Investments and Fair Value Measurements | 3 Months Ended |
Mar. 31, 2015 |
Investments and Fair Value Measurements [Abstract] | |
Investments and Fair Value Measurements | Note 2. Investments and Fair Value Measurements |
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Our cash and cash equivalents consist of cash and instruments with original maturities of less than 90 days. Our investments consist of instruments with original maturities of more than 90 days. As of March 31, 2015 and December 31, 2014, our cash, cash equivalents and investments are classified as follows (in thousands): |
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| | March31,2015 | | | December31,2014 | |
| | Amortized | | | Gross | | | Gross | | | Fair | | | Amortized | | | Gross | | | Gross | | | Fair | |
Cost | Unrealized | Unrealized | Value | Cost | Unrealized | Unrealized | Value |
| Gain | (Loss) | | | Gain | (Loss) | |
Classified as: | | | | | | | | | | | | | | | | | | | | | | | | |
Cash | | $ | 25,662 | | | $ | — | | | $ | — | | | $ | 25,662 | | | $ | 22,337 | | | $ | — | | | $ | — | | | $ | 22,337 | |
Cash equivalents: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Certificates of deposit1 | | | 7,623 | | | | — | | | | — | | | | 7,623 | | | | 6,454 | | | | — | | | | — | | | | 6,454 | |
Money market fund | | | — | | | | — | | | | — | | | | — | | | | 23 | | | | — | | | | — | | | | 23 | |
Total cash and cash equivalents | | | 33,285 | | | | — | | | | — | | | | 33,285 | | | | 28,814 | | | | — | | | | — | | | | 28,814 | |
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Investments (available for sale): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Certificates of deposit2 | | | 6,425 | | | | 1 | | | | (7 | ) | | | 6,419 | | | | 10,195 | | | | 1 | | | | (13 | ) | | | 10,183 | |
Corporate bonds | | | 7,342 | | | | — | | | | (31 | ) | | | 7,311 | | | | 9,214 | | | | 1 | | | | (29 | ) | | | 9,186 | |
Corporate equity security | | | 24 | | | | 448 | | | | — | | | | 472 | | | | 44 | | | | 710 | | | | — | | | | 754 | |
Total investments | | | 13,791 | | | | 449 | | | | (38 | ) | | | 14,202 | | | | 19,453 | | | | 712 | | | | (42 | ) | | | 20,123 | |
Total cash, cash equivalents and investments | | $ | 47,076 | | | $ | 449 | | | $ | (38 | ) | | $ | 47,487 | | | $ | 48,267 | | | $ | 712 | | | $ | (42 | ) | | $ | 48,937 | |
Contractual maturities on investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Due within 1 year | | $ | 3,144 | | | | | | | | | | | $ | 3,590 | | | $ | 11,631 | | | | | | | | | | | $ | 12,340 | |
Due after 1 through 5 years | | | 10,647 | | | | | | | | | | | | 10,612 | | | | 7,822 | | | | | | | | | | | | 7,783 | |
| | $ | 13,791 | | | | | | | | | | | $ | 14,202 | | | $ | 19,453 | | | | | | | | | | | $ | 20,123 | |
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1 | Certificate of deposit with original maturities of less than 90 days. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2 | Certificate of deposit with original maturities of more than 90 days. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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We manage our investments as a single portfolio of highly marketable securities that is intended to be available to meet our current cash requirements. We have no investments in auction rate securities. Certificates of Deposit and Corporate bonds are typically held until maturity. Corporate equity securities have no maturity and may be sold at any time. Our current holding of corporate equity securities consists of the common stock of Intelligent Epitaxy Technology, Inc (“IntelliEPI”), a Taiwan publicly-traded company. During the three months ended March 31, 2015, we sold some of our IntelliEpi stock. From this, our cash proceeds from sales of available-for-sale investments was $387,000. Our cost was $20,000 and our gross realized gain from sales of available-for-sale investments was $367,000.There were no sales of available-for-sale securities and no realized gains and losses for the three months ended March 31, 2014. |
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We began classifying IntelliEpi stock as an available-for-sale security upon its initial public offering in 2013. An unrealized gain of $448,000 net of tax remains as of March 31, 2015 for IntelliEpi stock still held. These securities are valued at fair market value at March 31, 2015 and December 31, 2014. There is no assurance that we will realize this value when the securities are sold in the future. |
