Financial Instruments

3 Months Ended

May 03, 2020

Investments, Debt and Equity Securities [Abstract]

Fair Value Measurements

We measure our cash equivalents, marketable securities, and restricted cash at fair value on a recurring basis. We define fair value as the exchange price that would be received from sale of 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. We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

•Level 1 - Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

•Level 2 - Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments; and

•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. These inputs are based on our own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.

We classify our cash equivalents, marketable securities and restricted cash within Level 1 or Level 2 because they are valued using either quoted market prices or inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded. Our fixed income available-for-sale securities consist of high quality, investment grade securities from diverse issuers. The valuation techniques used to measure the fair value of our marketable securities were derived from non-binding market consensus prices that are corroborated by observable market data or quoted market prices for similar instruments.

In addition to our cash equivalents, marketable securities and restricted cash, we measure the fair value of our convertible senior notes (the Notes) on a quarterly basis for disclosure purposes. We consider the fair value of the Notes at the end of the first quarter of fiscal 2021 to be a Level 2 measurement due to its limited trading activity. Refer to Note 6 for the carrying amount and estimated fair value of our Notes at the end of the first quarter of fiscal 2021.

Cash Equivalents, Marketable Securities and Restricted Cash

The following tables summarize our cash equivalents, marketable securities and restricted cash by significant investment categories at the end of fiscal 2020 and the first quarter of fiscal 2021 (in thousands):


	At the End of Fiscal 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Marketable Securities		Restricted Cash
Level 1
Money market accounts	$	—	$	—	$	—	$	26,355	$	11,068	$	—	$	15,287
Level 2

U.S. government treasury notes	323,751		2,146		—		325,897		—		325,897		—
U.S. government agencies	53,930		317		(3)		54,244		—		54,244		—
Corporate debt securities	452,318		3,954		(1)		456,271		3,001		453,270		—
Foreign government bonds	14,994		147		—		15,141		—		15,141		—
Asset-backed securities	87,267		699		—		87,966		—		87,966		—
Total	$	932,260	$	7,263	$	(4)	$	965,874	$	14,069	$	936,518	$	15,287


	At the End of the First Quarter of Fiscal 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash Equivalents		Marketable Securities		Restricted Cash
Level 1
Money market accounts	$	—	$	—	$	—	$	50,272	$	34,985	$	—	$	15,287
Level 2
U.S. government treasury notes	340,119		5,952		(1)		346,070		—		346,070		—
U.S. government agencies	41,675		618		(11)		42,282		—		42,282		—
Corporate debt securities	427,757		4,706		(412)		432,051		—		432,051		—
Foreign government bonds	21,776		413		—		22,189		—		22,189		—
Asset-backed securities	83,250		803		(85)		83,968		—		83,968		—
Total	$	914,577	$	12,492	$	(509)	$	976,832	$	34,985	$	926,560	$	15,287

The amortized cost and estimated fair value of our marketable securities are shown below by contractual maturity (in thousands):


	At the End of the First Quarter of Fiscal 2021
	Amortized Cost		Fair Value
Due within one year	$	396,243	$	398,933
Due in one to five years	516,314		525,606
Due in five to ten years	2,020		2,021
Total	$	914,577	$	926,560

Based on our evaluation of available evidence, we concluded that the gross unrealized losses on our investments at the end of fiscal 2020 and the first quarter of fiscal 2021 were temporary in nature. We do not intend to sell these investments and it is not more likely than not that we will be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. The following table presents gross unrealized losses and fair values for those investments that were in a continuous unrealized loss position at the end of fiscal 2020 and the first quarter of fiscal 2021, aggregated by investment category (in thousands):


	At the End of Fiscal 2020
	Less than 12 months						Greater than 12 months						Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. government treasury notes	$	—	$	—	$	1,000	$	—	$	1,000	$	—
U.S. government agencies	4,998		(3)		—		—		4,998		(3)
Corporate debt securities	9,691		(1)		—		—		9,691		(1)


Total	$	14,689	$	(4)	$	1,000	$	—	$	15,689	$	(4)


	At the End of the First Quarter of Fiscal 2021
	Less than 12 months						Greater than 12 months						Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. government treasury notes	$	14,975	$	(1)	$	—	$	—	$	14,975	$	(1)
U.S. government agencies	6,984		(11)		—		—		6,984		(11)
Corporate debt securities	57,571		(412)		—		—		57,571		(412)

Asset-backed securities	14,544		(85)		—		—		14,544		(85)
Total	$	94,074	$	(509)	$	—	$	—	$	94,074	$	(509)

Realized gains or losses on sale of marketable securities were not significant for all periods presented.