Note 3 – Fair Value Measurements and Marketable Securities

We, in accordance with U.S. GAAP, define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Effective January 1, 2008, we elected the fair value option for certain of our marketable securities purchased since such adoption. Management initially elected the fair value option for certain of our marketable securities because it views such investment securities as highly liquid and available to be drawn upon for working capital purposes making them similar to cash and cash equivalents. Accordingly, for such investments, we record net unrealized gain or loss in the other income (loss) - investment and interest caption in our consolidated statements of comprehensive income. We have not elected the fair value option for marketable securities acquired after December 31, 2009. Although these assets continue to be highly liquid and available, we do not believe these assets are representative of our operating activities. These assets are representative of our investing activities, and they will be available for future needs of the Company to support its current and projected growth.

Certain of our assets and liabilities are reported at fair value in the accompanying balance sheets. Such assets and liabilities include cash and cash equivalents, marketable securities, accounts and notes receivable, accounts payable, income taxes payable and other accrued expenses. The following tables provide fair value measurement information for our marketable securities and deferred compensation fund investment assets as of September 30, 2012 and December 31, 2011.


	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	Fair Value Measurements
Financial Assets:	As of September 30, 2012
Marketable securities
Municipal bonds	$	21,354,000	$	21,354,000	$	—	$	21,354,000	$	—
Equity securities - Deferred comp fund
Money Market	$	3,456,000	$	3,456,000	$	—	$	3,456,000	$	—
Large Cap Value		3,344,000		3,344,000		3,344,000		—		—
Large Cap Growth		2,682,000		2,682,000		2,682,000		—		—
Fixed income		1,903,000		1,903,000		1,903,000		—		—
Small Cap Value		1,484,000		1,484,000		1,484,000		—		—
Balanced and Lifestyle		1,223,000		1,223,000		1,223,000		—		—
Speciality		947,000		947,000		947,000		—		—
Large Cap Blend		843,000		843,000		843,000		—		—
International		735,000		735,000		735,000		—		—
Mid Cap Growth		358,000		358,000		358,000		—		—
Small Cap Growth		70,000		70,000		70,000		—		—
Mid Cap Value		68,000		68,000		68,000		—		—

Equity securities - Deferred comp fund	$	17,113,000	$	17,113,000	$	13,657,000	$	3,456,000	$	—


	As of December 31, 2011
Marketable securities
Municipal bonds	$	31,337,000	$	31,337,000	$	—	$	31,337,000	$	—
Equity securities - Deferred comp fund
Money Market	$	3,029,000	$	3,029,000	$	—	$	3,029,000	$	—
Large Cap Value		2,716,000		2,716,000		2,716,000		—		—
Large Cap Growth		2,184,000		2,184,000		2,184,000		—		—
Small Cap Value		1,244,000		1,244,000		1,244,000		—		—
Fixed Income		1,429,000		1,429,000		1,429,000		—		—
Specialty		832,000		832,000		832,000		—		—
Balanced and Lifestyle		814,000		814,000		814,000		—		—
International		562,000		562,000		562,000		—		—
Large Cap Blend		500,000		500,000		500,000		—		—
Mid Cap Growth		363,000		363,000		363,000		—		—
Mid Cap Value		54,000		54,000		54,000		—		—
Small Cap Growth		53,000		53,000		53,000		—		—

Equity securities - Deferred comp fund	$	13,780,000	$	13,780,000	$	10,751,000	$	3,029,000	$	—

The fair value of the municipal bonds is measured using pricing service data from an external provider. The fair value of equity investments in the funded deferred compensation plan are valued (Level 1) based on quoted market prices. The money market fund in the funded deferred compensation plan is valued (Level 2) at the net asset value (“NAV”) of the shares held by the plan at the end of the period. As a practical expedient, fair value of our money market fund is valued at the NAV as determined by the custodian of the fund. The money market fund includes short-term United States dollar denominated money-market instruments. The money market fund can be redeemed at its NAV on its measurement date as there are no significant restrictions on the ability of participants to sell this investment.

For the nine month period ended September 30, 2012, the other income (loss) - investment and interest caption on our consolidated statements of comprehensive income includes unrealized losses from marketable securities of $82,000 for investments recorded under the fair value option. There were no gains or losses for the three month period ended September 30, 2012 as there were no investments recorded under the fair value option.

For the three and nine month periods ended September 30, 2011, the other income (loss) - investment and interest caption on our consolidated statements of income includes unrealized losses from marketable securities of $125,000 and $377,000, respectively, for investments recorded under the fair value option.


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Other-than- temporary Impairments
September 30, 2012
Type of security:
Municipal bonds - available for sale	$	21,070,000	$	284,000	$	—		$	21,354,000	$	—

Total debt securities	$	21,070,000	$	284,000	$	—		$	21,354,000	$	—


December 31, 2011
Type of security:
Municipal bonds	$	2,167,000	$	82,000	$	—		$	2,249,000	$	—
Municipal bonds - available for sale		28,745,000		352,000		(9,000	)		29,088,000		—

Total debt securities	$	30,912,000	$	434,000	$	(9,000	)	$	31,337,000	$	—

For the three and nine month periods ended September 30, 2012, we received total proceeds of $1,100,000 and $15,971,000 respectively, from sales of available for sale municipal bonds. There were no realized gains from the sale of available for sale municipal bonds for the three month period ended September 30, 2012. The sales of available for sale municipal bonds for the nine months ended September 30, 2012 resulted in realized gains of $224,000 recorded in other income (loss), investment and interest caption on our statement of comprehensive income. The basis for the sale of these securities was a specific identification of each bond sold during this period.

For the three and nine month periods ended September 30, 2011, we received total proceeds of $3,134,000 and $5,760,000 respectively, from sales of available for sale municipal bonds. These sales resulted in realized gains of $48,000 and $50,000 recorded in other income (loss), investment and interest caption on our statement of comprehensive income for the three and nine month periods ended September 30, 2011, respectively. The basis for the sale of these securities was a specific identification of each bond sold during this period.

Set forth below are contractual maturities of total debt securities held at September 30, 2012 and December 31, 2011.


	As of September 30, 2012
Contractual maturity:	Municipal Bonds		Municipal Bonds - Available for Sale		Total Debt Securities
Maturing in one year or less	$	—	$	4,381,000	$	4,381,000
Maturing after one year through three years		—		11,094,000		11,094,000
Maturing after three years		—		5,879,000		5,879,000

Total debt securities	$	—	$	21,354,000	$	21,354,000


	As of December 31, 2011
Contractual maturity:	Municipal Bonds		Municipal Bonds - Available for Sale		Total Debt Securities
Maturing in one year or less	$	34,000	$	4,100,000	$	4,134,000
Maturing after one year through three years		2,215,000		18,874,000		21,089,000
Maturing after three years		—		6,114,000		6,114,000

Total debt securities	$	2,249,000	$	29,088,000	$	31,337,000