Fair Value Measurements

6 Months Ended

Jun. 30, 2014

Fair Value Measurements

Fair Value Measurements

5. Fair Value Measurements

We define 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.

Our valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. We classify these inputs into the following hierarchy:

Level 1—Quoted prices for identical instruments in active markets.

Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3—Unobservable inputs and little, if any, market activity for the assets.

Our available-for-sale securities are measured at fair value on a recurring basis and our debt is carried at the amortized cost basis. The estimated fair values were as follows:

	Estimated Fair Value Measurements at Reporting Date Using:
Types of Instruments	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets at June 30, 2014:
U.S. government securities	$	23,553	$	—	$	—	$	23,553
U.S. government agency securities	—		54,722		—		54,722
U.S. corporate notes	—		33,628		—		33,628
U.S. commercial paper	—		34,942		—		34,942
Equity securities	13,925		—		—		13,925
Money market funds	185,830		—		—		185,830
Total assets measured at estimated fair value	$	223,308	$	123,292	$	—	$	346,600
Liabilities at June 30, 2014:
Convertible subordinated notes due 2023	$	—	$	417,148	$	—	$	417,148
Non-recourse notes due 2029	—		454,500		—		454,500
Total fair value of liabilities	$	—	$	871,648	$	—	$	871,648

	Estimated Fair Value Measurements at Reporting Date Using
Types of Instruments	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets at December 31, 2013:
U.S. government securities	$	42,158	$	—	$	—	$	42,158
U.S. government agency securities	98,236		43,095		—		141,331
U.S. corporate notes	61,591		33,386		—		94,977
U.S. commercial paper	3,499		98,523		—		102,022
Money market funds	122,343		—		—		122,343
Total assets measured at estimated fair value	$	327,827	$	175,004	$	—	$	502,831
Liabilities at December 31, 2013:
Convertible subordinated notes due 2023	$	—	$	408,250	$	—	$	408,250

At June 30, 2014, securities with a total fair value of $5.4 million were measured using Level 2 inputs in comparison to December 31, 2013, at which time the securities had a fair value of $5.4 million and were measured using Level 1 inputs.

Due to their short-term maturities, we believe that the fair value of our bank deposits, receivables from collaborative arrangements, accounts payable and accrued expenses approximate their carrying value.