v2.3.0.15
Fair Value
9 Months Ended
Sep. 30, 2011
Fair Value [Abstract] 
FAIR VALUE

NOTE 4: FAIR VALUE

The applicable accounting guidance establishes a framework for measuring fair value and expands required disclosure about the fair value measurements of assets and liabilities. This guidance requires the Company to classify and disclose assets and liabilities measured at fair value on a recurring basis, as well as fair value measurements of assets and liabilities measured on a nonrecurring basis in periods subsequent to initial measurement, in a three-tier fair value hierarchy as described below.

 

The guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The guidance describes three levels of inputs that may be used to measure fair value:

 

  •  

Level 1 — Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

 

  •  

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 assets or liabilities. The Company primarily uses broker quotes for valuation of its short-term investments.

 

  •  

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.

The Company uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. During the nine months ended September 30, 2011, there were no nonrecurring fair value measurements of assets and liabilities subsequent to initial recognition.

The following table sets forth the fair value of the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2011 and December 31, 2010, based on the three-tier fair value hierarchy:

 

                                 
    Level 1     Level 2     Level 3     Total  
    (In thousands)  
                                 

September 30, 2011

                               

Cash equivalents:

                                

Money market funds

   $ 45,256     $ —       $ —       $ 45,256  

Short-term investments:

                                

State, municipal and local government agencies bonds

     —         34,167       —         34,167  

Corporate bonds

     —         18,297       —         18,297  

U.S. federal government bonds

     —         8,586       —         8,586  

Commercial paper

     —         4,598       —         4,598  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 45,256     $ 65,648     $ —       $ 110,904  
   

 

 

    

 

 

    

 

 

    

 

 

  
                                 

December 31, 2010

                               

Cash equivalents:

                                

Money market funds

   $ 68,395     $ —       $ —       $ 68,395  

Short-term investments:

                                

State, municipal and local government agencies bonds

     —         11,931       —         11,931  

Corporate bonds

     —         11,907       —         11,907  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 68,395     $ 23,838     $ —       $ 92,233  
   

 

 

    

 

 

    

 

 

    

 

 

  

At September 30, 2011 and December 31, 2010, maturities of short-term investments are as follows:

 

                 
    September 30, 2011     December 31, 2010  
    (In thousands)  

Short-term investments:

                

Less than one year

   $ 37,888     $ 21,174  

Due in 1 - 2 years

     11,555       2,664  

Due in 3 - 30 years (1)

     16,205       —    
   

 

 

    

 

 

  

Total short-term investments

   $ 65,648     $ 23,838  
   

 

 

    

 

 

  

 

(1) Represents the final maturity of variable rate demand notes. These securities have a put right on the part of the Company which allows the Company to put the security to the issuer, generally within a month of the balance sheet date. Should the Company exercise its put option on the put date, it is entitled to receive the par value of the security plus any accrued interest.

The following is a summary of available-for-sale securities:

 

                                 
    Amortized
Cost		     Gross Unrealized
Gains		     Gross Unrealized
Losses		     Estimated Fair
Value		  
    (In thousands)  

September 30, 2011

                                

State, municipal and local government agencies bonds

   $ 34,135     $ 37     $ (5 )    $ 34,167  

Corporate bonds

     18,321       —         (24 )      18,297  

U.S. federal government bonds

     8,584       3       (1 )      8,586  

Commercial paper

     4,598       —         —         4,598  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 65,638     $ 40     $ (30 )    $ 65,648  
   

 

 

    

 

 

    

 

 

    

 

 

  

December 31, 2010

                                

State, municipal and local government agencies bonds

   $ 11,915     $ 20     $ (4 )    $ 11,931  

Corporate bonds

     11,894       20       (7 )      11,907  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 23,809     $ 40     $ (11 )    $ 23,838  
   

 

 

    

 

 

    

 

 

    

 

 

  

Impairment of Investments

Harmonic monitors its investment portfolio for impairment on a periodic basis. In the event that the carrying value of an investment exceeds its fair value and the decline in value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis for the investment is established. In order to determine whether a decline in value is other-than-temporary, the Company evaluates, among other factors: the duration and extent to which the fair value has been less than the carrying value; the Company’s financial condition and business outlook, including key operational and cash flow metrics, current market conditions and future trends in the industry; and the Company’s relative competitive position within the industry. At the present time, the Company does not intend to sell its investments that have unrealized losses included in accumulated other comprehensive loss. In addition, the Company does not believe that it is more likely than not that it will be required to sell its investments that have unrealized losses included in accumulated other comprehensive loss before the Company recovers the principal amounts invested. The Company believes that the unrealized losses are temporary and do not require an other-than-temporary impairment, based on our evaluation of available evidence as of September 30, 2011.

As of September 30, 2011, there were no individual available-for-sale securities in a material unrealized loss position and the amount of unrealized losses on the total investment balance was insignificant.