Fair value measurement

12 Months Ended

Dec. 31, 2012

Fair value measurement

Fair value measurement

9. Fair value measurement

        The following table sets forth our financial assets that are measured at fair value on a recurring basis:

At December 31, 2012	Level 1		Level 2		Total
Assets:
Cash equivalents	$	39,001	$	2,460	$	41,461
Marketable securities		—		41,558		41,558
Restricted cash		30		—		30
Total assets	$	39,031	$	44,018	$	83,049

At December 31, 2011	Level 1		Level 2		Total
Assets:
Cash equivalents	$	81,082	$	—	$	81,082
Restricted cash		465		—		465
Total assets	$	81,547	$	—	$	81,547

        Our marketable securities available-for-sale utilize Level 2 inputs and consist primarily of corporate securities which include commercial paper and corporate debt instruments including notes issued by foreign or domestic corporations which pay in U.S. dollars and carry a rating of A or better. We have evaluated the various types of securities in our investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs. Due to variations in trading volumes and the lack of quoted market prices in active markets, our fixed maturities are classified as Level 2 securities.

        The fair value of our fixed maturity marketable securities available-for-sale is derived through the use of a third party pricing source or recent reported trades for identical or similar securities, making adjustments through the reporting date based upon available market observable data.

        Prior to December 31, 2011, we had Level 3 financial liabilities, accounted for at fair value on a recurring basis, which consisted of warrants to purchase shares of our Series B convertible preferred stock. The fair value of the warrants was determined under the Black-Scholes model using various assumptions including the expected term of the warrants, volatility of our common stock, risk free interest rate, and the dividend rate. To determine the estimated fair value of our common stock included in this model, we used an in depth valuation analysis of our common stock prepared with the assistance of an independent valuation firm. The increase in the fair value of the warrants is included in interest and other (expense) income in the accompanying consolidated statement of operations for the years ended December 31, 2011 and 2010. The following table provides reconciliation between the beginning and ending balances of preferred stock warrants in the tables above that used significant unobservable inputs (Level 3) for the year ended December 31, 2011:

Balance at December 31, 2010	$	140
Increase in the fair value of the liability		132
Exercise and conversion of preferred stock warrants into common stock		(272	)
Balance at December 31, 2011	$	—