Marketable Securities and Investments

12 Months Ended

Dec. 31, 2011

Marketable Securities [Abstract]

Marketable Securities and Investments

Marketable Securities and Investments:

The Company accounts for financial assets and liabilities in accordance with a fair value measurement accounting standard. The accounting standard provides a framework for measuring fair value under generally accepted accounting principles in the United States and requires expanded disclosures regarding fair value measurements. 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. The accounting standard also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available, 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 in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

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, including certain pricing models, discounted cash flow methodologies and similar techniques.

The following is a summary of marketable securities and other investment-related assets held at December 31, 2011 and 2010 (in thousands):

			Gross Unrealized					Aggregate Fair Value		Classified on Balance Sheet
										Short-term Marketable Securities		Long-term Marketable Securities
As of December 31, 2011	Cost		Gains		Losses
Available-for-sale securities:
Certificates of deposit	$	42	$	—	$	—		$	42	$	—	$	42
Corporate debt securities	524,515		873		(580		)	524,808		285,012		239,796
U.S. government agency obligations	145,995		78		(165		)	145,908		5,017		140,891
	$	670,552	$	951	$	(745	)	$	670,758	$	290,029	$	380,729
			Gross Unrealized					Aggregate Fair Value		Classified on Balance Sheet
										Short-term Marketable Securities		Long-term Marketable Securities
As of December 31, 2010	Cost		Gains		Losses
Available-for-sale securities:
Certificates of deposit	$	96	$	—	$	—		$	96	$	51	$	45
Commercial paper	59,912		34		(2		)	59,944		59,944		—
Corporate debt securities	651,855		1,416		(736		)	652,535		301,625		350,910
U.S. government agency obligations	161,722		102		(119		)	161,705		13,385		148,320
Auction rate securities	150,800		—		(13,544		)	137,256		—		137,256
	$	1,024,385	$	1,552	$	(14,401	)	$	1,011,536	$	375,005	$	636,531

Unrealized gains and unrealized temporary losses on investments classified as available-for-sale are included within

accumulated other comprehensive income (loss). Upon realization, those amounts are reclassified from accumulated other comprehensive income (loss) to gain (loss) on investments, net in the statement of operations. Realized gains and losses are reflected in the income statement as gain (loss) on investments, net. As of December 31, 2011, the Company did not hold any investment-related assets that have been in a continuous loss position for more than 12 months.

The following tables detail the fair value measurements within the fair value hierarchy of the Company’s financial assets, including investments and cash equivalents, at December 31, 2011 and 2010 (in thousands):

	Total Fair Value at December 31, 2011		Fair Value Measurements at Reporting Date Using
			Level 1		Level 2		Level 3
Money market funds	$	302,507	$	302,507	$	—	$	—
Certificates of deposit	42		42		—		—
Commercial paper	57,498		—		57,498		—
U.S. government agency obligations	145,908		—		145,908		—
Corporate debt securities	524,808		—		524,808		—
	$	1,030,763	$	302,549	$	728,214	$	—

	Total Fair Value at December 31, 2010		Fair Value Measurements at Reporting Date Using
			Level 1		Level 2		Level 3
Money market funds	$	55,648	$	55,648	$	—	$	—
Certificates of deposit	96		96		—		—
Commercial paper	59,944		—		59,944		—
U.S. government agency obligations	161,705		—		161,705		—
Corporate debt securities	652,535		—		652,535		—
Auction rate securities	137,256		—		—		137,256
	$	1,067,184	$	55,744	$	874,184	$	137,256

The following tables reflect the activity for the Company’s major classes of assets measured at fair value using Level 3 inputs for the years ended December 31, 2011 and 2010 (in thousands):

	Auction Rate Securities
Balance as of December 31, 2010	$	137,256
Redemptions and sales of securities	(137,256		)
Balance as of December 31, 2011	$	—

	Auction Rate Securities			Put Option related to Auction Rate Securities			Total
Balance as of December 31, 2009	$	244,505		$	9,614		$	254,119
Redemptions of securities	(124,100		)	—			(124,100		)
Unrealized gains included in accumulated other comprehensive income (loss), net	7,237			—			7,237
Realized gain on auction rate securities included in the statement of operations	9,614			—			9,614
Realized loss on other investment-related assets included in the statement of operations	—			(9,614		)	(9,614		)
Balance as of December 31, 2010	$	137,256		$	—		$	137,256

As of December 31, 2011, the Company grouped money market funds and certificates of deposit using a Level 1 valuation because market prices are readily available in active markets. As of December 31, 2011, the Company grouped commercial paper, U.S. government agency obligations and corporate debt securities using a Level 2 valuation because quoted prices for identical or similar assets are available in markets that are not active. As of December 31, 2011, the Company had no assets grouped using a Level 3 valuation.

Historically, the carrying value (par value) of the Company’s ARS holdings approximated fair market value due to the resetting of variable interest rates in a “Dutch auction” process. Beginning in mid-February 2008 and continuing throughout the period ended December 2011, however, the auctions for ARS held by the Company failed. As a result, the interest rates on ARS reset to the maximum rate per the applicable investment offering statements. The Company would not have been able to liquidate affected ARS until a future auction on these investments was successful, a buyer was found outside the auction process, the securities were called or refinanced by the issuer, or the securities matured. Due to these liquidity issues, the Company used a discounted cash flow analysis to determine the estimated fair value of these investments.

In November 2008, the Company entered into an agreement with one of its investment advisors, which required the advisor to repurchase at par value all outstanding ARS purchased through such advisor beginning on June 30, 2010. Such agreement created a separate financial instrument between the two companies (the “put option”). At any time during the period up until June 2010, the investment advisor had the right to call the ARS at par value, but did not do so. In early July 2010, the Company exercised the put option and $30.5 million of ARS were repurchased by the investment advisor at par value resulting in a gain recorded in the gain (loss) on investments, net in the consolidated statement of operations.

The Company elected to apply the fair value option, permissible under the accounting standard for the fair value option for financial assets and liabilities, to the put option. During the year ended December 31, 2010, the Company exercised the put option and as a result recorded a loss of $9.6 million, included in gain (loss) on investments, net in the consolidated statement of operations. As of December 31, 2010, the Company had estimated an aggregate loss of $13.5 million which was related to the impairment of ARS deemed to be temporary and included in accumulated other comprehensive income (loss) within stockholders’ equity. As of December 31, 2011 the Company no longer held any ARS.

As of December 31, 2010, the Company classified $137.3 million of ARS as long-term marketable securities on its consolidated balance sheet due to management’s estimate of its inability to liquidate these investments within the following twelve months. Contractual maturities of the Company’s marketable securities held at December 31, 2011 and 2010 are as follows:

	December 31,
	2011		2010
Available-for-sale securities:
Due in one year or less	$	290,029	$	375,005
Due after 1 year through 5 years	380,729		499,275
Due after 5 years	—		137,256
	$	670,758	$	1,011,536

For the year ended December 31, 2011, the Company recorded net losses on investments of $0.2 million. For the years ended December 31, 2010 and 2009, the Company recorded net gains on investments of $0.4 million and $0.8 million, respectively, on sales of marketable securities.