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ARRAY BIOPHARMA, INC.
Notes to the Financial Statements
For the Fiscal Years Ended June 30, 2012, 2011 and 2010
NOTE 3 MARKETABLE SECURITIES
Marketable securities consisted of the following as of June 30, 2012 (dollars in thousands):
Gross
Gross
Amortized
Unrealized Unrealized
Fair
Cost
Gains
Losses
Value
Short-term available-for-sale securities:
U.S. Government agency securities
$ 33,129
$
-
$
(1)
$ 33,128
Mutual fund securities
250
-
250
Sub-total
33,379
-
(1)
33,378
Long-term available-for-sale securities:
Mutual fund securities
473
-
-
473
Sub-total
473
-
-
473
Total
$ 33,852
$
-
$
(1)
$ 33,851
Marketable securities consisted of the following as of June 30, 2011 (dollars in thousands):
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
Short-term available-for-sale securities:
U.S. Government agency securities
$ 15,598
$
3
$
-
$ 15,601
Mutual fund securities
385
-
-
385
Sub-total
15,983
3
-
15,986
Long-term available-for-sale securities:
Mutual fund securities
623
-
-
623
Sub-total
623
-
-
623
Total
$ 16,606
$
3
$
-
$ 16,609
The majority of the mutual fund securities relate to securities held under the Company's Deferred
Compensation Plan.
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ARRAY BIOPHARMA, INC.
Notes to the Financial Statements
For the Fiscal Years Ended June 30, 2012, 2011 and 2010
The fair value measurement categories of these marketable securities were as follows (dollars in
thousands):
June 30,
2012
2011
Quoted prices in active markets for
identical assets (Level 1)
$ 33,851
$ 16,609
Observable inputs other than quoted
prices in active markets (Level 2)
-
-
Significant unobservable inputs (Level 3)
-
-
$ 33,851
$ 16,609
The amortized cost and estimated fair value of available-for-sale securities by contractual maturity as of
June 30, 2012 is (dollars in thousands):
Amortized
Cost
Fair Value
Due in one year or less
$ 33,379
$ 33,378
Due in one year to three years
473
473
$ 33,852
$ 33,851
Auction Rate Securities
As of June 30, 2010, the Company held five ARS with a par value of $26.3 million, a cost basis of
$11.0 million and an estimated fair value of $16.6 million. All of these securities were sold as of March 31,
2011.
Prior to the disposition of the ARS, and beginning in fiscal 2008, the auctions for all of the Company's ARS
were unsuccessful and the Company was unable to readily liquidate its ARS. The lack of successful
auctions resulted in the interest rate on these investments increasing to LIBOR plus additional basis
points as stipulated in the auction rate agreements, ranging from 200 to 350 additional basis points, which
continued from the time the auctions failed through their disposition in the quarter ended March 31, 2011.
The Company's ARS were measured using Level III, or unobservable inputs, as there was no active
market for the securities. The most significant unobservable inputs used in this method were the
estimates of the amount of time until a liquidity event would occur and the discount rate, which
incorporates estimates of credit risk and a liquidity premium (discount). Due to the inherent complexity in
valuing these securities, the Company engaged a third-party valuation firm to perform an independent
valuation of the ARS as part of its overall fair value analysis.
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