Marketable Securities and Fair Value Measurements

3 Months Ended

Jun. 30, 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 included in stockholders’ equity.

The Company’s marketable securities at June 30, 2014 and March 31, 2014 are invested in the following:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value
	(in $000’s)
At June 30, 2014:
US Treasury securities	$	19,486	$	—	$	—		$	19,486
Short-term government-backed securities		32,963		11		(2	)		32,972
Long-term government-backed securities		33,758		11		(9	)		33,760
	$	86,207	$	22	$	(11	)	$	86,218

	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

Fair Value Hierarchy

Fair value is defined as the price that would be received upon the sale of 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 values are 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 financial instruments recorded at fair value in the consolidated balance sheet, classified according to the three categories described above:

	Level 1		Level 2		Level 3		Total
	(in $000’s)
At June 30, 2014:
U.S. Treasury securities		—	$	19,486		—	$	19,486
Short-term government-backed securities		—		32,972		—		32,972
Long-term government-backed securities		—		33,760		—		33,760
		—	$	86,218		—	$	86,218

	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