Quarterly report pursuant to Section 13 or 15(d)

Fair Value

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Fair Value
3 Months Ended
Mar. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]  
Fair Value
Fair Value
Assets and liabilities recorded at fair value in the condensed consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows:
Level 1 - Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 - Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument's anticipated life.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and which reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date.
For Level 2 financial instruments, our investment advisor provides us with monthly account statements documenting the value of each investment based on prices received from an independent third-party valuation service provider. This third party evaluates the types of securities in our investment portfolio and calculates a fair value using a multi-dimensional pricing model that includes a variety of inputs, including quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks and default rates that are observable at commonly quoted intervals. As we are ultimately responsible for the determination of the fair value of these instruments, we perform quarterly analyses using prices obtained from another independent provider of financial instrument valuations, to validate that the prices we have used are reasonable estimates of fair value.
The following table presents our financial instruments that were measured at fair value on a recurring basis at March 31, 2013 by level within the fair value hierarchy (in thousands):
 
March 31, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
Financial Assets
 
 
 
 
 
 
 
Money market funds
$
17,931

 
$

 
$

 
$
17,931

Corporate bonds

 
8,446

 

 
8,446

U.S. Treasury obligations

 
5,509

 

 
5,509

Common shares of CO2 Solutions
930

 

 

 
930

Total
$
18,861

 
$
13,955

 
$

 
$
32,816

The following table presents our financial instruments that were measured at fair value on a recurring basis at December 31, 2012 by level within the fair value hierarchy (in thousands):
 
December 31, 2012
 
Level 1
 
Level 2
 
Level 3
 
Total
Financial Assets
 
 
 
 
 
 
 
Money market funds
$
24,789

 
$

 
$

 
$
24,789

Commercial paper

 
1,500

 

 
1,500

Corporate bonds

 
9,522

 

 
9,522

U.S. Treasury obligations

 
5,516

 

 
5,516

Common shares of CO2 Solutions
610

 

 

 
610

Total
$
25,399

 
$
16,538

 
$

 
$
41,937


We estimated the fair value of our investment in 10,000,000 common shares of CO2 Solutions using the market value of common shares as determined by trading on the TSX Venture Exchange. Accordingly, we have classified our investment in CO2 Solutions as a Level 1 investment. As of March 31, 2013, the fair value of our investment in CO2 Solutions’ common stock was $0.9 million with an unrealized gain of $0.2 million, net of $0.1 million of tax. During 2012, we evaluated our investment in the common shares of CO2 Solutions and determined the impairment was other-than-temporary considering the length of time and extent to which the fair value has been less than our cost, the financial condition and near term prospects of CO2 Solutions, and our management's ability and intent to hold the securities until fair value recovers. As a result of our analysis, we recorded an impairment of $0.8 million during the year ended December 31, 2012 as an expense in our condensed consolidated statement of operations as selling, general and administrative expense. At December 31, 2012, the estimated fair value of our investment in CO2 Solutions’ common stock was $0.6 million with an unrealized gain of $47,000.