(7) Investments

As of June 30, 2013 and December 31, 2012, the company held investments consisting of three auction-rate debt securities (life insurance company capital reserve funds), an auction-rate equity security (financial guarantee company capital reserve fund) and two preferred stock investments. These investments are classified as available for sale securities and as non-current assets on the company's balance sheet. Contractual maturities for the debt securities are 12 years or greater and the remaining securities have no fixed maturity. The amortized cost and fair value of these investments were as follows (in thousands):

	June 30, 2013						December 31, 2012
	Cost or Amortized Cost		Net Unrealized Gain (Loss)		Fair Value		Cost or Amortized Cost		Net Unrealized Gain (Loss)			Fair Value
Debt	$	7,150	$	50	$	7,200	$	7,150	$	(250	)	$	6,900
Equity⁽¹⁾		2,000		600		2,600		2,000		300			2,300
Total	$	9,150	$	650	$	9,800	$	9,150	$	50		$	9,200

⁽¹⁾As of June 30, 2013 and December 31, 2012, cost and fair value of the two preferred stock investments were $0.

The changes in fair value of the investments were recorded as follows (in thousands):

	Quarters Ended					Six Months Ended
	June 30,					June 30,
	2013		2012			2013		2012
Debt Securities
Fair value at beginning of period	$	6,900	$	6,100		$	6,900	$	6,100
Change in net unrealized gain (loss)		300		600			300		600
Fair value at end of period	$	7,200	$	6,700		$	7,200	$	6,700


Equity Securities
Fair value at beginning of period	$	2,600	$	2,700		$	2,300	$	2,400
Change in net unrealized gain (loss)		—		(100	)		300		200
Fair value at end of period	$	2,600	$	2,600		$	2,600	$	2,600


Total
Fair value at beginning of period	$	9,500	$	8,800		$	9,200	$	8,500
Change in net unrealized gain (loss)		300		500			600		800
Fair value at end of period	$	9,800	$	9,300		$	9,800	$	9,300

There was no sale, purchase, issuance, settlement or transfer activity related to these investments during the periods presented.

The fair values of these securities are based on a discounted cash flow analysis which consider the following Level 3 observable and unobservable inputs: (i) the underlying structure of each security; (ii) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions and the relevant risk associated with each security; and (iii) the expected time horizon until each security will be sold. The discount rates used in the present value calculations are based on yields on U.S. Treasury securities with similar time horizons (1.4% to 2.5% as of June 30, 2013) plus interest rate risk premiums (4% to 12% as of June 30, 2013) that are intended to compensate for general market risk and the risk specific to each security. The risk premiums are based upon current credit default swap pricing market data for similar or related securities or credit spreads for corporate bonds with similar credit ratings and similar maturities. The time horizons used in the present value calculations have a range of 3 to 8 years as of June 30, 2013.