Annual report pursuant to Section 13 and 15(d)

Fair Value

v2.4.0.6
Fair Value
 12 Months Ended
Jan. 31, 2012
Fair Value [Abstract]  
Fair Value
4. Fair Value

The Company records cash equivalents, short-term investments and its preferred stock warrant liability at fair value.

Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are required to be disclosed by level within the following fair value hierarchy:

Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument's anticipated life.

Level 3 – Inputs lack observable market data to corroborate management's estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

When determining fair value, whenever possible the Company uses observable market data, and relies on unobservable inputs only when observable market data is not available.

 

The fair value of these financial assets and liabilities was determined using the following inputs at January 31, 2011 and 2012:

 

     Fair Value Measurement Using      Total  
     Quoted Prices in
Active Markets
for Identical
Instruments
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		     
     (in thousands)  

Fair values as of January 31, 2011

            

Assets:

            

Money market funds

    $ 38,074       $ —         $ —         $ 38,074   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets measured at fair value

    $ 38,074       $ —         $ —         $ 38,074   
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities:

            

Preferred stock warrants

    $ —         $ —         $ 1,027       $ 1,027   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities measured at fair value

    $ —         $ —         $ 1,027       $ 1,027   
  

 

 

     

 

 

     

 

 

     

 

 

  

Fair values as of January 31, 2012

            

Assets:

            

Money market funds

    $ 31,614       $ —         $ —         $ 31,614   

Commercial paper

      —           30,480         —           30,480   

Corporate debt securities

      —           20,983         —           20,983   

U.S. agency notes

      —           900         —           900   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total assets measured at fair value

    $ 31,614       $ 52,363       $ —         $ 83,977   
  

 

 

     

 

 

     

 

 

     

 

 

  

The Company's money market funds are classified as Level 1 within the fair value hierarchy because they are valued primarily using quoted market prices. The Company's other cash equivalents and short-term investments are classified as Level 2 within the fair value hierarchy because they are valued using professional pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in active markets. The Company's preferred stock warrants were classified as Level 3 within the fair value hierarchy because they were valued using unobservable inputs and management's judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such financial instruments.

 

The following table provides a roll-forward of the fair value of the preferred stock warrants categorized as Level 3 for the years ended January 31, 2011 and 2012 (in thousands):

 

Balance at January 31, 2010

    $ 300   

Exercise of preferred stock warrants

      (142 ) 

Remeasurement of preferred stock warrants

      869   
  

 

 

  

Balance at January 31, 2011

      1,027   

Remeasurement of preferred stock warrants

      4,499   

Exercise of preferred stock warrants

      (3,374 ) 

Conversion of preferred stock warrants to common stock warrants

      (2,152 ) 
  

 

 

  

Balance at January 31, 2012

    $ —