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Fair Value Measurements of Financial Assets and Liabilities | 9 Months Ended
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Sep. 30, 2014
Fair Value Measurements of Financial Assets and Liabilities | 3. Fair Value Measurements of Financial Assets and Liabilities The Company defines fair value 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. For certain of our financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, accounts payable, and other current liabilities the carrying amounts approximate their fair value due to the relatively short maturity of these balances. The Company has assets that are valued in accordance with the provisions of the authoritative guidance that addresses fair value measurements. This guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
| • |  | Level 1—Valuations based on real-time quotes for transactions in active exchange markets involving identical assets.
| • |  | Level 2—Valuations based on readily available pricing sources for comparable instruments, identical instruments in less active markets, or models using market observable inputs.
| • |  | Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
Assets Measured at Fair Value on a Recurring Basis The following table represents information about the Company’s investments measured at fair value (in thousands).
|  | Fair value of investments as of September 30, 2014 |
|  | Total |  |  | Quoted Prices In Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Money market funds (1) |  | $ | 2,709 |  |  | $ | 2,709 |  |  | $ | — |  |  | $ | — |
Corporate bonds (2) |  |  | 34,930 |  |  |  | — |  |  |  | 34,930 |  |  |  | — |
|  | $ | 37,639 |  |  | $ | 2,709 |  |  | $ | 34,390 |  |  | $ | — |
|  | Fair value of investments as of December 31, 2013 |
|  | Total |  |  | Quoted Prices In Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Money market funds (1) |  | $ | 6,088 |  |  | $ | 6,088 |  |  | $ | — |  |  | $ | — |
Term deposits (1) |  |  | 7,122 |  |  |  | 7,122 |  |  |  | — |  |  |  | — |
Commercial paper (2) |  |  | 4,498 |  |  |  | — |  |  |  | 4,498 |  |  |  | — |
Corporate bonds (2) |  |  | 32,652 |  |  |  | — |  |  |  | 32,652 |  |  |  | — |
Federal and municipal obligations (3) |  |  | 4,000 |  |  |  | — |  |  |  | 4,000 |  |  |  | — |
|  | $ | 54,360 |  |  | $ | 13,210 |  |  | $ | 41,150 |  |  | $ | — |
(1) | Included in cash and cash equivalents in the Company’s Condensed Consolidated Balance Sheet.
(2) | Included in short-term investments in the Company’s Condensed Consolidated Balance Sheet.
(3) | Of this amount, approximately $3 million was included in cash equivalents at December 31, 2013 and the remainder was included in short-term investments in the Company’s Condensed Consolidated Balance Sheet.
Certain items in the table above are classified as Level 2 items because quoted prices in an active market are not readily accessible for those specific financial assets, and the Company may have relied on alternative pricing methods that do not rely exclusively on quoted prices to determine the fair value of the investments. The Company’s cash, cash equivalents, and short-term investments are as follows (in thousands):
|  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized (Losses) |  |  | Estimated Fair Value |
Balance at September 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Classified as cash and cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 20,697 |  |  | $ | — |  |  | $ | — |  |  | $ | 20,697 |
Money market funds |  |  | 2,709 |  |  |  | — |  |  |  | — |  |  |  | 2,709 |
|  |  | 23,406 |  |  |  | — |  |  |  | — |  |  |  | 23,406 |
Classified as short-term investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate bonds (4) |  |  | 34,973 |  |  |  | 8 |  |  |  | (51 | ) |  |  | 34,930 |
|  |  | 34,973 |  |  |  | 8 |  |  |  | (51 | ) |  |  | 34,930 |
Total |  | $ | 58,379 |  |  | $ | 8 |  |  | $ | (51 | ) |  | $ | 58,336 |
(4) | Securities totaling approximately $18.9 million were in an unrealized loss position at September 30, 2014. None of these securities were in a continuous unrealized loss position for greater than 12 months.
|  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized (Losses) |  |  | Estimated Fair Value |
Balance at December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Classified as cash and cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 25,540 |  |  | $ | — |  |  | $ | — |  |  | $ | 25,540 |
Term deposits |  |  | 7,122 |  |  |  | — |  |  |  | — |  |  |  | 7,122 |
Money market funds |  |  | 6,088 |  |  |  | — |  |  |  | — |  |  |  | 6,088 |
Federal and municipal obligations |  |  | 3,000 |  |  |  | — |  |  |  | — |  |  |  | 3,000 |
|  |  | 41,750 |  |  |  | — |  |  |  | — |  |  |  | 41,750 |
Classified as short-term investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial paper (5) |  |  | 4,498 |  |  |  | — |  |  |  | — |  |  |  | 4,498 |
Corporate bonds (5) |  |  | 32,654 |  |  |  | — |  |  |  | (2 | ) |  |  | 32,652 |
Federal and municipal obligations |  |  | 1,000 |  |  |  | — |  |  |  | — |  |  |  | 1,000 |
|  |  | 38,152 |  |  |  | — |  |  |  | (2 | ) |  |  | 38,150 |
Total |  | $ | 79,902 |  |  | $ | — |  |  | $ | (2 | ) |  | $ | 79,900 |
(5) | Securities totaling approximately $18.1 million were in an unrealized loss position at December 31, 2013. None of these securities were in a continuous unrealized loss position for greater than 12 months.
Our cash equivalent and short-term investment portfolio as of September 30, 2014 consists of investment grade U.S. Government Agency securities, taxable money market mutual funds and taxable commercial paper and corporate notes. We follow an established investment policy and set of guidelines to monitor, manage and limit our exposure to interest rate and credit risk. The policy sets forth credit quality standards and limits our exposure to any one issuer. As of September 30, 2014, we had no direct investments in structured investment vehicles, sub-prime mortgage-backed securities or collateralized debt obligations and no exposure to these financial instruments through our indirect holdings in money market mutual funds. During the first nine months of fiscal years 2014 and 2013 we had no impairment charge associated with our short-term investment portfolio. While we cannot predict future market conditions or market liquidity, we regularly review our investments and associated risk profiles, which we believe will allow us to effectively manage the risks of our investment portfolio. Short-term investments are classified as available-for-sale and are recorded on the Company’s Consolidated Balance Sheet at fair market value with unrealized gains or losses reported as a separate component of Accumulated Other Comprehensive (loss) Income. At September 30, 2014, the Company has classified all of its securities with original maturities beyond 90 days as short-term investments, even though the stated maturity dates may be one year or more beyond the current balance sheet date as these investments remain highly liquid and available for use in current operations.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13504-108611 + Details
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