Quarterly report pursuant to Section 13 or 15(d)

Fair Value

 v2.3.0.11
Fair Value
 6 Months Ended
Jun. 30, 2011
Fair Value  
Fair Value

10.       Fair Value

 

Under FASB ASC 820, Fair Value Measurements and Disclosures, fair value is defined as the price at which an asset could be exchanged or a liability transferred in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied.

 

Assets and liabilities recorded at fair value in our financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

 

Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets at the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

 

The fair valued assets we hold that are generally included under this Level 1 are money market securities where fair value is based on publicly quoted prices.

 

Level 2 — Are inputs, other than quoted prices included in Level 1, that are either directly or indirectly observable for the asset or liability through correlation with market data at the reporting date and for the duration of the instrument’s anticipated life.

 

The fair valued assets we hold that are generally assessed under Level 2 included government-sponsored enterprise securities, U. S. treasury bills and corporate bonds and commercial paper where fair value is based on valuation methodologies such as models using observable market inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers and other reference data.

 

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 and which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the reporting date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

 

Fair Value Measured on a Recurring Basis

 

Financial assets measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations (in thousands):

 

 

 

Assets at Fair Value as of June 30, 2011

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Money market funds

 

$

23,792

 

$

—

 

$

—

 

$

23,792

 

U. S. treasury bills

 

—

 

9,069

 

—

 

9,069

 

Government-sponsored enterprise securities

 

—

 

119,454

 

—

 

119,454

 

Corporate bonds and commercial paper

 

—

 

126,719

 

—

 

126,719

 

Total

 

$

23,792

 

$

255,242

 

$

—

 

$

279,034

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets at Fair Value as of December 31, 2010

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Money market funds

 

$

8,533

 

$

—

 

$

—

 

$

8,533

 

U. S. treasury bills

 

—

 

8,940

 

—

 

8,940

 

Government-sponsored enterprise securities

 

—

 

77,909

 

—

 

77,909

 

Corporate bonds and commercial paper

 

—

 

81,569

 

—

 

81,569

 

Total

 

$

8,533

 

$

168,418

 

$

—

 

$

176,951