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The following table summarizes the gross unrealized gains and losses and fair values for investments as of December 31, 2012 and December 31, 2011
aggregated by
major security type (in thousands):
At December 31, 2012 and 2011, corporate and governmental debt securities were recorded as available-for-
sale. These debt securities have a fixed interest rate. There
have been no significant changes in the maturity dates and average interest rates for the Company’s debt investment portfolio and debt obligations subsequent to
December 31,
2012 . At December 31, 2012 , equity securities were recorded as available-for-
sale and primarily represent a strategic investment in Carbonite, Inc. On August 31, 2012, j2
Global submitted a preliminary non-
binding proposal to acquire all outstanding shares for cash consideration of $10.50 per fully diluted share, representing a substantial
premium to the market trading price of the shares on such date. On September 8, 2012, Carbonite, Inc. informed j2 Global that it had rejected the proposal, without making a
counter-offer. There have been no further discussions between j2 Global and Carbonite, Inc. At December 31, 2012 , the Company’s available-for-
sale securities are carried at
fair value, with the unrealized gains and losses reported as a component of stockholders’ equity. Short-
term investments include restricted balances which the Company may not
liquidate until maturity, generally within 12 months. Restricted balances included in short-term investments were $34.9 million at December 31, 2012
. For the year ended
December 31, 2012 , the Company recorded gain from the sale of investments of approximately $0.3 million
, which included a reversal of unrealized gains from accumulated
other comprehensive income of approximately $0.1 million . For the year ended December 31, 2011
, the Company recorded gain from the sale of investments of approximately
$0.6 million , which included a reversal of unrealized gains from accumulated other comprehensive income of approximately $0.3 million .
Investments that have been in an unrealized loss position as of December 31, 2012 and December 31, 2011 had a fair value of $31.8 million and $46.2 million
,
respectively, and have been in a continuous unrealized loss for less than 12 months. Investments in a continuous unrealized loss for 12 months and longer as of
December 31,
2012 and December 31, 2011 had a fair value of $2.2 million and zero , respectively, which are determined to be temporary in nature.
Recognition and Measurement of Other-Than-Temporary Impairment
j2 Global regularly reviews and evaluates each investment that has an unrealized loss. An unrealized loss exists when the current fair value of an individual security is
less than its amortized cost basis. Unrealized losses that are determined to be temporary in nature are recorded, net of tax, in accumulated other comprehensive income for
available-for-sale securities, while such losses related to held-to-maturity securities are not recorded, as these investments are carried at their amortized cost.
Regardless of the classification of the securities as available-for-sale or held-to-maturity, the Company has assessed each position for impairment.
Factors considered in determining whether a loss is temporary include:
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Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
December 31, 2012
Debt Securities
$
66,541
$
149
$
(167
)
$
66,523
Equity Securities
20,610
3,251
(367
)
23,494
Total
$
87,151
$
3,400
$
(534
)
$
90,017
December 31, 2011
Debt Securities
$
73,731
$
99
$
(241
)
$
73,589
Total
$
73,731
$
99
$
(241
)
$
73,589
•
the length of time and the extent to which fair value has been below cost;
•
the severity of the impairment;
• the cause of the impairment and the financial condition and near-
term prospects of the issuer;
•
activity in the market of the issuer which may indicate adverse credit conditions; and
• the Company’
s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery.