Fair Value Measurements

12 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Under FASB guidance, fair value is defined as the price expected to be received from the sale of an asset or paid to transfer a liability in a transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. The FASB guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that the market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company’s judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available at that time. The fair value hierarchy is broken down into the following three levels based on the reliability of inputs:

• Level 1 – Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices which are readily and regularly available in an active market, valuation of these products can be done without a significant degree of judgment.

• Level 2 – Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments and model-derived valuations in which all significant inputs and significant value drives are observable in active markets.

• Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

As of September 30, 2012, the Company’s financial assets utilizing Level 1 inputs include short-term investment securities traded on an active securities exchange. The Company did not have any financial assets utilizing Level 2 or Level 3 inputs at September 30, 2012 and September 30, 2011.

The following tables represent the Company’s fair value hierarchy for financial assets measured at fair value on a recurring basis:

	September 30, 2012		September 30, 2011
	(Level 1)		(Level 1)
	(In thousands)
Money market instruments (1)	$	34,317	$	34,281
Semiconductor Manufacturing International Corp.
(SMIC) common stock (2)	1,099		1,497
Nanya Technology Corporation (Nanya) common stock (3)	14,752		—
	$	50,168	$	35,778

(1) Included in cash and cash equivalents

(2) Included in short-term investments

(3) Included in other assets

There were no transfers in or out of the Company's Level 1 assets during the twelve months ending September 30, 2012 and September 30, 2011.

As of September 30, 2012, the Company did not have any liabilities or non-financial assets that are measured on a fair value basis on a recurring basis.

Available-for-sale marketable securities consisted of the following:

	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
	(in thousands)
September 30, 2012
Money market instruments	$	34,317		$	—	$	—		$	34,317
Certificates of deposit	18,302			—		—			18,302
SMIC common stock	1,099			—		—			1,099
Nanya common stock	16,587			—		(1,835		)	14,752
Total	70,305			—		(1,835		)	68,470
Less: Amounts included in cash, cash equivalents
and restricted cash	(47,177		)	—		—			(47,177		)
	$	23,128		$	—	$	(1,835	)	$	21,293

	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
	(in thousands)
September 30, 2011
Money market instruments	$	34,281		$	—	$	—		$	34,281
Certificates of deposit	12,051			—		—			12,051
SMIC common stock	3,426			—		(1,929		)	1,497
Total	49,758			—		(1,929		)	47,829
Less: Amounts included in cash, cash equivalents
and restricted cash	(43,068		)	—		—			(43,068		)
	$	6,690		$	—	$	(1,929	)	$	4,761

In fiscal 2010, the Company sold all of its remaining shares of Ralink for approximately $3.2 million and recorded a pre-tax gain of approximately $2.8 million.

During the fourth quarter of fiscal 2012, the Company recorded a $2.3 million charge to write-down its investment in SMIC due to the decline in fair market value being considered other than temporary. The Company uses the weighted-average cost method to determine the cost basis of its shares of SMIC.

In September 2012, the Company invested approximately $27.1 million in Nanya, which was comprised of common shares which are classified as available-for-sale securities and private placement shares which are accounted for on the cost-basis (See Note 4). The Company determined that the decline in the fair value of its Nanya shares was not other than temporary based on the Company's assessment that the decline was primarily a result of historically volatile semiconductor stock prices. The Company also considered the severity and the duration of the impairment of its Nanya investment. The Company uses the weighted-average cost method to determine the cost basis of its shares of Nanya.

The Company held no debt securities at September 30, 2012 and September 30, 2011. As of September 30, 2012 and September 30, 2011, the Company had cash, cash equivalents and short-term investments of $39.3 million ($3.4 million of which is in China and subject to exchange control regulations) and $41.6 million, respectively, in foreign institutions.