PC CONNECTION INC Fair Value Disclosure
3. FAIR VALUE MEASUREMENTS
Cash equivalents and short-term investments consist of the following (in thousands):
December 31, 2025 | ||||||||||||
| Amortized Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value | |||||
Cash equivalents: | ||||||||||||
Money market funds | $ | 170,826 | $ | — | $ | — | $ | 170,826 | ||||
Short-term investments: | ||||||||||||
U.S. Government treasury securities | 213,358 | 99 | — | 213,457 | ||||||||
Total | $ | 384,184 | $ | 99 | $ | — | $ | 384,283 | ||||
December 31, 2024 | ||||||||||||
| Amortized Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value | |||||
Cash equivalents: | ||||||||||||
Money market funds | $ | 161,094 | $ | — | $ | — | $ | 161,094 | ||||
Short-term investments: | ||||||||||||
U.S. Government treasury securities | 264,074 | 309 | (88) | 264,295 | ||||||||
Total | $ | 425,168 | $ | 309 | $ | (88) | $ | 425,389 | ||||
Investments with maturities of 90 days or less from the date of purchase are classified as cash equivalents; investments with maturities of greater than 90 days from the date of purchase but less than one year are generally classified as short-term investments; and investments with maturities of one year or greater from the date of purchase are generally classified as long-term investments. All short-term investments had stated maturity dates of less than one year. The Company has recorded the securities at fair value in its consolidated balance sheets and unrealized gains and losses are reported as a component of accumulated other comprehensive income. The amount of realized gains and losses reclassified into earnings and the related adjustments to deferred taxes are based on the specific identification of the securities sold or securities that reached maturity date.
Fair Value
The Company measures certain financial assets at fair value. Fair value is determined based upon the exit price that would be received to sell an asset in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques are classified based on a three-level hierarchy, as follows:
| ● | Level 1 inputs: Quoted prices for identical assets or liabilities in active markets; |
| ● | Level 2 inputs: Observable inputs other than those described as Level 1; and |
| ● | Level 3 inputs: Unobservable inputs that are supportable by little or no market activities and are based on significant assumptions and estimates. |
As of December 31, 2025 and 2024, the fair value of the Company’s cash equivalents and short-term investments were all measured using level 1 inputs.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Mar 7, 2024 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.