Fair Value Measurements

3 Months Ended

Mar. 31, 2019

4. Fair Value Measurements

The following table summarizes the valuation of the Company’s assets and liabilities measured at fair value as categorized based on the hierarchy described in Note 2.

	Level 1		Level 2			Level 3		Total
	(In thousands)
March 31, 2019
Money market funds	$	155,570	$	—		$	—	$	155,570
Securities available-for-sale
Corporate debt		—		133,051			—		133,051
Trading securities
Corporate debt		—		56,465			—		56,465
U.S. Treasuries		—		27,296			—		27,296
Mutual funds held in rabbi trust		—		5,646			—		5,646
Foreign currency forward position		—		1,096			—		1,096
Total	$	155,570	$	223,554		$	—	$	379,124

December 31, 2018
Money market funds	$	112,529	$	—		$	—	$	112,529
Securities available-for-sale
Corporate debt		—		146,966			—		146,966
Trading securities
Corporate debt		—		71,861			—		71,861
U.S. Treasuries		—		17,178			—		17,178
Mutual funds held in rabbi trust		—		4,100			—		4,100
Foreign currency forward position		—		(1,021	)		—		(1,021	)
Total	$	112,529	$	239,084		$	—	$	351,613

Securities classified within Level 2 were valued using a market approach utilizing prices and other relevant information generated by market transactions involving comparable assets. The foreign currency forward contracts are classified within Level 2 as the valuation inputs are based on quoted market prices. The mutual funds held in a rabbi trust represent investments associated with the deferred cash incentive plan (see Note 14). There were no financial assets classified within Level 3 during the three months ended March 31, 2019 and 2018.

The Company enters into foreign currency forward contracts to hedge the net investment in the Company’s U.K. subsidiaries. The Company designates each foreign currency forward contract as a hedge and assesses the risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to be assessed prospectively and retrospectively. These hedges are for a one-month period and are used to limit exposure to foreign currency exchange rate fluctuations. The fair value of the asset is included in prepaid expenses and other assets and the fair value of the liability is included in accounts payable, accrued expenses and other liabilities in the Consolidated Statements of Financial Condition. Gains or losses on foreign currency forward contracts designated as hedges are included in accumulated other comprehensive loss in the Consolidated Statements of Financial Condition. A summary of the Company’s foreign currency forward position is as follows:

	As of
	March 31, 2019		December 31, 2018
	(In thousands)
Notional value	$	123,263	$	106,306
Fair value of notional		122,167		107,327
Fair value of the asset (liability)	$	1,096	$	(1,021	)

The following is a summary of the Company’s investments:

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
	(In thousands)
As of March 31, 2019
Securities available-for-sale
Corporate debt	$	133,039	$	238	$	(226	)	$	133,051

Trading securities
Corporate debt		56,626		2		(163	)		56,465
U.S. Treasuries		26,949		347		—			27,296
Mutual funds held in rabbi trust		5,281		365		—			5,646
Total trading securities		88,856		714		(163	)		89,407
Total investments	$	221,895	$	952	$	(389	)	$	222,458

December 31, 2018
Securities available-for-sale
Corporate debt	$	147,556	$	27	$	(617	)	$	146,966

Trading securities
Corporate debt		72,274		8		(421	)		71,861
U.S. Treasuries		16,953		225		—			17,178
Mutual funds held in rabbi trust		4,347		—		(247	)		4,100
Total trading securities		93,574		233		(668	)		93,139
Total investments	$	241,130	$	260	$	(1,285	)	$	240,105

The following table summarizes the fair value of the investments based upon the contractual maturities:

	As of
	March 31, 2019		December 31, 2018
	(In thousands)
Less than one year	$	129,435	$	134,255
Due in 1 - 5 years		93,023		105,850
Total	$	222,458	$	240,105

Proceeds from the sales and maturities of investments during the three months ended March 31, 2019 and 2018 were $100.1 million and $67.4 million, respectively.

The following table provides fair values and unrealized losses on investments and by the aging of the securities’ continuous unrealized loss position as of March 31, 2019 and December 31, 2018:

	Less than Twelve Months					Twelve Months or More					Total
	Estimated fair value		Gross unrealized losses			Estimated fair value		Gross unrealized losses			Estimated fair value		Gross unrealized losses
	(In thousands)
As of March 31, 2019
Corporate debt	$	27,031	$	(18	)	$	82,528	$	(371	)	$	109,559	$	(389	)

As of December 31, 2018
Corporate debt	$	80,282	$	(256	)	$	87,028	$	(782	)	$	167,310	$	(1,038	)

- 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.

+ References + Details