FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2012

FAIR VALUE MEASUREMENTS

Schedule of components and classification of financial assets and liabilities measured at fair value

	2012										2011
	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	306,604		$	306,604	$	—	$	—		$	27,711		$	27,711	$	—	$	—
Available-for-sale equity securities	4,410			4,410		—		—			3,364			3,364		—		—
Available-for-sale debt securities:
Corporate bonds	—			—		—		—			2,974			2,974		—		—
Auction rate floating securities	7,167			—		—		7,167			—			—		—		—
Total financial assets	$	318,181		$	311,014	$	—	$	7,167		$	34,049		$	34,049	$	—	$	—
Cash equivalents	$	306,604		$	306,604	$	—	$	—		$	27,711		$	27,711	$	—	$	—
Marketable securities	11,577			4,410		—		7,167			6,338			6,338		—		—
Total financial assets	$	318,181		$	311,014	$	—	$	7,167		$	34,049		$	34,049	$	—	$	—
Liabilities:
Acquisition-related contingent consideration	$	(455,082	)	$	—	$	—	$	(455,082	)	$	(420,084	)	$	—	$	—	$	(420,084	)

Schedule of reconciliation of contingent consideration obligations measured on a recurring basis using significant unobservable inputs (Level 3)

	2012			2011
Balance, beginning of year	$	(420,084	)	$	(20,220	)
Total unrealized gains:
Included in net (loss) income:
Arising during the year(1)	5,266			10,986
Reclassification from other comprehensive income (loss)	—			—
Included in other comprehensive income (loss):
Arising during the year	(784		)	831
Acquisition-related contingent consideration:
Issuances(2)	(145,728		)	(443,481		)
Payments(3)	106,248			31,800
Balance, end of year	$	(455,082	)	$	(420,084	)

(1) For the year ended December 31, 2012, a net gain of $5.3 million was recognized as Acquisition-related contingent consideration in the consolidated statements of (loss) income. The Acquisition-related contingent consideration net gain was primarily driven by (i) a net gain of $10.3 million related to the iNova acquisition, primarily due to changes in the estimated probability of achieving the milestones, partially offset by (ii) a net loss of $6.5 million related to the Elidel®/Xerese® license agreement, primarily driven by fair value adjustments to reflect accretion for the time value of money, partially offset by changes in the projected revenue forecast resulting from the FDA’s denial of the Company’s Citizen’s Petition regarding Zovirax® ointment, as described in note 3.

For the year ended December 31, 2011, $11.0 million was recognized as Acquisition-related contingent consideration in the consolidated statements of (loss) income.  The Acquisition-related contingent consideration gain was primarily driven by a $13.2 million gain related to assessment of the net sales milestones for the 2011 calendar year with respect to the PharmaSwiss acquisition and a $9.4 million gain related to assessment of the milestones with respect to the A002 program, which was suspended in 2011. These gains were partially offset by fair value adjustments to reflect accretion for the time value of money related to the Elidel®/Xerese® license agreement.

(2) Relates primarily to the OraPharma, Gerot Lannach, QLT, Atlantis and University Medical acquisitions as described in note 3.

(3) Relates primarily to payments of acquisition-related contingent consideration related to the Elidel®/Xerese® license agreement and the PharmaSwiss acquisition.