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Investments and Fair Value Measurements
 6 Months Ended
Jun. 30, 2012
Investments and Fair Value Measurements [Abstract]  
Investments and Fair Value Measurements
Note 3. Investments and Fair Value Measurements

Our cash, cash equivalents and investments are classified as follows (in thousands):

June 30, 2012
December 31, 2011
Gross
Gross
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Amortized
Unrealized
Unrealized
Fair
Cost
Gain
(Loss)
Value
Cost
Gain
(Loss)
Value
Classified as:
Cash
$
31,275
$
-
$
-
$
31,275
$
25,299
$
-
$
-
$
25,299
Cash equivalents:
Money market fund
6
-
-
6
857
-
-
857
Total cash equivalents
6
-
-
6
857
-
-
857
Total cash and cash equivalents
31,281
-
-
31,281
26,156
-
-
26,156
Investments (Available for sale):
Certificates of deposit
6,399
5
(7
)
6,397
3,561
5
(3
)
3,563
US Treasury and agency securities
1,200
-
-
1,200
1,200
-
(1
)
1,199
Corporate bonds
8,216
9
(35
)
8,190
9,859
2
(137
)
9,724
Total investments
15,815
14
(42
)
15,787
14,620
7
(141
)
14,486
Total cash, cash equivalents and investments
$
47,096
$           14
$
(42
)
$
47,068
$
40,776
$
7
$
(141
)
$
40,642
Contractual maturities on investments:
Due within 1 year
$
11,494
$
11,465
$
5,521
$
5,505
Due after 1 through 5 years
4,321
4,322
9,099
8,981
$
15,815
$
15,787
$
14,620
$
14,486


We manage our investments as a single portfolio of highly marketable securities that is intended to be available to meet our current cash requirements. We have no investments in auction rate securities. For the three months ended June 30, 2012 and 2011, we had none and $3,000 gross realized losses on sales of our available-for-sale securities, respectively. For the six months ended June 30, 2012 and 2011, we had none and $8,000 gross realized losses on sales of our available-for-sale securities, respectively.

The gross unrealized losses related to our portfolio of available-for-sale securities were primarily due to changes in interest rates and market and credit conditions of the underlying securities. We have determined that the gross unrealized losses on our available-for-sale securities as of June 30, 2012 are temporary in nature. We periodically reviewed our investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality and, our ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value.

The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2012 (in thousands):

In Loss Position
< 12 months
In Loss Position
> 12 months
Total In
Loss Position
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
Value
(Loss)
Value
(Loss)
Value
(Loss)
Investments:
Certificates of deposit
$
3,752
$
(7
)
$
-
$
-
$
3,752
$
(7
)
Corporate bonds
-
-
5,074
(35
)
5,074
(35
)
Total in loss position
$
3,752
$
(7
)
$
5,074
$
(35
)
$
8,826
$
(42
)

Investments in Privately-held Companies

We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business (see Note 10). The investment balances for the companies, including indirect minority investments in privately-held companies through our consolidated joint ventures, are accounted for under the equity method and are included in "other assets" in the condensed consolidated balance sheets and totaled $8.8 million and $8.3 million as of June 30, 2012 and December 31, 2011, respectively. We also maintain minority investments in other unconsolidated privately-held companies which are accounted for under the cost method. Our investments in these privately-held companies are reviewed for other than temporary declines in value on a quarterly basis. These are accounted for under the cost method as we do not have the ability to exercise significant influence over their operations. We monitor our investments for impairment and record reductions in carrying value when events or changes in circumstances indicate that the carrying value may not be recoverable. Reasons for other than temporary declines in value include whether the related company would have insufficient cash flow to operate for the next twelve months, significant changes in the operating performance and changes in market conditions. As of both June 30, 2012 and December 31, 2011, our investments in these unconsolidated privately-held companies had a carrying value of $392,000 and are also included in "other assets" in the condensed consolidated balance sheets.

Fair Value Measurements

Our financial assets and liabilities are valued using market prices on both active markets (Level 1) and less active markets (Level 2). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily-available pricing sources for comparable instruments. Level 3 instrument valuations are obtained from unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. As of June 30, 2012, we did not have any Level 3 assets or liabilities. This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, we measure certain financial assets and liabilities at fair value, primarily consisting of our short-term and long-term investments.
 
The type of instrument valued based on quoted market prices in active markets include our money market funds, which are generally classified within Level 1 of the fair value hierarchy. We classify all of our available-for-sale securities as having Level 2 inputs. The valuation techniques used to measure the fair value of these financial instruments having Level 2 inputs were derived from quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820, Fair Value Measurement, as of June 30, 2012 (in thousands):

Balance as of
June 30, 2012
Quoted Prices in
Active Markets of
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Assets:
Cash equivalents and investments:
Money market fund
$
6
$
6
$
-
Certificates of deposit
6,397
-
6,397
US Treasury and agency securities
1,200
-
1,200
Corporate bonds
8,190
-
8,190
Total
$
15,793
$
6
$
15,787
Liabilities
$
-
$
-
$
-

Items Measured at Fair Value on a Nonrecurring Basis

Certain assets that are subject to nonrecurring fair value measurements are not included in the table above. These assets include investments in privately-held companies accounted for by equity and cost methods (See Note 10). We did not record other-than-temporary impairment charges for either of these investments during the three and six months ended June 30, 2012 and 2011.