Annual report pursuant to Section 13 and 15(d)

Financial Instruments

v2.4.0.6
Financial Instruments
 12 Months Ended
Dec. 31, 2012
Financial Instruments

3. Financial Instruments

The composition of financial instruments is as follows:

 

     December 31, 2012  
   Amortized
Cost 		    Gross Unrealized     Fair
Value 		 
      
       Gains      Losses    

Money market funds

    $ 4,643      $ —         $ —        $ 4,643   

Government debt securities

      6,000        3         —          6,003   

Corporate debt securities

      49,441        6         (4 )      49,443   
  

 

 

    

 

 

     

 

 

    

 

 

  
     60,084        9         (4 )      60,089   

Less amounts included in cash and cash equivalents

      (4,643 )      —           —          (4,643 ) 
  

 

 

    

 

 

     

 

 

    

 

 

  
   $ 55,441      $ 9       $ (4 )    $ 55,446   
  

 

 

    

 

 

     

 

 

    

 

 

  

 

     December 31, 2011  
   Amortized
Cost 		    Gross Unrealized     Fair
Value 		 
      
       Gains      Losses    

Money market funds

    $ 14,372      $ —         $ —        $ 14,372   

Government debt securities

      15,966        3         —          15,969   

Corporate debt securities

      41,764        7         (30 )      41,741   
  

 

 

    

 

 

     

 

 

    

 

 

  
     72,102        10         (30 )      72,082   

Less amounts included in cash and cash equivalents

      (14,372 )      —           —          (14,372 ) 
  

 

 

    

 

 

     

 

 

    

 

 

  
   $ 57,730      $ 10       $ (30 )    $ 57,710   
  

 

 

    

 

 

     

 

 

    

 

 

  

 

As of December 31, 2012, the Company held 10 corporate debt securities with an aggregate fair value of $18.4 million that were in an unrealized loss position for less than 12 months. Gross unrealized losses represent temporary impairments on corporate debt securities related to multiple issuers, and were primarily caused by fluctuations in U.S. interest rates. The Company has determined that the gross unrealized losses on these securities at December 31, 2012 are temporary in nature. The Company evaluates securities for other-than-temporary impairment on a quarterly basis. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the issuer, and our intent and ability to hold the security in order to allow for an anticipated recovery in fair value.

All of the Company’s long-term available-for-sale securities were due between one and two years as of December 31, 2012.

The fair values of the Company’s financial instruments are the amounts that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants and are recorded using a hierarchal disclosure framework based upon the level of subjectivity of the inputs used in measuring assets and liabilities. The levels are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available.

The Company classifies its financial instruments within Level 1 or Level 2 of the fair value hierarchy on the basis of valuations using quoted market prices or alternate pricing sources and models utilizing market observable inputs, respectively. The Company’s money market funds were valued based on quoted prices for the specific securities in an active market and were therefore classified as Level 1. The government and corporate debt securities have been valued on the basis of valuations provided by third-party pricing services, as derived from such services’ pricing models. The pricing services may use a consensus price which is a weighted average price based on multiple sources or mathematical calculations to determine the valuation for a security, and have been classified as Level 2. The Company reviews Level 2 inputs and fair value for reasonableness and the values may be further validated by comparison to independent pricing sources. In addition, the Company reviews third-party pricing provider models, key inputs and assumptions and understands the pricing processes at its third-party providers in determining the overall reasonableness of the fair value of its Level 2 financial instruments. As of December 31, 2012 and 2011, the Company has not made any adjustments to the prices obtained from its third party pricing providers. The Company held no Level 3 financial instruments as of December 31, 2012 and 2011.

 

The following table presents a summary of the Company’s financial instruments that are measured on a recurring basis:

 

            Fair Value Measurements at December 31, 2012  
     Balance at
December 31,
2012		      Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		  

Money market funds

    $ 4,643       $ 4,643       $ —         $ —     

Government debt securities

      6,003         —           6,003         —     

Corporate debt securities

      49,443         —           49,443         —     
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 60,089       $ 4,643       $ 55,446       $ —     
  

 

 

     

 

 

     

 

 

     

 

 

  
            Fair Value Measurements at December 31, 2011  
     Balance at
December 31,
2011		      Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3) 		 

Money market funds

    $ 14,372       $ 14,372       $ —         $ —     

Government debt securities

      15,969         —           15,969         —     

Corporate debt securities

      41,741         —           41,741         —     
  

 

 

     

 

 

     

 

 

     

 

 

  
     $72,082         $14,372         $57,710         $—     
  

 

 

     

 

 

     

 

 

     

 

 

  

There were no transfers between Level 1, Level 2 or Level 3 securities in the year ended December 31, 2012.