Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2016

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

•Level 1—Quoted prices in active markets for identical assets or liabilities.

•Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The Company classifies its cash equivalents and investments within Level 1 and Level 2, as it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs. The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy (in thousands):



	As of June 30, 2016
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:
Money market funds	$	2,762	$	—	$	—	$	2,762
Short-term investments:
U.S. Agency securities	—		750		—		750
Corporate bonds	—		3,747		—		3,747
Long-term investments:
Corporate bonds	—		263		—		263
Certificates of deposit	245		—		—		245
Total	$	3,007	$	4,760	$	—	$	7,767



	As of December 31, 2015
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:
Money market funds	$	1,342	$	—	$	—	$	1,342
Short-term investments:
U.S. Agency securities	—		1,549		—		1,549
U.S. Treasury	—		500		—		500
Corporate bonds	—		7,763		—		7,763
Commercial paper	—		500		—		500
Certificates of deposit	2,555		—		—		2,555
Long-term investments:
U.S. Agency securities	—		497		—		497
Corporate bonds	—		874		—		874
Certificates of deposit	2,119		—		—		2,119
Total	$	6,016	$	11,683	$	—	$	17,699

During the three and six months ended June 30, 2016 and 2015, the Company did not have any transfers of financial assets measured at fair value on a recurring basis to or from Level 1, Level 2 or Level 3. The Company did not hold any Level 3 assets or liabilities as of June 30, 2016, and December 31, 2015.

The carrying amounts of the Company’s cash equivalents, accounts receivable and accounts payable approximate fair value due to their relatively short maturities.

- 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.

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