Support.com 2011 Annual Report Download - page 52

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
For marketable securities, measured at fair value using Level 2 inputs, we review trading activity and pricing for these investments as of the
measurement date. When sufficient quoted pricing for identical securities is not available, we use market pricing and other observable market inputs
for similar securities obtained from various third party data providers. These inputs either represent quoted prices for similar assets in active markets
or have been derived from observable market data.
Level 3 assets consist of non-UBS ARS with various state student loan authorities. Beginning in February 2008, all auctions for the ARS have
failed. Based on the continued failure of these auctions and the underlying maturities of the securities, we continue to classify our non-UBS holdings
as long-term assets. The fair value of the auction-rate securities as of December 31, 2011 and 2010 was estimated by management. The Company has
valued the ARS using a discounted cash flow model based on Level 3 assumptions, including the weighted average remaining term of the underlying
securities, the expected return, and the discount rate.
The following table provides a summary of changes in fair value of our Level 3 financial assets as of December 31, 2011 and 2010 (in
thousands):

 

  

 
Beginning balance $ 2,667 $ —
Transfer into Level 3 — —
Sales (1,400) —
Total gains/(losses):
Included in earnings — —
Included in other comprehensive income/loss (156) —
Ending balance $ 1,111 $ —

 

  

 
Beginning balance $ 22,655 $ 1,289
Transfer into Level 3 — —
Sales (21,300) —
Total gains/(losses):
Included in earnings 1,289 (1,289)
Included in other comprehensive income/loss 23 —
Ending balance $ 2,667 $ —
50
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