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The gross unrealized losses related to our portfolio of available-for-sale securities were primarily due to changes in interest rates and market and credit conditions of the underlying securities. We have determined that the gross unrealized losses on some of our available-for-sale securities as of March 31, 2015 are temporary in nature. We periodically review our investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality, and our ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value. |
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The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2015 (in thousands): |
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As of March 31, 2015 | | InLossPosition | | | InLossPosition | | | TotalIn | | | | | | | | | |
<12months | >12months | LossPosition | | | | | | | | |
| | Fair | | | Gross | | | Fair | | | Gross | | | Fair | | | Gross | | | | | | | | | |
Value | Unrealized | Value | Unrealized | Value | Unrealized | | | | | | | | |
| (Loss) | | (Loss) | | (Loss) | | | | | | | | |
Investments: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Certificates of deposit | | $ | 4,018 | | | $ | (7 | ) | | $ | 480 | | | $ | — | | | $ | 4,498 | | | $ | (7 | ) | | | | | | | | |
Corporate bonds | | | 7,311 | | | | (31 | ) | | | — | | | | — | | | | 7,311 | | | | (31 | ) | | | | | | | | |
Total in loss position | | $ | 11,329 | | | $ | (38 | ) | | $ | 480 | | | $ | — | | | $ | 11,809 | | | $ | (38 | ) | | | | | | | | |
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A portion of our investments would generate a loss if we sold them on March 31, 2015. The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2014 (in thousands): |
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As of December 31, 2014 | | InLossPosition | | | InLossPosition | | | TotalIn | | | | | | | | | |
<12months | >12months | LossPosition | | | | | | | | |
| | Fair | | | Gross | | | Fair | | | Gross | | | Fair | | | Gross | | | | | | | | | |
Value | Unrealized | Value | Unrealized | Value | Unrealized | | | | | | | | |
| (Loss) | | (Loss) | | (Loss) | | | | | | | | |
Investments: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Certificates of deposit | | $ | 4,492 | | | $ | (13 | ) | | $ | — | | | $ | — | | | $ | 4,492 | | | $ | (13 | ) | | | | | | | | |
Corporate bonds | | | 3,770 | | | | (27 | ) | | | 4,309 | | | | (2 | ) | | | 8,079 | | | | (29 | ) | | | | | | | | |
Total in loss position | | $ | 8,262 | | | $ | (40 | ) | | $ | 4,309 | | | $ | (2 | ) | | $ | 12,571 | | | $ | (42 | ) | | | | | | | | |
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Investments in Privately-held Companies |
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We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business (see Note 6). The investment balances for all of these companies, including minority investments indirectly in privately-held companies made by our consolidated subsidiaries, accounted for under the equity method are included in “other assets” in the consolidated balance sheets and totaled $12.5 million and $12.1 million as of March 31, 2015 and December 31, 2014, respectively. |
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We also maintain minority investments in one company which is accounted for under the cost method as we do not have the ability to exercise significant influence over their operations. Our investments under the cost method are reviewed for other than temporary declines in value on a quarterly basis. We monitor our investments for impairment and record reductions in carrying value when events or changes in circumstances indicate that the carrying value may not be recoverable. As of March 31, 2015 and December 31, 2014, our investments in this unconsolidated company had a carrying value of $200,000 and were also included in “other assets” in the condensed consolidated balance sheets. |
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Fair Value Measurements |
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ASC topic 820, Fair value measurement (“ASC 820”) establishes three levels of inputs that may be used to measure fair value. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets of the asset or identical assets. Level 2 instrument valuations are obtained from readily-available pricing sources for comparable instruments. Level 3 instrument valuations are obtained from unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. On a recurring basis, we measure certain financial assets and liabilities at fair value, primarily consisting of our short-term and long-term investments. |
