Investments

Marketable Securities

All of the Company's marketable securities at September 30, 2014, and December 31, 2013, were classified as "available-for-sale" securities, with changes in fair value recognized in stockholders' equity as "other comprehensive income (loss)". Marketable securities at September 30, 2014, consisted of the following:



	Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Short-term deposits	$	42,554		$	—	$	—		$	42,554
Mutual funds	15,722			5,153		(116		)	20,759
Corporate securities	105,932			13,539		(2,675		)	116,796
Corporate obligations	31,248			995		(163		)	32,080
Total available-for-sale securities	195,456			19,687		(2,954		)	212,189
Amounts classified as cash equivalents	(42,554		)	—		—			(42,554		)
Amounts classified as marketable securities	$	152,902		$	19,687	$	(2,954	)	$	169,635

Marketable securities at December 31, 2013, consisted of the following:



	Cost			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Short-term deposits	$	60,909		$	—	$	—		$	60,909
Mutual funds	15,722			5,061		—			20,783
United States government securities	50,356			23		—			50,379
Corporate securities	69,806			9,961		(5,208		)	74,559
Corporate obligations	31,356			885		(276		)	31,965
Commercial paper	1,799			—		—			1,799
Total available-for-sale securities	229,948			15,930		(5,484		)	240,394
Amounts classified as cash equivalents	(61,909		)	—		—			(61,909		)
Amounts classified as marketable securities	$	168,039		$	15,930	$	(5,484	)	$	178,485

Proceeds from sales of marketable securities were $105.1 million and $65.5 million for the nine months ended September 30, 2014 and 2013, respectively, and $9.4 million and $20.4 million for the three months ended September 30, 2014 and 2013, respectively. The Company determines gains and losses from sales of marketable securities based on specific identification of the securities sold. Gross realized gains and losses from sales of marketable securities, all of which are reported as a component of "Other income (expense), net" in the consolidated statements of operations for the three and nine months ended September 30, 2014 and 2013, were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(in thousands)
Gross realized gains	$	682		$	1,914		$	7,078		$	5,779
Gross realized losses	(1,683		)	(51		)	(3,012		)	(3,945		)
Realized gains (losses), net	$	(1,001	)	$	1,863		$	4,066		$	1,834

The fair value of the Company’s marketable securities with unrealized losses at September 30, 2014, all of which had unrealized losses for periods of less than twelve months, were as follows:



	Fair Value		Gross Unrealized Losses
	(in thousands)
Corporate securities	$	28,611	$	(2,675	)
Corporate obligations	7,592		(163		)
Mutual funds	5,079		(116		)
Total	$	41,282	$	(2,954	)

The fair value of the Company’s marketable securities with unrealized losses at December 31, 2013, and the duration of time that such losses had been unrealized, were as follows:



	Less than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
	(in thousands)
Corporate securities	$	15,609	$	(4,757	)	$	803	$	(451	)	$	16,412	$	(5,208	)
Corporate obligations	10,477		(276		)	—		—			10,477		(276		)
Total	$	26,086	$	(5,033	)	$	803	$	(451	)	$	26,889	$	(5,484	)

Gross unrealized losses primarily related to losses on corporate securities. The Company has evaluated such securities, which primarily consist of investments in publicly-traded entities, as of September 30, 2014, and has determined that there was no indication of other-than-temporary impairments. This determination was based on several factors, including the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the entity, and the Company's intent and ability to hold the corporate securities for a period of time sufficient to allow for any anticipated recovery in market value.

