Note J - Fair Value Measurements

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

Note J-Fair Value Measurements

Note J – Fair Value Measurements

GAAP defines fair value, establishes a framework for measuring fair value and requires certain disclosures about fair value measurements. In addition, GAAP establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included in Level 1 that are directly or indirectly observable for the asset or liability. Such inputs include quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs derived principally from or corroborated by observable market data by correlation or other means. Level 3 inputs are unobservable inputs for the asset or liability. Such inputs are used to measure fair value when observable inputs are not available.

The Company’s assets measured at fair value on a recurring basis at March 31, 2013, were as follows:

	Level 1		Level 2		Level 3
Assets:
Investments	$	2,977,000	$	500,000	$	—
Total assets measured at fair value	$	2,977,000	$	500,000	$	—
Liabilities:
Foreign currency hedge contracts	$	—	$	15,000	$	—
Total liabilities measured at fair value	$	—	$	15,000	$	—

The Company’s assets measured at fair value on a recurring basis at December 31, 2012, were as follows:

	Level 1		Level 2		Level 3
Assets:
Investments	$	5,262,000	$	1,501,000	$	—
Total assets measured at fair value	$	5,262,000	$	1,501,000	$	—

There were no liabilities measured at fair value on a recurring basis at December 31, 2012.

There were no transfers into or out of Level 1, Level 2 or Level 3.

Foreign currency forward contracts are measured at fair value using models based on observable market inputs such as foreign currency exchange rates; therefore, they are classified within Level 2 of the valuation hierarchy. The fair value of the Company’s investments in municipal bonds and bank guaranteed investment contracts is measured using Level 2 inputs. For these investments, fair value is not materially different than amortized cost.