Investments

Investments consist of available-for-sale securities and are recorded at fair value, which is based on quoted market prices. Unrealized gains and temporary losses on investments, net of tax, are recorded in Other comprehensive income (loss). Realized gains and losses are determined using the specific identification method.

At December 31, 2013 investments classified as available-for-sale securities were as follows:



	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Debt Securities:
U.S. treasury securities	$	124,861	$	88	$	—	$	124,949
Corporate debt securities	24,236		—		2,213		22,023
	$	149,097	$	88	$	2,213	$	146,972

In April 2013, the Company engaged Fairholme Capital Management, L.L.C. (“Fairholme Capital”), to serve as an

investment adviser to the Company. As of December 31, 2013, Fairholme Capital owns approximately 27.1% of the Company's common stock. Mr. Bruce Berkowitz is the Managing Member of Fairholme Capital and the Chairman of the Company's Board of Directors. Fairholme Capital will receive no compensation for their services as the Company's investment advisor.

As of December 31, 2013, pursuant to the terms of the Investment Management Agreement (the “Agreement”) with Fairholme Capital, Fairholme Capital agreed to supervise and direct the investments of an investment account established by the Company in accordance with the investment guidelines and restrictions approved by the Investment Committee of the Company’s Board of Directors, which were set forth in the Agreement. The investment guidelines require that, as of the date of any investment, (i) at least 50% of the investment account to be held in cash, investment grade cash equivalents or U.S. treasury securities, (ii) no more than 50% of the investment account be held in corporate debt securities, which may be investment grade or non-investment grade, and (iii) no more than 10% of the investment account be invested in securities of any one issuer (excluding the U.S. Government). The investment account may not be invested in equity securities. As of December 31, 2013, the investment account included $1.8 million of money market funds (which are classified within cash and cash equivalents), $124.9 million of U.S. treasury securities and $22.0 million of corporate debt securities. The issuers of the corporate debt securities are two national retail chains and are non-investment grade.

Effective February 21, 2014, the Company entered into an Amendment (the “Amendment”) to the Agreement with Fairholme Capital. Pursuant to the Amendment, the Company modified the investment guidelines and restrictions described in the Agreement. As amended, the investment guidelines require that, as of the date of any investment, (i) at least 50% of the investment account will be held in cash or cash equivalents, as defined in the Amendment and (ii) no more than 10% of the investment account will be invested in securities of any one issuer (excluding the U.S. Government). The investment account may not be invested in common stock securities.

At December 31, 2013, there were no U.S. treasury securities with unrealized losses. At December 31, 2013, corporate debt securities with a fair value of $22.0 million had $2.2 million of unrealized losses, net of tax, which were included in Accumulated other comprehensive income for the year ended December 31, 2013.

During the year ended December 31, 2013, realized gains from the sale of available-for-sale securities were $0.1 million and proceeds from the sale of available-for-sale securities were $7.7 million and proceeds from the maturity of available-for-sale securities were $100.0 million (which were primarily reinvested in U.S. treasury securities).

The Company evaluates investments with unrealized losses to determine if they experienced an other-than-temporary impairment. This evaluation is based on various factors, including length of time securities were in a loss position, ability and intent to hold investments until unrealized losses are recovered or maturity, investee's industry and amount of the unrealized loss. Based on these factors, at December 31, 2013, the unrealized losses related to the corporate debt securities of $2.2 million were deemed temporary.

At December 31, 2013, the contractual maturities of investments classified as available-for-sale were as follows:



	Cost		Fair Value
Due in one year or less	$	124,861	$	124,949
Due after one year through five years	24,236		22,023
	$	149,097	$	146,972

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations.