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Investments and Fair Value Measurements | 9 Months Ended
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Sep. 30, 2015
Investments and Fair Value Measurements [Abstract] |
Investments and Fair Value Measurements | Note 2. Investments and Fair Value Measurements Our cash and cash equivalents consist of cash and instruments with original maturities of less than 90 days. Our investments consist of instruments with original maturities of more than 90 days. As of September 30, 2015 and December 31, 2014, our cash, cash equivalents and investments are classified as follows (in thousands):
|  | September 30, 2015 |  | December 31, 2014 |
|  |  |  |  | Gross |  | Gross |  |  |  |  |  |  |  | Gross |  | Gross |  |  |  |
|  | Amortized |  | Unrealized |  | Unrealized |  | Fair |  | Amortized |  | Unrealized |  | Unrealized |  | Fair |
|  | Cost |  | Gain |  | (Loss) |  | Value |  | Cost |  | Gain |  | (Loss) |  | Value |
Classified as: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 15,723 |  | $ | — |  | $ | — |  | $ | 15,723 |  | $ | 22,337 |  | $ | — |  | $ | — |  | $ | 22,337 |
Cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Certificates of deposit 1 |  |  | 10,462 |  |  | — |  |  | — |  |  | 10,462 |  |  | 6,454 |  |  | — |  |  | — |  |  | 6,454 |
Money market fund |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 23 |  |  | — |  |  | — |  |  | 23 |
Total cash and cash equivalents |  |  | 26,185 |  |  | — |  |  | — |  |  | 26,185 |  |  | 28,814 |  |  | — |  |  | — |  |  | 28,814 |
Investments(available for sale): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Certificates of deposit 2 |  |  | 10,053 |  |  | 3 |  |  | (6) |  |  | 10,050 |  |  | 10,195 |  |  | 1 |  |  | (13) |  |  | 10,183 |
Corporate bonds |  |  | 8,825 |  |  | — |  |  | (38) |  |  | 8,787 |  |  | 9,214 |  |  | 1 |  |  | (29) |  |  | 9,186 |
Corporate equity securities |  |  | 200 |  |  | 227 |  |  | — |  |  | 427 |  |  | 44 |  |  | 710 |  |  | — |  |  | 754 |
Total investments |  |  | 19,078 |  |  | 230 |  |  | (44) |  |  | 19,264 |  |  | 19,453 |  |  | 712 |  |  | (42) |  |  | 20,123 |
Total cash, cash equivalents and investments |  | $ | 45,263 |  | $ | 230 |  | $ | (44) |  | $ | 45,449 |  | $ | 48,267 |  | $ | 712 |  | $ | (42) |  | $ | 48,937 |
Contractual maturities on investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due within 1 year |  | $ | 8,327 |  |  |  |  |  |  |  | $ | 8,551 |  | $ | 11,631 |  |  |  |  |  |  |  | $ | 12,340 |
Due after 1 through 5 years |  |  | 10,751 |  |  |  |  |  |  |  |  | 10,713 |  |  | 7,822 |  |  |  |  |  |  |  |  | 7,783 |
|  | $ | 19,078 |  |  |  |  |  |  |  | $ | 19,264 |  | $ | 19,453 |  |  |  |  |  |  |  | $ | 20,123 |
| 1. |  | Certificate of deposit with original maturities of less than 90 days.
| 2. |  | Certificate of deposit with original maturities of more than 90 days.
