3.	Investments and Fair Value Disclosures

Investments in Marketable Securities

Marketable securities that the Company does not intend to hold to maturity are classified as available-for-sale, are carried at fair value and are included on the Company’s balance sheet as either short-term or long-term investments depending on their maturity. Investments with original maturities greater than three months that mature less than one year from the consolidated balance sheet date are classified as short-term investments. Investments with maturities greater than one year from the consolidated balance sheet date are classified as long-term investments. Available-for-sale investments are marked-to-market at the end of each reporting period, with unrealized holding gains or losses, which represent temporary changes in the fair value of the investment, reflected in accumulated other comprehensive income, a separate component of stockholders’ equity (deficit). The Company’s primary objective when investing excess cash is preservation of principal. The following table summarizes the Company’s investments:


	March 31, 2013
	Contracted Maturity	Carrying Value
			(in thousands	)
Money market funds	demand	$	54,026

Total cash equivalents		$	54,026

U.S. agency notes	76 - 277 days	$	21,526
Commercial paper	2 - 306 days		28,978
Corporate bonds	5 - 299 days		24,389

Total short-term investments		$	74,893

U.S. agency notes	472 - 717 days	$	26,617
Corporate bonds	408 - 593 days		10,818

Total long-term investments		$	37,435

Fair Value

The following table summarizes the carrying and fair value of the Company’s financial assets (in thousands):


	March 31, 2013				December 31, 2012
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets
Cash equivalents and certificates of deposit *	$	54,610	$	54,610	$	63,795	$	63,795
Short and long-term investments		112,328		112,328		103,177		103,177

Total assets	$	166,938	$	166,938	$	166,972	$	166,972

*	Does not include $38.5 million and $27.4 million of operating cash balances as of March 31, 2013 and December 31, 2012, respectively.

The carrying amounts of the Company’s other financial instruments, accounts receivable, accounts payable and accrued expenses, approximate their respective fair values due to their short-term nature. (See Note 6 Borrowings for additional information on the fair value of debt.)

The Company uses a three-tier fair value measurement hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The three tiers are defined as follows:

•

Level 1. Observable inputs based on unadjusted quoted prices in active markets for identical instruments and include the Company’s investments in money market funds and certificates of deposit;

•

Level 2. Inputs valued using quoted market prices for similar instruments, nonbinding market prices that are corroborated by observable market data and include the Company’s investments and marketable securities in U.S. agency notes, commercial paper and corporate bonds; and

•

Level 3. Unobservable inputs for which there is little or no market data, which require the Company to develop its own assumptions.

Assets Measured at Fair Value on a Recurring Basis

The Company evaluates its financial assets subject to fair value measurements on a recurring basis to determine the appropriate level of classification for each reporting period. This determination requires significant judgments to be made. There were no transfers between classification levels during the periods. The following tables summarize the values (in thousands):


	March 31, 2013		Level 1		Level 2		Level 3
Money market funds	$	54,026	$	54,026	$	—	$	—
Certificates of deposit		584		584		—		—

Total cash equivalents and certificates of deposit		54,610		54,610		—		—

U.S. agency notes		48,143		—		48,143		—
Commercial paper		28,978		—		28,978		—
Corporate bonds		35,207		—		35,207		—

Total investments		112,328		—		112,328		—

Total cash equivalents, certificates of deposit and investments	$	166,938	$	54,610	$	112,328	$	—


	December 31, 2012		Level 1		Level 2		Level 3
Money market funds	$	63,189	$	63,189	$	—	$	—
Certificates of deposit		606		606		—		—

Total cash equivalents and certificates of deposit		63,795		63,795		—		—

U.S. agency notes		43,767		—		43,767		—
Commercial paper		27,489		—		27,489		—
Corporate bonds		31,921		—		31,921		—

Total investments		103,177		—		103,177		—

Total cash equivalents, certificates of deposit and investments	$	166,972	$	63,795	$	103,177	$	—

Assets Measured at Fair Value on a Nonrecurring Basis

The Company measures certain assets, including property and equipment, goodwill and intangible assets, at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. During the three months ended March, 2013 and 2012, there were no fair value measurements of assets or liabilities measured at fair value on a nonrecurring basis subsequent to their initial recognition.