Fair Value Measurement

3 Months Ended

Mar. 31, 2013

Fair Value Measurement

NOTE 3: FAIR VALUE MEASUREMENT

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes financial assets and liabilities measured at fair value on a recurring basis:

(In Thousands)	March 31, 2013							December 31, 2012
	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Deferred Compensation Liability	$	—	$	(10,639	)	$	—	$	—	$	(9,518	)	$	—

The Company maintains a deferred compensation plan that allows for certain management, highly compensated employees and non-employee directors to defer the receipt of base compensation, incentive pay compensation and director fees until a later date based on the terms of the plans. The liability representing benefits accrued for plan participants is valued at the quoted market prices of the participants’ investment elections, which consist of equity and debt funds. As such, the Company has classified the deferred compensation liability as a Level 2 liability. Refer to Note 1 for additional information regarding the deferred compensation plan.

Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The following table summarizes assets measured at fair value on a nonrecurring basis:

(In Thousands)	March 31, 2013						December 31, 2012
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets Held for Sale	$	—	$	9,525	$	—	$	—	$	11,104	$	—

Assets held for sale represents real estate properties that consist mostly of parcels of land and commercial buildings. The highest and best use of these assets is as real estate land parcels for development or real estate properties for use or lease; however, the Company has chosen not to develop or use these properties. In accordance with ASC Topic 360,Property, Plant and Equipment, assets held for sale are written down to fair value, and the adjustment is recorded in operating expenses. The Company estimated the fair values of these properties using the market values for similar properties.

Certain Financial Assets and Liabilities Not Measured at Fair Value

The following table summarizes the fair value of assets (liabilities) that are not measured at fair value in the consolidated balance sheets, but for which the fair value is disclosed:

(In Thousands)	March 31, 2013							December 31, 2012
	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Corporate Bonds 1	$	—	$	74,278		$	—	$	—	$	67,470		$	—
Perfect Home Bonds 2		—		—			17,671		—		—			18,449
Fixed-Rate Long Term Debt 3		—		(128,076	)		—		—		(127,261	)		—

¹ The fair value of corporate bonds is determined through the use of model-based valuation techniques for which all significant assumptions are observable in the market.

² The Perfect Home bonds were initially valued at cost. The Company periodically reviews the valuation utilizing company-specific transactions or changes in Perfect Home’s financial performance to determine if fair value adjustments are necessary.

³ The fair value of fixed-rate long term debt is estimated using the present value of underlying cash flows discounted at a current market yield for similar instruments. The carrying value of fixed-rate long term debt was $125.0 million at March 31, 2013 and December 31, 2012.

Held-to-Maturity Securities

The Company classifies its investments in debt securities as held-to-maturity securities based on its intent and ability to hold these securities to maturity. Accordingly, the debt securities, which mature at various dates during 2013 through 2015, are recorded at amortized cost in the consolidated balance sheets. At March 31, 2013 and December 31, 2012, investments classified as held-to-maturity securities consisted of the following:

			Gross Unrealized
(In Thousands)	Amortized Cost		Gains		Losses			Fair Value
March 31, 2013
Corporate Bonds	$	74,239	$	94	$	(55	)	$	74,278
Perfect Home Bonds		17,671		—		—			17,671
Total	$	91,910	$	94	$	(55	)	$	91,949
December 31, 2012
Corporate Bonds	$	67,412	$	99	$	(41	)	$	67,470
Perfect Home Bonds		18,449		—		—			18,449
Total	$	85,861	$	99	$	(41	)	$	85,919

The amortized cost and fair value of held-to-maturity bonds at March 31, 2013 by contractual maturity are as follows:

(In Thousands)	Amortized Cost		Fair Value
Due in one year or less	$	47,120	$	47,181
Due in years one through two		44,790		44,768
Total	$	91,910	$	91,949

Information pertaining to held-to-maturity bonds with gross unrealized losses is as follows:

	Less than 12 months					12 months or longer				Total
(In Thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
March 31, 2013
Corporate Bonds	$	30,327	$	(55	)	$	—	$	—	$	30,327	$	(55	)
December 31, 2012
Corporate Bonds	$	22,785	$	(41	)	$	—	$	—	$	22,785	$	(41	)

The unrealized losses relate principally to the increases in short-term market interest rates that occurred since the securities were purchased. As of March 31, 2013, 18 of the 41 bonds are in an unrealized loss position and at December 31, 2012, 16 of the 38 securities were in an unrealized loss position. The fair value is expected to recover as the securities approach their maturity or if market yields for such investments decline. In analyzing an issuer’s financial condition, management considers whether downgrades by bond rating agencies have occurred. The Company has the intent and ability to hold the investments until their amortized cost basis is recovered on the maturity date. As a result of management’s analysis and review, no declines are deemed to be other than temporary.

The Company has estimated that the carrying value of its Perfect Home bonds approximates fair value and, therefore, no impairment is considered to have occurred as of March 31, 2013. While no impairment was noted during the three months ended March 31, 2013, if profitability is delayed as a result of the significant start-up expenses associated with Perfect Home, there could be a change in the valuation of the Perfect Home bonds that may result in the recognition of an impairment loss in future periods.