Investments

6 Months Ended

Jun. 30, 2011

Investments

Investments

2. Investments

Investments consist of the following (in thousands):

	June 30, 2011		December 31, 2010
Short-term investments:
U.S. agency securities		751		2,250
Municipal securities		451		450
Corporate commercial paper		4,500		2,749
Foreign government bonds		775		775
Corporate debt securities		7,246		5,105
Total short-term investments		13,723		11,329
Long-term investment—auction rate security ("ARS")		116		122
Total investments	$	13,839	$	11,451

We record our investments at fair value. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1:	Quoted prices in active markets for identical assets or liabilities.
Level 2:	Directly or indirectly observable market-based inputs or unobservable inputs used in models or other valuation methodologies.
Level 3:	Unobservable inputs that are not corroborated by market data. The inputs require significant management judgment or estimation.

Our short-term investments consist entirely of marketable securities classified as available for sale, and were valued based on quoted market prices of similar instruments and other significant Level 2 inputs derived from, or corroborated by, observable market data. As of June 30, 2011 and December 31, 2010 our marketable securities consisted primarily of corporate debt, U.S. and foreign government and agency securities. Such amounts are recorded at fair value.

Our long-term investment consists entirely of a single ARS issuance, and was recorded at fair value using Level 3 inputs at June 30, 2011 and December 31, 2010. Due to the lack of observable market quotes on our ARS, we have estimated the fair value using inputs including the underlying financial condition and credit quality of the issuer, the maturity of the security, and secondary market bid levels of similar and identical securities.

On March 31, 2010, we reached a decision to liquidate our ARS. This liquidation of ARS primarily occured during the remainder of 2010. Prior to March 31, 2010, it was assumed that the ARS would be held until they were redeemed at full par value by the issuers, or until the underwriters and/or secondary offerors settled. As we no longer believed that we were to realize full par value from our ARS portfolio, the carrying value of our ARS was adjusted downward by $924,000 as of June 30, 2010, which was deemed to be an other-than-temporary adjustment. Of this amount, $378,000 was deemed to be other than-temporary during 2008, and therefore a further downward adjustment of $546,000 was recorded as a charge to other income (expense) during the six months ended June 30, 2010.

Based on Level 3 inputs, we estimated the fair value of our ARS to be $116,000 as of June 30, 2011, compared to a par value of $475,000. We have classified our ARS as a long-term investment as of June 30, 2011 due to our uncertainty as to when this security will be sold. During the six months ended June 30, 2011, we sold $25,000 of our ARS at par value, and recognized a $19,000 gain on the sale.

We had $1,000 of unrealized losses on our short-term investments as of both June 30, 2010, and December 31, 2010.