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Note 10 - Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Fair Value Disclosures [Text Block]

10. FAIR VALUE MEASUREMENTS

The following tables summarize the fair value measurement of the financial assets (in thousands):

		September 30, 2020
		Total				Level 1				Level 2				Level 3
Money market funds		$	41,195			$	41,195			$	-			$	-
Corporate debt securities			349,342				-				349,342				-
Commercial paper			7,985				-				7,985				-
U.S. treasuries and government agency bonds			14,749				-				14,749				-
Auction-rate securities backed by student-loan notes			2,916				-				-				2,916
Mutual funds and money market funds under deferred compensation plan			23,562				23,562				-				-
Total		$	439,749			$	64,757			$	372,076			$	2,916

		December 31, 2019
		Total				Level 1				Level 2				Level 3
Money market funds		$	28,100			$	28,100			$	-			$	-
Corporate debt securities			260,950				-				260,950				-
Commercial paper			1,994				-				1,994				-
U.S. treasuries and government agency bonds			19,493				-				19,493				-
Auction-rate securities backed by student-loan notes			3,138				-				-				3,138
Mutual funds and money market funds under deferred compensation plan			21,975				21,975				-				-
Total		$	335,650			$	50,075			$	282,437			$	3,138

●	Level 1—includes instruments with quoted prices in active markets for identical assets.
●	Level 2—includes instruments for which the valuations are based upon quoted market prices in active markets involving similar assets or inputs other than quoted prices that are observable for the assets. The market inputs used to value these instruments generally consist of market yields, recently executed transactions, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Pricing sources may include industry standard data providers, security master files from large financial institutions, and other third-party sources used to determine a daily market value.
●	Level 3—includes instruments for which the valuations are based on inputs that are unobservable and significant to the overall fair value measurement.

The Company’s level 3 assets consist of government-backed student loan auction-rate securities. The following table provides a rollforward of the fair value of the auction-rate securities (in thousands):

Balance at January 1, 2020		$	3,138
Change in unrealized gain included in other comprehensive income			28
Sale and settlement at par			(250	)
Balance at September 30, 2020		$	2,916

The Company determined the fair value of the auction-rate securities using a discounted cash flow model with the following assumptions:

		September 30, 2020 (1)					December 31, 2019
Time-to-liquidity (in years)		2	-	3	(2.5)		2	-	3
Discount rate		3.3%	-	7.6%	(5.4%)		4.0%	-	8.3%

(1)

The parenthetical value represents the weighted average, which was calculated based on the relative fair value of the securities.

The fair value measurement involves the analysis of valuation techniques and evaluation of unobservable inputs commonly used by market participants to price similar instruments. Outputs from the valuation process are assessed against various market sources when they are available, including marketplace quotes, recent trades of similar illiquid securities and independent pricing services. The valuation of the auction-rate securities is subject to significant management judgment regarding projected future cash flows, which will depend on many factors, including the quality of the underlying collateral, estimated time to liquidity including potential to be called or restructured, underlying final maturity, and market conditions, among others. Changes in any of the unobservable inputs used in the fair value measurement of auction-rate securities in isolation would result in a lower or higher fair value measurement. For example, an increase in the time-to-liquidity assumption or estimated discount rate would result in a lower fair value measurement.

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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