Investments and Fair Value Measurements

The Company’s total cash, cash equivalents and marketable securities was as follows (in thousands):



	June 30, 2013		December 30, 2012
Cash and cash equivalents	$	1,054,131	$	995,470
Short-term marketable securities	1,533,898		1,880,034
Long-term marketable securities	2,766,474		2,835,931
Total cash, cash equivalents and marketable securities	$	5,354,503	$	5,711,435

For certain of the Company’s financial instruments, including cash held in banks, accounts receivable and accounts payable, the carrying amounts approximate fair value due to their short maturities, and are therefore excluded from the fair value tables below.

Financial assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following types of instruments (in thousands):



	June 30, 2013								December 30, 2012
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Money market funds	$	613,718	$	—	$	—	$	613,718	$	582,743	$	—	$	—	$	582,743
Fixed income securities	128,805		4,370,162		—		4,498,967		27,386		4,917,939		—		4,945,325
Derivative assets	—		7,754		—		7,754		—		20,058		—		20,058
Total financial assets	$	742,523	$	4,377,916	$	—	$	5,120,439	$	610,129	$	4,937,997	$	—	$	5,548,126
Derivative liabilities	$	—	$	10,351	$	—	$	10,351	$	—	$	13,584	$	—	$	13,584
Total financial liabilities	$	—	$	10,351	$	—	$	10,351	$	—	$	13,584	$	—	$	13,584

Financial assets and liabilities measured and recorded at fair value on a recurring basis were presented on the Company’s Condensed Consolidated Balance Sheets as follows (in thousands):



	June 30, 2013								December 30, 2012
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents⁽¹⁾	$	662,517	$	149,796	$	—	$	812,313	$	582,743	$	229,360	$	—	$	812,103
Short-term marketable securities	66,912		1,466,986		—		1,533,898		16,589		1,863,445		—		1,880,034
Long-term marketable securities	13,094		2,753,380		—		2,766,474		10,797		2,825,134		—		2,835,931
Other current assets and other non-current assets	—		7,754		—		7,754		—		20,058		—		20,058
Total financial assets	$	742,523	$	4,377,916	$	—	$	5,120,439	$	610,129	$	4,937,997	$	—	$	5,548,126
Other current accrued liabilities and non-current liabilities	$	—	$	10,351	$	—	$	10,351	$	—	$	13,584	$	—	$	13,584
Total financial liabilities	$	—	$	10,351	$	—	$	10,351	$	—	$	13,584	$	—	$	13,584

————


⁽¹⁾	Cash equivalents exclude cash of $241.8 million and $183.4 million included in Cash and cash equivalents on the Condensed Consolidated Balance Sheets as of June 30, 2013 and December 30, 2012, respectively.

During the six months ended June 30, 2013, the Company had no transfers of financial assets or liabilities between Level 1 and Level 2. As of June 30, 2013 and December 30, 2012, the Company had no financial assets or liabilities categorized as Level 3 and 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 were as follows (in thousands):



	June 30, 2013									December 30, 2012
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
U.S. Treasury securities	$	128,798	$	8	$	(1	)	$	128,805	$	27,377	$	9	$	—		$	27,386
U.S. government-sponsored agency securities	17,599		17		(23		)	17,593		28,339		41		(1		)	28,379
International government securities	10,210		1		(24		)	10,187		153,936		13		(3		)	153,946
Corporate notes and bonds	894,157		2,184		(1,159		)	895,182		864,170		3,890		(938		)	867,122
Asset-backed securities	174,920		62		(332		)	174,650		179,356		453		—			179,809
Mortgage-backed securities	1,533		—		(25		)	1,508		1,872		8		(14		)	1,866
Municipal notes and bonds	3,261,133		17,044		(7,135		)	3,271,042		3,665,032		22,697		(912		)	3,686,817
Total available-for-sale investments	$	4,488,350	$	19,316	$	(8,699	)	$	4,498,967	$	4,920,082	$	27,111	$	(1,868	)	$	4,945,325

The fair value and gross unrealized losses on the available-for-sale securities that have been in a continuous unrealized loss position, aggregated by type of investment instrument, are summarized in the following table (in thousands). As of June 30, 2013, no securities have been in a continuous unrealized loss position for more than twelve months. Available-for-sale securities that were in an unrealized gain position have been excluded from the table.



	Fair Value		Gross Unrealized Loss
U.S. Treasury securities	$	24,294	$	(1	)
U.S. government-sponsored agency securities	5,763		(23		)
International government securities	2,976		(24		)
Corporate notes and bonds	334,887		(1,159		)
Asset-backed securities	120,003		(332		)
Mortgage-backed securities	1,508		(25		)
Municipal notes and bonds	897,226		(7,135		)
Total	$	1,386,657	$	(8,699	)

The gross unrealized loss related to U.S. Treasury and government-sponsored agency securities, international government securities, corporate and municipal notes and bonds, and asset-backed and mortgage-backed securities was primarily due to changes in interest rates. The gross unrealized loss on all available-for-sale fixed income securities at June 30, 2013 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 (in thousands).



	Three months ended						Six months ended
	June 30, 2013			July 1, 2012			June 30, 2013			July 1, 2012
Gross realized gains	$	967		$	949		$	1,685		$	2,024
Gross realized losses	(102		)	(270		)	(1,134		)	(822		)

Fixed income securities by contractual maturity as of June 30, 2013 are shown below (in thousands). Actual maturities may differ from contractual maturities because issuers of the securities may have the right to prepay obligations or the Company has the option to demand payment.



	Amortized Cost		Fair Value
Due in one year or less	$	1,450,513	$	1,455,297
After one year through five years	2,823,465		2,829,301
After five years through ten years	32,293		32,288
After ten years	182,079		182,081
Total	$	4,488,350	$	4,498,967

For those financial instruments where the carrying amounts differ from fair value, the following table represents the related carrying values and the fair values, which are based on quoted market prices (in thousands). These financial instruments were categorized as Level 1 as of both June 30, 2013 and December 30, 2012. See Note 6, “Financing Arrangements,” regarding maturity of the 1% Sr. Convertible Notes due 2013.



	June 30, 2013				December 30, 2012
	Carrying Value		Fair Value		Carrying Value		Fair Value
1% Sr. Convertible Notes due 2013	$	—	$	—	$	906,708	$	927,820
1.5% Sr. Convertible Notes due 2017	809,626		1,345,260		789,913		1,159,370
Total	$	809,626	$	1,345,260	$	1,696,621	$	2,087,190