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Fair Value on Financial Instruments
 3 Months Ended
Mar. 31, 2016
Fair Value on Financial Instruments

Note 2. Fair Value on Financial Instruments

The Company uses certain assumptions that market participants would use to determine the fair value of an asset or liability in pricing the asset or liability in an orderly transaction between market participants at the measurement date. The identification of market participant assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability. A fair value hierarchy has been established which gives precedence to fair value measurements calculated using observable inputs over those using unobservable inputs. This hierarchy prioritized the inputs into three broad levels as follows:

 

  •   Level 1: Quoted prices in active markets for identical instruments

 

  •   Level 2: Other significant observable inputs (including quoted prices in active markets for similar instruments)

 

  •   Level 3: Significant unobservable inputs (including assumptions in determining the fair value of certain investments)

Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments are readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

To estimate the fair value of Level 2 debt securities as of March 31, 2016, the Company’s primary service relies on inputs from multiple industry-recognized pricing sources to determine the price for each investment. Corporate debt and U.S. government agency securities are systematically priced by this service as of the close of business each business day. If the primary pricing service does not price a specific asset a secondary pricing service is utilized.

The fair values of the Company’s financial assets and liabilities were determined using the following inputs at March 31, 2016 (in thousands):

 

     Balance sheet
classification		    Total      Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		  

Money market funds

    Cash and cash equivalents    $ 6,648       $ 6,648       $ —         $ —     

United States government agency securities

    Short-term investments      9,997         —           9,997         —     

Corporate debt securities

    Short-term investments      60,516         —           60,516         —     

Marketable equity securities

    Marketable equity securities      5,082         5,082         —           —     
     

 

 

     

 

 

     

 

 

     

 

 

  

Total financial assets

       $ 82,243       $ 11,730       $ 70,513       $ —     
     

 

 

     

 

 

     

 

 

     

 

 

  

The fair values of the Company’s financial assets and liabilities were determined using the following inputs at December 31, 2015 (in thousands):

 

     Balance sheet
classification		    Total      Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		  

Money market funds

    Cash and cash equivalents    $ 59,302       $ 59,302       $ —         $ —     

Corporate debt securities

    Short-term investments      25,698         —           25,698         —     

Marketable equity securities

    Marketable equity securities      11,163         11,163         —           —     
     

 

 

     

 

 

     

 

 

     

 

 

  

Total financial assets

       $ 96,163       $ 70,465       $ 25,698       $ —     
     

 

 

     

 

 

     

 

 

     

 

 

  

The Company did not have any transfers among fair value measurement levels during the three months ended March 31, 2016 or the year ended December 31, 2015. The Company did not have any financial assets or liabilities classified as level 3 financial instruments at March 31, 2016 and December 31, 2015.