v2.4.0.6
Investments and Fair Value Measurements
 9 Months Ended
Sep. 30, 2012
Investments and Fair Value Measurements [Abstract]  
Investments and Fair Value Measurements
8.             Investments and Fair Value Measurements
We categorize financial assets and liabilities measured and reported at fair value in the financial statements on a recurring basis based upon the level of judgments associated with the inputs used to measure their fair value.  Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs used to determine the fair value of financial assets and liabilities are as follows:

 
·
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 assets or liability through correlation with market data at the measurement date and for the duration of the instrument's anticipated life.
 
·
Level 3 – Inputs reflect management's best 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.
 
Each major category of financial assets and liabilities 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.  The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Financial instruments in Level 1 generally include U.S. treasuries and mutual funds listed in active markets.  Financial instruments in Level 2 generally include municipal bonds listed in secondary markets.

The following table presents assets and liabilities measured at fair value as of September 30, 2012 and December 31, 2011.
 
 
 
Fair Value Measurements at Reporting Date Using
 
 
 
 
 
 
Quoted Prices in
 
 
Quoted Prices in
 
 
 
 
 
 
 
 
 
Active Markets for
 
 
Inactive Markets for
 
 
Significant
 
 
 
 
 
 
Identical Assets
 
 
Identical Assets
 
 
Unobservable Inputs
 
 
 
Total
 
 
(Level 1)
 
 
(Level 2)
 
 
(Level 3)
 
 As of September 30, 2012:
 
 
 
 
 
 
 
 
 
 
 
 
 Assets:
 
 
 
 
 
 
 
 
 
 
 
 
        Cash and cash equivalents
 
$
44,989
 
 
$
44,989
 
 
$
-
 
 
$
-
 
        Mutual funds
 
 
44,759
 
 
 
44,759
 
 
 
-
 
 
 
-
 
        Certificate of deposit
 
 
2,132
 
 
 
2,132
 
 
 
-
 
 
 
-
 
 
 
$
91,880
 
 
$
91,880
 
 
$
-
 
 
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 As of December 31, 2011:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
        Cash and cash equivalents
 
$
14,848
 
 
$
14,848
 
 
$
-
 
 
$
-
 
        Mutual funds
 
 
56,163
 
 
 
56,163
 
 
 
-
 
 
 
-
 
        Government agency bonds
 
 
5,261
 
 
 
-
 
 
 
5,261
 
 
 
-
 
        Certificate of deposit
 
 
2,085
 
 
 
2,085
 
 
 
-
 
 
 
-
 
 
 
$
78,357
 
 
$
73,096
 
 
$
5,261
 
 
$
-
 

The Company's cash and cash equivalents permit daily redemption and the fair values of these investments are based upon the quoted prices in active markets provided by the holding financial institutions. Short-term investments such as U.S. treasury securities, mutual funds and government agency bonds are held to their maturities and are carried at cost, which approximates fair value. The cash equivalents consist of liquid investments with a maturity of three months or less and the short-term investments consist of instruments with maturities greater than three months and less than one year. The certificate of deposit matures in July 2013.

We recognize transfers between levels within the fair value hierarchy, if any, at the end of each quarter. There were no significant transfers into/out of level 1, level 2 or level 3 during the nine months ended September 30, 2012 and 2011.

As of September 30, 2012, we held one security which was in an unrealized loss position with a total estimated fair value of $5.0 million and gross unrealized losses of less than $0.1 million.  We also recorded $0.9 million of gross unrealized gains.  The net unrealized gain of $0.8 million is reported in accumulated other comprehensive income in the stockholder's equity section of our balance sheet.  This security had not been in a continuous unrealized loss position for greater than one year.  The following table summarizes unrealized gains and losses for the nine months ended September 30, 2012.

 
 
September 30, 2012
 
 
 
Amortized Cost
 
 
Gross
Unrealized
Gains
 
 
Gross
Unrealized
Losses
 
 
Estimated Fair
Value
 
 Mutual funds
 
$
43,924
 
 
$
857
 
 
$
(22
)
 
$
44,759
 

As of December 31, 2011, we held two securities which were in an unrealized loss position with a total estimated fair value of $12.6 million and gross unrealized loss of approximately $0.2 million. These securities have not been in a continuous unrealized loss position for greater than one year. The net unrealized gain of $0.5 million is reported in accumulated other comprehensive income in the stockholder's equity section of our balance sheet.  The following table summarizes unrealized gains and losses for the year ended December 31, 2011.

 
 
December 31, 2011
 
 
 
Amortized Cost
 
 
Gross
Unrealized
Gains
 
 
Gross
Unrealized
Losses
 
 
Estimated Fair
Value
 
 Mutual funds
 
$
55,718
 
 
$
652
 
 
$
(207
)
 
$
56,163
 
 Government agency bonds
 
 
5,256
 
 
 
5
 
 
 
-
 
 
 
5,261
 
 
 
$
60,974
 
 
$
657
 
 
$
(207
)
 
$
61,424
 

We review the status of each security quarterly to determine whether an other-than-temporary impairment has occurred.  In making our determination, we consider a number of factors, including: (1) the significance of the decline, (2) whether the securities were rated below investment grade, (3) how long the securities have been in an unrealized loss position, and (4) our ability and intent to retain the investment for a sufficient period of time for it to recover.