FAIR VALUE MEASUREMENTS

Financial assets and liabilities measured at fair value on a recurring basis in the consolidated financial statements as of September 30, 2014 and December 31, 2013 are summarized by type of inputs applicable to the fair value measurements as follows:



September 30, 2014	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities (a)	$	121,168	$	12,858	$	35,609	$	169,635
Long-term investments (a)	272,428		—		14,950		287,378
Investments in certain funds	—		—		540		540
Precious metal and commodity inventories recorded at fair value	15,421		—		—		15,421
Commodity contracts on precious metal and commodity inventories	1,841		—		—		1,841
Total	$	410,858	$	12,858	$	51,099	$	474,815

Liabilities:
Financial instruments	$	20,264	$	24,459	$	—	$	44,723
Interest rate swap agreement	—		155		—		155
Total	$	20,264	$	24,614	$	—	$	44,878



December 31, 2013	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities (a)	$	139,786	$	15,334	$	23,365	$	178,485
Long-term investments (a)	209,168		53,754		18,303		281,225
Investments in certain funds	—		—		844		844
Precious metal and commodity inventories recorded at fair value	14,766		—		—		14,766
Commodity contracts on precious metal and commodity inventories	1,620		—		—		1,620
Total	$	365,340	$	69,088	$	42,512	$	476,940

Liabilities:
Financial instruments	$	—	$	25,090	$	—	$	25,090
Interest rate swap agreement	—		214		—		214
Total	$	—	$	25,304	$	—	$	25,304

(a) For additional detail of the marketable securities and long-term investments see Note 4 - "Investments."

Investments measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1 - Quoted prices are available in active markets for identical investments as of the reporting date. The types of investments included in Level 1 are listed debt and equity securities.

Level 2 - Pricing inputs are other than quoted prices in active markets for identical assets, which are either directly or indirectly observable as of the reporting date, and can include quoted prices in active markets for similar assets or liabilities, quoted prices in a market that is not active for identical assets or liabilities, or other inputs that can be corroborated by observable market data. Investments which are generally included in this category include corporate bonds and loans, less liquid and restricted equity securities.

Level 3 - Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation and due to lack of observable inputs, the assumptions used may impact the fair value of these investments in future periods. Investments which are generally included in this category include private investments, non-exchange traded derivative contracts, and currency and interest rate swaps. For certain marketable securities, net asset value is used which is included in quarterly statements received in arrears from a venture capital fund to determine the fair value of such fund. The fair value of certain other marketable securities are determined by incorporating and reviewing prices provided by third-party pricing services based on the specific features of the underlying securities.

During the nine months ended September 30, 2014, investments with a fair value of $58,666 were transferred from Level 2 to Level 1 based upon a change in trading volume.

The fair value of the Company's financial instruments, such as cash and cash equivalents, trade and other receivables and trade payables, approximate carrying value due to the short-term maturities of these assets and liabilities. Carrying cost approximates fair value for long-term debt which has variable interest rates.

The precious metal and commodity inventories associated with HNH's fair value hedges (see Note 6 – "Financial Instruments") are reported at fair value. Fair value of these inventories is based on quoted market prices on commodity exchanges and are considered Level 1 measurements. The derivative instruments that HNH purchases in connection with its precious metal and commodity inventories, specifically commodity futures and forwards contracts, are also valued at fair value. The futures contracts are Level 1 measurements since they are traded on a commodity exchange. The forward contracts are entered into with a counterparty and are considered Level 2 measurements.

Interest rate swap agreements are considered Level 2 measurements as the inputs are observable at commonly quoted intervals. Prior to the redemption of the Subordinated Notes and related Warrants, the embedded derivative features of the Subordinated Notes and Warrants (see Note 13 – "Debt and Capital Lease Obligations") were valued at fair value on a recurring basis and were considered Level 3 measurements.