We manage our investments as a single portfolio of highly marketable securities that is intended to be available to meet our current cash requirements. We have no investments in auction rate securities. Certificates of deposit and corporate bonds are typically held until maturity. Corporate equity securities have no maturity and may be sold at any time. Our holding of corporate equity securities consists of common stock of GCS Holdings, Inc. (“GHI”) (previously Global Communication Semiconductors, Inc), a Taiwan publicly-traded company. Previously, we also owned the common stock of Intelligent Epitaxy Technology, Inc. (“IntelliEpi”).We began classifying IntelliEpi stock as an available-for-sale security upon its initial public offering in 2013. We sold our remaining IntelliEpi stock in the second quarter of 2015. As of September 30, 2015, we no longer hold any IntelliEpi stock. There were no sales of available-for-sales securities and no realized gains and losses for the three months ended September 30, 2015. During the three months ended September 30, 2014, our cash proceeds from selling IntelliEpi stock was $319,000, our cost was $17,000 and our gross realized gain was $302,000. During the nine months ended September 30, 2015, our cash proceeds from sales of available-for-sale investments were $902,000, our cost was $43,000 and our gross realized gain from sales of available-for-sale investments was $859,000. During the nine months ended September 30, 2014, our cash proceeds from selling IntelliEpi stock were $665,000, our cost was $39,000 and our gross realized gain was $626,000. We began classifying GHI as an available-for-sale security in the second quarter of 2015 when we determined that there was sufficient trading volume in the exchange for the stock to be deemed readily marketable. An unrealized gain of $227,000 net of tax was recorded as of September 30, 2015. This security is valued at fair market value at September 30, 2015 and will be marked to market with changes through other comprehensive income until sold. There is no assurance that we will realize this value when the stock is sold in the future. The gross unrealized losses related to our portfolio of available-for-sale securities were primarily due to changes in interest rates and market and credit conditions of the underlying securities. We have determined that the gross unrealized losses on some of our available-for-sale securities as of September 30, 2015 are temporary in nature. We periodically review our investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality, and our ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value. A portion of our investments would generate a loss if we sold them on September 30, 2015. The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2015 (in thousands):
|  | In Loss Position |  | In Loss Position |  | Total In |
|  | < 12 months |  | > 12 months |  | Loss Position |
|  |  |  |  | Gross |  |  |  |  | Gross |  |  |  |  | Gross |
|  | Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized |
As of September 30, 2015 |  | Value |  | (Losses) |  | Value |  | (Losses) |  | Value |  | (Losses) |
Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Certificates of deposit |  | $ | 4,274 |  | $ | (6) |  | $ | 720 |  | $ | — |  | $ | 4,994 |  | $ | (6) |
Corporate bonds |  |  | 6,917 |  |  | (35) |  |  | 1,871 |  |  | (3) |  |  | 8,788 |  | $ | (38) |
Total in loss position |  | $ | 11,191 |  | $ | (41) |  | $ | 2,591 |  | $ | (3) |  | $ | 13,782 |  | $ | (44) |
The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2014 (in thousands):
|  | In Loss Position |  | In Loss Position |  | Total In |
|  | < 12 months |  | > 12 months |  | Loss Position |
|  |  |  |  | Gross |  |  |  |  | Gross |  |  |  |  | Gross |
|  | Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized |
As of December 31, 2014 |  | Value |  | (Loss) |  | Value |  | (Loss) |  | Value |  | (Loss) |
Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Certificates of deposit |  | $ | 4,492 |  | $ | (13) |  | $ | — |  | $ | — |  | $ | 4,492 |  | $ | (13) |
Corporate bonds |  |  | 3,770 |  |  | (27) |  |  | 4,309 |  |  | (2) |  |  | 8,079 |  | $ | (29) |
Total in loss position |  | $ | 8,262 |  | $ | (40) |  | $ | 4,309 |  | $ | (2) |  | $ | 12,571 |  | $ | (42) |
