2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates in Preparation of Financial Statements. The preparation of the accompanying Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Postage. We pass through to our clients the cost of postage that is incurred on behalf of those clients, and typically require an advance payment on expected postage costs. These advance payments are included in "client deposits" in the accompanying Condensed Consolidated Balance Sheets (the "Balance Sheet" or "Balance Sheets") and are classified as current liabilities regardless of the contract period. We net the cost of postage against the postage reimbursements for those clients where we require advance deposits, and include the net amount in processing and related services revenues. The cost of postage that has been shown net of the postage reimbursements from our clients for the first quarters of 2012 and 2011 were $67.4 million and $67.8 million, respectively.

Cash and Cash Equivalents. We consider all highly liquid investments with original maturities of three months or less at the date of the purchase to be cash equivalents. As of March 31, 2012, our cash equivalents consist primarily of institutional money market funds, commercial paper and time deposits held at major banks.

As of March 31, 2012, we had $4.8 million of restricted cash that serves to collateralize outstanding letters of credit. This restricted cash is included in Cash and cash equivalents in our Balance Sheet.

Short-term Investments and Other Financial Instruments. Our financial instruments as of March 31, 2012 include cash and cash equivalents, short-term investments, accounts receivable, accounts payable, interest rate swap contracts, and debt. Because of their short maturities, the carrying amounts of cash equivalents, accounts receivable, and accounts payable approximate their fair value.

Certain of our short-term investments and cash equivalents are considered "available-for-sale" and are reported at fair value in our Balance Sheets, with unrealized gains and losses, net of the related income tax effect, excluded from earnings and reported in a separate component of stockholders' equity. Realized and unrealized gains and losses were not material in any period presented.

All short-term investments held by us as of March 31, 2012 and December 31, 2011 have contractual maturities of less than one year from the time of acquisition. Our short-term investments at March 31, 2012 and December 31, 2011, consisted entirely of commercial paper. Proceeds from the sale/maturity of short-term investments for the first quarters of 2012 and 2011 were $12.1 million and $15.0 million, respectively.

The following table represents the fair value hierarchy based upon three levels of inputs, of which Levels 1 and 2 are considered observable and Level 3 is unobservable, for financial assets and liabilities measured at fair value on a recurring basis (in thousands):


	March 31, 2012						December 31, 2011
	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Money market funds (1)	$	96,545	$	—	$	96,545	$	77,174	$	—	$	77,174
Commercial paper (2)		—		20,435		20,435		—		16,895		16,895

Total	$	96,545	$	20,435	$	116,980	$	77,174	$	16,895	$	94,069

Liabilities:
Interest rate swap contracts (3)	$	—	$	1,249	$	1,249	$	—	$	1,005	$	1,005

Total	$	—	$	1,249	$	1,249	$	—	$	1,005	$	1,005

(1)	As of March 31, 2012 and December 31, 2011, all of the money market funds were classified on our Balance Sheet in cash equivalents.

(2)	As of March 31, 2012 and December 31, 2011, of the total commercial paper, $10.3 million and $4.8 million, respectively, were classified on our Balance Sheet in cash equivalents, and $10.1 and $12.1 million, respectively, were classified on our Balance Sheet in short-term investments.

(3)	As of March 31, 2012 and December 31, 2011, the fair value of the interest rate swap contracts were classified on our Balance Sheet in other non-current liabilities.

Valuation inputs used to measure the fair values of our money market funds were derived from quoted market prices. The fair values of all other financial instruments are based upon pricing provided by third-party pricing services. These prices were derived from observable market inputs.

We have chosen not to measure our debt at fair value, with changes recognized in earnings each reporting period. As of March 31, 2012, the estimated fair value of our Credit Agreement debt of $183 million (carrying value including current maturities) was approximately $192 million, and was estimated using a discounted cash flow methodology. As of March 31, 2012, the estimated fair value of our $150 million (par value) convertible debt, based upon quoted market prices or recent sales activity, was approximately $146 million.