Fair Value Measurements

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of October 1, 2017:



	Fair Value at Reporting Date Using
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
Cash Equivalents and Short-Term Investments:
US government treasuries and agencies securities	$	60,794	$	—	$	60,794
Money market funds	39,357		—		39,357
Asset-backed securities	—		14,840		14,840
Corporate bonds	—		123,403		123,403
International government bonds	—		5,420		5,420
Corporate commercial paper	—		24,460		24,460
Bank deposits	—		13,191		13,191
Repurchase agreement	—		142		142
Total assets measured at fair value	$	100,151	$	181,456	$	281,607

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of April 2, 2017:



	Fair Value at Reporting Date Using
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
Cash Equivalents and Short-Term Investments:
US government treasuries and agencies securities	$	61,556	$	—	$	61,556
Money market funds	140,425		—		140,425
Asset-backed securities	—		13,847		13,847
Corporate bonds	—		96,376		96,376
International government bonds	—		5,410		5,410
Corporate commercial paper	—		4,898		4,898
Bank deposits	—		12,305		12,305
Repurchase agreements	—		173		173
Total assets measured at fair value	$	201,981	$	133,009	$	334,990

The deferred compensation plan assets of $16.7 million and $16.0 million as of October 1, 2017 and April 2, 2017, are carried on the Condensed Consolidated Balance Sheets at their fair value which were determined on the basis of market prices observable for similar instruments and are considered Level 2 in the fair value hierarchy. See Note 15 for additional information on the Employee Benefit Plans.

The Convertible Notes are carried on the Condensed Consolidated Balance Sheets at their original issuance value including accreted interest, net of unamortized debt discount and issuance cost. The Convertible Notes are not marked to fair value at the end of each reporting period. The fair value of Convertible Notes was $398.6 million and $376.9 million as of October 1, 2017 and April 2, 2017, which was determined on the basis of market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy. See Note 16 for additional information on the Convertible Notes.

As of October 1, 2017, the fair value of the Initial Term B Loan was $200.6 million. The Company classified the Initial Term B Loan as Level 2 fair value measurement hierarchy as the debt is not actively traded and has variable interest structure based upon market rates currently available to the Company for debt with similar terms and maturities. Refer to Note 17 for additional information on Term B loan.

U.S. government treasuries and U.S. government agency securities as of October 1, 2017 and April 2, 2017 do not include any U.S. government guaranteed bank issued paper.

The securities in Level 1 are highly liquid and actively traded in exchange markets or over-the-counter markets. Level 2 fixed income securities are priced using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data. There were no transfers into or out of Level 1 or Level 2 financial assets during the three and six months ended October 1, 2017.

In connection with the acquisition of Synkera in fiscal 2017, a liability was recognized for the Company’s estimate of the fair value of contingent consideration on the acquisition date based on probability-based attainment of certain milestones. This fair value measurement is based on significant inputs not observed in the market and thus represents a Level 3 measurement, which reflects the Company’s own assumptions concerning the milestones related to the acquired business in measuring fair value. The fair value of the liability measured using significant unobservable inputs (Level 3) was approximately $1.3 million as of both October 1, 2017 and April 2, 2017.

As a result of the acquisition of SpectraBeam in fiscal 2018, a liability was recognized for the Company’s estimate of the fair value of contingent consideration on the acquisition date based on probability-based attainment of certain milestones. The fair value measurement is based on significant inputs not observed in the market and thus represents a Level 3 measurement, which reflects the Company’s own assumptions concerning the milestones related to the asset acquisition in measuring fair value. The fair value of the liability measured using significant unobservable inputs (Level 3) was approximately $4.1 million as of October 1, 2017.

Cash equivalents are highly liquid investments with original maturities of three months or less at the time of purchase. The Company maintains its cash and cash equivalents with reputable major financial institutions. Deposits with these banks may exceed the FDIC insurance limits or similar limits in foreign jurisdictions. These deposits typically may be redeemed upon demand and, therefore, bear minimal risk. While the Company monitors daily the cash balances in its operating accounts and adjusts the balances as appropriate, these balances could be affected if one or more of the financial institutions with which the Company deposits fails or is subject to other adverse conditions in the financial markets. As of October 1, 2017, the Company has not experienced any losses in its operating accounts.

All of the Company’s available-for-sale investments are subject to a periodic impairment review. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. The Company did not record any impairment charges related to its available-for-sale investments in the three and six months ended October 1, 2017 and October 2, 2016.