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Short-Term and Long-Term Investments
 9 Months Ended
Sep. 30, 2015
Investments, Debt and Equity Securities [Abstract]  
Short-Term and Long-Term Investments

2. Short-Term and Long-Term Investments

As of September 30, 2015 and December 31, 2014, the Company held one auction rate security that had experienced failed auctions of $3,000,000 at par value, which was purchased through and is held by a broker-dealer affiliate of Bank of America, N.A. (the “Failed Auction Security”). The Failed Auction Security held by the Company is Aaa/AA+ rated by major credit rating agencies, collateralized by student loans, and guaranteed by the U.S. Department of Education under the Federal Family Education Loan Program. Management is not aware of any reason to believe the issuer of the Failed Auction Security is presently at risk of default. Through September 30, 2015, the Company has continued to receive interest payments on the Failed Auction Security in accordance with the terms of its indenture. Management believes the Company ultimately should be able to liquidate the Failed Auction Security without significant loss primarily due to the overall quality of the issue held and the collateral securing the substantial majority of the underlying obligation. However, current conditions in the auction rate securities market have led management to conclude the recovery period for the Failed Auction Security exceeds 12 months. As a result, the Company continued to classify the Failed Auction Security as long-term as of September 30, 2015.

The following is a summary of available-for-sale securities (in thousands):

 

September 30, 2015

    Cost      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		      Estimated
Fair
Value		  

Failed Auction Security

    $ 3,000       $ —         $ 371       $ 2,629  

Brokered certificates of deposit

      340         1         —           341  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 3,340       $ 1       $ 371       $ 2,970  
  

 

 

     

 

 

     

 

 

     

 

 

  

December 31, 2014

    Cost      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		      Estimated
Fair
Value		  

Failed Auction Security

    $ 3,000      $ —        $ 425      $ 2,575  

Brokered certificates of deposit

      700        —          3        697  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 3,700      $ —        $ 428      $ 3,272  
  

 

 

     

 

 

     

 

 

     

 

 

  

As of September 30, 2015, the Failed Auction Security had been in an unrealized loss position for greater than 12 months.

The amortized cost and estimated fair value of available-for-sale securities on September 30, 2015, by contractual maturities, are shown below (in thousands):

 

     Cost      Estimated
Fair Value		  

Due in two to ten years

    $ 340      $ 341  

Due in ten to twenty years

      —          —    

Due in twenty to forty years

      3,000        2,629  
  

 

 

     

 

 

  
   $ 3,340      $ 2,970  
  

 

 

     

 

 

  

Based on the fair value measurements described in Note 3, the fair value of the Failed Auction Security on September 30, 2015, with a par value of $3,000,000, was estimated by the Company to be approximately $2,629,000. The gross unrealized loss of $371,000 on the Failed Auction Security consists of two types of estimated loss: an aggregate credit loss of $72,000 and an aggregate temporary impairment of $299,000. In determining the amount of credit loss, the Company compared the present value of cash flows expected to be collected to the amortized cost basis of the security, considering credit default risk probabilities and changes in credit ratings as significant inputs, among other factors (See Note 3).

The following table represents a rollforward of the activity related to the credit loss recognized in earnings on available-for-sale auction rate securities held by the Company for the nine months ended September 30 (in thousands):

 

     2015      2014  

Balance at the beginning of the period

    $ 84      $ 395  

Changes in the amount related to credit gain for which other-than- temporary impairment was not previously recognized

      (12 )       (39 ) 
  

 

 

     

 

 

  

Balance at the end of the period

    $ 72      $ 356  
  

 

 

     

 

 

  

At this time, the Company has no intent to sell the impaired Failed Auction Security and does not believe it is more likely than not the Company will be required to sell this security. If current market conditions deteriorate further, the Company may be required to record additional unrealized losses. If the credit rating of the security deteriorates, the Company may be required to adjust the carrying value of the investment through impairment charges recorded in the Condensed Consolidated Statements of Operations, and any such impairment adjustments may be material.

Based on the Company’s ability to access cash and cash equivalents and its expected operating cash flows, management does not anticipate the current lack of liquidity associated with the Failed Auction Security held will affect the Company’s ability to execute its current operating plan.