NOTE 2. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

Securities classified as cash and cash equivalents and available-for-sale marketable securities as of June 30, 2011 and December 31, 2010 are summarized below (in thousands). Estimated fair value is based on quoted market prices for these investments.

June 30, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash and cash equivalents:
Cash	$	4,990	$	—	$	—	$	4,990
Money market funds		31,321		—		—		31,321
Total cash and cash equivalents	$	36,311	$	—	$	—	$	36,311
Available-for-sale securities:
Total maturing within 1 year and included in marketable securities:
U.S. corporate debt securities	15,403		5		(1)		15,407
U.S. government agency debt securities	16,191		7		—		16,198
U.S. Treasury securities	45,852		558		(493)		45,917
Total maturing between 1 and 2 years and included in marketable securities:
U.S. corporate debt securities	—		—		—		—
U.S. government agency debt securities	20,101		21		(1)		20,121
U.S. Treasury securities	30,197		59		—		30,256
Total available-for-sale securities	$	127,744	$	650	$	(495)	$	127,899

Total cash, cash equivalents and marketable securities	$	164,055	$	650	$	(495)	$	164,210
December 31, 2010	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash and cash equivalents:
Cash	$	3,913	$	—	$	—	$	3,913
Money market funds		17,613		—		—		17,613
U.S. Treasury securities		1,000		—		—		1,000
Total cash and cash equivalents	$	22,526	$	—	$	—	$	22,526
Available-for-sale securities:
Total maturing within 1 year and included in marketable securities:
U.S. corporate debt securities	12,099		4		(2)		12,101
U.S. government agency debt securities	25,667		21		—		25,688
U.S. Treasury securities	10,015		21		—		10,036
Total maturing between 1 and 2 years and included in marketable securities:
U.S. corporate debt securities	—		—		—		—
U.S. government agency debt securities	—		—		—		—
U.S. Treasury securities	6,512		25		—		6,537
Total available-for-sale securities	$	54,293	$	71	$	(2)	$	54,362

Total cash, cash equivalents and marketable securities	$	76,819	$	71	$	(2)	$	76,888

The Company considers all highly liquid investments with a maturity at date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with banks, money market instruments and commercial paper. The Company places its cash, cash equivalents and marketable securities with high quality, U.S. financial institutions and, to date has not experienced material losses on any of its balances. All marketable securities are classified as available-for-sale since these instruments are readily marketable. These securities are carried at fair value, which is based on readily available market information, with unrealized gains and losses included in accumulated other comprehensive gain within shareholders' equity. The Company uses the specific identification method to determine the amount of realized gains or losses on sales of marketable securities. Realized gains or losses have been insignificant and are included in "interest and other income" in the condensed statement of operations.

At June 30, 2011, the Company had eight securities in an unrealized loss position. The following table shows the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2011 (in thousands):

	Less than 12 months					12 months or greater				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. corporate debt securities	4,067		(1		)	—		—		4,067		(1		)
U.S. government agency debt securities	11,032		(1		)	—		—		11,032		(1		)
U.S. Treasury securities	1,512		(493		)	—		—		1,512		(493		)
Total available-for-sale	$	16,611	$	(495	)	$	—	$	—	$	16,611	$	(495	)

The gross unrealized losses above were caused by interest rate increases. No significant facts or circumstances have arisen to indicate that there has been any deterioration in the creditworthiness of the issuers of the Company's securities. Based on the Company's review of these securities, including the assessment of the duration and severity of the unrealized losses and the Company's ability and intent to hold the investments until maturity, there were no material other-than-temporary impairments for these securities at June 30, 2011.

Fair value is defined 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. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company utilizes the following fair value hierarchy based on three levels of inputs:

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

· Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, 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 following table represents the Company's fair value hierarchy for its financial assets measured at fair value on a recurring basis as of June 30, 2011 (in thousands):

	Level 1		Level 2		Level 3		Total
Money market funds	$	31,321	$	—	$	—		31,321
U.S. corporate debt securities	—		15,407		—		15,407
U.S. government agency debt securities	—		36,319		—		36,319
U.S. Treasury securities	—		76,173		—		76,173
Total	$	31,321	$	127,899	$	—	$	159,220

The following table represents the Company's fair value hierarchy for its financial assets measured at fair value on a recurring basis as of December 31, 2010 (in thousands):

	Level 1		Level 2		Level 3		Total
Money market funds	$	17,613	$	—	$	—	$	17,613
U.S. corporate debt securities	—		12,101		—		12,101
U.S. government agency debt securities	—		25,688		—		25,688
U.S. Treasury securities	—		17,573		—		17,573
Total	$	17,613	$	55,362	$	—	$	72,975

There are no financial liabilities measured at fair value on a recurring basis as of June 30, 2011 and December 31, 2010.