3.	FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Short-term and long-term investments consist of the following:


	As of December 31, 2012		As of June 30, 2012
(in thousands)	Amortized Cost Basis	Aggregate Fair Value	Amortized Cost Basis	Aggregate Fair Value
Time deposit – international	$ 333	$ 333	$ 19,419	$ 19,419
Time deposit - domestic	34,118	34,118	0	0
U.S. government debt securities	45,451	45,451	0	0
Auction rate securities	6,000	5,400	52,625	34,289
Total investments	$ 85,902	$ 85,302	$ 72,044	$ 53,708

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The following hierarchy prioritizes the inputs (generally, assumptions that market participants use in pricing an asset or liability) used to measure fair value based on the quality and reliability of the information provided by the inputs:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; inputs that are derived principally from or corroborated by observable market data or other means.

·	Level 3 - Measured based on prices or valuation models using unobservable inputs to the extent relevant observable inputs are not available (i.e., where there is little or no market activity for the asset or liability).

The following table provides information regarding the financial assets accounted for at fair value and the type of inputs used to value the assets:

(in thousands)	Level 1	Level 2	Level 3	Total
Balance, December 31, 2012: Short-term and long-term investments: Time deposit – international	$ 0	$ 333	$ 0	$ 333
Time deposit - domestic	0	34,118	0	34,118
U.S. government debt securities	45,451	0	0	45,451
Auction rate security	0	0	5,400	5,400
Total short-term and long-term investments	$ 45,451	$ 34,451	$ 5,400	$ 85,302
Balance, June 30, 2012: Short-term and long-term investments:
Time deposit – international	$ 0	$ 19,419	$ 0	$ 19,419
Auction rate securities	0	0	34,289	34,289
Total short-term and long-term investments	$ 0	$ 19,419	$ 34,289	$ 53,708

At December 31, 2012 and June 30, 2012, the Company's investments, other than the Company's investment in auction rate securities, were recognized at fair value determined based upon observable input information provided by the Company's pricing service vendors for identical or similar assets. For these investments, cost approximated fair value. During the three and six months ended December 31, 2012 and 2011, the Company did not recognize any gains or losses on its investments other than those related to the Company's investments in auction rate securities. See "Auction Rate Securities" below for further discussion on the valuation of the Company's investments in auction rate securities.

The contractual maturities of investments held at December 31, 2012 are as follows:

(in thousands)	Amortized Cost Basis	Aggregate Fair Value
Due within one year	$ 79,723	$ 79,723
Due between 1 – 2 years	179	179
Due after 10 years – auction rate security	6,000	5,400
Total short-term and long-term investments	$ 85,902	$ 85,302

AUCTION RATE SECURITIES

The Company's investment in one remaining auction rate security, carried at estimated fair value, was its only assets valued on the basis of Level 3 inputs at December 31, 2012. Auction rate securities are long-term debt instruments with variable interest rates that are designed to reset to prevailing market interest rates every 7 to 35 days through the auction process. The one remaining auction rate security held by the Company is secured by student loans for which repayment is guaranteed by the Federal Family Education Loan Program ("FFELP"). Before February 2008, due to the liquidity previously provided by the interest rate reset mechanism and the anticipated short-term nature of the Company's investment, the auction rate securities were classified as short-term investments available-for-sale in the Company's consolidated balance sheets. Beginning in February 2008, auctions for these securities failed to obtain sufficient bids to establish a clearing rate, and the securities were not saleable in auction, thereby no longer providing short-term liquidity. The auction rate securities have been classified as long-term investments available-for-sale since February 2008 instead of being classified as short-term investments, as was the case before February 2008.

During the quarter ended December 31, 2012, the Company sold auction rate securities having a cost basis of approximately $46.6 million and a carrying value of approximately $32.6 million. As a result of the transaction, the Company recognized a gain of approximately $4.1 million.

A summary of the sale of auction rate securities during the three and six month periods ended December 31, 2012 and 2011 were as follows:


		Three Months Ended	Six Months Ended
		December 31,	December 31,
(in thousands)	2012	2011	2012	2011
Original cost, par value	$ 46,625	$ 0	$ 46,625		$ 0
Impairment losses previously recorded in:
Consolidated statement of operations	(14,000)	0	(14,000)		0
Carrying value	32,625	0	32,625		0
Proceeds from sales	36,719	0	36,719		0
Gain from sales recorded in consolidated statement of operations	$ 4,094	$ 0	$ 4,094		$ 0

As of December 31, 2012, following a series of disposals in the three months ended December 31, 2012, described in the table above, the Company had one auction rate security remaining with an original cost of $6.0 million. The Company updated its assessment as of December 31, 2012 as to whether it would likely recover the entire cost basis of this security, whether the security had incurred an other-than-temporary impairment, and the amount of the other-than-temporary impairment attributable to credit loss. The fair value assessment was based on a contingent written offer from the issuer of the security to repurchase the security, and the Company's decision to sell it to the issuer. This assessment is subject to change based on the underlying contingent terms of the offer and market conditions. Based on its evaluation, the Company determined that the cumulative other-than-temporary impairment loss of approximately $0.6 million as of December 31, 2012 was credit based, and recorded the $0.6 million loss in the Company's statement of operations for the three and six months ended December 31, 2012.

The following table contains a reconciliation of changes in the fair value of auction rate securities, and the related unrealized losses for the six months ended December 31, 2012 and 2011:

(in thousands)	Cost	Temporary Impairment Loss (1)	OTTI – Non-Credit Loss (1)	OTTI – Credit Loss (2)	Fair Value
Balance, June 30, 2012	$ 52,625	$ (4,336)	$ 0	$ (14,000)	$ 34,289
Change in losses related to investments	0	(3)	0	0	(3)
Balance, September 30, 2012	52,625	(4,339)	0	(14,000)	34,286
Change in losses related to investments	0	515	0	(600)	(85)
Changes in losses related to sale	(46,625)	3,824	0	14,000	(28,801)
Balance, December 31, 2012	$ 6,000	$ 0	$ 0	$ (600)	$ 5,400

(in thousands)	Cost	Temporary Impairment Loss (1)	OTTI – Non-Credit Loss (1)	OTTI – Credit Loss (2)	Fair Value
Balance, June 30, 2011	$ 57,625	$ (6,280)	$ 0	$ (10,000)	$ 41,345
Changes in losses related to investments	0	(1,492)	0	0	(1,492)
Balance, September 30, 2011	57,625	(7,772)	0	(10,000)	39,853
Changes in losses related to investments	0	103	0	0	103
Balance, December 31, 2011	$ 57,625	$ (7,669)	$ 0	$ (10,000)	$ 39,956

(1)	OTTI means "other-than-temporary impairment." The amounts in this column are recorded, net of tax, in the accumulated other comprehensive income (loss) component of stockholders' equity.

(2)	Increases in the amounts in this column are recorded in the condensed consolidated statement of operations.

The Company plans to continue to monitor its investment, including the liquidity and creditworthiness of the issuer, of its one remaining auction rate security on an ongoing basis for indications of further impairment and, if an impairment is identified, for proper classification of the impairment. Based on the Company's expected operating cash flows and sources of cash, the Company does not believe that any reduction in the liquidity of its auction rate security will have a material impact on its overall ability to meet its liquidity needs.