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Financial Instruments | 6 Months Ended
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Jun. 30, 2023
Investments, All Other Investments [Abstract] |
Financial Instruments | Financial Instruments Cash, Cash Equivalents and Marketable Securities The following tables summarize our cash and cash equivalents, and marketable securities on our Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 (in thousands):
|  |  |  |  |  |  |  |  |  | Reported as:
June 30, 2023 |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value |  | Cash and Cash Equivalents |  | Marketable securities, short-term |  | Marketable securities, long-term
Cash |  | $ | 759,407 |  |  | $ | — |  |  | $ | — |  |  | $ | 759,407 |  |  | $ | 759,407 |  |  | $ | — |  |  | $ | — |
Money market funds |  | 192,549 |  |  | — |  |  | — |  |  | 192,549 |  |  | 192,549 |  |  | — |  |  | — |
Corporate bonds |  | 59,703 |  |  | — |  |  | (1,740) |  |  | 57,963 |  |  | — |  |  | 39,145 |  |  | 18,818 |
U.S. government treasury bonds |  | 14,054 |  |  | — |  |  | (325) |  |  | 13,729 |  |  | — |  |  | 9,096 |  |  | 4,633 |
Asset-backed securities |  | 3,600 |  |  | — |  |  | (13) |  |  | 3,587 |  |  | — |  |  | 2,012 |  |  | 1,575 |
Municipal bonds |  | 1,437 |  |  | — |  |  | (18) |  |  | 1,419 |  |  | — |  |  | 1,419 |  |  | — |
U.S. government agency bonds |  | 5,214 |  |  | — |  |  | (84) |  |  | 5,130 |  |  | — |  |  | 4,133 |  |  | 997 |
Total |  | $ | 1,035,964 |  |  | $ | — |  |  | $ | (2,180) |  |  | $ | 1,033,784 |  |  | $ | 951,956 |  |  | $ | 55,805 |  |  | $ | 26,023 |
|  |  |  |  |  |  |  |  |  | Reported as:
December 31, 2022 |  | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value |  | Cash and Cash Equivalents |  | Marketable securities, short-term |  | Marketable securities, long-term
Cash |  | $ | 712,921 |  |  | $ | — |  |  | $ | — |  |  | $ | 712,921 |  |  | $ | 712,921 |  |  | $ | — |  |  | $ | — |
Money market funds |  | 229,129 |  |  | — |  |  | — |  |  | 229,129 |  |  | 229,129 |  |  | — |  |  | — |
Corporate bonds |  | 69,390 |  |  | — |  |  | (2,915) |  |  | 66,475 |  |  | — |  |  | 36,510 |  |  | 29,965 |
U.S. government treasury bonds |  | 20,559 |  |  | — |  |  | (549) |  |  | 20,010 |  |  | — |  |  | 15,404 |  |  | 4,606 |
Asset-backed securities |  | 4,514 |  |  | 1 |  |  | (37) |  |  | 4,478 |  |  | — |  |  | 2,909 |  |  | 1,569 |
Municipal bonds |  | 3,447 |  |  | — |  |  | (61) |  |  | 3,386 |  |  | — |  |  | 2,711 |  |  | 675 |
U.S. government agency bonds |  | 5,231 |  |  | 1 |  |  | (69) |  |  | 5,163 |  |  | — |  |  | — |  |  | 5,163 |
Total |  | $ | 1,045,191 |  |  | $ | 2 |  |  | $ | (3,631) |  |  | $ | 1,041,562 |  |  | $ | 942,050 |  |  | $ | 57,534 |  |  | $ | 41,978 |
The following table summarizes the fair value of our available-for-sale marketable securities classified by contractual maturity as of June 30, 2023 and December 31, 2022 (in thousands):
|  | June 30, 2023 |  | December 31, 2022
Due in 1 year or less |  | $ | 50,644 |  |  | $ | 51,037 |
Due in 1 year through 5 years |  | 31,184 |  |  | 48,475 |
Total |  | $ | 81,828 |  |  | $ | 99,512 |
The securities that we invest in are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those securities purchased at a lower yield show a mark-to-market unrealized loss. Our unrealized losses as of June 30, 2023 and December 31, 2022 are primarily due to changes in interest rates and credit spreads. The following tables summarize the gross unrealized losses as of June 30, 2023 and December 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous loss position (in thousands):
