Fair Value Measurements

12 Months Ended

Dec. 31, 2015

Note 19.

Fair Value Measurements

The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis which were comprised of the following types of instruments at December 31, 2014 and 2015:

	Fair Value Measurements at
	December 31, 2014 Using
	Level 1		Level 2		Level 3
	(in thousands)
Assets:
Cash and cash equivalents:
Time deposits with original maturities less than three months	$	39,619		-		-
Marketable securities available-for-sale:
Time deposit with original maturities more than three months		-		158		-
Money market fund		2,219		-		-
Restricted marketable securities:
Time deposits with original maturities of more than three months		-		337		-
Total	$	41,838		495		-
Liabilities:
Short-term debt	$	-		130,000		-
Total	$	-		130,000		-

	Fair Value Measurements at
	December 31, 2015 Using
	Level 1		Level 2		Level 3
	(in thousands)
Assets:
Cash and cash equivalents:
Time deposits with original maturities less than three months	$	5,918		-		-
Marketable securities available-for-sale:
Time deposit with original maturities more than three months		-		5,428		-
Money market fund		13,083		-		-
Restricted marketable securities:
Time deposits with original maturities of more than three months		-		563		-
Total	$	19,001		5,991		-
Liabilities:
Short-term debt	$	-		180,000		-
Total	$	-		180,000		-

The following table presents fair value measurements of assets that are measured at fair value on a nonrecurring basis at December 31, 2014 and the associated losses recognized in 2014 (nil in 2013 and 2015):

Fair Value Measurements at

reporting Date Using

For the

Year

Ended

December

31, 2014

December

Impairment

31, 2014

Level 1

Level 2

Level 3

loss

(in thousands)

Assets:

Investments in Non-marketable Equity Securities- Oculon Optoelectronics Inc.

309

The Company reviews the carrying values of financial assets carried at cost when impairment indicators are present. For such financial assets that do not have a quoted market price, management of the Company reviews the current operating performance of the investee based on evaluation of the latest available financial statements, as well as changes in the industry and market prospects based on publicly available information. The impairment charge recognized in 2014 for the investment in Oculon Optoelectronics Inc. was determined based on the difference between the Company’s carrying value and the proportionate equity interest in the net book value of the investee at year end (which was management’s best estimate of the amount to be realized from this investment).

Non-financial assets such as goodwill, intangible assets, and property, plant, and equipment are measured at fair value only when an impairment loss is recognized. No such impairments were recognized in 2013, 2014 and 2015.

There were no transfers between Level 1 and Level 2 of fair value hierarchy and no transfers into or out of Level 3 financial instruments during the year ended December 31, 2013, 2014 and 2015.

The following table summarizes changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2013, 2014 and 2015:

	Warrant
	obligation
	(in thousands)

Balance at January 1, 2013	$	-
Liability for warrant obligation		1,415
Unrealized gain for change in the fair value of the warrant included in earnings		(160)
Balance at December 31, 2013	$	1,255
Gain for expiration of the warrant included in earnings		(1,255)
Balance at December 31, 2014	$	-
Balance at December 31, 2015	$	-
The amount of total gain in 2013 included in earnings attributable to the change in unrealized gain relating to assets and liabilities still held at December 31, 2013	$	160

The Company estimated the fair value for warrant obligation based on an external expert’s valuation report. The calculated fair values are estimated by using Binomial Model. The measure is based on significant inputs that are not observable in the market, which are Level 3 inputs. Key valuation assumptions include (a) a risk free rate of 0.58% for the expected terms of 0.81 years is derived from the yield rate of 1 years Zero-Coupon ROC central government bond at the reporting date; (b) an expected volatility of 46.35%, which is based on the average historical volatility of the comparative companies’ publicly traded shares.

- 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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