Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2016

2. Fair Value of Financial Instruments

The estimated fair values of the Company’s financial instruments, which include cash equivalents, accounts receivable, accounts payable and other accrued liabilities approximate their carrying values due to the short-term nature of these instruments. The Company records marketable securities at amortized cost, which approximates fair value.

The Company’s fair value hierarchy for its cash equivalents and marketable securities as of September 30, 2016 and December 31, 2015, respectively, was as follows:

September 30, 2016	Level 1		Level 2		Level 3		Total
Money market securities	$	6,167	$	—	$	—	$	6,167
Commercial paper		—		25,671		—		25,671
Federal agency notes		—		15,095		—		15,095
Corporate notes		—		10,933		—		10,933
U.S. treasuries		—		4,521		—		4,521
Pre-refunded municipal bonds (1)		—		2,738		—		2,738
Total	$	6,167	$	58,958	$	—	$	65,125

December 31, 2015	Level 1		Level 2		Level 3		Total
Money market securities	$	2,001	$	—	$	—	$	2,001
Federal agency notes		—		11,722		—		11,722
U.S. treasuries		—		7,059		—		7,059
Corporate notes		—		6,884		—		6,884
Pre-refunded municipal bonds (1)		—		4,747		—		4,747
Commercial paper		—		3,794		—		3,794
Certificates of deposits		—		2,220		—		2,220
Total	$	2,001	$	36,426	$	—	$	38,427

(1)	Pre-refunded municipal bonds are collateralized by U.S. treasuries.

The fair value maturities of the Company’s cash equivalents and marketable securities as of September 30, 2016 are as follows:

Maturities by Period

Total

Less than

1 year

1-5 years

5 - 10 years

More than

10 years

Cash equivalents and marketable securities

65,125

53,283

11,842

—

The Company considers all highly liquid marketable securities with original maturities of 90 days or less at the date of acquisition to be cash equivalents. Cash equivalents include money market funds and commercial paper totaling $23,464 and $2,401 at September 30, 2016 and December 31, 2015, respectively. Cash equivalents are carried at cost or amortized cost, which approximates fair value.

- 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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