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Fair Value
3 Months Ended
Mar. 31, 2016
Fair Value Disclosures [Abstract]  
Fair Value
Fair Value
The following table summarizes the fair value hierarchy for the Company’s financial assets (cash, cash equivalents, short-term investments, non-current investments, and foreign currency derivatives) and financial liabilities (foreign currency derivatives) measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015 (in thousands):
Balance as of March 31, 2016:
 
 
 
 
 
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
53,431

 
$
36,389

 
$

 
$
89,820

Short-term investments:
 
 
 
 
 
 
 
Asset-backed securities

 
53,613

 

 
53,613

Corporate debt securities

 
77,686

 

 
77,686

Commercial paper

 
42,354

 

 
42,354

Government agency securities

 
17,206

 

 
17,206

Other securities

 
11,633

 

 
11,633

Total short-term investments

 
202,492

 

 
202,492

Foreign currency derivatives

 
1,531

 

 
1,531

Investments:
 
 
 
 
 
 
 
Asset-backed securities

 
11,917

 

 
11,917

Corporate debt securities

 
35,436

 

 
35,436

Government agency securities

 
12,000

 

 
12,000

Other securities

 
4,008

 

 
4,008

Total investments

 
63,361

 

 
63,361

Total
$
53,431

 
$
303,773

 
$

 
$
357,204

Liabilities:
 
 
 
 
 
 
 
Foreign currency derivatives
$

 
$
1,316

 
$

 
$
1,316

Total
$

 
$
1,316

 
$

 
$
1,316

Balance as of December 31, 2015:
 
 
 
 
 
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
84,625

 
$
27,943

 
$

 
$
112,568

Short-term investments:
 
 
 
 
 
 
 
Asset-backed securities

 
51,973

 

 
51,973

Corporate debt securities

 
81,600

 

 
81,600

Commercial paper

 
48,762

 

 
48,762

Government agency securities

 
12,684

 

 
12,684

Other securities

 
15,128

 

 
15,128

Total short-term investments

 
210,147

 

 
210,147

Foreign currency derivatives

 
1,431

 

 
1,431

Investments:
 
 
 
 
 
 
 
Asset-backed securities

 
11,818

 

 
11,818

Corporate debt securities

 
36,414

 

 
36,414

Government agency securities

 
11,944

 

 
11,944

Other securities

 
1,999

 

 
1,999

Total investments

 
62,175

 

 
62,175

Total
$
84,625

 
$
301,696

 
$

 
$
386,321

Liabilities:
 
 
 
 
 
 
 
Foreign currency derivatives
$

 
$
1,298

 
$

 
$
1,298

Total
$

 
$
1,298

 
$

 
$
1,298


The estimated fair values of the Company’s other financial instruments which are not measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015 were as follows (in thousands):
Balance as of March 31, 2016:
 
 
 
 
 
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Liabilities:
 
 
 
 
 
 
 
Convertible senior notes
$

 
$
312,570

 
$

 
$
312,570

Total
$

 
$
312,570

 
$

 
$
312,570

Balance as of December 31, 2015:
 
 
 
 
 
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Liabilities:
 
 
 
 
 
 
 
Convertible senior notes
$

 
$
307,481

 
$

 
$
307,481

Total
$

 
$
307,481

 
$

 
$
307,481


The Company utilized levels 1 and 2 to value its financial assets on a recurring basis. Level 1 instruments use quoted prices in active markets for identical assets or liabilities, which include the Company’s cash accounts, short-term deposits, and money market funds as these specific assets are liquid. Level 2 instruments are valued using the market approach, which uses 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. Level 2 instruments include commercial paper, corporate debt securities, United States government securities, government agency securities, asset-backed securities, and other securities, as similar or identical instruments can be found in active markets.
The Company recorded derivative assets and liabilities at fair value. The Company’s derivatives consist of foreign exchange forward contracts. The Company has elected to use the income approach to value the derivatives, using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present amount assuming that participants are motivated, but not compelled to transact.
Level 2 inputs for the valuations are limited to quoted prices for similar assets or liabilities in active markets (specifically foreign currency spot rate and forward points) and inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR rates, credit default spot rates, and company specific LIBOR spread). Mid-market pricing is used as a practical expedient for fair value measurements. The fair value measurement of an asset or liability must reflect the nonperformance risk of the entity and the counterparty. Therefore, the impact of the counterparty’s creditworthiness when in an asset position and the Company’s creditworthiness when in a liability position has also been factored into the fair value measurement of the derivative instruments and did not have a material impact on the fair value of these derivative instruments. Both the counterparty and the Company are expected to continue to perform under the contractual terms of the instruments. The estimated fair value of the convertible senior notes, which have been classified as Level 2 financial instruments, was determined based on the quoted price of the convertible senior notes in an over-the-counter market on March 31, 2016.