Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Measurements

Fair Value Measurements

2. Fair Value Measurements

The Company generally invests its excess cash in investment grade short-term fixed income securities and money market funds. The portion in cash and cash equivalents represents highly liquid instruments with insignificant interest rate risk and original maturities of three months or less. Short-term investments are classified as available for sale and are carried at fair value, with the unrealized gains and losses, net of tax, reported as a separate component stockholders' equity. There was an unrealized loss of $4,000 related to agency bonds as of June 30, 2011. There were no unrealized gains and losses as of December 31, 2010. The Company had no realized gains or losses on short-term investments in the three and six months ended June 30, 2011 and 2010.

The Company has established a three-tier fair value hierarchy, categorizing the inputs used to measure fair value. The hierarchy can be described as follows: Level 1- observable inputs such as quoted prices in active markets; Level 2- inputs other than the quoted prices in active markets that are observable either directly or indirectly; and Level 3- unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Cash equivalents consist of money market instruments that have original maturities of 90 days or less. These instruments are classified in Level 1 of the fair value hierarchy. The Company also invests in federal agency and corporate bonds with an original maturity date of greater than 90 days that are classified as short-term investments. These instruments are classified within Level 2 of the fair value hierarchy. The Company has no Level 3 financial assets.

The Company's valuation techniques used to measure the fair values of money market accounts that were classified as Level 1 in the table below were derived from quoted market prices. The Company's valuation techniques used to measure the fair values of the Company's U.S. Treasury, U.S. government and U.S. government agency debt securities, corporate bonds and commercial paper that are classified as Level 2 in the table below, generally all of which mature within two years and the counterparties to which have high credit ratings, were derived from non-binding market consensus prices that are corroborated by observable market data or quoted market prices for similar instruments.

The following is a summary of the fair value of the major categories of financial instruments held by the Company (in thousands):

	June 30, 2011		December 31, 2010
Money market accounts	$	553	$	3,500
Commercial paper		500		500
Agency bonds		4,042		8,629
Other fixed income securities		2,206		502
Total	$	7,301	$	13,131

The following is a summary of the Company's financial assets that are accounted for at fair value on a recurring basis by level in accordance with the fair value hierarchy described above (in thousands):

	June 30, 2011
	Level 1		Level 2		Level 3		Total
Money market accounts	$	553	$	—	$	—	$	553
Commercial paper		—		500		—		500
Agency bonds		—		4,042		—		4,042
Other fixed income securities		—		2,206		—		2,206
Total assets	$	553	$	6,748	$	—	$	7,301

	December 31, 2010
	Level 1		Level 2		Level 3		Total
Money market accounts	$	3,500	$	—	$	—	$	3,500
Commercial paper		—		500		—		500
Agency bonds		—		8,629		—		8,629
Other fixed income securities		—		502		—		502
Total assets	$	3,500	$	9,631	$	—	$	13,131

The fair value of short-term investments with contractual maturities is as follows at June 30, 2011 (in thousands):

Due in less than one year	$	6,748
Due in more than one year		—
Total	$	6,748

The Company has the ability, if necessary, to liquidate any of its investments in the next 12 months. Accordingly, those investments with contractual maturities greater than one year from the date of purchase are classified as short-term in the accompanying condensed consolidated balance sheets.