | 41,551 |  |  | (79) |  |  | — |  |  | — |  |  | 41,551 |  |  | (79) |
Total |  | $ | 843,087 |  | $ | (2,251) |  | $ | 26,395 |  | $ | (48) |  | $ | 869,482 |  | $ | (2,299) |
The following summarizes contractual underlying maturities of the Company’s available-for-sale investments in debt securities at March 31, 2018:
|  |  | Due one year or less |  | Due after one year through four years
(In thousands) |  |  | Cost |  |  | Fair Value |  |  | Cost |  |  | Fair Value
Marketable securities |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds |  | $ | 224,976 |  | $ | 224,287 |  | $ | 121,217 |  | $ | 120,836
U.S. government agency securities |  |  | 174,495 |  |  | 174,218 |  |  | 19,812 |  |  | 19,806
Commercial paper |  |  | 52,015 |  |  | 51,994 |  |  | — |  |  | —
Certificates of deposit |  |  | 46,888 |  |  | 46,820 |  |  | 1,976 |  |  | 1,966
Asset backed securities |  |  | 30,844 |  |  | 30,753 |  |  | 223,546 |  |  | 222,794
Total |  | $ | 529,218 |  | $ | 528,072 |  | $ | 366,551 |  | $ | 365,402

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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