Fair Value Of Financial Instruments

6 Months Ended

Jun. 30, 2019

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value represents the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs are based on market data obtained from independent sources. The fair value hierarchy is based on the following three levels of inputs, of which the first two are considered observable and the last one is considered unobservable:


•	Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.


•	Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.


•	Level 3 – Unobservable inputs.

Assets and liabilities measured at fair value on a recurring basis included the following as of June 30, 2019 and December 31, 2018 (in thousands):



	June 30, 2019								December 31, 2018
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Cash equivalents	$	312,857	$	312,857	$	—	$	—	$	129,172	$	129,172	$	—	$	—
Corporate bonds	7,998		—		7,998		—		58,033		—		58,033		—
U.S. treasury securities	—		—		—		—		138,726		—		138,726		—
Commercial paper	—		—		—		—		7,973		—		7,973		—
Total	$	320,855	$	312,857	$	7,998	$	—	$	333,904	$	129,172	$	204,732	$	—

As of June 30, 2019 and December 31, 2018, cash equivalents of $312.9 million and $129.2 million, respectively, consisted of money market funds with original maturity dates of three months or less.

As of June 30, 2019 and December 31, 2018, corporate bonds, U.S. treasury securities, and commercial paper were classified within Level 2 of the fair value hierarchy. These instruments were valued using information obtained from pricing services, which obtained quoted market prices from a variety of industry data providers.

Convertible Notes

The Company’s 2021 Notes described in Note 8 - Debt are shown in the accompanying condensed consolidated balance sheets at their original issuance value, net of unamortized discount and debt issuance costs, and are not remeasured to fair value each period. The approximate fair value of the Company’s 2021 Notes as of June 30, 2019 was $454.6 million. The fair value of the 2021 Notes was estimated on the basis of quoted market prices of similar instruments, which, due to the lack of trading activity, are considered Level 2 in the fair value hierarchy.

- 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