|  | As of June 30, 2023
|  | Less than 12 months |  | 12 Months of Greater |  | Total
June 30, 2023 |  | Fair Value |  | Unrealized Loss |  | Fair Value |  | Unrealized Loss |  |  | Fair Value |  | Unrealized Loss
Corporate bonds |  | $ | 1,514 |  |  | $ | (15) |  |  | $ | 56,155 |  |  | $ | (1,725) |  |  |  | $ | 57,669 |  |  | $ | (1,740) |
U.S. government treasury bonds |  | 1,986 |  |  | (32) |  |  | 11,743 |  |  | (293) |  |  |  | 13,729 |  |  | (325) |
Asset-backed securities |  | 2,565 |  |  | (5) |  |  | 1,022 |  |  | (8) |  |  |  | 3,587 |  |  | (13) |
Municipal bonds |  | — |  |  | — |  |  | 685 |  |  | (18) |  |  |  | 685 |  |  | (18) |
U.S. government agency bonds |  | 3,980 |  |  | (33) |  |  | 1,150 |  |  | (51) |  |  |  | 5,130 |  |  | (84) |
Total |  | $ | 10,045 |  |  | $ | (85) |  |  | $ | 70,755 |  |  | $ | (2,095) |  |  |  | $ | 80,800 |  |  | $ | (2,180) |
|  | As of December 31, 2022
|  | Less than 12 months |  | 12 Months of Greater |  | Total
December 31, 2022 |  | Fair Value |  | Unrealized Loss |  | Fair Value |  | Unrealized Loss |  |  | Fair Value |  | Unrealized Loss
Corporate bonds |  | $ | 10,639 |  |  | $ | (440) |  |  | $ | 54,634 |  |  | $ | (2,475) |  |  |  | $ | 65,273 |  |  | $ | (2,915) |
U.S. government treasury bonds |  | 5,262 |  |  | (177) |  |  | 14,748 |  |  | (372) |  |  |  | 20,010 |  |  | (549) |
Asset-backed securities |  | 2,636 |  |  | (17) |  |  | 1,275 |  |  | (20) |  |  |  | 3,911 |  |  | (37) |
Municipal bonds |  | — |  |  | — |  |  | 2,412 |  |  | (61) |  |  |  | 2,412 |  |  | (61) |
U.S. government agency bonds |  | 3,017 |  |  | (5) |  |  | 1,136 |  |  | (64) |  |  |  | 4,153 |  |  | (69) |
Total |  | $ | 21,554 |  |  | $ | (639) |  |  | $ | 74,205 |  |  | $ | (2,992) |  |  |  | $ | 95,759 |  |  | $ | (3,631) |
Accounts Receivable Factoring We enter into factoring transactions on a non-recourse basis with financial institutions to sell certain of our non-U.S. accounts receivable. We account for these transactions as sales of accounts receivables and include the cash proceeds as a part of our cash flows from operations in the Condensed Consolidated Statements of Cash Flows. Total accounts receivable sold under the factoring arrangements was $8.2 million during the three months and $16.2 million for the six months ended June 30, 2023. Factoring fees on the sales of receivables were recorded in other income (expense), net in our Condensed Consolidated Statement of Operations and were not material. Fair Value Measurements Fair value is an exit price, representing the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value: Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities 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 asset or liability. We obtain fair values for our Level 2 investments. Our custody bank and asset managers independently use professional pricing services to gather pricing data which may include quoted market prices for identical or comparable financial instruments, or inputs other than quoted prices that are observable either directly or indirectly, and we are ultimately responsible for these underlying estimates. Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation. The following tables summarize our financial assets measured at fair value as of June 30, 2023 and December 31, 2022 (in thousands):
