Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Measurements

Fair Value Measurements

Note 3.  Fair Value Measurements

The Company measures certain financial assets, including cash equivalents and marketable securities, at their fair value on a recurring basis. The fair value of these financial assets was determined based on a hierarchy of three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:

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

Level 2:  Observable inputs other than Level 1 inputs, 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 for substantially the full term of the assets or liabilities.

Level 3:  Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company did not have any non-financial assets or liabilities that were measured or disclosed at fair value on a recurring basis at September 30, 2012 and December 31, 2011, respectively. The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis at September 30, 2012 and December 31, 2011 by level within the fair value hierarchy:

	Actively Quoted Markets for Identical Assets  Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Balance at September 30, 2012
	(In thousands)
As of September 30, 2012:
Assets
Money market deposits	$	6,731	$	—	$	—	$	6,731
U.S. Treasury securities	1,284		—		—		1,284
Debt securities of U.S. government-sponsored entities	—		767		—		767
Commercial paper	—		26,263		—		26,263
Corporate debt securities	—		40,708		—		40,708
Total	$	8,015	$	67,738	$	—	$	75,753

	Actively Quoted Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Balance at December 31, 2011
	(In thousands)
As of December 31, 2011:
Assets
Money market deposits	$	7,377	$	—	$	—	$	7,377
Debt securities of U.S. government-sponsored entities	—		19,350		—		19,350
Commercial paper	—		19,999		—		19,999
Corporate debt securities	—		29,005		—		29,005
Total	$	7,377	$	68,354	$	—	$	75,731

The Company’s debt securities of U.S. government-sponsored entities, commercial paper and corporate bonds are classified as Level 2 as they are valued using multi-dimensional relational pricing models that use observable market inputs, including benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data. Not all inputs listed are available for use in the evaluation process on any given day for each security evaluation. In addition, market indicators and industry and economic events are monitored and may serve as a trigger to acquire further corroborating market data. There were no transfers between Level 1 and Level 2 categories during the three and nine months ended September 30, 2012 and 2011, respectively.

All of the Company’s marketable securities are classified as available-for-sale. The following tables illustrate the Company’s available-for-sale marketable securities as of the dates indicated:

	September 30, 2012
	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
	(In thousands)
U.S. Treasury securities	$	1,283	$	1	$	—		$	1,284
Debt securities of U.S. government-sponsored entities	767		—		—			767
Commercial paper	26,244		19		—			26,263
Corporate debt securities	40,712		7		(11		)	40,708
Total	$	69,006	$	27	$	(11	)	$	69,022

	December 31, 2011
	Amortized  Cost		Unrealized  Gains		Unrealized  Losses			Estimated  Fair Value
	(In thousands)
Debt securities of U.S. government-sponsored entities	$	19,351	$	2	$	(2	)	$	19,351
Commercial paper	19,232		17		—			19,249
Corporate debt securities	29,052		5		(52		)	29,005
Total	$	67,635	$	24	$	(54	)	$	67,605

The Company had no realized gains or losses on available-for-sale marketable securities for the three and nine months ended September 30, 2012 and 2011, respectively.

The following table summarizes the Company’s portfolio of available-for-sale marketable securities by contractual maturity as of the dates indicated:

	September 30, 2012				December 31, 2011
	Amortized  Cost		Estimated Fair Value		Amortized  Cost		Estimated Fair Value
	(In thousands)
Due in one year or less	$	68,236	$	68,251	$	67,635	$	67,605
Due in more than one year but less than five years	770		771		—		—
Total	$	69,006	$	69,022	$	67,635	$	67,605