Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

3. Fair Value Measurements

We measure our cash equivalents, marketable securities, auction rate security ("ARS"), and the earn-out liability associated with our acquisition of MPC Data Limited ("MPC") (see note 4) at fair value. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Directly or indirectly observable market-based inputs or unobservable inputs used in models or other valuation methodologies.

Level 3: Unobservable inputs that are not corroborated by market data. The inputs require significant management judgment or estimation.

We classify our cash equivalents and marketable securities within Level 1 or Level 2. This is because we value our cash equivalents and marketable securities using quoted market prices or alternative pricing sources and models utilizing market observable inputs. We classify our investment in ARS within Level 3 because it is valued using valuation techniques based on multiple inputs. We classify our earn-out liability associated with MPC within Level 3 as it is valued using valuation techniques using inputs such as management's estimation of future sales. Some of the inputs to these models are unobservable in the market and are significant.

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

	December 31, 2011
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Direct or Indirect Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets
Cash equivalents:
Money market funds	$	6,576	$	—	$	—	$	6,576
Corporate debt		—		501		—		501
Total cash equivalents		6,576		501		—		7,077
Short-term investments:
U.S. agency securities		—		1,751		—		1,751
Municipal securities		—		355		—		355
Corporate commercial paper		—		1,250		—		1,250
Foreign government bonds		—		500		—		500
Corporate debt securities		—		5,763		—		5,763
Total short-term investments		—		9,619	$	—		9,619
Restricted cash—money market fund		875		—		—		875
Total assets	$	7,451	$	10,120	$	—	$	17,571
MPC earn-out liability	$	—	$	—	$	766	$	766

	December 31, 2010
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Direct or Indirect Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets
Cash equivalents:
Money market funds	$	10,078	$	—	$	—	$	10,078
Total cash equivalents		10,078		—		—		10,078
Short-term investments:
U.S. agency securities		—		2,250		—		2,250
Municipal securities		—		450		—		450
Corporate commercial paper		—		2,749		—		2,749
Foreign government bonds		—		775		—		775
Corporate debt securities		—		5,105		—		5,105
Total short-term investments		—		11,329		—		11,329
Long-term investment—ARS		—		—		122		122
Restricted cash—money market fund		875		—		—		875
Total assets	$	10,953	$	11,329	$	122	$	22,404

An impairment charge of $518,000 was recognized in the fourth quarter of 2011 for intangible assets measured using level 3 inputs and recorded at fair value on a non-recurring basis. These intangible assets were associated with acquired technology (see Note 6).