Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Measurements

Note 4. Fair Value Measurements

The Company measures certain financial assets at fair value on a recurring basis, including cash equivalents, short-term investments, and equity investments. The fair value of these financial assets was determined based on three levels of inputs:

• Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities

• Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active

• Level 3: Unobservable inputs that reflect the Company’s own assumptions

Items Measured at Fair Value on a Recurring Basis

The following table presents information about the Company’s financial assets that have been measured at fair value (in thousands) on a recurring basis as of December 31, 2011 and 2010 and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value.

	Fair Value Measurements as of December 31, 2011
	Total		Level 1		Level 2		Level 3
	(In thousands)
Cash equivalents
Money market funds	$	6,544	$	6,544	$	—	$	—
Corporate notes and bonds		20,697		20,697		—		—
Short-term investments
Corporate notes and bonds		39,254		39,254		—		—
U.S. government agency securities		39,485		39,485		—		—
Restricted cash		10,168		10,168		—		—
Equity investments
Publicly traded investments		37,204		37,204		—		—
Total	$	153,352	$	153,352	$	—	$	—
	Fair Value Measurements as of December 31, 2010
	Total		Level 1		Level 2		Level 3
	(In thousands)
Cash equivalents
Money market funds	$	44,348	$	44,348	$	—	$	—
Corporate notes and bonds		120,984		120,984		—		—
U.S. government agency securities		3,700		3,700		—		—
Short-term investments
Corporate notes and bonds		76,157		76,157		—		—
U.S. government agency securities		22,146		22,146		—		—
Restricted cash		10,000		10,000		—		—
Equity investments
Publicly traded investments		27,541		27,541		—		—
Total	$	304,876	$	304,876	$	—	$	—

Investments in marketable securities classified as short-term investments and equity investments of public companies are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy. The Company carries its equity investments in private companies at cost and no fair value is derived on a recurring basis.

Items Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities of the Company are measured at estimated fair value on a non-recurring basis. These assets and liabilities are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). The Company performed a valuation using Level 3 inputs of its investment in the Rhapsody joint venture as of March 31, 2010. The Company performed the analysis as a result of the restructuring and related deconsolidation of Rhapsody, which is further described in Note 3, Rhapsody Joint Venture. The fair value analysis used multiple valuation models and was based on assumptions of future results made by management, including operating and cash flow projections.

The Company also performed a valuation of its goodwill as of June 30, 2009 using Level 3 inputs and recorded goodwill impairment charges of $175.6 million during the quarter ended June 30, 2009. See Note 10, Goodwill, for additional information.

See Note 7, Deferred Costs, for a description of the $20.0 million impairment charge for deferred project costs in the quarter ended December 31, 2011.