Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Fair Value Measurements

j2 Global complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:



	§	Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

	§	Level 2 – Include other inputs that are directly or indirectly observable in the marketplace.

	§	Level 3 – Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company measures its cash equivalents and investments at fair value. j2 Global’s cash equivalents, short-term investments and other debt securities are primarily classified within Level 1. Cash equivalents and marketable securities are valued primarily using quoted market prices utilizing market observable inputs. The fair value of the senior unsecured notes (See Note 8 - Long-Term Debt) was determined using the quoted market prices of debt instruments with similar terms, credit rating and maturities, which are considered Level 2 inputs. The total carrying value of long-term debt was $245.7 million and $245.2 million, and the corresponding fair value was approximately $283.3 million and $275.5 million, at December 31, 2013 and December 31, 2012, respectively.

The following tables present the fair values of the Company’s financial instruments that are measured at fair value on a recurring basis (in thousands):



December 31, 2013	Level 1		Level 2		Level 3		Fair Value
Cash equivalents:
Money market and other funds	101,232		—		—		101,232
Time deposits	22,773		—		—		22,773
Certificates of Deposit	14,402		—		—		14,402
Equity securities	30,047		—		—		30,047
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	23,702		—		—		23,702
Debt securities issued by states of the United States and political subdivisions of the states	3,296		—		—		3,296
Debt securities issued by foreign governments	—		—		—		—
Corporate debt securities	66,692		—		—		66,692
Total	$	262,144	$	—	$	—	$	262,144

December 31, 2012	Level 1		Level 2		Level 3		Fair Value
Cash equivalents:
Money market and other funds	99,351		—		—		99,351
Time deposits	22,093		—		—		22,093
Certificates of Deposit	34,876		—		—		34,876
Equity securities	23,497		—		—		23,497
Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies	6,450		—		—		6,450
Debt securities issued by states of the United States and political subdivisions of the states	11,658		—		—		11,658
Debt securities issued by foreign governments	3,589		—		—		3,589
Corporate debt securities	44,826		—		—		44,826
Total	$	246,340	$	—	$	—	$	246,340

Losses associated with other-than-temporary impairments are recorded as a component of other income (expenses). Gains and losses not associated with other-than-temporary impairments are recorded as a component of other comprehensive income.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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