3. Fair Value Measurements

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The following tables set forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of January 31, 2016 and January 31, 2015. There were no fair value measurements of our financial assets and liabilities using significant level 3 inputs for the periods presented:

 

						Fair Value at January 31, 2016 Using
		January 31, 2016				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)
		(Amounts in thousands)
Financial assets:
Money market accounts (a)		$	3,654			$	3,654			$	—
Available for sale marketable securities:
Current marketable securities:
U.S. treasury notes and bonds—conventional			502				502				—
U.S. government agency issues			1,002				—				1,002
Non-current marketable securities:
U.S. treasury notes and bonds—conventional			7,762				7,762				—
U.S. government agency issues			3,002				—				3,002
Total		$	15,922			$	11,918			$	4,004

 

						Fair Value at January 31, 2015 Using
		January 31, 2015				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)
		(Amounts in thousands)
Financial assets:
Money market accounts (a)		$	1,575			$	1,575			$	—
Available for sale marketable securities:
Current marketable securities:
U.S. treasury notes and bonds—conventional			1,501				1,501				—
U.S. government agency issues			6,015				—				6,015
Non-current marketable securities:
U.S. treasury notes and bonds—conventional			4,286				4,286				—
U.S. government agency issues			2,507				—				2,507
Total		$	15,884			$	7,362			$	8,522

 

a)	Money market funds and U.S. treasury bills are included in cash and cash equivalents on the accompanying consolidated balance sheets and are valued at quoted market prices for identical instruments in active markets.

 

Assets

and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to our tangible property and equipment, goodwill, and other intangible assets, which are re-measured when the derived fair value is below carrying value on our consolidated balance sheets. For these assets and liabilities, we do not periodically adjust carrying value to fair value except in the event of impairment. When we determine that impairment has occurred, the carrying value of the asset is reduced to fair value and the difference is recorded to loss from impairment in our consolidated statements of operations and comprehensive loss.

As of January 31, 2016, the Company reviewed the projected future cash flows of the Timeline Labs operations and determined that the carrying amount was greater than the fair value. As a result, all long-term assets related to Timeline Labs were fully impaired and reflected as a $21.9 million loss on impairment of TLL, LLC net assets in our consolidated statements of operations and comprehensive loss for the period ending January 31, 2016. The impairment of assets included: i) $15.8 million relating to the Timeline Labs acquired goodwill, ii) $5.2 million of acquired intangible assets, and iii) $0.9 million of capitalized internal use software. Additionally, we reduced the contingent consideration liability associated with the Timeline Labs acquisition to zero, as we determined the defined performance criteria would not be achieved. Therefore, we credited the reversal of the liability of $0.4 million to the loss on impairment of assets.

Available-for-Sale Securities

We determine the appropriate classification of debt investment securities at the time of purchase and reevaluate such designation as of each balance sheet date. Our investment portfolio consists of money market funds, U.S. treasury notes and bonds, and U.S. government agency notes and bonds as of January 31, 2016 and 2015. All highly liquid investments with an original maturity of three months or less when purchased are considered to be cash equivalents. All cash equivalents are carried at cost, which approximates fair value. Our marketable securities are classified as available-for-sale and are reported at fair value with unrealized gains and losses, net of tax, reported in stockholders’ equity as a component of accumulated other comprehensive loss. The amortization of premiums and accretions of discounts to maturity are computed under the effective interest method and is included in other expenses, net, in our consolidated statements of operations and comprehensive loss. Interest on securities is recorded as earned and is also included in other expenses, net. Any realized gains or losses would be shown in the accompanying consolidated statements of operations and comprehensive loss in other expenses, net. We provide fair value measurement disclosures of available-for-sale securities in accordance with one of three levels of fair value measurement mentioned above.

The following is a summary of cash, cash equivalents and available-for-sale securities, including the cost basis, aggregate fair value and unrealized gains and losses, for short-and long-term marketable securities portfolio as of January 31, 2016 and 2015:

 

		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Estimated Fair Value
		(Amounts in thousands)
January 31, 2016:
Cash		$	55,079			$	—			$	—			$	55,079
Cash equivalents			3,654				—				—				3,654
Cash and cash equivalents			58,733				—				—				58,733
U.S. treasury notes and bonds—short-term			503				—				(1	)			502
U.S. treasury notes and bonds—long-term			7,756				6				—				7,762
U.S. government agency issues—short-term			1,001				1				—				1,002
U.S. government agency issues—long-term			2,977				25				—				3,002
Total cash, cash equivalents and marketable securities		$	70,970			$	32			$	(1	)		$	71,001
January 31, 2015:
Cash		$	88,444			$	—			$	—			$	88,444
Cash equivalents			1,575				—				—				1,575
Cash and cash equivalents			90,019				—				—				90,019
U.S. treasury notes and bonds—short-term			1,500				1				—				1,501
U.S. treasury notes and bonds—long-term			4,268				18				—				4,286
U.S. government agency issues—short-term			6,008				7				—				6,015
U.S. government agency issues—long-term			2,490				17				—				2,507
Total cash, cash equivalents and marketable securities		$	104,285			$	43			$	—			$	104,328

The gross realized gains and losses on sale of available-for-sale securities for fiscal years 2016, 2015 and 2014 were immaterial. For purposes of determining gross realized gains and losses, the cost of securities sold is based on specific identification.

Contractual maturities of available-for-sale debt securities at January 31, 2016 are as follows (amounts in thousands):

 

		Estimated Fair Value
Maturity of one year or less		$	1,504
Maturity between one and five years			10,764
Total		$	12,268

We concluded that there were no other-than-temporary declines in investments recorded as of January 31, 2016, 2015 and 2014. The unrealized holding losses, net of tax, on available-for-sale securities, which are not material for the periods presented, have been included in stockholders’ equity as a component of accumulated other comprehensive loss.

Cash, Cash Equivalents and Marketable Securities

Cash and cash equivalents consist primarily of highly liquid investments in money market mutual funds, government sponsored enterprise obligations, treasury bills, commercial paper and other money market securities with remaining maturities at date of purchase of 90 days or less.

The fair value of cash, cash equivalents, restricted cash and marketable securities at January 31, 2016 and 2015 was $71.1 million and $105.4 million, respectively.

Restricted Cash

At times, we may be required to maintain cash held as collateral for performance obligations with our customers.

In December 2014, in conjunction with our acquisition of TLL, LLC (“Timeline Labs”), we entered into an agreement to fund a $2.5 million escrow from which Timeline Labs could make withdrawals for working capital purposes in advance of the February 2, 2015 acquisition date. The unused portion of $1.1 million as of January 31, 2015, was classified as restricted cash in our consolidated balance sheet. On February 2, 2015, this amount was retained by the Company.