FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2013

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

(5) FAIR VALUE MEASUREMENTS

The FASB has issued authoritative guidance which requires that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions.  Under the standard, fair value measurements are separately disclosed by level within the fair value hierarchy.  The fair value hierarchy establishes and prioritizes the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs.  Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company.  Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The three levels of the fair value hierarchy established are as follows:

Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3	Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.

Fixed-income securities and mutual funds are valued using a third party pricing agency. The valuation is based on observable inputs including pricing for similar assets and other observable market factors. There has been no material change from period to period.  The estimated fair value of our long-term debt based on a market approach was approximately $1.0 million as of March 31, 2013 and December 31, 2012 and represent Level 2 measurements.  When determining the estimated fair value of our long-term debt, we used market-based risk measurements, such as credit risk.

The following table presents the Company’s fair value measurements as of March 31, 2013 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall.  Amounts in the table are in thousands.

			Fair Value Measurement at March 31, 2013 Using:
			Quoted Prices in Active		Significant Other		Significant Unobservable
	Fair Value at		Markets for Identical Assets		Observable Inputs		Inputs
Description	March 31, 2013		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents
Cash and money market	$	8,053	$	8,053	$	—	$	—
Available-for-Sale
Marketable securities
U.S. government agency securities	33,734		—		33,734		—
Corporate bonds	47,521		—		47,521		—
Certificates of deposit	4,975		—		4,975		—
Commercial paper	1,199		—		1,199		—
Total	$	95,482	$	8,053	$	87,429	$	—

The following table presents the Company’s fair value measurements as of December 31, 2012 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall.  Amounts in the table are in thousands.

			Fair Value Measurement at December 31, 2012 Using:
			Quoted Prices in Active		Significant Other		Significant Unobservable
	Fair Value at		Markets for Identical Assets		Observable Inputs		Inputs
Description	December 31, 2012		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents
Cash and money market	$	13,095	$	13,095	$	—	$	—
Corporate bonds	250		—		250		—
Available-for-Sale
Marketable securities
U.S. government agency securities	44,308		—		44,308		—
Certificates of deposit	5,939		—		5,939		—
Corporate bonds	43,330		—		43,330		—
Commercial paper	1,199		—		1,199		—
Total	$	108,121	$	13,095	$	95,026	$	—

As of March 31, 2013 and December 31, 2012 there were available-for-sale securities in a continuous unrealized loss position for less than twelve months where the total unrealized losses were $5,685 and $4,800 respectively. At March 31, 2013 and December 31, 2012 there were no available-for-sale securities in a continuous loss position for greater than twelve months.

The following summarizes contractual underlying maturities of the Company’s available-for-sale investments in debt securities at March 31, 2013 (in thousands):

	Cost		Fair Value
Due in one year or less	$	58,362	$	57,170
Due after one year through two years	28,997		30,259
	$	87,359	$	87,429