Fair Value Measurements

9 Months Ended

Sep. 30, 2013

FairValueDisclosuresTextBlockAbstract

Fair values of assets and liabilities are determined based on a three-level measurement input hierarchy. Level 1 inputs are quoted prices in active markets for identical assets or liabilities as of the measurement date.

Level 2 inputs are other than quoted market prices that are observable, either directly or indirectly, for an asset or liability. Level 2 inputs 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. The Company uses quoted prices of similar instruments with an active market to determine the fair value of its Level 2 investments.

Level 3 inputs are unobservable for the asset or liability when there is little, if any, market activity for the asset or liability. Level 3 inputs are based on the best information available, and may include data developed by the Company. The Company uses the net asset value included in quarterly statements it receives in arrears from two venture capital funds to determine the fair value of such funds. The Company uses prices determined by third-party pricing services based on the specific features of the underlying securities for certain corporate securities and corporate obligations. The Company uses its own forecast data and probability assessments to determine the fair value of the contingent consideration.

Assets and liabilities measured at fair value on a recurring basis at September 30, 2013, summarized by measurement input category, were as follows:



	Total		Level 1		Level 2		Level 3
	(in thousands)
Assets
Cash, including short-term deposits⁽¹⁾	$	120,214	$	120,214	$	—	$	—
Mutual funds⁽²⁾	16,129		16,129		—		—
United States government securities⁽²⁾	50,412		50,412		—		—
Corporate securities⁽²⁾	73,970		67,922		—		6,048
Commercial paper⁽³⁾	6,298		—		6,298		—
Corporate obligations⁽²⁾	24,386		—		12,573		11,813
Investments in certain funds⁽⁴⁾	849		—		—		849
	$	292,258	$	254,677	$	18,871	$	18,710


(1)	Reported within "Cash and cash equivalents".


(2)	Reported within “Marketable securities”.


(3)	At September 30, 2013, the Company reported $1.7 million and $4.6 million within "Cash and cash equivalents" and "Marketable securities", respectively.


(4)	Reported within "Other investments".

Assets and liabilities measured at fair value on a recurring basis at December 31, 2012, summarized by measurement input category, were as follows:



	Total			Level 1		Level 2		Level 3
	(in thousands)
Assets
Cash, including short-term deposits⁽¹⁾	$	68,265		$	68,265	$	—	$	—
Mutual funds⁽²⁾	11,820			11,820		—		—
United States government securities⁽²⁾	99,477			99,477		—		—
Corporate securities⁽²⁾	20,117			20,117		—		—
Commercial paper⁽³⁾	22,291			—		22,291		—
Corporate obligations⁽²⁾	48,714			—		46,931		1,783
Investments in certain funds⁽⁴⁾	1,021			—		—		1,021
	$	271,705		$	199,679	$	69,222	$	2,804

Liabilities
Acquisition-related contingent consideration⁽⁵⁾	$	(475	)	$	—	$	—	$	(475	)


(1)	At December 31 2012, the Company reported $68.2 million and $0.1 million within “Cash and cash equivalents” and “Marketable securities,” respectively.


(2)	Reported within “Marketable securities.”


(3)	At December 31, 2012, the Company reported $3.4 million and $18.9 million within "Cash and cash equivalents" and "Marketable securities."


(4)	Reported within "Other investments".


(5)	Reported within “Accrued expenses”.

There were no transfers of securities among the various measurement input levels during the nine month period ended September 30, 2013. The liability for contingent consideration was reversed during the nine-month period ended September 30, 2013 (see Note 3).

Changes in the fair value of assets valued using Level 3 measurement inputs during the nine-month period ended September 30, 2013, were as follows:



	Amount
	(in thousands)
Balance, January 1, 2013	$	2,804
Purchases	39,332
Sales	(22,958		)
Realized gain on sale	1,556
Change in fair value	(2,024		)
Balance, September 30, 2013	$	18,710

In November 2012, the Company invested $6.0 million in convertible debentures of School Specialty Inc. (“School Specialty”) with a face amount of $11.9 million. On January 28, 2013, School Specialty filed for protection under Chapter 11 of the United States Bankruptcy Code, and in subsequent months the Company invested approximately $21.3 million as part of the debtor-in-possession loan to School Specialty. Upon School Specialty emerging from bankruptcy on June 11, 2013, the Company received 26,457 shares of common stock of the post-bankruptcy entity in exchange for the convertible debentures, and received $17.5 million in cash and 49,136 shares of common stock of the post-bankruptcy entity in exchange for its investment in the debtor-in-possession loan. The fair value of the common stock of the post-bankruptcy entity received was $109 per share. In connection with these transactions, the Company recognized a loss on disposal of the subordinated debentures of approximately $3.2 million and a gain on disposal of the investment in the debtor-in-possession loan of approximately $1.6 million, both of which are included as a component of “Other income (expense), net” in the consolidated statements of operations for the nine months ended September 30, 2013. In addition, the Company invested $9.8 million in senior secured notes of the post-bankruptcy entity in June 2013. The Company's investments in the common stock and senior secured notes of the post-bankruptcy entity are included as Level 3 corporate securities and Level 3 corporate obligations, respectively, as of September 30, 2013.

The Company’s 3/4% Convertible Senior Notes due December 22, 2023 had a carrying value of approximately $0.3 million as of September 30, 2013, and December 31, 2012, which was a reasonable approximation of fair value as of both dates.

- 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.

+ References+ Details