. Fair Value Measurements

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 GAAP 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 inactive, 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 held at March 31, 2013 and December 31, 2012 (in thousands):



			Gross Unrealized							Classification on Balance Sheet
As of March 31, 2013	Cost		Gains		Losses			Aggregate Fair Value		Short-term Marketable Securities		Long-term Marketable Securities
Available-for-sale securities:
Certificates of deposit	$	3,275	$	—	$	—		$	3,275	$	3,221	$	54
Commercial paper	7,488		4		—			7,492		7,492		—
Corporate debt securities	715,141		1,306		(137		)	716,310		320,683		395,627
U.S. government agency obligations	190,061		79		(58		)	190,082		16,555		173,527
	$	915,965	$	1,389	$	(195	)	$	917,159	$	347,951	$	569,208


			Gross Unrealized							Classification on Balance Sheet
As of December 31, 2012	Cost		Gains		Losses			Aggregate Fair Value		Short-term Marketable Securities		Long-term Marketable Securities
Available-for-sale securities:
Certificates of deposit	$	3,100	$	—	$	—		$	3,100	$	3,057	$	43
Commercial paper	7,481		2		(1		)	7,482		7,482		—
Corporate debt securities	691,931		1,269		(205		)	692,995		217,548		475,447
U.S. government agency obligations	189,607		95		(28		)	189,674		7,505		182,169
	$	892,119	$	1,366	$	(234	)	$	893,251	$	235,592	$	657,659

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 March 31, 2013, 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 and liabilities, at March 31, 2013 and December 31, 2012 (in thousands):




	Total Fair Value at			Fair Value Measurements at Reporting Date Using
	March 31, 2013			Level 1		Level 2		Level 3
Marketable Securities:
Money market funds	$	413		$	413	$	—	$	—
Certificates of deposit	7,775			7,775		—		—
Commercial paper	7,492			—		7,492		—
Corporate debt securities	716,310			—		716,310		—
U.S. government agency obligations	190,082			—		190,082		—
	$	922,072		$	8,188	$	913,884	$	—
Other Assets:
Note receivable	$	18,882		$	—	$	—	$	18,882
	$	18,882		$	—	$	—	$	18,882


	Total Fair Value at			Fair Value Measurements at Reporting Date Using
	December 31, 2012			Level 1		Level 2		Level 3
Marketable Securities:
Money market funds	$	22,255		$	22,255	$	—	$	—
Certificates of deposit	7,473			7,473		—		—
Commercial paper	9,482			—		9,482		—
Corporate debt securities	692,995			—		692,995		—
U.S. government agency obligations	189,674			—		189,674		—
	$	921,879		$	29,728	$	892,151	$	—
Liabilities:
Contingent consideration obligation related to Verivue acquisition	$	(1,200	)	$	—	$	—	$	(1,200	)
	$	(1,200	)	$	—	$	—	$	(1,200	)

Contractual maturities of the Company’s marketable securities held at March 31, 2013 and December 31, 2012 were as follows (in thousands):



	March 31, 2013		December 31, 2012
Available-for-sale securities:
Due in 1 year or less	$	347,951	$	235,592
Due after 1 year through 5 years	569,208		657,659
	$	917,159	$	893,251

The following tables reflect the activity for the Company’s major classes of assets and liabilities measured at fair value using Level 3 inputs at March 31, 2013 and December 31, 2012 (in thousands):



	Other Assets- Note Receivable		Other Long-Term Liabilities- Contingent Consideration Obligation
Balance as of December 31, 2012	$	—	$	(1,200	)
Fair value adjustment for contingent consideration for acquisition of Verivue	—		1,200
Fair value of note receivable	18,882		—
Balance as of March 31, 2013	$	18,882	$	—

As of March 31, 2013 and December 31, 2012, the Company had grouped money market funds and certificates of deposit using a Level 1 valuation because market prices for such investments are readily available in active markets. As of March 31, 2013 and December 31, 2012, the Company had 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 inactive.

As of March 31, 2013, the fair value of the Company's asset using Level 3 valuation consisted of a $25.0 million face value convertible note receivable, that is due and payable on July 24, 2014, related to the divestiture of the ADS business. A key assumption in valuing the note receivable was the probability of the note ultimately converting to equity of MediaMath, as opposed to redemption in full for cash. The valuation assumed a 90% probability of being converted to equity. If a 70% probability of conversion was used, the fair value of the note would have been $20.2 million. As of December 31, 2012, the fair value of the Company's liabilities grouped using Level 3 valuation consisted of a contingent consideration related to the acquisition of Verivue.