Investments

9 Months Ended

Sep. 30, 2012

Investments [Abstract]

Investments

2. Investments

Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date. Currently, we classify all securities as available-for-sale. We carry available-for-sale securities at fair value, with temporary unrealized gains and losses, net of tax, reported in accumulated other comprehensive income, a component of stockholders’ investment. The amortized cost of debt securities in this category reflects amortization of premiums and accretion of discounts to maturity computed under the effective interest method. We include this amortization in the caption “Net investment income and other” within the Condensed Consolidated Statement of Operations and Comprehensive Income. We also include in “Net investment income and other” realized gains and losses on sales of securities and declines in value of securities determined to be other-than-temporary. We base the cost of securities sold upon the specific identification method. We include interest and dividends on securities classified as available-for-sale in net investment income.

The following table summarizes unrealized gains and losses related to our investments designated as available-for-sale (dollars in thousands):

	September 30, 2012
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Certificates of deposit	$	2,804	$	—	$	—		$	2,804
Auction rate municipal securities		882		41		—			923
Total investments	$	3,686	$	41	$	—		$	3,727
	December 31, 2011
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate obligations	$	11,260	$	—	$	(1	)	$	11,259
U.S. Government notes		14,049		7		(4	)		14,052
Auction rate municipal securities		893		9		—			902
Total investments	$	26,202	$	16	$	(5	)	$	26,213

The following table shows the net carrying value (amortized cost) and estimated fair value of investments at September 30, 2012 by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because the issuers of the securities may have the right or obligation to prepay obligations without prepayment penalties.

	Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,804	$	2,804
Due after one year through three years		—		—
Due after three years		882		923
Total investments	$	3,686	$	3,727

The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of September 30, 2012 and December 31, 2011, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (dollars in thousands):

	September 30, 2012				December 31, 2011
	Less than 12 Months				Less than 12 Months
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate obligations	$	—	$	—	$	3,810	$	(1	)
U.S. Government notes		—		—		6,758		(4	)
	$	—	$	—	$	10,568	$	(5	)

We had no realized gains or losses on the sale of our debt securities for the three months ended September 30, 2012, and realized gains of $3,000 and no losses for the nine months ended September 30, 2012. We had realized gains of $8,000 and losses of $22,000 for the three months ended September 30, 2011 and realized gains of $35,000 and losses of $44,000 for the nine months ended September 30, 2011.

We recognized unrealized gains of $41,000 and no unrealized losses in accumulated other comprehensive income as of September 30, 2012. We recognized unrealized gains of $16,000 and unrealized losses of $5,000 as of December 31, 2011.

Auction Rate Securities

At September 30, 2012 and December 31, 2011, we held $1.1 million par value of various auction rate securities. The assets underlying the auction rate instruments are municipal bonds. Maturity dates for our auction rate municipal securities are 2030 and 2036. Given the extent of the decline in fair value associated with our auction rate securities, we recognized an other-than-temporary impairment of $11,000, before taxes, during the nine months ended September 30, 2012. No other-than-temporary impairments were recognized during the three months ended September 30, 2012 or during the three and nine months ended September 30, 2011. When evaluating investments for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer of the investment securities and any changes thereto, and our intent to sell, or whether it is more-likely-than-not that we would be required to sell the investment before recovery of the investment’s amortized cost basis.

As a result of failed auctions, our auction rate instruments are not currently liquid. Due to the continuation of the unstable credit environment, we believe that the recovery period for most of our auction rate instruments will exceed 12 months. Accordingly, we have classified the fair value of the auction rate instruments that were not redeemed prior to September 30, 2012 as long-term.