Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Measurements

5. Fair Value Measurements

U.S. GAAP establishes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value.

Level 1: Quoted prices for identical assets or liabilities in active markets at the measurement date

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data at the measurement date

Level 3: Unobservable inputs reflecting management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date

When applying the fair value principles in valuation of assets and liabilities, we are required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term maturity of these instruments.

The following table summarizes fair value measurements by level at December 31, 2012 and 2011 for assets and liabilities measured at fair value on a recurring basis (dollars in thousands):

Description	Level 1				Level 2				Level 3				Total
	2012		2011		2012		2011		2012		2011		2012		2011
Assets:
Investments	$	—	$	—	$	2,804	$	25,311	$	—	$	902	$	2,804	$	26,213
Total assets at fair value	$	—	$	—	$	2,804	$	25,311	$	—	$	902	$	2,804	$	26,213

The valuation technique used to measure fair value of certificates of deposit was based on quoted market prices or corroborated by observable market data.

The fair values of some investment securities previously held within our investment portfolio were based on quoted market prices from various stock and bond exchanges. Certain of our debt securities were classified at fair value utilizing Level 2 inputs. For these securities, fair value was measured using observable market data that includes dealer quotes, live trading levels, trade execution data, credit information and the bond’s terms and conditions. The fair values of our auction rate investment instruments were classified in Level 3 because they were valued using a trinomial discounted cash flow model.

There were no transfers between Level 1 and Level 2 measurements in 2012 or 2011. The following table sets forth a reconciliation of beginning and ending balances for each major category for assets measured at fair value using significant unobservable inputs (Level 3) during 2012 and 2011 (dollars in thousands).

	Years Ended December 31,
Description	2012			2011
Balance as of January 1	$	902		$	951
Assets acquired		—			—
Assets sold or redeemed		(822	)		(25	)
Transfers out of Level 3		—			—
Losses included in earnings		(71	)		(6	)
Losses included in other comprehensive loss		(9	)		(18	)
Balance as of December 31	$	—		$	902