INVESTMENTS AND FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

We invest surplus funds in excess of operational requirements in a diversified portfolio of marketable securities, with the objectives of delivering competitive returns, maintaining a high degree of liquidity, and seeking to avoid the permanent impairment of principal.

Our investments in marketable debt securities are classified and accounted for as available-for-sale. The marketable debt securities are classified either short-term or long-term based on each instrument’s underlying contractual maturity date. As of December 31, 2021, we reported $7.3 million investment in debt securities as Other assets on our Consolidated Balance Sheets as the management intends to hold these investment for more than 12 months from the reporting date. We did not have marketable securities as of December 31, 2020. We may sell certain marketable debt securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation.

Our investments in marketable equity securities are classified based on the nature of the securities and their availability for use in current operations. The marketable equity securities are measured at fair value with gains and losses recognized in Interest and other income (loss), net on our Consolidated Statements of Income and Comprehensive Income.

We regularly review our investment portfolio to identify and evaluate investments that have indicators of possible impairment. Investments are considered impaired when a decline in fair value is judged to be other-than-temporary. If the cost of an individual investment exceeds its fair value, we evaluate, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, and our intent and ability to hold the investment. Once a decline in fair value is determined to be other-than-temporary, we will record an impairment charge and establish a new cost basis in the investment.

Marketable securities as of December 31, 2021 consisted of the following (in thousands):


	December 31, 2021
	Cost or Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Mutual funds	$	50,000	$	—	$	(338)	$	49,662
Equity securities	38,100		—		(1,331)		36,769
Corporate bonds	6,996		290		—		7,286
	$	95,096	$	290	$	(1,669)	$	93,717

As December 31, 2021, marketable securities are classified and reported on our Consolidated Balance Sheets as follows:


	December 31, 2021
	Marketable Securities (current)		Other Assets, Net (non-current)		Total
Mutual funds	$	49,662	$	—	$	49,662
Equity securities	36,769		—		36,769
Corporate bonds	—		7,286		7,286
	$	86,431	$	7,286	$	93,717

The amortized costs and fair value of our marketable debt securities, by contractual maturity, as of December 31, 2021 (in thousands) are as follows:


	December 31, 2021
	Amortized Cost		Fair Value
Less than 1 year	$	—	$	—
1 to 5 years	6,996		7,286
Total	$	6,996	$	7,286

Derivative Financial Instruments

We invest in derivatives that are not designated as hedging instruments and which consisted of call and put options. When we sell call and put options, the premium received is reported as Other current liabilities on our Consolidated Balance Sheets. When we purchase put or call options, the premium paid is reported as Marketable securities on our Consolidated Balance Sheets. The carrying value of these options are adjusted to the fair value at the end of each reporting period until the options expire. Gains and losses recognized from the periodic adjustments to fair value are recognized as Interest and other income, on our Consolidated Statements of Income and Comprehensive Income. At December 31, 2021, we had $6.3 million derivative instruments which consisted of call and put options sold at their fair value as of the balance sheet date. These derivative instruments are reported as Other current liabilities on our Consolidated Balance Sheets.


	Cost		Unrealized Gains		Fair Value
Liabilities
Derivative instruments	$	6,370	$	(103)	$	6,267
	$	6,370	$	(103)	$	6,267

A summary of realized and unrealized gains and losses from our equity securities and derivative instruments are as follows (in thousands):


	Years Ended December 31,
	2021		2020
Net unrealized losses recognized on equity investments	$	(1,669)	$	—
Net realized gains recognized on equity investments	2,148		—
Net realized losses recognized on derivative instruments	(1,467)		—
Net unrealized gains recognized on derivative instruments	103		—
Total net gains (losses) recognized in interest and other income	$	(885)	$	—

Fair Value Measurements

Our financial instruments measured at fair value on a recurring basis consisted of money market funds, mutual funds, equity securities, corporate debt securities and derivatives. Equity securities are classified within Level 1 of the fair value hierarchy as they are valued based on quoted market price in an active market. Corporate debt securities and derivative instruments are valued based on quoted prices in markets that are less active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency are generally classified within Level 2 of the fair value hierarchy. We had no Level 2 financial instruments at December 31, 2020.

Financial instruments valued based on unobservable inputs which reflect the reporting entity’s own assumptions or data that market participants would use in valuing an instrument are generally classified within Level 3 of the fair value hierarchy. We did not hold Level 3 financial instruments as of December 31, 2021 and 2020.

Financial instruments measured at fair value on a recurring basis as of December 31, 2021 and 2020 are classified based on the valuation technique in the table below (in thousands):


	December 31, 2021
	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Mutual funds	49,662						49,662
Equity securities	36,769		—		—		36,769
Corporate bonds	—		7,286		—		7,286
Total assets at fair value	$	86,431	$	7,286	$	—	$	93,717

Liabilities
Derivative instruments	$	—	$	6,267	$	—	$	6,267
Total liabilities at fair value	$	—	$	6,267	$	—	$	6,267


	December 31, 2020
	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	45,614	$	—	$	—	$	45,614
Total assets at fair value	$	45,614	$	—	$	—	$	45,614