FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2013

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

4. FAIR VALUE MEASUREMENTS

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it would transact, and considers assumptions that market participants would use when pricing the asset or liability.

The three levels of inputs that may be used to measure fair value are as follows:

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

Level 2- Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities.

Level 3- Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.

The following is a summary of cash equivalents and short-term investments by type of instruments as of March 31, 2013 and December 31, 2012 measured at fair value on a recurring basis (in thousands):

	March 31, 2013
	Level 1		Level 2		Level 3		Total
Money market funds	$	6,524	$	—	$	—	$	6,524
Commercial paper		—		11,186		—		11,186
U.S. agency securities		—		57,525		—		57,525
Corporate bonds		—		30,973		—		30,973
Total assets measured at fair value	$	6,524	$	99,684	$	—	$	106,208

	December 31, 2012
	Level 1		Level 2		Level 3		Total
Money market funds	$	13,505	$	-	$	-	$	13,505
Commercial paper		-		9,696		-		9,696
U.S. agency securities		-		56,315		-		56,315
Corporate bonds		-		34,751		-		34,751
Total assets measured at fair value	$	13,505	$	100,762	$	-	$	114,267

In general, and where applicable, the Company uses quoted market prices in active markets for identical assets to determine fair value.  This pricing methodology applies to Level 1 investments which are comprised of money market funds. If quoted prices in active markets for identical assets are not available, then the Company uses quoted prices for similar assets or inputs other than quoted prices that are observable, either directly or indirectly. These investments are included in Level 2 and consist of commercial paper, U.S. agency securities and corporate bonds. U.S. agency securities and corporate bonds are valued at a consensus price, which is a weighted average price based on market prices from a variety of industry standard data providers used as inputs to a distribution-curve based algorithm. Certificates of deposit and commercial paper are valued using market prices where available, adjusting for accretion of the purchase price to face value at maturity.

During the three months ended March 31, 2013 and 2012, the Company did not have any transfers between Level 1 and Level 2 fair value instruments.