Description |  | Balance as of June 30, 2023 |  | Level 1 |  | Level 2 |  |
Cash equivalents: |  |  |  |  |  |  |  |
Money market funds |  | $ | 192,549 |  |  | $ | 192,549 |  |  | $ | — |  |  |
Short-term investments: |  |  |  |  |  |  |  |
U.S. government agency bonds |  | 4,133 |  |  | — |  |  | 4,133 |  |  |
U.S. government treasury bonds |  | 9,096 |  |  | 9,096 |  |  | — |  |  |
Corporate bonds |  | 39,145 |  |  | — |  |  | 39,145 |  |  |
Municipal bonds |  | 1,419 |  |  | — |  |  | 1,419 |  |  |
Asset-backed securities |  | 2,012 |  |  | — |  |  | 2,012 |  |  |
Long-term investments: |  |  |  |  |  |  |  |
U.S. government treasury bonds |  | 4,633 |  |  | 4,633 |  |  | — |  |  |
Corporate bonds |  | 18,818 |  |  | — |  |  | 18,818 |  |  |
U.S. government agency bonds |  | 997 |  |  | — |  |  | 997 |  |  |
Asset-backed securities |  | 1,575 |  |  | — |  |  | 1,575 |  |  |
|  | $ | 274,377 |  |  | $ | 206,278 |  |  | $ | 68,099 |  |  |
Description |  | Balance as of December 31, 2022 |  | Level 1 |  | Level 2
Cash equivalents: |  |  |  |  |  |
Money market funds |  | $ | 229,129 |  |  | $ | 229,129 |  |  | $ | — |
Short-term investments: |  |  |  |  |  |
U.S. government treasury bonds |  | 15,404 |  |  | 15,404 |  |  | — |
Corporate bonds |  | 36,510 |  |  | — |  |  | 36,510 |
Municipal bonds |  | 2,711 |  |  | — |  |  | 2,711 |
Asset-backed securities |  | 2,909 |  |  | — |  |  | 2,909 |
Long-term investments: |  |  |  |  |  |
U.S. government treasury bonds |  | 4,606 |  |  | 4,606 |  |  | — |
Corporate bonds |  | 29,965 |  |  | — |  |  | 29,965 |
Municipal bonds |  | 675 |  |  | — |  |  | 675 |
U.S. government agency bonds |  | 5,163 |  |  | — |  |  | 5,163 |
Asset-backed securities |  | 1,569 |  |  | — |  |  | 1,569 |
|  | $ | 328,641 |  |  | $ | 249,139 |  |  | $ | 79,502 |
Investments in Privately Held Companies Our investments in privately held companies in which we cannot exercise significant influence and do not own a majority equity interest or otherwise control are accounted for under the measurement alternative. Under the measurement alternative, the carrying value of our equity investment is adjusted to fair value for observable transactions for identical or similar investments of the same issuer. Investments in equity securities are reported on our Consolidated Balance Sheet as other assets, and we periodically evaluate them for impairment. We record any change in carrying value of our equity securities, in other income (expense), net in our Consolidated Statement of Operations. The carrying value of our equity investments in privately held companies without readily determinable fair values were not material, excluding Heartland, as of June 30, 2023 or 2022 and the associated adjustments to the carrying values of the investments were not material during the quarters ended June 30, 2023 and 2022. On April 24, 2023, we entered into a Subscription Agreement (the "Subscription Agreement") with Heartland Dental Holding Corporation (“Heartland”) who is an affiliate of KKR Core Holding Company LLC, which is an investment vehicle managed or advised by, or otherwise affiliated with, Kohlberg Kravis Roberts & Co. L.P. (“KKR”). Heartland is a dental support organization (“DSO”) that provides nonclinical administrative and support services to supported dental professional