Investments and Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis as of October 2, 2011 were as follows:



	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Money market funds	$	495,121	$	495,121	$	—	$	—
Fixed income securities	4,281,312		88,161		4,193,151		—
Equity securities	72,769		72,769		—		—
Derivative assets	29,026		—		29,026		—
Other	4,186		—		4,186		—
Total financial assets	$	4,882,414	$	656,051	$	4,226,363	$	—

Derivative liabilities	$	79,106	$	—	$	79,106	$	—
Total financial liabilities	$	79,106	$	—	$	79,106	$	—

Financial assets and liabilities measured at fair value on a recurring basis as of January 2, 2011 were as follows:



	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Money market funds	$	587,973	$	587,973	$	—	$	—
Fixed income securities	4,448,837		30,803		4,418,034		—
Equity securities	90,425		90,425		—		—
Derivative assets	19,462		—		19,462		—
Other	4,379		—		4,379		—
Total financial assets	$	5,151,076	$	709,201	$	4,441,875	$	—

Derivative liabilities	$	76,762	$	—	$	76,762	$	—
Total financial liabilities	$	76,762	$	—	$	76,762	$	—

Financial assets and liabilities measured at fair value on a recurring basis as of October 2, 2011, were presented on the Condensed Consolidated Balance Sheets as follows:



	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Cash equivalents⁽¹⁾	$	655,837	$	498,121	$	157,716	$	—
Short-term marketable securities	1,478,702		95,245		1,383,457		—
Long-term marketable securities	2,714,663		62,685		2,651,978		—
Other current assets and other non-current assets	33,212		—		33,212		—
Total assets	$	4,882,414	$	656,051	$	4,226,363	$	—

Other current accrued liabilities	$	72,682	$	—	$	72,682	$	—
Non-current liabilities	6,424		—		6,424		—
Total liabilities	$	79,106	$	—	$	79,106	$	—

__________


⁽¹⁾	Cash equivalents exclude cash of $419.0 million included in Cash and cash equivalents on the Condensed Consolidated Balance Sheets as of October 2, 2011.

Financial assets and liabilities measured at fair value on a recurring basis as of January 2, 2011, were presented on the Condensed Consolidated Balance Sheets as follows:



	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Cash equivalents⁽¹⁾	$	613,698	$	587,973	$	25,725	$	—
Short-term marketable securities	2,018,565		112,906		1,905,659		—
Long-term marketable securities	2,494,972		8,322		2,486,650		—
Other current assets and other non-current assets	23,841		—		23,841		—
Total assets	$	5,151,076	$	709,201	$	4,441,875	$	—

Other current accrued liabilities	$	33,606	$	—	$	33,606	$	—
Non-current liabilities	43,156		—		43,156		—
Total liabilities	$	76,762	$	—	$	76,762	$	—

__________


⁽¹⁾	Cash equivalents exclude cash of $215.5 million included in Cash and cash equivalents on the Condensed Consolidated Balance Sheets as of January 2, 2011.

As of October 2, 2011 and January 2, 2011, the Company had no financial assets or liabilities categorized as Level 3.

As of October 2, 2011, the Company had not elected the fair value option for any financial assets and liabilities for which such an election would have been permitted.

Available-for-Sale Investments. Available-for-sale investments as of October 2, 2011 were as follows:



	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(In thousands)
Fixed income securities:
U.S. Treasury and government agency securities	$	93,557	$	41	$	(49	)	$	93,549
U.S. government-sponsored agency securities	75,269		5		(20		)	75,254
Corporate notes and bonds	862,096		1,649		(3,721		)	860,024
Asset-backed securities	173,926		80		(98		)	173,908
Mortgage-backed securities	5,466		30		—			5,496
Municipal notes and bonds	3,051,952		22,412		(1,283		)	3,073,081
	4,262,266		24,217		(5,171		)	4,281,312
Equity investments	68,164		4,605		—			72,769
Total available-for-sale investments	$	4,330,430	$	28,822	$	(5,171	)	$	4,354,081

