Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

2. Fair Value Measurements

The Company measures certain financial assets at fair value on a recurring basis. The fair value of these financial assets was determined based on three levels of inputs, of which, the first two levels are considered observable and the last unobservable. The three levels of inputs that may be used to measure fair value are as follows:

Level 1 – Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or the fair value is determined through the use of models or other valuation methodologies.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The inputs to determine fair value require significant management judgment or estimation.

Assets and liabilities measured at fair value on a recurring basis consist of marketable securities and debt security investments. As of September 30, 2012 and December 31, 2011, the reported fair value of marketable securities, using Level 1 inputs, was $581,000 and $1.0 million, respectively. Marketable securities are included in other assets on the Company’s unaudited condensed consolidated balance sheets. As of September 30, 2012 and December 31, 2011, the reported fair value of debt security investments, using Level 1 inputs, was $76.0 million and $36.9 million, respectively. Debt security investments are included in short term debt security investments and restricted cash on the Company’s unaudited condensed consolidated balance sheets.

As of September 30, 2012, the Company did not have any outstanding fixed interest rate debt. As of December 31, 2011, all of the Company’s debt was at a fixed interest rate and totaled $61.8 million. The fair market value of fixed interest rate debt is subject to interest rate risk. Generally, the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. The estimated fair value of the Company’s debt, using Level 2 inputs, at December 31, 2011 was $62.9 million. The fair value of debt is based on estimates made by investment bankers based on the fair value of the Company’s fixed interest rate debt. For fixed interest rate debt, interest rate changes do not impact financial position, operations or cash flows.

Restricted cash included $3.5 million of debt security investments and $125,000 of cash equivalents at September 30, 2012 and December 31, 2011, for which the fair value is measured using Level 1 inputs. The debt security investments are reported at fair value and the carrying amount of cash equivalents approximates fair value.

Cash equivalents consist of $30.6 million and $145.4 million at September 30, 2012 and December 31, 2011, respectively, for which the fair value is measured using Level 1 inputs. The carrying amount of cash equivalents approximates fair value.