Fair Value Measurements

3 Months Ended

Mar. 31, 2020

Note 4. Fair Value Measurements

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in thousands):


			At March 31, 2020
			Quoted prices		Significant
			in active		other		Significant
			markets for		observable		unobservable
	March 31,		identical assets		inputs		inputs
	2020		(Level 1)		(Level 2)		(Level 3)
Assets
Money market funds ⁽ⁱ⁾	$	3,975	$	3,975	$	-	$	-
U.S. government agency bonds ⁽ⁱⁱ⁾		1,503		-		1,503		-
Bank certificates of deposit ^{(ii) (iii)}		13,909		-		13,909		-
Commercial paper ⁽ⁱⁱ⁾		8,961		-		8,961		-
Corporate notes ⁽ⁱⁱ⁾		63,573		-		63,573		-
Asset-backed securities ⁽ⁱⁱ⁾		23,650		-		23,650		-
Total Assets	$	115,571	$	3,975	$	111,596	$	-
Liabilities
Cash-settled stock options	$	2,165	$	-	$	2,165	$	-
Total liabilities	$	2,165	$	-	$	2,165	$	-


			At December 31, 2019
			Quoted prices		Significant
			in active		other		Significant
			markets for		observable		unobservable
	December 31,		identical assets		inputs		inputs
	2019		(Level 1)		(Level 2)		(Level 3)
Assets
Money market funds ⁽ⁱ⁾	$	2,530	$	2,530	$	-	$	-
Bank certificates of deposit ^{(ii) (iv)}		14,208		-		14,208		-
Commercial paper ⁽ⁱⁱ⁾		7,484		-		7,484		-
Corporate notes ⁽ⁱⁱ⁾		65,638		-		65,638		-
Asset-backed securities ⁽ⁱⁱ⁾		25,424		-		25,424		-
Total Assets	$	115,284	$	2,530	$	112,754	$	-
Liabilities
Cash-settled stock options	$	6,685		-		6,685		-
Total liabilities	$	6,685	$	-	$	6,685	$	-

(i)	Included in cash and cash equivalents with a maturity of three months or less from date of purchase on the condensed consolidated balance sheets.

(ii)	Included in short-term investments on the condensed consolidated balance sheets.

(iii)

As of March 31, 2020, a bank certificate of deposit investment totaling $1,500 (in thousands) is included in cash and cash equivalents on the condensed consolidated balance sheets, as the investment has a maturity of three months or less from the date of purchase on the condensed consolidated balance sheets.

(iv)

As of December 31, 2019, a bank certificate of deposit totaling $1,201 (in thousands) is included in cash and cash equivalents on the condensed consolidated balance sheets, as the investment has a maturity of three months or less from the date of purchase on the condensed consolidated balance sheets.

Money market funds and currency are highly liquid investments and are actively traded. The pricing information on these investment instruments is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

U.S. government agency bonds, U.S. government bonds, bank certificates of deposit, commercial paper, corporate notes and asset-backed securities are measured at fair value using Level 2 inputs. The Company reviews

trading activity and pricing for these investments as of each measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from third party data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value hierarchy.

The fair value of cash-settled stock options is based on the Black-Scholes option valuation model utilizing the Company’s stock price, the cash-settled options’ remaining term, expected stock price volatility, and the risk-free interest rate as of the measurement date. The changes in the fair value are reflected in compensation expense within selling, general and administrative expense on the consolidated income statement. See Note 9, Stock-Based Compensation for further details regarding these cash-settled stock options.

There were no transfers between levels within the fair value hierarchy during the periods presented.

- 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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