Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value Measurements

Schedule of assets and liabilities subject to fair value measurements

Assets and liabilities subject to fair value measurements are as follows (in thousands):

	As of December 31, 2014
	Level 1		Level 2		Level 3		Balance
Assets
Money market funds(1)	$	298,416	$	—	$	—	$	298,416
Federally-sponsored and corporate debt securities(2)				420,731		—		420,731
Total assets	$	298,416	$	420,731	$	—	$	719,147
Liabilities
Convertible notes due 2016(3)	$	388,153	$	—	$	—	$	388,153
Contingent consideration(4)		—		—		11,502		11,502
Total liabilities	$	388,153	$	—	$	11,502	$	399,655

	As of December 31, 2013
	Level 1		Level 2		Level 3		Balance
Assets
Money market funds(1)	$	145,194	$	—	$	—	$	145,194
Federally-sponsored and corporate debt securities(2)		—		857,711		—		857,711
Total assets	$	145,194	$	857,711	$	—	$	1,002,905
Liabilities
Convertible notes due 2016(3)	$	593,750	$	—	$	—	$	593,750
Contingent consideration(4)		—		—		6,616		6,616
Total liabilities	$	593,750	$	—	$	6,616	$	600,366

(1)	Included in cash and cash equivalents on the accompanying consolidated balance sheets.
(2)	Included in current and non-current marketable investments on the accompanying consolidated balance sheets. The fair value of these securities is principally measured or corroborated by trade data for identical securities in which related trading activity is not sufficiently frequent to be considered a Level 1 input or comparable securities that are more actively traded. See also Note 4—Investments—Marketable Investments—Held-to-Maturity Investments to these consolidated financial statements.
(3)	Included in convertible notes on the accompanying consolidated balance sheets. The fair value of our Convertible Notes is estimated using Level 1 observable inputs since our Convertible Notes are trading with sufficient frequency such that we believe related pricing can be used as the primary basis for measuring their fair value. As of December 31, 2014 and December 31, 2013, the fair value of the Convertible Notes was substantially higher than their book value. This was primarily due to the excess conversion value of the notes compared to the notes' par value, and the fact that any such excess would be paid in shares of our common stock.
(4)	Included in other liabilities on the accompanying consolidated balance sheets. The fair value of contingent consideration has been estimated using probability weighted discounted cash flow (DCF) models. The DCF models incorporate Level 3 inputs including estimated discount rates that we believe market participants would consider relevant in pricing and the projected timing and amount of cash flows, which are estimated and developed, in part, based on the requirements specific to each acquisition agreement. We analyze and evaluate these fair value measurements quarterly to determine whether valuation inputs continue to be relevant and appropriate or whether current period developments warrant adjustments to valuation inputs and related measurements. Any increases or decreases in discount rates would have an inverse impact on the corresponding fair value, while increases or decreases in expected cash flows would result in corresponding increases or decreases in fair value. As of the years ending December 31, 2014 and 2013, the cost of debt and weighted average cost of capital used to discount projected cash flows relating to our contingent consideration ranged from 6.1 percent to 15.5 percent and 8.7 percent to 16.5 percent, respectively.

Schedule of reconciliations of the beginning and ending balances of Level 3 assets and liabilities

The tables below provide a reconciliation of the beginning and ending balances of Level 3 assets and liabilities for the years ended December 31, 2014 and 2013 (in thousands):

	Contingent Consideration
Balance January 1, 2014—Asset (Liability)	$	(6,616	)
Transfers into Level 3		—
Transfers out of Level 3		—
Total gains/(losses) realized/unrealized:
Included in earnings		(1,090	)
Included in other comprehensive income		112
Purchases		(5,200	)
Sales		—
Issuances		—
Settlements		1,292
Balance December 31, 2014—Asset (Liability)	$	(11,502	)
Amount of total gains/(losses) for the year ended December 31, 2014 included in earnings that are attributable to the change in unrealized gains or losses related to outstanding liabilities	$	(1,090	)

	Contingent Consideration
Balance January 1, 2013—Asset (Liability)	$	(6,730	)
Transfers into Level 3		—
Transfers out of Level 3		—
Total gains/(losses) realized/unrealized:
Included in earnings		210
Included in other comprehensive income		(96	)
Purchases		—
Sales		—
Issuances		—
Settlements		—
Balance December 31, 2013—Asset (Liability)	$	(6,616	)
Amount of total gains/(losses) for the year ended December 31, 2013 included in earnings that are attributable to the change in unrealized gains related to outstanding liabilities	$	210