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Fair Value Measurements

3 Months Ended

Mar. 31, 2020

NOTE 5-FAIR VALUE MEASUREMENTS

The Company follows authoritative accounting guidance, which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

Level 1:

Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2:

Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3:

Unobservable inputs that reflect the reporting entity’s own assumptions.

The carrying amounts of the Company’s other current assets, accounts payable and accrued liabilities are generally considered to be representative of their fair value because of the short-term nature of these instruments. No transfers between levels have occurred during the periods presented.

Assets and liabilities measured at fair value on a recurring basis based on Level 1 and Level 2 fair value measurement criteria as of March 31, 2020 are as follows (in thousands):

			Fair Value Measurements Using
			Quoted Prices		Significant
			in Active		Other
	Balance as of		Markets for		Observable
	March 31,		Identical Assets		Inputs
	2020		(Level 1)		(Level 2)
Marketable securities:
US government	$	68,414	$	68,414	$	—
Corporate bonds		55,671		—		55,671
Commercial paper⁽¹⁾		8,486		—		8,486
Money market funds⁽²⁾		13,904		13,904		—
Certificates of deposit		1,788		—		1,788
	$	148,263	$	82,318	$	65,945

(1)

$1.6 million is included within cash and cash equivalents on the condensed consolidated balance sheets.

(2)

Included within cash and cash equivalents on the condensed consolidated balance sheets.

Assets and liabilities measured at fair value on a recurring basis based on Level 1 and Level 2 fair value measurement criteria as of December 31, 2019 are as follows (in thousands):

			Fair Value Measurements Using
			Quoted Prices		Significant
			in Active		Other
	Balance as of		Markets for		Observable
	December 31,		Identical Assets		Inputs
	2019		(Level 1)		(Level 2)
Marketable securities:
US government	$	66,094	$	66,094	$	—
Corporate bonds		68,084		—		68,084
Commercial paper		7,658		—		7,658
Money market funds⁽¹⁾		16,998		16,998		—
Certificates of deposit		4,108		—		4,108
	$	162,942	$	83,092	$	79,850

⁽¹⁾	Included within cash and cash equivalents on the condensed consolidated balance sheets.

The Company’s marketable securities are valued based on publicly available quoted market prices for identical securities as of March 31, 2020 and December 31, 2019.

- 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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