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Note 14 - Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

14. Fair Value Measurements

The guidance on fair value measurements requires fair value measurements to be classified and disclosed in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The Company measures its investments in marketable securities at fair value using the market approach which uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The Company has cash equivalents which consist of money market funds valued using the amortized cost method, in accordance with Rule 2a-7 under the 1940 Act which approximates fair value.

The convertible notes are carried on the consolidated balance sheets at their original issuance value including accreted interest, net of unamortized debt discount and issuance costs. The Convertible Notes are not marked to fair value at the end of each reporting period. As of December 31, 2019 and 2018, the fair value of Convertible Notes was determined on the basis of market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy. The fair value of the Convertible Notes as of December 31, 2019 and 2018 was $845,296 and $512,428, respectively.

The following table presents information about assets required to be carried at fair value on a recurring basis:

December 31, 2019

Total

Level 1

Level 2

Assets

Cash equivalents:

Money market funds
$ 190,598 $ 67,494 $ 123,104

Commercial paper
9,465 — 9,465

Municipal bonds
1,250 — 1,250

Investments in marketable securities:

U.S. Treasury securities 3,759 3,759 —

Municipal bonds 6,119 — 6,119

Corporate notes/bonds
119,449 — 119,449

Asset-backed securities
4,268 — 4,268

Commercial paper
6,464 — 6,464

Certificate of deposit
72 72 —

$ 341,444 $ 71,325 $ 270,119

December 31, 2018

Total

Level 1

Level 2

Assets

Cash equivalents:

Money market funds
$ 740 $ 38 $ 702

Commercial paper
96,759 — 96,759

Investments in marketable securities:

Municipal bonds
6,733 — 6,733

Corporate notes/bonds
146,126 — 146,126

Variable rate demand notes
8,900 — 8,900

Asset-backed securities
32,923 — 32,923

Commercial paper
39,701 — 39,701

Certificate of deposit
956 956 —

$ 332,838 $ 994 $ 331,844

As discussed in Note 2, the Company has a marketable equity investment. The marketable equity investment is classified as Level 1 in the fair value hierarchy. As discussed in Note 2, the Company has non-marketable equity investments which are classified within Level 3 in the fair value hierarchy.

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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