Fair Value Measurements

9 Months Ended

Jun. 30, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

(3) Fair Value Measurements

     The accounting guidance on fair value measurements defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. The guidance is applicable for all financial assets and financial liabilities and for all nonfinancial assets and nonfinancial liabilities recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.

     Fair Value Hierarchy

     Accounting guidance on fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

     The Company’s Level 1 asset consists of its investment in OctoPlus, N.V. (see Note 6 for further information). The fair market value of this investment is based on the quoted price of OctoPlus shares traded on the Euronext Amsterdam Stock Exchange.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities 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 asset or liability.

     The Company’s Level 2 assets consist of money market funds, U.S. Treasury securities, corporate bonds, municipal bonds, U.S. agency securities, agency and municipal securities, certain asset-backed securities and mortgage-backed securities. Fair market values for these assets are based on quoted vendor prices and broker pricing where all significant inputs are observable.

Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

     In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company did not significantly change its valuation techniques from prior periods.

     Assets and Liabilities Measured at Fair Value on a Recurring Basis

     In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 (in thousands):

	Quoted Prices
	in Active Markets						Total Fair
	for Identical		Significant Other		Significant		Value as of
	Instruments		Observable Inputs		Unobservable Inputs		June 30,
	(Level 1)		(Level 2)		(Level 3)		2011
Assets:
Cash equivalents	$	—	$	4,337	$	—	$	4,337
Available for sale debt securities
US government obligations		—		29,391		—		29,391
Mortgage backed securities		—		4,145		—		4,145
Municipal bonds		—		2,932		—		2,932
Asset backed securities		—		1,617		—		1,617
Corporate bonds		—		3,672		—		3,672
Other assets		2,476		—		—		2,476
Total assets measured at fair value	$	2,476	$	46,094	$	—	$	48,570

     Short-term investments disclosed in the condensed consolidated balance sheets include held-to-maturity investments totaling $3.1 million as of June 30, 2011. Held-to-maturity investments are carried at an amortized cost.

     The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2010 (in thousands):

	Quoted Prices
	in Active Markets						Total Fair
	for Identical		Significant Other		Significant		Value as of
	Instruments		Observable Inputs		Unobservable Inputs		September 30,
	(Level 1)		(Level 2)		(Level 3)		2010
Assets:
Cash equivalents	$	—	$	10,128	$	—	$	10,128
Available for sale debt securities
US government obligations		—		25,626		704		26,330
Mortgage backed securities		—		4,757		69		4,826
Municipal bonds		—		3,150		—		3,150
Asset backed securities		—		1,113		—		1,113
Corporate bonds		—		5,852		—		5,852
Other assets		2,624		—		—		2,624
Total assets measured at fair value	$	2,624	$	50,626	$	773	$	54,023

     Changes in Level 3 Instruments Measured at Fair Value on a Recurring Basis

     The Company had no financial assets in the three months ended June 30, 2011, that were measured using significant unobservable inputs (Level 3 inputs), thus no table is presented. The following tables reconcile financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Nine Months Ended June 30, 2011
	Available-for-Sale Debt Securities
	U.S. Government			Mortgage
	Obligations			Backed			Total
Balance, September 30, 2010	$	704		$	69		$	773
Transfers into Level 3		—			—			—
Transfers out of Level 3		(695	)		(68	)		(763	)
Total realized and unrealized gains (losses):
Included in other comprehensive income (loss)		19			(1	)		18
Purchases, issuances, sales and settlements, net		(28	)		—			(28	)
Balance, June 30, 2011	$	—		$	—		$	—
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Three Months Ended June 30, 2010
	Available-for-Sale Debt Securities
	U.S. Government			Mortgage
	Obligations			Backed			Total
Balance, March 31, 2010	$	924		$	145		$	1,069
Transfers into Level 3		—			—			—
Total realized and unrealized gains (losses):
Included in other comprehensive income (loss)		(33	)		1			(32	)
Purchases, issuances, sales and settlements, net		(103	)		(3	)		(106	)
Balance, June 30, 2010	$	788		$	143		$	931
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Nine Months Ended June 30, 2010
	Available-for-Sale Debt Securities
	U.S. Government			Mortgage
	Obligations			Backed			Total
Balance, September 30, 2009	$	1,130		$	73		$	1,203
Transfers into Level 3		—			147			147
Transfers out of Level 3		(36	)		(73	)		(109	)
Total realized and unrealized gains (losses):
Included in other comprehensive income (loss)		(39	)		4			(35	)
Purchases, issuances, sales and settlements, net		(267	)		(8	)		(275	)
Balance, June 30, 2010	$	788		$	143		$	931

     Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

     The Company’s investments in non-marketable securities of private companies are accounted for using the cost method as the Company does not exert significant influence over the investee’s operating or financial activities. These investments, as well as held-to-maturity securities, are measured at fair value on a non-recurring basis when they are deemed to be other-than-temporarily impaired. In determining whether a decline in value of non-marketable equity investments in private companies has occurred and is other-than-temporary, an assessment is made by considering available evidence, including the general market conditions in the investee’s industry, the investee’s product development status and subsequent rounds of financing and the related valuation and/or the Company’s participation in such financings. The Company also assesses the investee’s ability to meet business milestones and the financial condition and near-term prospects of the individual investee, including the rate at which the investee is using its cash and the investee’s need for possible additional funding at a potentially lower valuation. The valuation methodology for determining the decline in value of non-marketable equity securities is based on inputs that require management judgment and are Level 3 inputs.