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Note 5 - Financial Instruments Measured at Fair Value | 9 Months Ended
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Sep. 30, 2023
Notes to Financial Statements |
Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring [Text Block] |
5. | Financial Instruments Measured at Fair Value
Our cash, cash equivalents, and short-term investments consisted primarily of cash and other investment grade securities. We do not hold investment securities for trading purposes. All short-term investments in debt securities are classified as available-for-sale and recorded at fair value. Investment securities are exposed to market risk due to changes in interest rates and credit risk and we monitor credit risk and attempt to mitigate exposure by making high-quality investments and through investment diversification. We assess whether unrealized loss positions on available-for-sale debt securities are due to credit-related factors. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in earnings through an allowance account. Unrealized gains and losses that are not due to credit-related factors are included in accumulated other comprehensive income (loss). Factors that could indicate an impairment exists include, but are not limited to earnings performance, changes in credit rating or adverse changes in the regulatory or economic environment of the asset. Gross realized gains and losses on sales of short-term investments are included in interest income. Realized gains and losses for the periods presented were not significant. Investments that we have classified as short-term, by security type, are as follows (in thousands):
|  | September 30, 2023 |
|  |  |  |  |  | Gross |  |  | Gross |  |  | Estimated |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gains |  |  | Losses (1) |  |  | Value |
Corporate debt securities (2) |  | $ | 40,601 |  |  | $ | 2 |  |  | $ | 75 |  |  | $ | 40,528 |
Bank certificates of deposit |  |  | 22,640 |  |  |  | 6 |  |  |  | 7 |  |  |  | 22,639 |
U.S. treasury securities |  |  | 21,918 |  |  |  | - |  |  |  | 251 |  |  |  | 21,667 |
Asset-backed securities |  |  | 8,652 |  |  |  | - |  |  |  | 31 |  |  |  | 8,621 |
Foreign government security |  |  | 725 |  |  |  | - |  |  |  | - |  |  |  | 725 |
|  | $ | 94,536 |  |  | $ | 8 |  |  | $ | 364 |  |  | $ | 94,180 |
|  | December 31, 2022 |
|  |  |  |  |  | Gross |  |  | Gross |  |  | Estimated |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gains |  |  | Losses (1) |  |  | Value |
Corporate debt securities (2) |  | $ | 59,283 |  |  | $ | 30 |  |  | $ | 240 |  |  | $ | 59,073 |
Bank certificates of deposit |  |  | 36,500 |  |  |  | 20 |  |  |  | 41 |  |  |  | 36,479 |
U.S. treasury securities |  |  | 34,614 |  |  |  | 1 |  |  |  | 418 |  |  |  | 34,197 |
Asset-backed securities |  |  | 12,727 |  |  |  | 10 |  |  |  | 79 |  |  |  | 12,658 |
Foreign government security |  |  | 828 |  |  |  | - |  |  |  | - |  |  |  | 828 |
|  | $ | 143,952 |  |  | $ | 61 |  |  | $ | 778 |  |  | $ | 143,235 |
| (1) | As of September 30, 2023, the cost and fair value of investments with loss positions was approximately $75.8 million and $75.4 million, respectively. As of December 31, 2022, the cost and fair value of investments with loss positions was approximately $86.3 million and $85.5 million, respectively. We evaluated the nature of these investments, credit worthiness of the issuer and the duration of these impairments to determine if a credit loss exists. We have the ability and intent to hold these investments to maturity.
| (2) | Corporate debt securities include investments in financial and other corporate institutions. No single issuer represents a significant portion of the total corporate debt securities portfolio.
Effective maturities of short-term investments are as follows (in thousands):
|  | September 30, 2023 |  |  | December 31, 2022 |
|  | Amortized |  |  | Estimated |  |  | Amortized |  |  | Estimated |
|  | Cost |  |  | Fair Value |  |  | Cost |  |  | Fair Value |
Due in one year or less |  | $ | 70,275 |  |  | $ | 70,012 |  |  | $ | 112,956 |  |  | $ | 112,683 |
Due after one year through five years |  |  | 23,536 |  |  |  | 23,443 |  |  |  | 30,996 |  |  |  | 30,552 |
Due after five years through ten years |  |  | 725 |  |  |  | 725 |  |  |  | - |  |  |  | - |
|  | $ | 94,536 |  |  | $ | 94,180 |  |  | $ | 143,952 |  |  | $ | 143,235 |
Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices 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 in which little or no market data exists, therefore requiring an entity to develop its own assumptions. When available, we use quoted market prices to determine the fair value of our investments, and they are included in Level 1. When quoted market prices are unobservable, we use quotes from independent pricing vendors based on recent trading activity and other relevant information, and they are included in Level 2. The following table summarizes, by major security type, our financial instruments that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):
|  | Fair value measurements at September 30, 2023 using: |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Total estimated |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | fair value |
Cash |  | $ | 243,956 |  |  | $ | - |  |  | $ | - |  |  | $ | 243,956 |
U.S. treasury securities |  |  | - |  |  |  | 21,667 |  |  |  | - |  |  |  | 21,667 |
Corporate debt securities |  |  | - |  |  |  | 41,523 |  |  |  | - |  |  |  | 41,523 |
Asset-backed securities |  |  | - |  |  |  | 8,621 |  |  |  | - |  |  |  | 8,621 |
Money market funds |  |  | - |  |  |  | 48,435 |  |  |  | - |  |  |  | 48,435 |
Bank certificates of deposit |  |  | - |  |  |  | 22,639 |  |  |  | - |  |  |  | 22,639 |
Foreign government security |  |  | - |  |  |  | 725 |  |  |  | - |  |  |  | 725 |
|  | $ | 243,956 |  |  | $ | 143,610 |  |  | $ | - |  |  | $ | 387,566 |
|  | Fair value measurements at December 31, 2022 using: |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Total estimated |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | fair value |
Cash |  | $ | 190,371 |  |  | $ | - |  |  | $ | - |  |  | $ | 190,371 |
Corporate debt securities |  |  | - |  |  |  | 69,753 |  |  |  | - |  |  |  | 69,753 |
Money market funds |  |  | - |  |  |  | 40,290 |  |  |  | - |  |  |  | 40,290 |
Bank certificates of deposit |  |  | - |  |  |  | 37,480 |  |  |  | - |  |  |  | 37,480 |
U.S. treasury securities |  |  | - |  |  |  | 34,196 |  |  |  | - |  |  |  | 34,196 |
Asset-backed securities |  |  | - |  |  |  | 12,658 |  |  |  | - |  |  |  | 12,658 |
Foreign government security |  |  | - |  |  |  | 828 |  |  |  | - |  |  |  | 828 |
|  | $ | 190,371 |  |  | $ | 195,205 |  |  | $ | - |  |  | $ | 385,576 |

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- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 820 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//820/tableOfContent + Details
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