Cash Equivalents, Investment Securities Avaliable-for-Sale and Fair Value Measurments - Note 4

12 Months Ended

Dec. 31, 2011

Fair Value Disclosures

Cash Equivalents, Investment Securities Available-for-Sale and Fair Value Measurements - Note 4

4. Cash equivalents, investment securities, available-for-sale, and fair value measurements

Fair value is defined as the exchange price that would be received for 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 liability. As a basis for considering such assumptions, the authoritative guidance establishes a three level fair value inputs hierarchy, and requires an entity to maximize the use of observable valuation inputs and minimize the use of unobservable inputs. We use market data, assumptions and risks we believe market participants would use in measuring the fair value of the asset or liability, including the risks inherent in the inputs and the valuation techniques. The hierarchy is summarized below.

Level 1 - Observable inputs such as quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs such as quoted prices for similar assets or liabilities in markets that are not sufficiently active to qualify as Level 1 or, other inputs that are observable by market data.

Level 3 - Unobservable inputs for which there is little or no market data, which requires us to develop our own assumptions, which are significant to the measurement of the fair values.

As of December 31, 2011, our cash and cash equivalents and investments available-for-sale securities portfolio are comprised of short-term highly rated money market savings accounts and an equity investment with a quoted price in an active market. Prior to December 31, 2010, our investment securities were comprised of debt securities and equity investments. Generally, they were issued by the U.S. government, its agencies, corporations, and student loan financial aid organizations. Accounting for these investments is discussed in Note 2.

Prior to December 2010, we held student loan auction-rate securities (SLARS), fair valued at $2.7 million. During 2010, we redeemed a total of $200,000 of our SLARS at par value through a voluntary lottery redemption program and sold our remaining SLARS for proceeds of approximately $2.4 million.

The valuation inputs hierarchy classification for assets and liabilities measured at fair value on a recurring basis are summarized below as of December 31, 2011 and 2010. These tables do not include cash held in our money market savings accounts.

As of December 31, 2011:		Level 1		Level 2		Level 3		Total
Assets
Corporate equity securities	$	-	$	8,000	$	-	$	8,000
	$	-	$	8,000	$	-	$	8,000
As of December 31, 2010:		Level 1		Level 2		Level 3		Total
Assets
Corporate equity securities	$	-	$	13,000	$	-	$	13,000
	$	-	$	13,000	$	-	$	13,000

The corporate equity securities are classified within Level 2 of the fair value hierarchy because they are valued using inputs and common methods with sufficient levels of transparency and observability. Because these securities are traded on the OTC market with lower average trading volumes we have deemed them not sufficiently active to qualify as Level 1.

Our investments are summarized below as of December 31, 2011 and December 31, 2010.

										Classification on Balance Sheet
												Investment
		Cost/		Gross		Gross						Securities,
		Amortized		Unrealized		Unrealized		Estimated		Cash		Available-
		Cost		Gains		Losses		Fair Value		Equivalents		For-Sale
As of December 31, 2011:
Assets
Corporate equity securities	$	43,000	$	-	$	(35,000)	$	8,000	$	-	$	8,000
	$	43,000	$	-	$	(35,000)	$	8,000	$	-	$	8,000
										Classification on Balance Sheet
												Investment
		Cost/		Gross		Gross						Securities,
		Amortized		Unrealized		Unrealized		Estimated		Cash		Available-
		Cost		Gains		Losses		Fair Value		Equivalents		For-Sale
As of December 31, 2010:
Assets
Corporate equity securities	$	43,000	$	-	$	(30,000)	$	13,000	$	-	$	13,000
	$	43,000	$	-	$	(30,000)	$	13,000	$	-	$	13,000

As of December 31, 2011, the unrealized losses on our investments in equity securities were due primarily to declines in the pricing of these securities.

Our significant nonfinancial assets and liabilities that are subject to consideration for recognition and disclosure at fair value in the financial statements on a nonrecurring basis primarily include property and equipment, capital lease obligations, a tenant improvement loan agreement and deferred rent. If we conclude there has been an event indicating the potential impairment of a nonfinancial asset or liability, or periodically if no such indicating event is deemed to have occurred, we determine the fair value, test for impairments, and record significant impairments, in the period of determination.

The maturities of the investment securities available-for-sale as of December 31, 2011 are shown below:

		Amortized		Unrealized		Unrealized		Estimated
		Cost		Gains		Losses		Fair Value
Maturity date:
Less than one year	$	43,000	$	-	$	(35,000)	$	8,000
Due in 1-3 years		-						-
	$	43,000					$	8,000