Financial Instruments and Fair Value Measurement

12 Months Ended

Dec. 31, 2011

Financial Instruments and Fair Value Measurement

Financial Instruments and Fair Value Measurement

5.     Financial Instruments and Fair Value Measurement

The table below presents information about assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2011 and the valuation techniques the Company utilized to determine such fair value. Fair values determined based on Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. The Company's Level 1 assets consist of marketable equity securities. Fair values determined based on Level 2 inputs utilize observable quoted prices for similar assets and liabilities in active markets and observable quoted prices for identical or similar assets in markets that are not very active. The Company's Level 2 assets consist primarily of U.S. Treasury securities, U.S. government-sponsored agency securities, U.S. government-sponsored agency mortgage-backed securities, non-U.S. government, agency and Supranational securities and global corporate debt securities. Fair values determined based on Level 3 inputs utilize unobservable inputs and include valuations of assets or liabilities for which there is little, if any, market activity. The Company's Level 3 assets consist of warrants for the purchase of equity securities in non-publicly traded companies. The Company's Level 1 liability relates to the Company's publicly traded CVRs. The Level 2 liability relates to forward currency contracts and the Level 3 liability consists of contingent consideration related to undeveloped product rights resulting from the Gloucester acquisition.

	Balance at December 31, 2011			Quoted Price in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale securities	$	788,690		$	560	$	788,130	$	-
Forward currency contracts		48,561			-		48,561		-
Total assets	$	837,251		$	560	$	836,691	$	-
Liabilities:
Acquisition related contingent consideration	$	(137,473	)	$	60,583	$	-	$	(76,890	)

	Balance at December 31, 2010			Quoted Price in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	5,000		$	-		$	5,000		$	-
Available-for-sale securities		1,250,173			4,268			1,242,402			3,503
Warrants		1,757			-			-			1,757
Warrants classified as held for sale		1,904			-			-			1,904
Securities classified as held for sale		19,863			3,655			-			16,208
Total assets	$	1,278,697		$	7,923		$	1,247,402		$	23,372
Liabilities:
Forward currency contracts	$	(18,436	)	$	-		$	(18,436	)	$	-
Acquisition related contingent consideration		(464,937	)		(212,042	)		-			(252,895	)
Total liabilities	$	(483,373	)	$	(212,042	)	$	(18,436	)	$	(252,895	)

There were no security transfers between Levels 1 and 2 in 2011. The following tables represent a roll-forward of the fair value of Level 3 instruments (significant unobservable inputs):

	2011			2010
Assets:
Balance at beginning of period	$	23,372		$	1,598
Amounts acquired or issued		-			-
Net realized and unrealized gains (losses)		1,194			(281	)
Settlements		(22,477	)		22,055
Transfers in and/or out of Level 3		(2,089	)		-
Balance at end of period	$	-		$	23,372

Settlements of $22.5 million during 2011 consisted of Level 3 instruments that were considered non-core assets acquired in the acquisition of Abraxis and were included in the sale of the non-core assets in April 2011.

	2011			2010
Liabilities:
Balance at beginning of period	$	(252,895	)	$	-
Amounts acquired or issued		-			(230,201	)
Net accretion		(3,995	)		(22,694	)
Settlements		-			-
Transfers in and/or out of Level 3		180,000			-
Balance at end of period	$	(76,890	)	$	(252,895	)

Transfers out of Level 3 assets during 2011 consisted of warrants to purchase stock in two privately held companies. Transfers out of Level 3 liabilities consisted of $180.0 million related to a milestone that was part of the contingent consideration in the Gloucester acquisition. The milestone was achieved and valued based on its contractually defined amount. The milestone was paid in July 2011.