The amortized cost and estimated fair value of available-for-sale debt securities and marketable securities with no contractual maturities at September 30, 2014, by contractual maturity, were as follows:



	Cost		Estimated Fair Value
	(in thousands)
Debt securities:
Mature after one year through three years	$	223	$	228
Mature in more than three years	31,025		31,852
Total debt securities	31,248		32,080
Securities with no contractual maturities	164,208		180,109
Total	$	195,456	$	212,189

Financial Instrument Obligations

In 2014, the Company entered into short sale transactions on certain financial instruments in which the Company received proceeds from the sale of such financial instruments and incurred obligations to deliver or purchase securities at a later date. Upon initially entering into such short sale transactions the Company recognized obligations totaling approximately $19.5 million, with a comparable amount of the Company's cash and cash equivalents reclassified as restricted cash. Subsequent changes in the fair value of such obligations, determined based on the closing market price of the financial instruments, are recognized currently as gains or losses, with a comparable reclassification made between the amounts of the Company's unrestricted and restricted cash. The Company's obligations for such transactions are reported as "Financial instrument obligations" with a comparable amount reported as "Restricted cash" in the Company's consolidated balance sheet. As of September 30, 2014, the Company's financial instrument obligations consisted of the following.



	Initial Obligation		Estimated Fair Value
	(in thousands)
Corporate securities	$	655	$	532
Market indices	18,685		19,603
Covered call options	80		123
Naked put options	92		6
Total	$	19,512	$	20,264

For the three and nine months ended September 30, 2014, the Company incurred losses on the financial instrument obligations totaling $0.1 million and $0.8 million, respectively, which are included as a component of "Other income (expense), net" in the Company's consolidated statements of operations.

Equity-Method Investments

In January 2013, the Company acquired a 40% membership interest in Again Faster LLC, a fitness equipment company, for total cash consideration of $4.0 million. In August 2013, the Company acquired 1,316,866 shares of the common stock of iGo, Inc. (“iGo”), in a cash tender offer for total consideration of $5.2 million. The shares of common stock of iGo acquired by the Company represented approximately 44.7% of the issued and outstanding shares of iGo at the date of acquisition. Both Again Faster and iGo are accounted for using the traditional method of accounting for equity-method investments, with the Company recognizing its equity in the losses of iGo on a one-quarter lag basis.

In May 2014, the Company increased its holdings of the common stock of API Technologies Corp. (“API”), a designer and manufacturer of high performance systems, subsystems, modules, and components, to 11,377,192 shares through the acquisition of 1,666,666 shares on the open market. Upon acquiring such shares the Company held approximately 20.6% of the total outstanding common stock of API. Effective as of that date the investment in API has been accounted for as an equity-method investment using the fair value option, with changes in fair value based on the market price of API's common stock recognized currently as income or loss from equity method investees. The Company elected the fair value option to account for its investment in API in order to more appropriately reflect the value of API in its financial statements. Prior to such time the investment in API was accounted for as an available-for-sale security, and upon the change in classification the Company recognized a loss of approximately $0.6 million that had previously been included as a component of "accumulated other comprehensive income".

The following table summarizes the Company's equity-method investments.



	Ownership				Carrying Value				Income (Loss) Recognized
									Three Months Ended						Nine Months Ended
	September 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013		September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
					(in thousands)
Traditional equity method
Again Faster	40.0	%	40.0	%	$	3,115	$	3,671	$	(263	)	$	(138	)	$	(556	)	$	(218	)
iGo	46.9	%	44.7	%	2,742		4,668		(121		)	—			(1,926		)	—

Fair value option
API	20.6	%			26,871		—		(4,459		)	—			(920		)	—
Total					$	32,728	$	8,339	$	(4,843	)	$	(138	)	$	(3,402	)	$	(218	)

Based on the closing market price of iGo’s publicly-traded shares, the value of the Company’s investment in iGo was approximately $4.2 million at September 30, 2014.

Other Investments

The Company's other investments at September 30, 2014, include a $25.0 million cost-method investment in a limited partnership that co-invested with other private investment funds in a public company. The investment in the limited partnership had an approximate fair value of $23.4 million at September 30, 2014, based on the net asset value indicated in the monthly statement received from the partnership. The Company's other investments at September 30, 2014, also include investments in a venture capital funds totaling $0.5 million and a promissory note with an amortized cost of $3.0 million, which is a reasonable approximation of fair value at September 30, 2014.