FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2014

FAIR VALUE MEASUREMENTS

5. FAIR VALUE MEASUREMENTS

Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability. As a basis for classifying the fair value measurements, a three-tier fair value hierarchy, which classifies the fair value measurements based on the inputs used in measuring fair value, was established as follows: (Level 1) observable inputs such as quoted prices in active markets for identical assets or liabilities; (Level 2) significant other observable inputs that are observable either directly or indirectly; and (Level 3) significant unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, the Company records its marketable securities at fair value.

The Company’s money market funds and investments classified within Level 1 of the fair value hierarchy are valued using quoted market prices in active markets for identical assets. The Company’s investments classified within Level 2 of the fair value hierarchy are valued based on a market approach using quoted prices, when available, or matrix pricing compiled by third party pricing vendors, using observable market inputs such as interest rates, yield curves, and credit risk. If applicable, the Company will recognize transfers into and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. In the fourth quarter of 2014, the Company transferred all municipal and corporate bonds from Level 1 to Level 2 based on the Company’s periodic review of its policy and the fact that these securities are not traded as frequently as Level 1 investments. There were no significant transfers of investments between Level 1 and Level 2 during the year ended December 31, 2013.

The fair value hierarchy of the Company’s cash equivalents and marketable securities at fair value is as follows:

(in thousands)	December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Money market funds	$	2,295	$	2,295	$	—
Marketable securities:
Municipal bonds	$	27,855	$	—	$	27,855
Corporate bonds		65,348		—		65,348
Certificates of deposit		3,428		—		3,428
Total marketable securities	$	96,631	$	—	$	96,631

(in thousands)	December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Money market funds	$	2,232	$	2,232	$	—
Marketable securities:
Municipal bonds	$	41,600	$	10,569	$	31,031
Corporate bonds		31,916		31,916		—
Certificates of deposit		2,945		—		2,945
Total marketable securities	$	76,461	$	42,485	$	33,976

Assets Measured at Fair Value on a Nonrecurring Basis

Assets recorded at fair value on a nonrecurring basis, such as property and equipment, and intangible assets are recognized at fair value when they are impaired. During 2014, 2013, and 2012, the Company did not recognize any impairments on its assets measured at fair value on a nonrecurring basis.