Marketable Securities and Fair Value Measurements

12 Months Ended

Mar. 31, 2014

Marketable Securities and Fair Value Measurements

Note 3. Marketable Securities and Fair Value Measurements

Marketable Securities

The Company’s marketable securities are classified as available-for-sale securities and, accordingly, are recorded at fair value. The difference between amortized cost and fair value is reported as a component of other comprehensive income.

The Company’s marketable securities at March 31, 2014 and 2013 are classified on the balance sheet as follows (in thousands):

	March 31,
	2014		2013
	(in $000’s)
Short-term marketable securities	$	55,663	$	67,256
Long-term marketable securities		41,761		11,406
	$	97,424	$	78,662

The Company’s marketable securities at March 31, 2014 and 2013 are invested in the following (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value
	(in $000’s)
At March 31, 2014:
US Treasury securities	$	31,487	$	—	$	—		$	31,487
Short-term government-backed securities		24,174		6		(4	)		24,176
Long-term government-backed securities		41,779		8		(26	)		41,761
	$	97,440	$	14	$	(30	)	$	97,424

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value
	(in $000’s)
At March 31, 2013:
US Treasury securities	$	59,020	$	—	$	—		$	59,020
Short-term government-backed securities		8,235		1		—			8,236
Long-term government-backed securities		11,405		3		(2	)		11,406
	$	78,660	$	4	$	(2	)	$	78,662

Fair Value Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

Level 2 includes financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Level 3 is comprised of unobservable inputs that are supported by little or no market activity. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The following table presents the Company’s fair value hierarchy for its financial instruments measured at fair value as of March 31, 2014 and 2013:

	Level 1		Level 2		Level 3		Total
	(in $000’s)
At March 31, 2014:
U.S. Treasury securities	$	—	$	31,487	$	—	$	31,487
Short-term government-backed securities		—		24,176		—		24,176
Long-term government-backed securities		—		41,761		—		41,761
	$	—	$	97,424	$	—	$	97,424

	Level 1		Level 2		Level 3		Total
	(in$000’s)
At March 31, 2013:
U.S. Treasury securities	$	—	$	59,020	$	—	$	59,020
Short-term government-backed securities		—		8,236		—		8,236
Long-term government-backed securities		—		11,406		—		11,406
	$	—	$	78,662	$	—	$	78,662

In May 2013, the Company invested $0.8 million in preferred stock of a private technology company. In addition, the Company committed to invest an additional $0.7 million if this private technology company achieves certain milestones or otherwise at the Company’s option. This other investment is accounted for using the cost method and is measured at fair value on a nonrecurring basis only if there are identified events or changes in circumstance that may have a significant adverse effect on the fair value of these investments. The aggregate carrying amount of this other investment was $0.8 million as of March 31, 2014 and is classified within other assets in the consolidated balance sheets.