6.	Fair Value Measurements

The Company measures fair value and provides required disclosures about fair value measurements as it relates to financial and nonfinancial assets and liabilities in accordance with a framework specified by GAAP. This framework addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP. The framework also includes additional guidance to provide greater clarity about the credit and noncredit component of an other-than-temporary impairment event.

The fair value framework requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: quoted market prices in active markets for identical assets and liabilities

Level 2: observable market based inputs or unobservable inputs that are corroborated by market data

Level 3: unobservable inputs that are not corroborated by market data

The carrying value of cash and cash equivalents, accounts receivable and trade payables approximates the fair value due to their short-term maturities.

For recognition purposes, on a recurring basis, the Company measures available for sale short-term and long-term investments at fair value. Short-term investments had an aggregate fair value of $227.5 million at September 30, 2011 and $192.9 million at December 31, 2010. The fair value of these investments is determined using quoted prices in active markets. Long-term investments at September 30, 2011 and December 31, 2010 were comprised as follows:

	September 30, 2011		December 31, 2010
Auction rate securities	$	14,954	$	15,789
Corporate bonds		1,043		10,398
	$	15,997	$	26,187

The fair value of corporate bonds is determined using quoted prices in active markets. The fair value of long-term investments in auction rate securities is based on a valuation technique that includes the present value of future cash flows (principal and interest payments), review of the underlying collateral, and considers relevant probability weighted and risk adjusted observable inputs and minimizes the use of unobservable inputs.

There were no losses from other than temporary reductions in the fair value of investments in auction rate securities during the three months ended September 30, 2011 and 2010. The Company recognized a pre-tax decrease of $0.9 million in other comprehensive income during the three months ended September 30, 2011 and a pre-tax decrease of $61,000 in other comprehensive income during the three months ended September 30, 2010, due to temporary changes in the fair value of its investments in auction rate securities.

There were no losses from other than temporary reductions in the fair value of investments in auction rate securities during the nine months ended September 30, 2011. During the nine months ended September 30, 2010, the Company recognized a net pre-tax loss of $1.0 million from auction rate securities. Included in the net pre-tax loss of $1.0 million from auction rate securities is a $2.1 million charge for other than temporary impairment losses, partially offset by a realized gain of $1.1 million as a result of proceeds of $3.5 million from the sales of auction rate securities in excess of the cost basis of $2.4 million. The Company recognized a net pre-tax decrease of $0.8 million in other comprehensive income during the nine months ended September 30, 2011 and a pre-tax increase of $107,000 which increased other comprehensive income during the nine months ended September 30, 2010, due to temporary changes in the fair value of its investments in auction rate securities.

Cumulatively to date, the Company has incurred $9.2 million in pre-tax charges due to other-than-temporary reductions in the value of its investments in auction rate securities, realized losses of $4.9 million from sales of auction rate securities and pre-tax temporary impairment charges of $3.1 million reflected in other comprehensive income. The Company's investments in auction rate securities represent interests in insurance securitizations collateralized by pools of residential and commercial mortgages, asset backed securities and other structured credits relating to the credit risk of various bond guarantors that mature at various dates from June 2021 through July 2052. These auction rate securities were intended to provide liquidity via an auction process which is scheduled every 28 days, that resets the applicable interest rate, allowing investors to either roll over their holdings or gain immediate liquidity by selling such interests at par. Interest rates are capped at a floating rate of one month LIBOR plus additional spread ranging from 1.25% to 4.00% depending on prevailing rating. During the second half of the year 2007, through 2008, 2009, 2010 and through September 30, 2011, the auctions for these securities failed. As a result of current negative conditions in the global credit markets, auctions for the Company's investment in these securities have recently failed to settle on their respective settlement dates. Consequently, the investments are not currently liquid through the normal auction process and may be liquidated if a buyer is found outside the auction process. Although the auctions have failed, the Company continues to receive underlying cash flows in the form of interest income from the investments in auction rate securities. As of September 30, 2011, the fair value of the Company's investments in auction rate securities was below cost by approximately $12.3 million. The fair value of the auction rate securities has been below cost for more than one year.

Beginning in the third quarter of 2008 and at September 30, 2011, the Company determined that the market for its investments in auction rate securities and for similar securities continued to be inactive since there were few observable or recent transactions for these securities or similar securities. The Company's investments in auction rate securities were classified within Level 3 of the fair value hierarchy because the Company determined that significant adjustments using unobservable inputs were required to determine fair value as of September 30, 2011 and December 31, 2010.

