Fair Value Measurements

3 Months Ended

Mar. 31, 2017

FAIR VALUE MEASUREMENTS

The Company's financial instruments consist of cash equivalents, short-term investments, accounts receivable, auction rate securities, accounts payable, drawings on revolving lines of credit, long-term debt, contingent purchase consideration and interest rate swaps.

The valuation techniques used to measure fair value are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The carrying amounts of cash equivalents, short-term investments, accounts receivable, accounts payable, drawings on revolving lines of credit, the long-term notes and interest rate swaps are considered reasonable estimates of their fair market value, due to the short maturity of most of these instruments or as a result of the competitive market interest rates, which have been negotiated.

The following table presents information about the Company's assets and liabilities measured at fair value:



			Fair Value Measurements at March 31, 2017
	Total		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	306,000	$	306,000	$	—	$	—
Short-term investments	164,928		164,928		—		—
Interest rate swap	50		—		50		—
Auction rate securities	1,146		—		—		1,146
Total assets	$	472,124	$	470,928	$	50	$	1,146
Liabilities
Long-term notes	$	40,500	$	—	$	40,500	$	—
Total liabilities	$	40,500	$	—	$	40,500	$	—

			Fair Value Measurements at December 31, 2016
			Fair Value Measurements at December 31, 2016
	Total		Level 1		Level 2		Level 3
Assets
Cash equivalents	$	179,699	$	179,699	$	—	$	—
Short-term investments	206,616		206,616		—		—
Interest rate swap	77		—		77		—
Auction rate securities	1,144		—		—		1,144
Total assets	$	387,536	$	386,315	$	77	$	1,144
Liabilities
Long-term notes	$	41,351	$	—	$	41,351	$	—
Total liabilities	$	41,351	$	—	$	41,351	$	—

Short-term investments are recorded at book value. Unrealized gains or losses are not recorded since these investments are considered held-to-maturity and consist of liquid investments including U.S. government and government agency notes, corporate notes, commercial paper and certificates of deposit with original maturities of greater than three months but less than one year. The fair value of the short-term investments considered available-for-sale as of December 31, 2016 was $41,591. This amount included an unrealized loss of $432. There were no short-term investments considered available-for-sale as of March 31, 2017. The fair value of the short-term investments considered held-to-maturity as of March 31, 2017 and December 31, 2016 was $164,928 and $165,025, respectively, which represents an unrealized loss of $97 and $163, respectively, as compared to the book value recorded on the Consolidated Balance Sheets for the same periods.

The fair value of the auction rate securities considered prices observed in inactive secondary markets for the securities held by the Company.

The fair value of accrued contingent purchase consideration incurred was determined using an income approach at the acquisition date and reporting date. That approach is based on significant inputs that are not observable in the market. Key assumptions include assessing the probability of meeting certain milestones required to earn the contingent purchase consideration.

The following table presents information about the Company's movement in Level 3 assets and liabilities measured at fair value:



	Three Months Ended March 31,
	2017		2016
Auction Rate Securities
Balance, beginning of period	$	1,144	$	1,136
Change in fair value and accretion	2		2
Balance, end of period	$	1,146	$	1,138
Contingent Purchase Consideration
Balance, beginning of period	$	—	$	20
Period transactions	—		—
Change in fair value and currency fluctuations	—		1
Balance, end of period	$	—	$	21

- 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.

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