Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements and Marketable Securities

v2.4.0.6
Fair Value Measurements and Marketable Securities
 14 Months Ended
Mar. 31, 2013
Fair Value Disclosures [Abstract]  
Fair Value Measurements and Marketable Securities

NOTE 6— FAIR VALUE MEASUREMENTS AND MARKETABLE SECURITIES

The Company accounts for its marketable securities in accordance with ASC 820 “Fair Value Measurements and Disclosures.” ASC 820 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. ASC 820 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. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. For Level 2 securities that have market prices from multiples sources, a “consensus price” or a weighted average price for each of these securities can be derived from a distribution-curve-based algorithm which includes market prices obtained from a variety of industrial standard data providers (e.g. Bloomberg), security master files from large financial institutions, and other third-party sources. Level 2 securities with short maturities and infrequent secondary market trades are typically priced using mathematical calculations adjusted for observable inputs when available.

The following table sets forth the Company’s financial assets (cash equivalents and marketable securities) at fair value on a recurring basis as of March 31, 2013 and December 31, 2012:

 

     Fair Value as of
March 31,
2013		      Basis of Fair Value Measurements  
(in thousands)       Level 1      Level 2      Level 3  

Money market funds

    $ 9,345       $ 9,345       $ —         $ —     

Certificates of deposit

      2,125         —           2,125         —     

Corporate debt securities

      42,978         —           42,978         —     

U.S. Government securities

      35,664         —           35,664         —     

Commercial paper

      13,990         —           13,990         —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Total cash equivalents and marketable securities

    $ 104,102       $ 9,345       $ 94,757       $ —     
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     Fair Value as of
December 31,
2012		      Basis of Fair Value Measurements  
(in thousands)       Level 1      Level 2      Level 3  

Money market funds

    $ 5,886       $ 5,886       $ —         $ —     

Certificates of deposit

      1,185         —           1,185         —     

Corporate debt securities

      20,242         —           20,242         —     

Government securities

      27,899         —           27,899         —     

Commercial paper

      15,613         —           15,613         —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Total cash equivalents and marketable securities

    $ 70,825       $ 5,886       $ 64,939       $ —     
  

 

 

     

 

 

     

 

 

     

 

 

  

The Company invests in highly-liquid, investment-grade securities. The following is a summary of the Company’s available-for-sale securities at March 31, 2013 and December 31, 2012:

 

As of March 31, 2013 (in thousands):    Cost Basis     Unrealized
Gain		     Unrealized
Loss		     Fair
Value		  

Money market funds

    $ 9,345      $ —        $ —        $ 9,345   

Certificates of deposit

      2,125        —          —          2,125   

Corporate debt securities

      42,982        8        (12 )      42,978   

U.S. Government securities

      35,654        11        (1 )      35,664   

Commercial paper

      13,990        —          —       13,990   
  

 

 

    

 

 

    

 

 

    

 

 

  
     104,096        19        (13 )      104,102   

Less cash equivalents

      (20,218 )      (1 )      —          (20,219 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total marketable securities

    $ 83,878      $ 18      $ (13 )    $ 83,883   
  

 

 

    

 

 

    

 

 

    

 

 

  

 

As of December 31, 2012 (in thousands):    Cost Basis     Unrealized
Gain		      Unrealized
Loss		     Fair
Value		  

Money market funds

    $ 5,886      $ —        $ —       $ 5,886   

Certificates of deposit

      1,185        —           —          1,185   

Corporate debt securities

      20,237        6        (1 )      20,242   

Government securities

      27,893        12         (6 )      27,899   

Commercial paper

      15,613        —           —          15,613   
  

 

 

    

 

 

     

 

 

    

 

 

  
     70,814        18         (7 )      70,825   

Less cash equivalents

      (11,006 )      —           —          (11,006 ) 
  

 

 

    

 

 

     

 

 

    

 

 

  

Total marketable securities

    $ 59,808      $ 18       $ (7 )    $ 59,819   
  

 

 

    

 

 

     

 

 

    

 

 

  

There were no realized gains or losses in the three months ended March 31, 2013 and 2012.

As of March 31, 2013, weighted average days to maturity for the Company’s available for sale securities was 184 days, with the longest maturity being March 2015.

The following table provides the breakdown of the marketable securities with unrealized losses at March 31, 2013 (in thousands):

 

As of March 31, 2013 (in thousands):    In loss position for less
than twelve months		  
   Fair Value      Unrealized Loss  

Government securities

    $ 6,653       $ (1 ) 

Corporate debt securities

      20,116         (12 ) 
  

 

 

     

 

 

  

Total marketable securities

    $ 26,769       $ (13 ) 
  

 

 

     

 

 

  

The Company determined the fair value of the liability associated with its warrants to purchase 11.6 million shares of outstanding common stock using a Black-Scholes Model. See detailed discussion in Note 4 — Stockholders’ Equity.