THRX » Topics » 5. Fair Value Measurements

These excerpts taken from the THRX 10-K filed Feb 27, 2009.

5. Fair Value Measurements

        In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 defines fair value, provides a consistent framework for measuring fair value GAAP and expands fair value financial statement disclosure requirements. SFAS 157 does not require any new fair value measurements. It only applies to accounting pronouncements that already require or permit fair value measures, except for standards that relate to share-based payments (SFAS 123(R)). The Company adopted SFAS 157 effective January 1, 2008.

        SFAS 157's valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect the Company's market assumptions. SFAS 157 classifies these inputs into the following hierarchy:

        Level 1 Inputs—Quoted prices for identical instruments in active markets.

        Level 2 Inputs—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

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THERAVANCE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Fair Value Measurements (Continued)

        Level 3 Inputs—Unobservable inputs and little, if any, market activity for the assets.

        The fair value of these financial assets was determined using the following inputs at December 31, 2008:

 
  Fair Value Measurements at Reporting Date Using  
 
  Quoted Prices
in Active
Markets for
Identical
Assets
  Significant
Other
Observable
Inputs
  Significant
Unobservable
Inputs
   
 
(in thousands)
  Level 1   Level 2   Level 3   Total  

U.S. government securities

  $ 39,632   $   $   $ 39,632  

U.S. government agency securities

    28,103     966         29,069  

U.S. corporate notes

    9,712     9,965         19,677  

U.S. commercial paper

        24,942         24,942  

Certificates of deposit

    60             60  

Money market funds

    91,035             91,035  
                   
 

Total

  $ 168,542   $ 35,873   $   $ 204,415  
                   

        SFAS 157 requires separate disclosure of assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a nonrecurring basis.

5. Fair Value Measurements




        In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 defines fair value, provides a consistent framework for measuring
fair value GAAP and expands fair value financial statement disclosure requirements. SFAS 157 does not require any new fair value measurements. It only applies to accounting pronouncements that
already require or permit fair value measures, except for standards that relate to share-based payments (SFAS 123(R)). The Company adopted SFAS 157 effective January 1, 2008.



        SFAS 157's
valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable
inputs reflect the Company's market assumptions. SFAS 157 classifies these inputs into the following hierarchy:



        Level 1 Inputs—Quoted prices for identical instruments in active markets.




        Level 2 Inputs—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are
not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.



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THERAVANCE, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



5. Fair Value Measurements (Continued)



        Level 3 Inputs—Unobservable inputs and little, if any, market activity for the assets.




        The
fair value of these financial assets was determined using the following inputs at December 31, 2008:






























































































































































































 
 Fair Value Measurements at Reporting Date Using  
 
 Quoted Prices

in Active

Markets for

Identical

Assets
 Significant

Other

Observable

Inputs
 Significant

Unobservable

Inputs
  
 
(in thousands)
 Level 1  Level 2  Level 3  Total  

U.S. government securities

 $39,632 $ $ $39,632 

U.S. government agency securities

  28,103  966    29,069 

U.S. corporate notes

  9,712  9,965    19,677 

U.S. commercial paper

    24,942    24,942 

Certificates of deposit

  60      60 

Money market funds

  91,035      91,035 
          
 

Total

 $168,542 $35,873 $ $204,415 
          




        SFAS 157
requires separate disclosure of assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a nonrecurring basis.



EXCERPTS ON THIS PAGE:

10-K (2 sections)
Feb 27, 2009
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