Fair Value Measurements

6 Months Ended

Jun. 28, 2020

Note 12. Fair Value Measurements

The following tables summarize assets and liabilities measured at fair value on a recurring basis as of June 28, 2020 and December 31, 2019:

	As of June 28, 2020
	Total		Quoted market prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(In thousands)
Assets:
Cash equivalents: money-market funds	$	22,180	$	22,180	$	—	$	—
Available-for-sale debt investments: convertible debt⁽¹⁾		1,326		—		—		1,326
Available-for-sale investments: certificates of deposit⁽¹⁾		147		—		147		—
Trading securities: mutual funds⁽¹⁾		4,446		4,446		—		—
Foreign currency forward contracts⁽²⁾		273	—			273		—
Total assets measured at fair value	$	28,372	$	26,626	$	420	$	1,326
Liabilities:
Foreign currency forward contracts⁽³⁾	$	1,336	$	—	$	1,336	$	—
Contingent consideration⁽⁴⁾		6,016		—		—		6,016
Total liabilities measured at fair value	$	7,352	$	—	$	1,336	$	6,016

	As of December 31, 2019
	Total		Quoted market prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(In thousands)
Assets:
Cash equivalents: money-market funds	$	22,105	$	22,105	$	—	$	—
Available-for-sale debt investments: convertible debt⁽¹⁾		1,326		—		—		1,326
Available-for-sale investments: certificates of deposit⁽¹⁾		149		—		149		—
Trading securities: mutual funds⁽¹⁾		4,023		4,023		—		—
Foreign currency forward contracts⁽²⁾		152		—		152		—
Total assets measured at fair value	$	27,755	$	26,128	$	301	$	1,326
Liabilities:
Foreign currency forward contracts⁽³⁾	$	525	$	—	$	525	$	—
Contingent consideration⁽⁴⁾		5,928		—		—		5,928
Total liabilities measured at fair value	$	6,453	$	—	$	525	$	5,928

⁽¹⁾	^{Included in Short-term investments on the Company’s unaudited condensed consolidated balance sheets.}

⁽²⁾	^{Included in Prepaid expenses and other current assets on the Company’s unaudited condensed consolidated balance sheets.}

⁽³⁾	^{Included in Other accrued liabilities on the Company’s unaudited condensed consolidated balance sheets.}

⁽⁴⁾

^{Included in Other non-current accrued liabilities on the Company’s unaudited condensed consolidated balance sheets. The contingent consideration represents the estimated fair value of the additional variable cash consideration payable in connection with the acquisition of Meural in August 2018 that is contingent upon the achievement of certain technical and service revenue milestones. As of June 28, 2020 and December 31, 2019, there were no material changes in the range of expected outcomes and the fair value of the contingent consideration from the acquisition date.}

The Company’s investments in cash equivalents and trading securities are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company’s available-for-sale marketable investments are classified within Level 2 of the fair value hierarchy because they are valued based on readily available pricing sources for comparable instruments, identical instruments in less active markets, or models using market observable inputs. The Company’s foreign currency forward contracts are classified within Level 2 of the fair value hierarchy as they are valued using pricing models that take into account the contract terms as well as currency rates and counterparty credit rates. The Company verifies the reasonableness of these pricing models using observable market data for related inputs into such models. The Company enters into foreign currency forward contracts with only those counterparties that have long-term credit ratings of A-/A3 or higher. The Company's contingent consideration resulting from acquisitions and available-for-sale convertible debt securities, which were issued by a privately held company, are classified within Level 3 of the fair value hierarchy as the valuations typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. The carrying value of non-financial assets and liabilities measured at fair value in the financial statements on a recurring basis, including accounts receivable and accounts payable, approximate fair value due to their short maturities.

- 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.

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