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The type of instrument valued based on quoted market prices in active markets include our money market funds, which are generally classified within Level 1 of the fair value hierarchy. Other than corporate equity securities which are based on quoted market prices and classified as Level 1, we classify our available-for-sale securities including certificates of deposit, corporate bonds as having Level 2 inputs. The valuation techniques used to measure the fair value of these financial instruments having Level 2 inputs were derived from quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. |
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We place short term foreign currency hedges that are intended to offset the potential cash exposure related to fluctuations in the exchange rate between the United States dollar and Japanese yen. We measure the fair value of these foreign currency hedges at each month end and quarter end using current exchange rates and in accordance with generally accepted accounting principles. At quarter end any foreign currency hedges not settled are netted in “accrued liabilities” on the consolidated balance sheet and classified as Level 3 assets and liabilities. As of March 31, 2015 the net change in fair value from the placement of the hedge to settlement at each month end during the quarter had a de minimis impact to the consolidated results. |
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There were no changes in valuation techniques or related inputs in the three months ended March 31, 2015. There have been no transfers between fair value measurement levels during the three months ended March 31, 2015. |
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The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of March 31, 2015 (in thousands): |
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| | Balance as of | | | Quoted Prices in | | | Significant Other | | | Significant | | | | | | | | | | | | | | | | | |
31-Mar-15 | Active Markets of | Observable Inputs | Unobservable Inputs | | | | | | | | | | | | | | | | |
| Identical Assets | (Level2) | (Level 3) | | | | | | | | | | | | | | | | |
| (Level1) | | | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash equivalents and investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Certificates of deposit | | $ | 14,042 | | | $ | — | | | $ | 14,042 | | | $ | — | | | | | | | | | | | | | | | | | |
Corporate bonds | | | 7,311 | | | | — | | | | 7,311 | | | | — | | | | | | | | | | | | | | | | | |
Corporate equity securities | | | 472 | | | | 472 | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Total | | $ | 21,825 | | | $ | 472 | | | $ | 21,353 | | | $ | — | | | | | | | | | | | | | | | | | |
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Foreign currency hedge obligations | | $ | 2 | | | $ | — | | | $ | — | | | $ | 2 | | | | | | | | | | | | | | | | | |
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The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of December 31, 2014 (in thousands): |
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| | Balance as of | | | Quoted Prices in | | | Significant Other | | | Significant | | | | | | | | | | | | | | | | | |
31-Dec-14 | Active Markets of | Observable Inputs | Unobservable Inputs | | | | | | | | | | | | | | | | |
| Identical Assets | (Level2) | (Level 3) | | | | | | | | | | | | | | | | |
| (Level1) | | | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash equivalents and investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Money market fund | | $ | 23 | | | $ | 23 | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | |
Certificates of deposit | | | 10,183 | | | | — | | | | 10,183 | | | | — | | | | | | | | | | | | | | | | | |
Corporate bonds | | | 9,186 | | | | — | | | | 9,186 | | | | — | | | | | | | | | | | | | | | | | |
Corporate equity securities | | | 754 | | | | 754 | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Total | | $ | 20,146 | | | $ | 777 | | | $ | 19,369 | | | $ | — | | | | | | | | | | | | | | | | | |
Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | |
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Items Measured at Fair Value on a Nonrecurring Basis |
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Certain assets that are subject to nonrecurring fair value measurements are not included in the table above. These assets include investments in privately-held companies accounted for by equity and cost method (See Note 6). We did not record other-than-temporary impairment charges for either of these investments during the three months ended March 31, 2015 or 2014. |