Marketable Securities and Fair Value Disclosures

Marketable Securities

As of June 30, 2014 and December 31, 2013, all of the Company’s marketable securities were classified as available-for-sale and their estimated fair values were $6.3 million and $5.9 million, respectively.

The following table presents details of the Company’s marketable securities as of June 30, 2014 and December 31, 2013 (in thousands):



	Available-for-Sale Securities as of June 30, 2014									Available-for-Sale Securities as of December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term:
Mutual funds	$	6,329	$	9	$	(29	)	$	6,309	$	5,934	$	—	$	(64	)	$	5,870
Total	$	6,329	$	9	$	(29	)	$	6,309	$	5,934	$	—	$	(64	)	$	5,870

There were no other-than-temporary impairment losses recorded during the three and six months ended June 30, 2014 or 2013. Any other-than-temporary impairment losses on marketable securities would be recorded in “Other income, net” in the Company’s unaudited consolidated and condensed statements of operations.

Fair Value Disclosures

ASC 820, Fair Value Measures and Disclosures, establishes a value hierarchy based on three levels of inputs, of which the first two are considered observable and the third is considered unobservable:


•	Level 1 assets consist of money market fund deposits and mutual funds that are traded in active markets with sufficient volume and frequency of transactions. The fair values of these assets were determined from quoted prices in active markets for identical assets.

•

Level 2 assets consist of bank time deposits, foreign exchange option contracts, and Level 2 liabilities consist of foreign exchange option contracts. The fair values of these assets and liabilities were determined from inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•

Level 3 assets and liabilities include indemnification assets and contingent consideration liabilities, recorded as the result of acquisitions. The fair value of an acquired indemnification asset is affected most significantly by changes in the fair value of the subject of the indemnification and changes in the expected probabilities of collecting the asset amounts. The fair value of an acquisition-related contingent consideration liability is affected most significantly by changes in the estimated probabilities of the contingencies being achieved.

The Company records certain assets and liabilities at fair value. The following tables present the Company’s fair value hierarchy for its assets and liabilities which are measured at fair value on a recurring basis as of June 30, 2014 and December 31, 2013 (in thousands):



		Fair Value Measurements at June 30, 2014 Using
	Balance Sheet Classification	Level 1		Level 2		Level 3		Total
Financial assets:
Bank time deposits	Cash and cash equivalents	$	—	$	83,287	$	—	$	83,287
Money market fund deposits	Cash and cash equivalents	6,182		—		—		6,182
Mutual funds	Marketable securities, current portion	6,309		—		—		6,309
Indemnification assets associated with acquisitions, current	Prepaid expenses and other current assets	—		—		604		604
Indemnification assets associated with acquisitions, noncurrent	Other assets	—		—		227		227
Total		$	12,491	$	83,287	$	831	$	96,609

		Level 1		Level 2		Level 3		Total
Financial liabilities:
Foreign exchange option contracts	Accrued expenses	$	—	$	90	$	—	$	90
Contingent consideration liability associated with acquisitions, current	Accrued expenses	—		—		10,155		10,155
Contingent consideration liability associated with acquisitions, noncurrent	Other long-term liabilities	—		—		7,626		7,626
Total		$	—	$	90	$	17,781	$	17,871



		Fair Value Measurements at December 31, 2013 Using
	Balance Sheet Classification	Level 1		Level 2		Level 3		Total
Financial assets:
Bank time deposits	Cash and cash equivalents	$	—	$	79,662	$	—	$	79,662
Money market fund deposits	Cash and cash equivalents	14,154		—		—		14,154
Mutual funds	Marketable securities, current portion	5,870		—		—		5,870
Foreign exchange option contracts, net	Prepaid expenses and other current assets	—		129		—		129
Indemnification assets associated with acquisitions, current	Prepaid expenses and other current assets	—		—		304		304
Indemnification assets associated with acquisitions, noncurrent	Other assets	—		—		597		597
Total		$	20,024	$	79,791	$	901	$	100,716

		Level 1		Level 2		Level 3		Total
Financial liabilities:
Foreign exchange option contracts	Accrued expenses	$	—	$	175	$	—	$	175
Contingent consideration liability associated with acquisitions, current	Accrued expenses	—		—		11,237		11,237
Contingent consideration liability associated with acquisitions, noncurrent	Other long-term liabilities	—		—		12,426		12,426
Total		$	—	$	175	$	23,663	$	23,838

The Company did not have any transfers of assets or liabilities between Level 1 and Level 2 or Level 3 of the fair value measurement hierarchy during the three or six months ended June 30, 2014.

The following table presents a summary of changes in fair value of the Company’s Level 3 financial assets and liabilities measured on a recurring basis for the six months ended June 30, 2014 (in thousands):



	Level 3 Inputs
	Assets			Liabilities
Balance at December 31, 2013	$	901		$	23,663
Payment of contingent consideration liability	—			(5,500		)
Change in fair value of contingent consideration liability, included in acquisition costs and other related benefits	—			(973		)
Change in fair value of acquired indemnification assets and contingent consideration liability, included in currency translation adjustments	60			161
Increase in fair value of contingent consideration liability, included in general and administrative expenses	—			430
Change in indemnification assets recorded in acquisitions	(130		)	—
Balance at June 30, 2014	$	831		$	17,781

The Company’s non-financial assets and liabilities, which include goodwill and long-lived assets held and used, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur, or if an annual impairment test is required, the Company would evaluate the non-financial assets and liabilities for impairment. If an impairment was to occur, the asset or liability would be recorded at its estimated fair value. During the three months ended March 31, 2013, the Company recorded an impairment of its Nitro customer list intangible asset in the amount of $1.5 million. No impairment was recorded in the three and six months ended June 30, 2014. See Note 11, Goodwill and Purchased Intangible Assets, for additional information.