FAIR VALUE MEASUREMENT AND MARKETABLE SECURITIES

12 Months Ended

Dec. 31, 2016

FAIR VALUE MEASUREMENT AND MARKETABLE SECURITIES

NOTE 4 FAIR VALUE MEASUREMENT AND MARKETABLE SECURITIES

Fair value measurement

The Company measures its investments in money market funds classified as cash equivalents and marketable securities at fair value on a recurring basis.

U.S. Government debt securities and money market funds are classified as Level 1. The Company’s corporate debt marketable securities are traded in markets that are not considered to be active, but are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Accordingly, these assets categorized as Level 2.

The Company’s financial assets measured at fair value on a recurring basis consisted of the following types of instruments as of December 31, 2016 and 2015:

	As of December 31, 2016
	U.S. dollars in thousands
	Level 1		Level 2		Total
Cash equivalent – Money market funds		6,123		—		6,123
U.S. government treasuries		22,893		—		22,893
Corporate debt securities		—		329,337		329,337
		29,016		329,337		358,353

	As of December 31, 2015
	U.S. dollars in thousands
	Level 1		Level 2		Total
Cash equivalent – Money market funds		1,986		—		1,986
U.S. government treasuries		10,874		—		10,874
Corporate debt securities		—		309,502		309,502
		12,860		309,502		322,362

Short term deposits included in cash and cash equivalents were $188,051 thousand and $27,601 thousand, as of December 31, 2016 and 2015, respectively.

The carrying amount of cash and cash equivalents, restricted short-term bank deposits, trade accounts receivable and accounts payable, approximate fair value because of their generally short maturities.

Marketable securities

As of December 31, 2016 and 2015, the Company held government and corporate debt securities. The adjusted cost, aggregate fair value and gross unrealized gains and losses by major security types were as follows:

	As of December 31, 2016
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate fair value
	U.S. dollars in thousands
U.S. government treasuries		22,939		12		58		22,893
Corporate debt securities		330,015		140		818		329,337
		352,954		152		876		352,230

	As of December 31, 2015
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate fair value
	U.S. dollars in thousands
U.S. government treasuries		10,898		1		25		10,874
Corporate debt securities		311,253		38		1,789		309,502
		322,151		39		1,814		320,376

The aggregated fair value of investments with unrealized losses as of December 31, 2016 and 2015 was $256,844 thousand and $307,990 thousand, respectively. The gross unrealized losses of investments that were in an unrealized loss position for longer than 12 months as of December 31, 2016 and 2015 was $26 thousand and $69 thousand, respectively.

During the years ended December 31, 2016 and 2015 no other-than-temporary impairments were recognized by the Company. During the year ended December 31, 2014 the Company recognized other-than-temporary impairment of $152 thousand, related to debt securities.

Contractual maturities

Contractual maturities of investments in available-for-sale debt securities were as follows:

	Adjusted cost as of December 31, 2016
Due in 1 year		121,608
Due in 2 years		154,240
Due in 3 years		57,316
Due in 4 years		19,790
		352,954

- 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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