Fair Value Measurements

9 Months Ended

Sep. 30, 2011

Fair Value Measurements

Fair Value Measurements

Note 10. Fair Value Measurements

The Company's assets and liabilities subject to fair value measurements on a recurring basis and the related fair value hierarchy are as follows:

	Fair Value as of September 30, 2011
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	37,660	$	—	$	—	$	37,660
Corporate debt securities	$	—	$	329,662	$	—	$	329,662
Residential mortgage-backed securities		—		91,830		—		91,830
Government-sponsored enterprise securities		—		15,313		—		15,313
Asset-backed securities		—		65,332		—		65,332
Marketable securities	$	—	$	502,137	$	—	$	502,137
Money market funds	$	8,844	$	—	$	—	$	8,844
U.S. Treasury securities		1,305		—		—		1,305
Corporate debt securities		—		50,284		—		50,284
Residential mortgage-backed securities		—		7,801		—		7,801
Government-sponsored enterprise securities		—		8,560		—		8,560
Asset-backed securities		—		3,127		—		3,127
Restricted investments	$	10,149	$	69,772	$	—	$	79,921

The Company evaluates the types of securities in its investment portfolios to determine the proper classification in the fair value hierarchy based on trading activity and the observability of market inputs.

The Company generally obtains a single quote or price per instrument from independent third parties to help it determine the fair value of securities in Level 1 and Level 2 of the fair value hierarchy. The Company's Level 1 cash and money market instruments are valued based on quoted prices from third parties, and the Company's Level 1 U.S. Treasury securities are valued based on broker quotes. The Company's Level 2 assets are valued using a multi-dimensional pricing model that includes a variety of inputs including actual trade data, benchmark yield data, non-binding broker/dealer quotes, issuer spread data, monthly payment information, collateral performance and other reference information. These are all observable inputs. The Company reviews the values generated by the multi-dimensional pricing model for reasonableness, which could include reviewing other publicly available information.

The Company does not hold auction rate securities, loans held for sale, mortgage-backed securities backed by sub-prime or Alt-A collateral or any other investments which require the Company to determine fair value using a discounted cash flow approach. Therefore, the Company does not need to adjust its analysis or change its assumptions specifically to factor illiquidity in the markets into its fair values.

The fair value of the Company's receivables, other assets, accounts payable, accrued expenses and other payables approximate their carrying amount due to the relatively short maturity of these items. The fair value of the Company's convertible subordinated debt is based on quoted market prices. The quoted market price of the Company's convertible subordinated debt was approximately $299,000 (book value of $272,802) as of September 30, 2011. With respect to its lease financing, the Company evaluated its incremental borrowing rate as of September 30, 2011, based on the current interest rate environment and the Company's credit risk. The fair value of the BioMed lease financing was approximately $258,000 (book value of $251,744) as of September 30, 2011 based on a discounted cash flow analysis, and current rates for corporate debt having similar characteristics and companies with similar creditworthiness.