Fair Value Measurements and Marketable Securities

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements and Marketable Securities

NOTE 4—FAIR VALUE MEASUREMENTS AND MARKETABLE SECURITIES

The Company accounts for its marketable securities in accordance with ASC 820 “Fair Value Measurements and Disclosures.” ASC 820 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. ASC 820 defines 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. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use

of observable inputs 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 for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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.

The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. For Level 2 securities that have market prices from multiples sources, a “consensus price” or a weighted average price for each of these securities can be derived from a distribution-curve-based algorithm which includes market prices obtained from a variety of industrial standard data providers (e.g. Bloomberg), security master files from large financial institutions, and other third-party sources. Level 2 securities with short maturities and infrequent secondary market trades are typically priced using mathematical calculations adjusted for observable inputs when available.

The following table sets forth the Company’s financial assets (cash equivalents and available-for-sale marketable securities) at fair value on a recurring basis as of December 31, 2013 and 2012:

(in thousands)	Fair Value as of December 31, 2013		Basis of Fair Value Measurements
			Level 1		Level 2		Level 3
Money market funds	$	4,285	$	4,285	$	—	$	—
Certificates of Deposit		1,584		—		1,584
Corporate debt securities		49,019		—		49,019		—
Government securities		21,731		—		21,731		—
Municipal securities		2,815				2,815
Commercial paper		2,599		—		2,599		—
Total cash equivalents and marketable securities	$	82,033	$	4,285	$	77,748	$	—
(in thousands)	Fair Value as of December 31, 2012		Basis of Fair Value Measurements
			Level 1		Level 2		Level 3
Money market funds	$	5,886	$	5,886	$	—	$	—
Certificates of deposit		1,185		—		1,185		—
Corporate debt securities		20,242		—		20,242		—
Government securities		27,899		—		27,899		—
Commercial paper		15,613		—		15,613		—
Total cash equivalents and marketable securities	$	70,825	$	5,886	$	64,939	$	—

The Company invests in highly-liquid, investment-grade securities. The following is a summary of the Company’s available-for-sale securities at December 31, 2013 and 2012:

As of December 31, 2013 (in thousands):	Cost Basis		Unrealized Gain		Unrealized Loss			Fair Value
Money market funds	$	4,285	$	—	$	—		$	4,285
Certificates of Deposit		1,584		—		—			1,584
Corporate debt securities		49,001		25		(7	)		49,019
Government securities		21,722		12		(3	)		21,731
Municipal securities		2,814		1		—			2,815
Commercial paper		2,599		—		—			2,599
		82,005		38		(10	)		82,033
Less cash equivalents		7,279		—		—			7,279
Total marketable securities	$	74,726	$	38	$	(10	)	$	74,754
As of December 31, 2012 (in thousands):	Cost Basis		Unrealized Gain		Unrealized Loss			Fair Value
Money market funds	$	5,886	$	—	$	—		$	5,886
Certificates of deposit		1,185		—		—			1,185
Corporate debt securities		20,237		6		(1	)		20,242
Government securities		27,893		12		(6	)		27,899
Commercial paper		15,613		—		—			15,613
		70,814		18		(7	)		70,825
Less cash equivalents		11,006		—		—			11,006
Total marketable securities	$	59,808	$	18	$	(7	)	$	59,819

The Company recognized realized gains of $5,000 in 2013. There were no realized losses in 2013. There were no realized gains or losses in 2012 and 2011. The Company realized no gains in 2013 that were previously classified as unrealized gains and losses in accumulated other comprehensive income at December 31, 2012.

As of December 31, 2013, weighted average maturity for the Company’s available for sale securities was approximately 6.4 months, with the longest maturity being May 2015.

The following table provides the breakdown of the marketable securities with unrealized losses at December 31, 2013 (in thousands):

As of December 31, 2013 (in thousands):	In loss position for less than twelve months
	Fair Value		Unrealized Loss
Government securities	$	2,898	$	(3	)
Corporate debt securities		11,919		(7	)
Total marketable securities	$	14,817	$	(10	)

The Company classifies financial instruments in Level 3 of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In addition to these unobservable inputs, the valuation models for Level 3 financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly. The only Level 3 financial instruments are warrants. The Company determined the fair value of the liability associated with its warrants to purchase 8.3 million shares of outstanding common stock using a Black-Scholes Model. See detailed discussion in Note 8—  Stockholders’ Equity.