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Securities Available For Sale
 6 Months Ended
Jun. 30, 2013
Available-for-sale Securities [Abstract]  
Securities Available For Sale
Securities Available For Sale
As of June 30, 2013, the Company’s securities available for sale consisted of auction rate securities, which represent interests in pools of student loans guaranteed by the U.S. government under the Federal Family Education Loan Program. During the second quarter of 2013, the issuer of one of the Company's student loan auction rate securities redeemed its security at the security's par value of $2.6 million. Additionally, during the quarter ended June 30, 2013, the Company sold its structured finance security, which had a par value of $5.0 million and a cost basis of $1.7 million. This structured finance security, which was fully collateralized by investment grade credit-linked notes is composed of floating rate international bank notes, had an attached credit default swap under which the principal value of the security would be partially or fully forfeited at net default rates on the underlying corporate debt obligations ranging from 8% to 9%. As of December 31, 2012, the net default rate was estimated to be 6.22%.
Details of the second quarter 2013 redemption and sale transactions, as well as the corresponding securities, are as follows (in millions):

Par Value
 
Cumulative Credit Losses
 
Adjusted Cost Basis
 
Gross Unrealized (Losses) Gains
 
Fair Value
 
Redemption or Sale Price
 
Reversal of Gross Unrealized Losses (Gains)
 
Realized Gain on Disposal
Student loan auction rate security
$
2.6

 
$
—

 
$
2.6

 
$
(0.2
)
 
$
2.4

 
$
2.6

 
$
0.2

 
$
—

Structured finance auction rate security
5.0

 
(3.3
)
 
1.7

 
1.3

 
3.0

 
2.4

 
(0.6
)
 
(0.7
)
Total
$
7.6

 
$
(3.3
)

$
4.3


$
1.1


$
5.4


$
5.0


$
(0.4
)

$
(0.7
)
The gross unrealized gain of $1.1 million, net, was comprised of $0.7 million of unrealized gains in other comprehensive income and a deferred tax liability of $0.4 million.
Management believes the temporary unrealized decline in estimated fair value associated with its remaining student loan auction rate securities is primarily attributable to the limited liquidity of these investments and overall market volatility. The Company expects to recover the remaining cost basis of its student loan auction rate securities, and does not intend to sell, or believe that it will more likely than not be required to sell its student loan auction rate securities before recovery of their cost basis, which may be at maturity.        
The fair values of the Company's auction rate securities were estimated by an independent valuation firm, Houlihan Capital Advisors, LLC, as of June 30, 2013 and December 31, 2012, using a probability weighted discounted cash flow model. The valuation of these securities is sensitive to market conditions and management’s judgment and can change significantly based on the assumptions used. The following tables set forth the fair values of the Company’s auction rate securities by type of security and underlying credit rating as of the dates indicated (in millions):
 
Underlying Credit Rating (1)
As of June 30, 2013
AA-
 
BB
 
CCC
 
Total
Student loan auction rate securities
$
6.7

 
$
2.6

 
 
 
$
9.3

 
Underlying Credit Rating (1)
As of December 31, 2012
AA-
 
BB
 
CCC
 
Total
Student loan auction rate securities
$
9.1

 
$
2.6

 
 
 
$
11.7

Structured finance auction rate securities
 
 
 
 
2.7

 
2.7

Total auction rate securities
$
9.1


$
2.6


$
2.7


$
14.4

(1)
The Company’s auction rate securities maintain split ratings. For purposes of this table, securities are categorized according to their lowest rating.
The weighted average yields on the Company’s auction-rate securities ranged from 1.46% to 1.92% for the six months ended June 30, 2013. These yields represent the predetermined “maximum” reset rates that occur upon auction failures according to the specific terms within each security’s governing documents.
Auction Rate Securities – Reconciliation of Cost Basis to Fair Value    
The Company's student loan auction rate securities have been in a continuous unrealized loss position for over twelve months. The following table presents the cost basis, gross cumulative unrealized (losses) gains and estimated fair values of the Company’s auction rate securities as of the dates indicated (in millions):







 
June 30, 2013
 
 Adjusted Cost Basis (1)
 
Gross Cumulative
Unrealized
(Losses)/Gains
 
Fair Value
Student loan auction rate securities
$
10.3

 
$
(1.0
)
 
$
9.3

 
 
 
 
 
 
 
December 31, 2012
 
Adjusted Cost Basis (1)
 
Gross Cumulative
   Unrealized
(Losses)/Gains
 
Fair Value
Student loan auction rate securities
$
12.9

 
$
(1.2
)
 
$
11.7

Structured finance auction rate securities
1.7

 
1.0

 
2.7

Total auction rate securities
$
14.6

 
$
(0.2
)
 
$
14.4

(1)
Adjusted cost basis reflects adjustments for credit and other losses recognized in earnings on our structured finance security. There were no adjustments to the cost basis of securities held as of June 30, 2013. Cumulative adjustments to the cost basis of securities held as of December 31, 2012 totaled $3.3 million. Par value of securities held as of June 30, 2013 and December 31, 2012 totaled $10.3 million and $17.9 million, respectively.
As of June 30, 2013, contractual maturities of the Company’s student loan auction rate securities ranged from 15 to 34 years.