Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements And Marketable Securities

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Fair Value Measurements And Marketable Securities
12 Months Ended
Dec. 31, 2011
Fair Value Measurements And Marketable Securities [Abstract]  
Fair Value Measurements And Marketable Securities

NOTE 3—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. The Company's short-term investments primarily utilize broker quotes in a non-active market for valuation of these securities.

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. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The following table sets forth the Company's financial assets (cash equivalents and marketable securities) at fair value on a recurring basis as of December 31, 2011 and 2010:

 

     Fair Value as of
December 31,
2011
     Basis of Fair Value Measurements  
    (in thousands)       Level 1      Level 2      Level 3  

Money market funds

   $ 4,050       $ 4,050       $ —         $ —     

Corporate bonds

     4,690         —           4,690         —     

Government securities

     5,970         —           5,970         —     

Commercial paper

     5,548         —           5,548         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash equivalents and marketable securities

   $ 20,258       $ 4,050       $ 16,208       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Fair Value as of
December 31,
2010
     Basis of Fair Value Measurements  
    (in thousands)       Level 1      Level 2      Level 3  

Money market funds

   $ 4,627       $ 4,627       $      $  —    

Certificates of deposit

     245         —          245         —    

Corporate bonds

     1,663         —          1,663         —    

Government securities

     3,202         —          3,202         —    

Commercial paper

     4,865         —          4,865         —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cash equivalents and marketable securities

   $ 14,602       $ 4,627       $ 9,975       $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 

 

The Company invests in highly-liquid, investment-grade securities. The following is a summary of the Company's available-for-sale securities at December 31, 2011 and 2010:

 

    As of December 31, 2011 (in thousands):    Cost Basis     Unrealized
Gain
     Unrealized
Loss
    Fair
Value
 

Money market funds

   $ 4,050      $ —         $ —        $ 4,050   

Corporate bonds

     4,693        —           (3     4,690   

Government securities

     5,968        2        —          5,970   

Commercial paper

     5,548        —           —          5,548   
  

 

 

   

 

 

    

 

 

   

 

 

 
     20,259        2         (3     20,258   

Less cash equivalents

     (5,850     —           —          (5,850
  

 

 

   

 

 

    

 

 

   

 

 

 

Total marketable securities

   $ 14,409      $ 2       $ (3   $ 14,408   
  

 

 

   

 

 

    

 

 

   

 

 

 

 

    As of December 31, 2010 (in thousands):    Cost Basis     Unrealized
Gain
     Unrealized
Loss
     Fair
Value
 

Money market funds

   $ 4,627      $ —         $ —         $ 4,627   

Certificates of deposit

     245        —           —           245   

Corporate bonds

     1,662        1         —           1,663   

Government securities

     3,202        —           —           3,202   

Commercial paper

     4,865        —           —           4,865   
  

 

 

   

 

 

    

 

 

    

 

 

 
     14,601        1         —           14,602   

Less cash equivalents

     (8,594     —           —           (8,594
  

 

 

   

 

 

    

 

 

    

 

 

 

Total marketable securities

   $ 6,007      $ 1       $ —         $ 6,008   
  

 

 

   

 

 

    

 

 

    

 

 

 

There were no realized gains or losses in 2011 and 2010.

As of December 31, 2011, weighted average days to maturity for the Company's available for sale securities was 61 days, with the longest maturity being July 2012.

As of December 31, 2010, there were no marketable securities with unrealized losses.

The Company classifies financial instruments in Level 3 of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In addition to these unobservable inputs, the valuation models for Level 3 financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly. The only Level 3 financial instruments are warrants. The Company determined the fair value of the liability associated with its warrants to purchase 16.6 million shares of outstanding common stock using a Black-Scholes Model. See detailed discussion in Note 8Stockholders' Equity.