Fair Value Measurements

3 Months Ended

Apr. 01, 2017

The inputs used in the valuation methodologies in measuring fair value are defined in the fair value hierarchy as follows:

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 upon the lowest level of input that is significant to the fair value measurement. The carrying value of the Company’s accounts receivable, accounts payable and accrued liabilities approximates their fair value due to the short-term nature of these instruments.

Cash Equivalents and Short-Term Investments

The components of the Company’s cash equivalents and short-term investments are as follows (in thousands):



			Fair Value Measured Using
	April 1, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Cash equivalents:
Money market funds	$	95,496	$	95,496	$	—
Commercial papers	10,492		—		10,492
Total cash equivalents	$	105,988	$	95,496	$	10,492

Short-term investments:
Corporate debt securities	$	15,661	$	—	$	15,661
Commercial papers	14,742		—		14,742
U.S. agency debt securities	18,618		—		18,618
U.S. government securities	56,483		—		56,483
Total short-term investments	$	105,504	$	—	$	105,504



			Fair Value Measured Using
	December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Cash equivalents:
Money market funds	$	99,992	$	99,992	$	—
Commercial papers	1,999		—		1,999
Total cash equivalents	$	101,991	$	99,992	$	1,999

Short-term investments:
Corporate debt securities	$	10,110	$	—	$	10,110
Commercial papers	12,956		—		12,956
U.S. agency debt securities	21,697		—		21,697
U.S. government securities	64,475		—		64,475
Total short-term investments	$	109,238	$	—	$	109,238

The Company considers all highly liquid investments with maturity of three months or less at the time of purchase to be cash equivalents. The Company holds money market funds that invest primarily in high-quality short-term money-market instruments, and these funds are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Company presents available-for-sale investments as current assets as they are available for the Company's current operations.

Money market funds have been classified as Level 1 because these securities are valued based upon quoted prices in active markets. The Company’s Level 2 assets are priced using quoted market prices for similar instruments or non-binding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency which are obtained from quoted market prices, independent pricing vendors or other sources, to determine the ultimate fair value of these assets. The Company has no assets classified as Level 3. The Company’s policy is to recognize transfers among Level 1, Level 2 and Level 3 classifications as of the actual date of the events or change in circumstances that caused the transfers. The Company did not have any transfers between Level 1 and Level 2 in the three months ended April 1, 2017.

As of April 1, 2017 and December 31, 2016, the Company had no liabilities measured at fair value.

Financial assets measured at amortized cost, gross unrealized gains, gross unrealized losses and fair value by significant investment categories are summarized as follows (in thousands):



	As of April 1, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	$	95,496	$	—	$	—		$	95,496
Commercial papers	10,492		—		—			10,492
Total cash equivalents	$	105,988	$	—	$	—		$	105,988
Short-term investments:
Corporate debt securities	$	+15,672	$	2	$	(13	)	$	15,661
Commercial papers	14,742		—		—			14,742
U.S. agency debt securities	18,623		1		(6		)	18,618
U.S. government securities	56,516		1		(34		)	56,483
Total short-term investments	$	105,553	$	4	$	(53	)	$	105,504



	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	$	99,992	$	—	$	—		$	99,992
Commercial papers	1,999		—		—			1,999
Total cash equivalents	$	101,991	$	—	$	—		$	101,991
Short-term investments:
Corporate debt securities	$	10,119	$	—	$	(9	)	$	10,110
Commercial papers	12,956		—		—			12,956
U.S. agency debt securities	21,698		1		(2		)	21,697
U.S. government securities	64,482		8		(15		)	64,475
Total short-term investments	$	109,255	$	9	$	(26	)	$	109,238

The Company’s realized gain was immaterial in the three months ended April 1, 2017. There were no securities in a material continuous loss position for 12 months or longer as of April 1, 2017 and December 31, 2016.

The contractual maturity date of the cash equivalents and short-term investments at estimated fair value was as follows (in thousands):



	As of
	April 1, 2017		December 31, 2016
Due within one year	$	195,003	$	205,250
Due between one and five years	16,489		5,979
Total	$	211,492	$	211,229

- 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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