Investments and Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]

INVESTMENTS AND FAIR VALUE MEASUREMENTS

INVESTMENTS AND FAIR VALUE MEASUREMENTS

The Company utilizes a three-tier framework for assets and liabilities required to be measured at fair value. In addition, the Company uses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost) to value these assets and liabilities as appropriate. The Company uses an exit price when determining the fair value. The exit price represents amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

The Company utilizes a three-tier fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level	1	Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level	2	Inputs other than quoted prices that are observable for the assets 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 in which there is little market data, which requires the reporting entity to develop their own assumptions.

This hierarchy requires the use of observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

The Company’s recurring financial assets and liabilities subject to fair value measurements and the necessary disclosures are as follows:

	Fair Value Measurements as of December 31, 2011
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	194,259	$	194,259	$	—	$	—
Certificates of deposit	2,206		—		2,206		—
Bonds	4,573		4,573		—		—
Marketable securities	76,486		70,884		5,602		—
Warrants (1)	1,962		—		—		1,962
Total	$	279,486	$	269,716	$	7,808	$	1,962
Liabilities:
Fair value of derivatives embedded within convertible debt	$	133,500	$	—	$	—	$	133,500

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(1) Warrants include 1,000,000 of LTS Warrants received on November 4, 2011 which were carried at $1,890 as of December 31, 2011 and are included in "Other assets". The company recognized income of $690 for the year ended December 31, 2011 related to the change in fair value from receipt. (See Note 14.)

	Fair Value Measurements as of December 31, 2010
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money market funds	$	267,333	$	267,333	$	—	$	—
Certificates of deposit	2,773		—		2,773		—
Bonds	5,300		5,300		—		—
Marketable securities	78,754		74,640		4,114		—
Total	$	354,160	$	347,273	$	6,887	$	—
Liabilities:
Fair value of derivatives embedded within convertible debt	$	141,492	$	—	$	—	$	141,492

The fair value of investment securities available for sale included in Level 1 are based on quoted market prices from various stock exchanges. The Level 2 investment securities available for sale were not registered and therefore do not have direct market quotes or have certain restrictions.

The fair value of derivatives embedded within convertible debt were derived using a valuation model and have been classified as Level 3. The valuation model assumes future dividend payments by the Company and utilizes interest rates and credit spreads for secured to unsecured debt, unsecured to subordinated debt and subordinated debt to preferred stock to determine the fair value of the derivatives embedded within the convertible debt. The changes in fair value of derivatives embedded within convertible debt as of December 31, 2011, 2010 and 2009 are disclosed. (See Note 7.)

The fair value of the warrants were derived using the Black-Scholes model and have been classified as Level 3. The assumptions used under the Black-Scholes model in computing the fair value of the warrants are based on contractual term of the warrants, volatility of the underlying stock based on the historical quoted prices of the underlying stock, assumed future dividend payments and a risk-free rate of return.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record assets and liabilities at fair value on a nonrecurring basis. Generally, assets and liabilities are recorded at fair value on a nonrecurring basis as a result of impairment charges.

The Company’s nonrecurring nonfinancial assets subject to fair value measurements are as follows:

			Fair Value Measurements Using:
Description	Year Ended December 31, 2009 Impairment Charge		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Investment in real estate	$	5,000	$	12,204	$	—	$	—	$	12,204
Investment in non-consolidated real estate businesses	3,500		1,248		—		—		1,248
Total	$	8,500	$	13,452	$	—	$	—	$	13,452

The Company estimated the fair value of its mortgage receivable and non-consolidated real estate using observable inputs such as market pricing based on recent events, however, significant judgment was required to select certain inputs from observed market data. The decrease in the mortgage receivable and the non-consolidated real estate were attributed to the decline in the New York and California real estate markets due to various factors including downward pressure on housing prices, the impact of the recent contraction in the subprime and mortgage markets generally and a large inventory of unsold homes at the same time that sales volumes were decreasing. The $8,500 of impairment charges taken in the first quarter of 2009 were included in the results from operations for the year ended December 31, 2009.