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Investments and Fair Value Measurements | 9 Months Ended
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Sep. 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):
|  | September 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 |  | $ | 27,490 |  |  | $ | - |  |  | $ | - |  |  | $ | 27,490 |  |  | $ | 25,299 |  |  | $ | - |  |  | $ | - |  |  | $ | 25,299 |
Cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  |  | 8,013 |  |  |  | - |  |  |  | - |  |  |  | 8,013 |  |  |  | 857 |  |  |  | - |  |  |  | - |  |  |  | 857 |
Total cash equivalents |  |  | 8,013 |  |  |  | - |  |  |  | - |  |  |  | 8,013 |  |  |  | 857 |  |  |  | - |  |  |  | - |  |  |  | 857 |
Total cash and cash equivalents |  |  | 35,503 |  |  |  | - |  |  |  | - |  |  |  | 35,503 |  |  |  | 26,156 |  |  |  | - |  |  |  | - |  |  |  | 26,156 |
Investments (Available for sale): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Certificates of deposit |  |  | 6,878 |  |  |  | 7 |  |  |  | (4 | ) |  |  | 6,881 |  |  |  | 3,561 |  |  |  | 5 |  |  |  | (3 | ) |  |  | 3,563 |
US Treasury and agency securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,200 |  |  |  | - |  |  |  | (1 | ) |  |  | 1,199 |
Corporate bonds |  |  | 9,085 |  |  |  | 12 |  |  |  | (34 | ) |  |  | 9,063 |  |  |  | 9,859 |  |  |  | 2 |  |  |  | (137 | ) |  |  | 9,724 |
Total investments |  |  | 15,963 |  |  |  | 19 |  |  |  | (38 | ) |  |  | 15,944 |  |  |  | 14,620 |  |  |  | 7 |  |  |  | (141 | ) |  |  | 14,486 |
Total cash, cash equivalents and investments |  | $ | 51,466 |  |  | $ | 19 |  |  | $ | (38 | ) |  | $ | 51,447 |  |  | $ | 40,776 |  |  | $ | 7 |  |  | $ | (141 | ) |  | $ | 40,642 |
Contractual maturities on investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due within 1 year |  | $ | 10,581 |  |  |  |  |  |  |  |  |  |  | $ | 10,577 |  |  | $ | 5,521 |  |  |  |  |  |  |  |  |  |  | $ | 5,505 |
Due after 1 through 5 years |  |  | 5,382 |  |  |  |  |  |  |  |  |  |  |  | 5,367 |  |  |  | 9,099 |  |  |  |  |  |  |  |  |  |  |  | 8,981 |
|  | $ | 15,963 |  |  |  |  |  |  |  |  |  |  | $ | 15,944 |  |  | $ | 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 both the three months ended September 30, 2012 and 2011, we did not have any realized gain or loss on sales of our available-for-sale securities. For the nine months ended September 30, 2012 and 2011, we had none and $8,000 of gross realized loss 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 September 30, 2012 are temporary in nature. We periodically review 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 September 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 |  | $ | 3,314 |  |  | $ | (3 | ) |  | $ | 200 |  |  | $ | (1 | ) |  | $ | 3,514 |  |  | $ | (4 | )
Corporate bonds |  |  | 2,725 |  |  |  | (17 | ) |  |  | 1,517 |  |  |  | (17 | ) |  |  | 4,242 |  |  |  | (34 | )
Total in loss position |  | $ | 6,039 |  |  | $ | (20 | ) |  | $ | 1,717 |  |  | $ | (18 | ) |  | $ | 7,756 |  |  | $ | (38 | )
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 December 31, 2011 (in thousands):
| In Loss Position < 12 months |  | Total In Loss Position |
|  |  | Gross |  |  |  | Gross |
| Fair |  | Unrealized |  | Fair |  | Unrealized |
| Value |  | (Loss) |  | Value |  | (Loss) |
Investments: |  |  |  |  |  |  |  |
Certificates of Deposit |  |  | 678 |  |  |  | (3 | ) |  |  | 678 |  |  |  | (3 | )
US Treasury and agency securities |  |  | 1,199 |  |  |  | (1 | ) |  |  | 1,199 |  |  |  | (1 | )
Corporate bonds |  | $ | 8,221 |  |  | $ | (137 | ) |  | $ | 8,221 |  |  | $ | (137 | )
Total in loss position |  | $ | 10,098 |  |  | $ | (141 | ) |  | $ | 10,098 |  |  | $ | (141 | )
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 by 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 $9.1 million and $8.3 million as of September 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 September 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 September 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 including certificates of deposit and corporate bonds 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. There were no changes in valuation techniques or related inputs in the three months ended September 30, 2012. There have been no transfers between fair value measurement levels during the three month ended September 30, 2012. The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of September 30, 2012 (in thousands):
|  | Balance as of September 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 |  | $ | 8,013 |  |  | $ | 8,013 |  |  | $ | - |
Certificates of deposit |  |  | 6,881 |  |  |  | - |  |  |  | 6,881 |
Corporate bonds |  |  | 9,063 |  |  |  | - |  |  |  | 9,063 |
Total |  | $ | 23,957 |  |  | $ | 8,013 |  |  | $ | 15,944 |
Liabilities |  | $ | - |  |  | $ | - |  |  | $ | - |
The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of December 31, 2011 (in thousands):
|  | Balance as of December 31, 2011 |  |  | Quoted Prices in Active Markets of Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |
Assets: |  |  |  |  |  |  |  |  |
Cash equivalents and investments: |  |  |  |  |  |  |  |  |
Money market fund – cash |  | $ | 857 |  |  | $ | 857 |  |  | $ | — |
Certificates of deposit |  |  | 3,563 |  |  |  | — |  |  |  | 3,563 |
US Treasury and agency securities |  |  | 1,199 |  |  |  | — |  |  |  | 1,199 |
Corporate bonds |  |  | 9,724 |  |  |  | — |  |  |  | 9,724 |
Total |  | $ | 15,343 |  |  | $ | 857 |  |  | $ | 14,486 |
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. We have investments in privately-held companies accounted for by equity and cost method (See Note 10), which are periodically assessed for other-than-temporary iimpairment. If we determine that an other-than-temporary impairment has occured, we write-down the investment to its fair value. For the three and nine months ended September 30, 2012 and 2011, we did not record other-than-temporary impairment charges for these investments.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13504-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 15C, 15D -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13433-108611 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 159 -Paragraph 17-22, 27, 28 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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