FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2013

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

2. FAIR VALUE MEASUREMENTS

The authoritative literature for fair value measurements established a three-tier fair value hierarchy, which prioritizes the inputs in measuring fair value. These tiers are as follows: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than the quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as significant unobservable inputs (entity developed assumptions) in which little or no market data exists.

As of March 31, 2013, the Company held certain investments that are required to be measured at fair value on a recurring basis. The following tables present the Company’s fair value hierarchy for these financial assets as of March 31, 2013 and December 31, 2012:

	March 31, 2013
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	335,592	$	335,592	$	0	$	0
Short-term investments	132,220		39,702		92,518		0
Total financial assets	$	467,812	$	375,294	$	92,518	$	—

	December 31, 2012
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	35,857	$	35,857	$	0	$	0
Short-term investments	121,573		31,459		90,114		0
Long-term investments:
Auction rate securities	1,442		0		0		1,442
Total financial assets	$	158,872	$	67,316	$	90,114	$	1,442

The Company considers its short-term investments to be “available for sale” and accordingly classifies them as current, as management can sell these investments at any time at its option. The cost basis of short-term investments held at March 31, 2013 approximated the fair value of these securities. Related unrealized gains and losses are recorded as a component of accumulated other comprehensive income (loss) in the equity section of the accompanying balance sheet. The amount of unrealized loss on short-term investments amounted to $63 as of March 31, 2013.

Fair value for Level 1 is based on quoted market prices. Fair value for Level 2 is based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. Inputs are obtained from various sources including market participants, dealers and brokers. The securities classified as Level 3 are auction rate securities that are not actively traded.  The Company determined the fair value of these securities based on a discounted cash flow model that incorporated a discount period, coupon rate, liquidity discount and coupon history.  In determining the fair value, the Company also considered the rating of the securities by investment rating agencies and whether the securities were backed by the United States government.

The following table summarizes the changes in the financial assets measured at fair value using Level 3 inputs for the three months ended March 31, 2013:

Long -term Investments
Beginning balance	$	1,442
Transfers into Level 3	0
Sales and redemptions of securites	(1,528		)
Realized income- included in net income	86
Ending balance	$	0
Total realized loss on sale of securities included in Investment income (loss), net for the period	$	(72	)

There were no transfers between Level 1 and 2.