Short-Term and Long-Term Investments

12 Months Ended

Dec. 31, 2020

Investments, Debt and Equity Securities [Abstract]

4. SHORT-TERM AND LONG-TERM INVESTMENTS

As of December 31, 2020 the Company held $50,166,000

of short-term investments, consisting of obligations of the U.S. Treasury, all of which were debt securities with original maturities greater than three months but less than one year the time of purchase.

As of December 31, 2020 and 2019, the Company held one auction rate security with a par value of $3,000,000, purchased through and held in custody by a broker-dealer affiliate of Bank of America, N.A., that has experienced failed auctions (the “Failed Auction Security”) since February 2008. The Failed Auction Security held by the Company is Aaa/AA+ rated by major credit rating agencies, is collateralized by student loans, and is 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 December 31, 2020, 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 December 31, 2020.

Details of our investments are as follows (in thousands):


	December 31, 2020
	Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Measured at fair value:
Available-for-sale debt securities:
Money Market Funds	$	69,493	$	—	$	—
U.S. Treasury Obligations		19,998		50,166		—
Failed Auction Security		—		—		2,517

Total		89,491		50,166		2,517
Other measurement basis:
Cash on hand		72,251		—		—

Total	$	161,742	$	50,166	$	2,517


	December 31, 2019
	Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Measured at fair value:
Available-for-sale debt securities:
Money Market Funds	$	9,630	$	—	$	—
Failed Auction Security		—		—		2,510

Total		9,630		—		2,510

Other measurement basis:
Cash on hand		75,038		—		—

Total	$	84,668	$	—	$	2,510

The following is a summary of the

available-for-sale

securities (in thousands):


December 31, 2020	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Treasury Obligations	$	70,172	$	—	$	8	$	70,164
Failed Auction Security		3,000		—		483		2,517


December 31, 2019
Failed Auction Security	$	3,000	$	—	$	490	$	2,510

As of December 31, 2020 and 2019, the Failed Auction Security had been in an unrealized loss position for greater than 12 months.

The amortized cost and estimated fair value of the

available-for-sale

securities on December 31, 2020,

by type and contractual maturities, are shown below (in thousands):

U.S. Treasury Obligations:
	Cost		Estimated Fair Value
Maturities greater than three months but less than one year	$	50,174	$	50,166
Maturities less than three months		19,998		19,998

	$	70,172	$	70,164



Failed Auction Security:
	Cost		Estimated Fair Value
Due in twenty to forty years	$	3,000	$	2,517

Based on the fair value measurements described in Note 5, the fair value of the Failed Auction Security on December 31, 2020, with a par value of $3,000,000, was estimated by the Company to be approximately $2,517,000. The gross unrealized loss of $483,000 on the Failed Auction Security consists of two types of estimated loss: an aggregate credit loss of $33,000 and an aggregate temporary impairment of $450,000. 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 5).

The following table represents a rollforward of the activity related to the credit loss recognized in earnings on the Failed Auction Security held by the Company for the years ended December 31 (in thousands):


	2020			2019			2018
Balance at the beginning of the period	$	37		$	41		$	48
Reductions in the amount related to credit gain for which other-than-temporary impairment was not previously recognized		(4	)		(4	)		(7	)

Balance at the end of the period	$	33		$	37		$	41

At this time, the Company has no intent to sell the Failed Auction Security and does not believe it is more likely than not the Company will be required to sell the 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 Consolidated Statement of Operations, and any such impairment adjustments may be material.

Based on the Company’s ability to access cash and cash equivalents, its short-term investments, 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.