Fair Value Measurements

3 Months Ended

Mar. 31, 2018

The carrying values of the Company’s accounts receivable, accounts payable, and accrued liabilities approximated their fair values due to the short period of time to maturity or repayment.

The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):



	March 31, 2018
	Level 1		Level 2		Level 3		Total

Assets:
Money market funds	$	169,430	$	—	$	—	$	169,430
U.S. government agencies	—		74,922		—		74,922
Corporate debt securities	—		296,098		—		296,098
Derivative assets	—		833		—		833
Total	$	169,430	$	371,853	$	—	$	541,283
Liabilities:
Derivative liabilities	$	—	$	430	$	—	$	430
Stock warrant liability	—		—		164		164
Total	$	—	$	430	$	164	$	594



	December 31, 2017
	Level 1		Level 2		Level 3		Total

Assets:
Money market funds	$	193,066	$	—	$	—	$	193,066
U.S. government agencies	—		79,624		—		79,624
Corporate debt securities	—		291,582		—		291,582
Total	$	193,066	$	371,206	$	—	$	564,272
Liabilities:
Derivative liabilities	$	—	$	2,138	$	—	$	2,138
Stock warrant liability	—		—		208		208
Total	$	—	$	2,138	$	208	$	2,346

The fair value of the Company’s Level 1 financial instruments is based on quoted market prices in active markets for identical instruments. The fair value of the Company’s Level 2 financial instruments is based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data.

In addition, Level 2 assets and liabilities include derivative financial instruments associated with hedging activity, which are further discussed in Note 3. Derivative financial instruments are initially measured at fair value on the contract date and are subsequently remeasured to fair value at each reporting date using inputs such as spot rates, forward rates, and discount rates. There is not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets.

There were no Level 3 assets as of March 31, 2018 and December 31, 2017. There were Level 3 liabilities as of March 31, 2018 and December 31, 2017. There have been no transfers between fair value measurement levels during the three months ended March 31, 2018 and April 1, 2017.

In 2017, the Company acquired an equity ownership interest in a privately-held company in exchange for $6.0 million in cash. This investment is accounted for using the cost method of accounting since the Company is unable to exercise any significant influence. Upon adoption of ASU 2016-01 on January 1, 2018, the Company elected to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. This investment has been recorded at historical cost, classified within “Other assets” on the Company’s consolidated balance sheet as of March 31, 2018 and December 31, 2017.

- 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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