Following is a summary of changes in financial assets measured using Level 3 inputs:



	Investments in Associated Companies (a)			Other Investments - Related Party (b)			ModusLink Warrants (c)			Marketable Securities and Other (d)			Total
Assets
Balance at June 30, 2013	$	8,582		$	10,341		$	2,835		$	20,952		$	42,710
Additions - fair value elections in 2013	—			—			—			—			—
Purchases	1,000			—			—			—			1,000
Sales	—			—			—			(32		)	(32		)
Realized gain on sale	—			—			—			—			—
Unrealized gains	114			915			—			—			1,029
Unrealized losses	(6,206		)	(15		)	(581		)	(2,210		)	(9,012		)
Balance at September 30, 2013	$	3,490		$	11,241		$	2,254		$	18,710		$	35,695

Balance at June 30, 2014	$	2,080		$	10,205		$	2,434		$	32,346		$	47,065
Purchases	—			—			—			2,756			2,756
Sales	—			—			—			(137		)	(137		)
Realized loss on sale	—			—			—			—			—
Unrealized gains	—			1,307			—			1,184			2,491
Unrealized losses	(49		)	(694		)	(333		)	—			(1,076		)
Balance at September 30, 2014	$	2,031		$	10,818		$	2,101		$	36,149		$	51,099



	Long - Term Investments
	Investments in Associated Companies (a)			Other Investments - Related Party (b)			ModusLink Warrants (c)			Marketable Securities and Other (d)			Total
Assets
Balance at December 31, 2012	$	10,521		$	11,263		$	—		$	2,804		$	24,588
Additions - fair value elections in 2013	3,065			—			—			—			3,065
Purchases	1,311			—			3,184			39,332			43,827
Sales	—			(764		)	—			(22,958		)	(23,722		)
Realized gain on sale	—			—			—			1,556			1,556
Unrealized gains	114			826			—			186			1,126
Unrealized losses	(11,521		)	(84		)	(930		)	(2,210		)	(14,745		)
Balance at September 30, 2013	$	3,490		$	11,241		$	2,254		$	18,710		$	35,695

Balance at December 31, 2013	$	2,243		$	10,228		$	5,832		$	24,209		$	42,512
Purchases	—			—			—			13,294			13,294
Sales	—			(1,496		)	—			(4,869		)	(6,365		)
Realized loss on sale	—			—			—			(129		)	(129		)
Unrealized gains	—			2,884			—			3,644			6,528
Unrealized losses	(212		)	(798		)	(3,731		)	—			(4,741		)
Balance at September 30, 2014	$	2,031		$	10,818		$	2,101		$	36,149		$	51,099

(a) Unrealized losses are recorded in Income (Loss) of associated companies, net of taxes in the Company's Consolidated Statements of Operations.

(b) Unrealized gains and losses are recorded in Income from other investments-related party in the Company's Consolidated Statements of Operations.

(c) Unrealized gains and losses are recorded in (Loss) Income from investments held at fair value in the Company's Consolidated Statements of Operations.

(d) Realized gains on sale are recorded in Other expense (income), net in the Company's Consolidated Statements of Operations.

Long-Term Investments - Valuation Techniques

The Company primarily uses three valuation methods to estimate the fair value of its Level 3 investments. The Company estimated the value of its investments in associated companies primarily using a discounted cash flow method adjusted for additional information related to debt covenants, solvency issues, etc. The Company estimates the value of Other investments - related party, which represents its interest in the SPII Liquidating Trust, based on the net asset value of each series of the Trust. The ModusLink Warrants are valued using the Black-Scholes option pricing model (for additional information see Note 4 – "Investments").

Level 3 Liabilities

During the nine months ended September 30, 2013, the Company recognized a $184 decrease in fair value for the derivative features of the HNH Subordinated notes. As of September 30, 2014 and December 31, 2013, the Company did not hold any financial liabilities that are measured using Level 3 inputs.

Assets Measured at Fair Value on a Nonrecurring Basis

The Company’s non-financial assets measured at fair value on a non-recurring basis in 2014 and 2013 include the assets acquired and liabilities assumed in the acquisitions described in Note 2 – “Acquisitions”. Significant judgments and estimates are made to determine the acquisition date fair values which may include the use of appraisals, discounted cash flow techniques or other information the Company considers relevant to the fair value measurement.

As of September 30, 2014 and December 31, 2013, WebBank has impaired loans of $556, of which $94 is guaranteed by the USDA or SBA and $2,564, of which $2,196 is guaranteed by the USDA or SBA, respectively. These loans are measured at fair value on a nonrecurring basis using Level 3 inputs. See the "Impaired Loans" section of Note 7 – "Trade, Other and Loans Receivable" for additional discussion of loan impairment measurements.