An auction rate security is a type of structured financial instrument where its fair value can be estimated based on a valuation technique that includes the present value of future cash flows (principal and interest payments), review of the underlying collateral and considers relevant probability weighted and risk adjusted observable inputs and minimizes the use of unobservable inputs. Probability weighted inputs included the following:

·	Probability of earning maximum rate until maturity
·	Probability of passing auction at some point in the future
·	Probability of default at some point in the future (with appropriate loss severity assumptions)

The Company determined that the appropriate risk-free discount rate (before risk adjustments) used to discount the contractual cash flows of its auction rate securities ranged from 0.1% to 3.1%, based on the term structure of the auction rate security. Liquidity risk premiums are used to adjust the risk-free discount rate for each auction rate security to reflect uncertainty and observed volatility of the current market environment. This risk of nonperformance has been captured within the probability of default and loss severity assumptions noted above. The risk-adjusted discount rate, which incorporates liquidity risk, appropriately reflects the Company's estimate of the assumptions that market participants would use (including probability weighted inputs noted above) to estimate the selling price of the asset at the measurement date.

In determining whether the decline in value of the ARS investments was other-than-temporary, the Company considered several factors including, but not limited to, the following: (1) the reasons for the decline in value (credit event, interest related or market fluctuations); (2) the Company's ability and intent to hold the investments for a sufficient period of time to allow for recovery of value; (3) whether the decline is substantial; and (4) the historical and anticipated duration of the events causing the decline in value. The evaluation for other-than-temporary impairments is a quantitative and qualitative process, which is subject to various risks and uncertainties. The risks and uncertainties include changes in the credit quality of the securities, changes in liquidity as a result of normal market mechanisms or issuer calls of the securities, and the effects of changes in interest rates.

Assets (liabilities) measured at fair value on a recurring basis include the following as of September 30, 2011 and December 31, 2010 (in thousands):

	Three Months Ended September 30, 2011 Using
(In thousands)	Quoted Prices in Active Markets (Level 1)			Quoted Prices in Active Markets (Level 2)		Quoted Prices in Active Markets (Level 3)		Total Carrying Value at September 30, 2011
Cash and cash equivalents	$	31,541		$	-	$	-	$	31,541
Short term investments:
Investment funds – debt securities		215,447			-		-		215,447
Corporate bonds		12,030			-		-		12,030
Total short term investments		227,477			-		-		227,477
Long term investments:
Auction rate securities		-			-		14,954		14,954
Corporate bonds		1,043			-		-		1,043
Total long term investments		1,043			-		14,954		15,997
Other long-term financial asset		839			-		-		839
Derivative financial instrument (included accrued expenses in the balance sheet)		(1,481	)		-		-		(1,481	)

	Three Months Ended December 31, 2010 Using
(In thousands)	Quoted Prices in Active Markets (Level 1)		Quoted Prices in Active Markets (Level 2)		Quoted Prices in Active Markets (Level 3)		Total Carrying Value at December 31, 2010
Cash and cash equivalents	$	53,436	$	-	$	-	$	53,436
Short term investments:
Investment funds – debt securities		171,462		-		-		171,462
Corporate bonds		21,398		-		-		21,398
Total short term investments		192,860		-		-		192,860
Long term investments:
Auction rate securities		-		-		15,789		15,789
Corporate bonds		10,398		-		-		10,398
Total long term investments		10,398		-		15,789		26,187
Other long-term financial asset		1,335		-		-		1,335
Derivative financial instrument (included accrued expenses in the balance sheet)		49		-		-		49

Activity in long term investments (Level 3) was as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Balance at beginning of period	$	15,848		$	15,746		$	15,789		$	20,019
Proceeds from sales of auction rate securities		-			-			-			(3,463	)
Realized gain included in net earnings		-			-			-			1,052
Unrealized gain (loss) included in net earnings		-			-			-			(2,030	)
Unrealized gain (loss) included in other comprehensive income		(894	)		(61	)		(835	)		107
Balance at end of period	$	14,954		$	15,685		$	14,954		$	15,685

The Company recorded a liability for contingent consideration as part of the purchase price for the acquisition of VIOX Corporation at the estimated fair value of $11.5 million as of January 3, 2011. The contingent consideration arrangement requires the Company to pay the former owners of VIOX Corporation an earnout agreed upon amount, depending on the achievement of certain revenue and operating profit performance goals, with the earnout period ending 30 months after the acquisition date. The fair value of the contingent consideration arrangement was estimated based on expected revenue and operating profit during the earnout period and the discounted future cash payments that result from the calculation of the earnout as specified in the purchase agreement. The fair value of the earnout is based on significant inputs that are unobservable in the market, which is a Level 3 input. Key assumptions include a discount rate of 20 percent and estimated revenues and operating profit during the earnout period. The Company performs a quarterly revaluation of contingent consideration and records the change as a component of operating income. During the three months and nine months ended September 30, 2011, the change in the fair value of this contingent consideration liability was $0.6 million and $1.7 million, respectively, based on an estimated fair value of $13.2 million as of September 30, 2011. See Note 15 for additional information regarding this acquisition.

For disclosure purposes, the Company is required to measure the fair value of outstanding debt on a recurring basis. The fair value of outstanding debt is determined using quoted prices in active markets. The fair value of long-term debt, based on quoted market prices, was $94.0 million at September 30, 2011 and $93.1 million at December 31, 2010.