corporations (“PCs”). Pursuant to the Subscription Agreement we acquired less than a 5% equity interest and have no significant influence in Heartland through the purchase of Class A Common Stock for $75 million. In connection with the Subscription Agreement, we entered into a Stockholders’ Agreement, by and among us, Heartland Dental Topco, LLC (“Topco”) and funds and accounts managed by affiliates of KKR & Co. Inc. (“KKR”), and a Side Letter, by and among us, Heartland, Topco and KKR (the "Side Letter"). Subject to certain restrictions set forth in the Side Letter, we agreed to provisions applicable to Heartland’s stockholders, including certain drag-along and voting obligations. Similar to our other private equity investments Heartland is accounted for under the measurement alternative. Based on review of our equity investment, we determined there were no adjustments to the carrying value and it is properly reflected on our Consolidated Balance Sheet in other assets at $75 million as of June 30, 2023. Derivatives Not Designated as Hedging Instruments We enter into foreign currency forward contracts to minimize the short-term impact of foreign currency exchange rate fluctuations on certain trade and intercompany receivables and payables. These forward contracts are classified within Level 2 of the fair value hierarchy. As a result of the settlement of foreign currency forward contracts, during the three months ended June 30, 2023 and 2022, we recognized net gains of $1.1 million and of $10.8 million, respectively, and during the six months ended June 30, 2023 and 2022, we recognized a net loss of $5.3 million and a net gain of $9.2 million, respectively. As of June 30, 2023 and December 31, 2022, the fair value of foreign exchange forward contracts outstanding was not material. The following tables present the gross notional value of all our foreign exchange forward contracts outstanding as of June 30, 2023 and December 31, 2022 (in thousands):
| June 30, 2023
| Local Currency Amount |  | Notional Contract Amount (USD)
Euro | €218,700 |  | $ | 238,786 |
Canadian Dollar | C$106,000 |  | 79,959 |
Polish Zloty | PLN279,700 |  | 68,452 |
Chinese Yuan | ¥408,000 |  | 56,266 |
British Pound | £43,900 |  | 55,704 |
Japanese Yen | ¥5,340,000 |  | 37,136 |
Swiss Franc | CHF30,000 |  | 33,526 |
Brazilian Real | R$143,300 |  | 29,532 |
Mexican Peso | M$230,000 |  | 13,491 |
Israeli Shekel | ILS49,380 |  | 13,300 |
New Zealand Dollar | NZ$9,900 |  | 6,046 |
Czech Koruna | Kč60,000 |  | 2,750 |
New Taiwan Dollar | NT$82,000 |  | 2,629 |
Australian Dollar | A$3,460 |  | $ | 2,302 |
Korean Won | ₩1,800,000 |  | 1,365 |
|  |  | $ | 641,244 |
| December 31, 2022
| Local Currency Amount |  | Notional Contract Amount (USD)
Euro | €186,900 |  | $ | 200,010 |
Polish Zloty | PLN365,988 |  | 83,307 |
Canadian Dollar | C$109,000 |  | 80,514 |
Chinese Yuan | ¥471,000 |  | 68,223 |
British Pound | £41,200 |  | 49,677 |
Japanese Yen | ¥6,200,000 |  | 47,196 |
Israeli Shekel | ILS110,030 |  | 31,383 |
Swiss Franc | CHF25,000 |  | 27,165 |
Brazilian Real | R$141,200 |  | 26,839 |
Mexican Peso | M$230,000 |  |  | 11,746 |
New Zealand Dollar | NZ$6,000 |  | 3,806 |
Australian Dollar | A$4,000 |  | 2,721 |
Czech Koruna | Kč56,000 |  | 2,469 |
New Taiwan Dollar | NT$60,000 |  | 1,959 |
|  |  | $ | 637,015 |

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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