Investments in Privately-held Companies We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business (see Note 6). The investment balances for all of these companies, including minority investments indirectly in privately-held companies made by our consolidated subsidiaries, accounted for under the equity method are included in “other assets” in the consolidated balance sheets and totaled $12.5 million and $12.1 million as of September 30, 2015 and December 31, 2014, respectively. As noted above, in the second quarter of 2015, we re-classified our minority investment in one company, which was accounted for under the cost method, as available-for- sale short-term investments and written-up to market value. As of September 30, 2015, we no longer maintain any investments under the cost method. As of December 31, 2014, our investments in this unconsolidated company had a carrying value of $200,000 and were included in “other assets” in the condensed consolidated balance sheets. Fair Value Measurements We invest primarily in money market accounts, certificates of deposits, corporate bonds and notes, and government securities. ASC topic 820, Fair value measurement (“ASC 820”) establishes three levels of inputs that may be used to measure fair value. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets of the asset or identical assets. Level 2 instrument valuations are obtained from readily-available pricing sources for comparable instruments. Level 3 instrument valuations are obtained from unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. On a recurring basis, we measure certain financial assets and liabilities at fair value, primarily consisting of our short-term and long-term investments. The type of instrument valued based on quoted market prices in active markets include our money market funds, which are generally classified within Level 1 of the fair value hierarchy. Other than corporate equity securities which are based on quoted market prices and classified as Level 1, we classify our available-for-sale securities including certificates of deposit and corporate bonds as having Level 2 inputs. The valuation techniques used to measure the fair value of these financial instruments having Level 2 inputs were derived from bank statements, quoted market prices, broker or dealer statements or quotations, or alternative pricing sources with reasonable levels of price transparency. We place short-term foreign currency hedges that are intended to offset the potential cash exposure related to fluctuations in the exchange rate between the United States dollar and Japanese Yen. We measure the fair value of these foreign currency hedges at each month end and quarter end using current exchange rates and in accordance with generally accepted accounting principles. At quarter end any foreign currency hedges not settled are netted in “accrued liabilities” on the consolidated balance sheet and classified as Level 3 assets and liabilities. As of September 30, 2015 the net change in fair value from the placement of the hedge to settlement at each month end during the quarter had a de minimis impact to the consolidated results. There were no changes in valuation techniques or related inputs in the three months ended September 30, 2015. There have been no transfers between fair value measurements levels during the three months ended September 30, 2015. The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of September 30, 2015 (in thousands):
|  |  |  |  | Quoted Prices in |  |  |  |  | Significant |
|  |  |  |  | Active Markets of |  | Significant Other |  | Unobservable |
|  | Balance as of |  | Identical Assets |  | Observable Inputs |  | Inputs |
|  | September 30, 2015 |  | (Level 1) |  | (Level 2) |  | (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents and investments: |  |  |  |  |  |  |  |  |  |  |  |  |
Certificates of deposit |  | $ | 10,050 |  | $ | — |  | $ | 10,050 |  | $ | — |
Corporate bonds |  |  | 8,787 |  |  | — |  |  | 8,787 |  |  | — |
Corporate equity securities |  |  | 427 |  |  | 427 |  |  | — |  |  | — |
Total |  | $ | 19,264 |  | $ | 427 |  | $ | 18,837 |  | $ | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency hedge obligations |  | $ | 25 |  | $ | — |  | $ | — |  | $ | 25 |
The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of December 31, 2014 (in thousands):
|  |  |  |  | Quoted Prices in |  |  |  |  | Significant |
|  |  |  |  | Active Markets of |  | Significant Other |  | Unobservable |
|  | Balance as of |  | Identical Assets |  | Observable Inputs |  | Inputs |
|  | December 31, 2014 |  | (Level 1) |  | (Level 2) |  | (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents and investments: |  |  |  |  |  |  |  |  |  |  |  |  |
Money market fund |  | $ | 23 |  | $ | 23 |  | $ | — |  | $ | — |
Certificates of deposit |  |  | 10,183 |  |  | — |  |  | 10,183 |  |  | — |
Corporate bonds |  |  | 9,186 |  |  | — |  |  | 9,186 |  |  | — |
Corporate equity securities |  |  | 754 |  |  | 754 |  |  | — |  |  | — |
Total |  | $ | 20,146 |  | $ | 777 |  | $ | 19,369 |  | $ | — |
Liabilities |  | $ | — |  | $ | — |  | $ | — |  | $ | — |
Items Measured at Fair Value on a Nonrecurring Basis Certain assets that are subject to nonrecurring fair value measurements are not included in the table above. These assets include investments in privately-held companies accounted for by equity and cost method (See Note 6). We did not record other-than-temporary impairment charges for either of these investments during the three and nine months ended September 30, 2015 and 2014.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13433-108611 + Details
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