Fair Value Measurements

Financial Assets Measured at Fair Value on a Recurring Basis:

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of July 1, 2018:



	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
Assets
Cash Equivalents and Short-Term Investments:
US government treasuries and agencies securities	$	60,288	$	—	$	60,288
Money market funds	26,979		—		26,979
Asset-backed securities	—		15,865		15,865
Corporate bonds	—		109,482		109,482
International government bonds	—		2,644		2,644
Corporate commercial paper	—		10,683		10,683
Bank deposits	—		41,456		41,456
Repurchase agreement	—		291		291
Total assets measured at fair value	$	87,267	$	180,421	$	267,688

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of April 1, 2018:



	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
Assets
Cash Equivalents and Short-Term Investments:
US government treasuries and agencies securities	$	60,272	$	—	$	60,272
Money market funds	48,847		—		48,847
Asset-backed securities	—		16,687		16,687
Corporate bonds	—		109,605		109,605
International government bonds	—		2,638		2,638
Corporate commercial paper	—		9,034		9,034
Bank deposits	—		45,080		45,080
Repurchase agreements	—		142		142
Total assets measured at fair value	$	109,119	$	183,186	$	292,305

U.S. government treasuries and U.S. government agency securities as of July 1, 2018 and April 1, 2018 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 months ended July 1, 2018.

Deferred Compensation Plan:

The deferred compensation plan assets of $18.1 million and $16.9 million as of July 1, 2018 and April 1, 2018, 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 14 for additional information on the Employee Benefit Plans.

Convertible Notes:

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 $426.3 million and $422.0 million as of July 1, 2018 and April 1, 2018, 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 15 for additional information on the Convertible Notes.

Bank Loan:

The Term B-1 Loan is carried on the Condensed Consolidated Balance Sheets at its outstanding principal balance including accreted interest, net of unamortized debt discount and issuance cost. The fair value of the Term B-1 Loan and the Initial Term B Loan was $199.6 million as of July 1, 2018 and April 1, 2018, respectively. The Company classified the Term B-1 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 16 for additional information.

Others:

In fiscal 2017, IDT purchased substantially all of the assets and liabilities of Synkera Technologies, Inc. (Synkera) for total purchase consideration of approximately $2.8 million, of which $1.5 million was paid in cash at closing and $1.3 million was recorded as a liability representing the fair value of contingent cash consideration of up to $1.5 million. The 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. During the three months ended July 1, 2018, the Company paid $0.7 million upon the achievement of certain milestones. The fair value of the liability measured using significant unobservable inputs (Level 3) was approximately $0.6 million and $1.3 million as of July 1, 2018 and April 1, 2018, respectively.

In fiscal 2018, the Company purchased certain assets of SpectraBeam, LLC ("SpectraBeam") for a total purchase consideration of $17.0 million, of which $12.9 million was paid in cash at closing and $4.1 million was recorded as a liability representing the contingent cash consideration. The 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 July 1, 2018 and April 1, 2018.