Cash Equivalents and Short-term and Long-term Investments

3 Months Ended

Mar. 31, 2020

Cash and Cash Equivalents [Abstract]

Cash Equivalents and Short-term and Long-term Investments

The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and cash equivalents include cash held in banks and amounts held in interest-bearing money market accounts. Cash equivalents are carried at cost, which approximates their fair value.

The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified all of its marketable securities at March 31, 2020 as “available-for-sale” pursuant to ASC 320, Investments – Debt and Equity Securities. Investments not classified as cash equivalents are presented as either short-term or long-term investments based on both their maturities as well as the time period the Company intends to hold such securities.

The Company adjusts the cost of available-for-sale debt securities for amortization of premiums and accretion of discounts to maturity. The Company includes such amortization and accretion in interest income. The cost of securities sold is based on the specific identification method. The Company includes in interest income interest and dividends on securities classified as available-for-sale.

In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments-Credit Losses. The new standard requires an estimate of expected credit losses only when the fair value of an available-for-sale debt security is below its amortized cost basis, and credit losses are limited to the amount by which the security’s amortized cost basis exceeds its fair value. Credit-related impairment is recognized as an allowance for credit losses on the balance sheet with a corresponding adjustment to earnings.

The standard additionally requires an investor to determine whether a decline in the fair value below the amortized cost basis of an available-for-sale debt security is due to credit-related factors or noncredit-related factors. Any impairment that is not credit related is recognized in other comprehensive income, net of applicable taxes. The Company adopted ASU 2016-13 effective January 1, 2020, with no material impact on its consolidated financial statements and related disclosures.

The following is a summary of available-for-sale securities with unrealized losses as of March 31, 2020 (in thousands):



	Less than 12 months
	Fair Value		Unrealized Losses
Corporate obligations	$	50,840	$	(181	)
Total available-for sale securities in an unrealized loss position	$	50,840	$	(181	)

There were no securities in an unrealized loss for greater than 12 months as of March 31, 2020. The unrealized losses on the Company's corporate obligations were caused by central bank and market interest rate decreases on securities purchased at a premium. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases. The Company did not record an allowance for credit losses as of March 31, 2020.

Prior to January 1, 2020, the Company reviewed marketable securities for other-than-temporary impairment whenever the fair value of a marketable security was less than the amortized cost and evidence indicated that a marketable security’s carrying amount was not recoverable within a reasonable period of time. Other-than-temporary impairments of investments were recognized in the consolidated statements of operations if the Company had experienced a credit loss, had the intent to sell the marketable security, or if it was more likely than not that the Company would be required to sell the marketable security before recovery of the amortized cost basis. Evidence considered in this assessment included reasons for the impairment, compliance with the Company’s investment policy, the severity and the duration of the impairment and changes in value subsequent to the end of the period.

The aggregate fair value of securities held by the Company in an unrealized loss position for less than twelve months as of December 31, 2019 was $35.8 million. The aggregate fair value of securities held by the Company in an unrealized loss position for more than twelve months as of December 31, 2019 was zero. The aggregate unrealized loss for those securities in an unrealized loss position for more than twelve months was zero. The Company determined it did not hold any investments with any other-than-temporary impairment as of December 31, 2019.

The following is a summary of cash, cash equivalents and available-for-sale securities as of March 31, 2020 and December 31, 2019 (in thousands):



	March 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Cash and cash equivalents due in 90 days or less	$	277,485	$	1	$	—		$	277,486
Available-for-sale securities:
Corporate obligations	97,260		56		(181		)	97,135
U.S. Treasury securities	32,545		147		—			32,692
Certificates of deposit	245		3		—			248
Mortgage and other asset backed securities	8,000		2		—			8,002
Total available-for-sale securities	$	138,050	$	208	$	(181	)	$	138,077
Total cash, cash equivalents and available-for-sale securities	$	415,535	$	209	$	(181	)	$	415,563



	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Cash and cash equivalents due in 90 days or less	$	237,677	$	—	$	—		$	237,677
Available-for-sale securities:
Corporate obligations	124,676		219		(15		)	124,880
U.S. Treasury securities	78,230		98		(1		)	78,327
Certificates of deposit	490		3		—			493
Mortgage and other asset backed securities	12,476		5		(12		)	12,469
Total available-for-sale securities	$	215,872	$	325	$	(28	)	$	216,169
Total cash, cash equivalents and available-for-sale securities	$	453,549	$	325	$	(28	)	$	453,846