FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2013

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

4. FAIR VALUE MEASUREMENTS

The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect the Company’s market assumptions. The Company classifies these inputs into the following hierarchy:

Level 1 Inputs— Quoted prices for identical instruments in active markets.

Level 2 Inputs— Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs— Unobservable inputs and little, if any, market activity for the assets.

The Company’s available-for-sale securities are measured at fair value on a recurring basis while the Company’s Convertible Notes are not measured at fair value on a recurring basis. The estimated fair values were as follows:

	Estimated Fair Value Measurements at Reporting Date Using
Types of Instruments	Quoted Prices in Active Markets for Identical Assets			Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Level 1			Level 2		Level 3		Total
Cash and cash equivalents and available-for-sale securities at June 30, 2013:
Cash and money market funds	$	124,713		$	—	$	—	$	124,713
U.S. Treasury securities	233,542			—		—		233,542
Total	358,255			—		—		358,255
Less amounts classified as cash equivalents	(124,713		)	—		—		(124,713		)
Total available-for-sale securities	$	233,542		$	—	$	—	$	233,542
Cash and cash equivalents and available-for-sale securities at December 31, 2012:
Cash and money market funds	$	58,605		$	—	$	—	$	58,605
U.S. Treasury securities	155,981			—		—		155,981
Total	214,586			—		—		214,586
Less amounts classified as cash equivalents	(58,605		)	—		—		(58,605		)
Total available-for-sale securities	$	155,981		$	—	$	—	$	155,981

As of June 30, 2013, the Company’s available-for-sale securities have original contractual maturity up to 18 months.  However, the Company may or may not hold securities with stated maturities greater than 12 months until maturity. In response to changes in the availability of and the yield on alternative investments as well as liquidity requirements, the Company may sell these securities prior to their stated maturities. As these securities are viewed by the Company as available to support current operations, securities with maturities beyond 12 months are classified as current assets. Due to their short-term maturities, the Company believes that the fair value of its bank deposits, accounts payable and accrued expenses approximate their carrying value.