Available-for-sale investments as of January 2, 2011 were as follows:



	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(In thousands)
Fixed income securities:
U.S. Treasury and government agency securities	$	36,015	$	53	$	(33	)	$	36,035
U.S. government-sponsored agency securities	24,336		85		—			24,421
Corporate notes and bonds	401,182		2,689		(196		)	403,675
Asset-backed securities	10,069		45		(5		)	10,109
Mortgage-backed securities	6,500		35		—			6,535
Municipal notes and bonds	3,972,268		9,435		(13,641		)	3,968,062
	4,450,370		12,342		(13,875		)	4,448,837
Equity investments	68,525		21,900		—			90,425
Total available-for-sale investments	$	4,518,895	$	34,242	$	(13,875	)	$	4,539,262

The fair value and gross unrealized losses on the available-for-sale securities that have been in an unrealized loss position, aggregated by type of investment instrument, and the length of time that individual securities have been in a continuous unrealized loss position as of October 2, 2011, are summarized in the following table. Available-for-sale securities that were in an unrealized gain position have been excluded from the table.



	Less than 12 months					Greater than 12 months
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss
	(In thousands)
U.S. Treasury and government agency securities	$	63,863	$	(49	)	$	—	$	—
U.S. government-sponsored agency securities	74,243		(20		)	—		—
Corporate notes and bonds	368,016		(3,721		)	—		—
Asset-backed securities	130,334		(98		)	—		—
Municipal notes and bonds	361,035		(1,236		)	12,634		(47		)
Total	$	997,491	$	(5,124	)	$	12,634	$	(47	)

Gross unrealized gains and losses related to publicly-traded equity investments are due to changes in market prices. The Company has cash flow hedges designated to substantially mitigate risks of both gains and losses from these equity investments, as discussed in Note 3, “Derivatives and Hedging Activities.” The gross unrealized loss related to U.S. Treasury and U.S. government-sponsored agency securities, corporate and municipal notes and bonds, and asset-backed securities was primarily due to changes in interest rates. The gross unrealized loss on all available-for-sale fixed income securities at October 2, 2011 was considered temporary in nature. Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and the Company’s intent and ability to hold an investment for a period of time sufficient to allow for any anticipated recovery in market value. For debt security investments, the Company considered additional factors including the Company’s intent to sell the investments or whether it is more likely than not the Company will be required to sell the investments before the recovery of its amortized cost.

The following table shows the gross realized gains and (losses) on sales of available-for-sale securities for the three and nine months ended October 2, 2011 and October 3, 2010.



	Three months ended						Nine months ended
	October 2, 2011			October 3, 2010			October 2, 2011			October 3, 2010
	(In thousands)
Gross realized gains	$	1,276		$	3,898		$	6,890		$	15,685
Gross realized (losses)	(672		)	(4		)	(882		)	(305		)

Fixed income securities by contractual maturity as of October 2, 2011 are shown below. Actual maturities may differ from contractual maturities because issuers of the securities may have the right to prepay obligations.



	Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	1,563,875	$	1,566,649
Due after one year through five years	2,698,391		2,714,663
Total	$	4,262,266	$	4,281,312

For certain of the Company’s financial instruments, including accounts receivable and accounts payable, the carrying amounts approximate fair value due to their short maturities. For those financial instruments where the carrying amounts differ from fair value, the following table presents the related carrying values and the fair values, which are based on quoted market prices as of October 2, 2011 and January 2, 2011.



	October 2, 2011				January 2, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
1% Sr. Convertible Notes due 2013	$	839,224	$	901,843	$	993,199	$	1,118,375
1.5% Sr. Convertible Notes due 2017	743,934		1,053,400		717,833		1,132,500
Total	$	1,583,158	$	1,955,243	$	1,711,032	$	2,250,875