FAIR VALUE

The Company follows the authoritative guidance fair value measurement and the fair value option for financial assets and financial liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:



Level 1		Quoted prices in active markets for identical assets.
Level 2		Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

When applying fair value principles in the valuation of assets, we are required to maximize the use of quoted market prices and minimize the use of unobservable inputs. We calculate the fair value of our Level 1 and Level 2 instruments based on the exchange traded price of similar or identical instruments, where available, or based on other observable inputs. There were no significant transfers into or out of Level 1 or Level 2 that occurred between December 31, 2014 and June 30, 2015.

The following is a list of the Company’s assets required to be measured at fair value on a recurring basis and where they were classified within the hierarchy as of June 30, 2015 (in thousands):



	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable Securities
Money market funds (1)	$	2,296	$	2,296	$	—	$	—
Corporate bonds and notes (2)	310,677		—		310,677		—
Municipal bonds and notes (2)	73,507		—		73,507		—
Treasury and agency notes and bills (2)	19,206		—		19,206		—
Commercial paper (3)	9,391		—		9,391		—
Total Assets	$	415,077	$	2,296	$	412,781	$	—

The following footnotes indicate where the noted items were recorded in the Condensed Consolidated Balance Sheet at June 30, 2015:


(1)	Reported as cash and cash equivalents.


(2)	Reported as short-term investments.


(3)	Reported as either cash and cash equivalents or short-term investments.

The following is a list of the Company’s assets required to be measured at fair value on a recurring basis and where they were classified within the hierarchy as of December 31, 2014 (in thousands):



	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Marketable Securities
Money market funds (1)	$	20,883	$	20,883	$	—	$	—
Corporate bonds and notes (2)	281,754		—		281,754		—
Municipal bonds and notes (2)	37,215		—		37,215		—
Treasury and agency notes and bills (2)	41,268		—		41,268		—
Commercial paper (3)	33,775		—		33,775		—
Total Assets	$	414,895	$	20,883	$	394,012	$	—

The following footnotes indicate where the noted items were recorded in the Condensed Consolidated Balance Sheet at December 31, 2014:


(1)	Reported as cash and cash equivalents.


(2)	Reported as short-term investments.


(3)	Reported as either cash and cash equivalents or short-term investments.

Non-Recurring Fair Value Measurements

The following table represents the activity in level 3 assets (in thousands):



	Patent Assets
Balance at December 31, 2014	$	4,280	(1	)
Asset additions	—
Assets sold	—
Assets received	—
Balance at June 30, 2015	$	4,280

(1) This amount represents the value of the patents that were received in 2014 as part of settlement agreements reached with parties to resolve prior disputes. These assets were valued using a methodology based on an arms-length purchase price of bulk patent assets, with adjustments based on limited pick rights, the total available market, and remaining average patent life. The value above is gross and the accumulated amortization to date is $0.6 million.