Fair Value Measurements

6 Months Ended

Mar. 31, 2013

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 March 31, 2013, the Company’s financial assets utilizing Level 1 inputs included investment securities traded on an active securities exchange. The Company did not have any financial assets utilizing Level 2 or Level 3 inputs at March 31, 2013 or September 30, 2012.

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

	March 31, 2013		September 30, 2012
	(Level 1)		(Level 1)
	(In thousands)
Money market instruments (1)	$	19,313	$	34,317
Semiconductor Manufacturing International Corp.
(SMIC) common stock (2)	1,771		1,099
Nanya Technology Corporation (Nanya) common stock (3)	27,324		14,752
	$	48,408	$	50,168

(1) Included in cash and cash equivalents

(2) Included in short-term investments

(3) Included in short-term investments at March 31, 2013 and other assets at September 30, 2012.

There were no transfers in or out of Level 1 assets during the three months ended March 31, 2013.

As of March 31, 2013, the Company did not have any liabilities or non-financial assets that are measured at fair value on a recurring basis.

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

March 31, 2013	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
				(In thousands)
Money market instruments	$	19,313		$	—	$	—		$	19,313
Certificates of deposit	15,288			—		—			15,288
SMIC common stock	1,099			672		—			1,771
Nanya common stock	13,676			13,648		—			27,324
Total	49,376			14,320		—			63,696
Less: Amounts included in cash, cash equivalents
and restricted cash	(29,333		)	—		—			(29,333		)
	$	20,043		$	14,320	$	—		$	34,363
September 30, 2012	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
				(In thousands)
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

During the three months ended March 31, 2013, the Company sold approximately 40.5 million shares of Nanya common stock for approximately $4.7 million which resulted in a pre-tax gain of approximately $2.1 million.    

As of March 31, 2013 and September 30, 2012, the Company had cash, cash equivalents and short-term investments of $39.2 million ($2.7 million of which is in China and subject to exchange control regulations) and $39.3 million, respectively, in foreign financial institutions.