Quarterly report pursuant to Section 13 or 15(d)

Financial Instruments

v3.10.0.1
Financial Instruments
9 Months Ended
Sep. 30, 2018
Financial Instruments Disclosure [Abstract]  
Financial Instruments

4.Financial Instruments

Our financial assets are measured at fair value on a recurring basis using the following hierarchy to prioritize valuation inputs, in accordance with applicable GAAP:

 

Level 1:

Quoted prices in active markets for identical assets or liabilities that we have the ability to access

 

Level 2:

Observable market-based inputs or unobservable inputs that are corroborated by market data such as quoted prices, interest rates and yield curves

 

Level 3:

Inputs that are unobservable data points that are not corroborated by market data

We review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. We recognize transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs. There have been no transfers between Level 1, Level 2 and Level 3 in any periods presented.

Financial assets and liabilities are considered Level 2 when their fair values are determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities. In addition, Level 2 financial instruments are valued using comparisons to like-kind financial instruments and models that use readily observable market data as their basis. U.S. Treasury, government agency and corporate debt obligations, commercial paper and asset-backed securities are valued primarily using market prices of comparable securities, bid/ask quotes, interest rate yields and prepayment spreads and are included in Level 2.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. We have no Level 3 financial assets or liabilities.

The following tables summarize the estimated fair value and related valuation input hierarchy of our available-for-sale securities as of each period end:

 

 

 

 

 

Total

 

 

Total

 

 

Total

 

 

Total

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

As of September 30, 2018:

 

Input Level

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

Money market funds

 

Level 1

 

$

40,424

 

 

$

 

 

$

 

 

$

40,424

 

U.S. Treasury obligations

 

Level 2

 

 

138,332

 

 

 

 

 

 

(180

)

 

 

138,152

 

Government agency obligations

 

Level 2

 

 

18,990

 

 

 

 

 

 

(39

)

 

 

18,951

 

Corporate debt obligations

 

Level 2

 

 

137,678

 

 

 

5

 

 

 

(206

)

 

 

137,477

 

Commercial paper

 

Level 2

 

 

15,488

 

 

 

 

 

 

 

 

 

15,488

 

Asset-backed securities

 

Level 2

 

 

12,809

 

 

 

1

 

 

 

(31

)

 

 

12,779

 

Total available-for-sale securities

 

 

 

 

363,721

 

 

 

6

 

 

 

(456

)

 

 

363,271

 

Less amounts classified as cash equivalents

 

 

 

 

(64,761

)

 

 

 

 

 

5

 

 

 

(64,756

)

Amounts classified as short-term investments

 

 

 

$

298,960

 

 

$

6

 

 

$

(451

)

 

$

298,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

Total

 

 

Total

 

 

Total

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

As of December 31, 2017:

 

Input Level

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

Money market funds

 

Level 1

 

$

68,730

 

 

$

 

 

$

 

 

$

68,730

 

U.S. Treasury obligations

 

Level 2

 

 

39,068

 

 

 

 

 

 

(28

)

 

 

39,040

 

Government agency obligations

 

Level 2

 

 

4,749

 

 

 

 

 

 

(21

)

 

 

4,728

 

Corporate debt obligations

 

Level 2

 

 

46,532

 

 

 

2

 

 

 

(98

)

 

 

46,436

 

Commercial paper

 

Level 2

 

 

1,592

 

 

 

 

 

 

 

 

 

1,592

 

Asset-backed securities

 

Level 2

 

 

4,122

 

 

 

 

 

 

(6

)

 

 

4,116

 

Total available-for-sale securities

 

 

 

 

164,793

 

 

 

2

 

 

 

(153

)

 

 

164,642

 

Less amounts classified as cash equivalents

 

 

 

 

(77,769

)

 

 

 

 

 

 

 

 

(77,769

)

Amounts classified as short-term investments

 

 

 

$

87,024

 

 

$

2

 

 

$

(153

)

 

$

86,873

 

 

The amortized cost and fair value of our available-for-sale securities by contractual maturity were as follows:

 

 

As of September 30, 2018

 

 

As of December 31, 2017

 

 

Amortized

 

 

Estimated

 

 

Amortized

 

 

Estimated

 

 

Cost

 

 

Fair Value

 

 

Cost

 

 

Fair Value

 

 

(in thousands)

 

 

(in thousands)

 

Maturing within one year

$

324,519

 

 

$

324,204

 

 

$

151,938

 

 

$

151,852

 

Maturing in one to five years

 

39,202

 

 

 

39,067

 

 

 

12,855

 

 

 

12,790

 

Total available-for-sale securities

$

363,721

 

 

$

363,271

 

 

$

164,793

 

 

$

164,642

 

 

As of September 30, 2018, certain available-for-sale securities had been in a continuous unrealized loss position, each for less than twelve months. As of this date, no significant facts or circumstances were present to indicate a deterioration in the creditworthiness of the respective issuers, and the Company has no requirement or intention to sell these securities before maturity or recovery of their amortized cost basis. During the three and nine months ended September 30, 2018 and 2017, we did not recognize any other-than-temporary impairment losses.

In addition, restricted cash collateralized by money market funds is a financial asset measured at fair value and is a Level 1 financial instrument under the fair value hierarchy. As of September 30, 2018 and December 31, 2017, restricted cash totaled $1.4 million and $1.4 million, respectively.

The following table provides a reconciliation of cash, cash equivalents and restricted cash within the condensed consolidated balance sheets that sum to the total of the same such amounts in the condensed consolidated statement of cash flows:

 

 

 

September 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

 

(in thousands)

 

Cash and cash equivalents

 

 

66,028

 

 

 

79,223

 

Restricted cash - short term

 

 

194

 

 

 

194

 

Restricted cash - long term

 

 

1,200

 

 

 

1,200

 

Total cash, cash equivalents and restricted cash

 

$

67,422

 

 

$

80,617