Cash, Cash Equivalents and Investments

9 Months Ended

Oct. 01, 2011

Cash, Cash Equivalents and Investments

Cash, Cash Equivalents and Investments

3. Cash, Cash Equivalents and Investments

The Company’s cash equivalents and short-term investments as of October 1, 2011 consisted of corporate bonds, money market funds, municipal bonds, variable-rate demand notes, U.S. government agency bonds, U.S. Treasury bills, international government bonds, certificates of deposit, asset-backed securities and commercial paper. The Company’s long-term investments consist of auction-rate securities. Early in fiscal 2008, auctions for many of the Company’s auction-rate securities failed because sell orders exceeded buy orders. As of October 1, 2011, the Company held $19.3 million par value auction-rate securities, all of which have experienced failed auctions. The underlying assets of the securities consisted of student loans and municipal bonds, of which $17.3 million were guaranteed by the U.S. government and the remaining $2.0 million were privately insured. As of October 1, 2011, $17.3 million of the auction-rate securities had credit ratings of AAA and $2.0 million had a credit rating of A. These securities have contractual maturity dates ranging from 2029 to 2046 and with current yields of 0.3% to 3.1% per year at October 1, 2011. The Company is receiving the underlying cash flows on all of its auction-rate securities. The principal amounts associated with failed auctions are not expected to be accessible until a successful auction occurs, the issuer redeems the securities, a buyer is found outside of the auction process or the underlying securities mature. The Company is unable to predict if these funds will become available before their maturity dates.

The Company does not expect to need access to the capital represented by any of its auction-rate securities prior to their maturities. The Company does not intend to sell, and believes it is not more likely than not that it will be required to sell, its auction-rate securities before their anticipated recovery in market value or final settlement at the underlying par value. The Company believes that the credit ratings and credit support of the security issuers indicate that they have the ability to settle the securities at par value. As such, the Company has determined that no other-than-temporary impairment losses existed as of October 1, 2011.

The Company’s cash, cash equivalents and investments consist of the following (in thousands):

	October 1, 2011
	Cost		Gross Unrealized Losses			Gross Unrealized Gains		Fair Value
Cash and Cash Equivalents:
Cash on hand	$	41,855	$	—		$	—	$	41,855
Available-for-sale securities:
Money market funds	66,328		—			—		66,328
Total cash and cash equivalents	$	108,183	$	—		$	—	$	108,183
Short-term Investments:
Available-for-sale securities:
Corporate bonds	$	80,102	$	(282	)	$	240	$	80,060
Municipal bonds	56,308		(5		)	99		56,402
Variable-rate demand notes	13,200		—			—		13,200
U.S. government agency	10,029		(1		)	20		10,048
U.S. Treasury bills	8,600		—			—		8,600
International government bonds	2,791		—			1		2,792
Certificates of deposit	1,570		(1		)	—		1,569
Asset-backed securities	1,245		(1		)	—		1,244
Commercial paper	1,000		—			—		1,000
Total short-term investments	$	174,845	$	(290	)	$	360	$	174,915
Long-term Investments:
Available-for-sale securities:
Auction rate securities	$	19,275	$	(1,435	)	$	—	$	17,840
Total long-term investments	$	19,275	$	(1,435	)	$	—	$	17,840

	January 1, 2011
	Cost		Gross Unrealized Losses			Gross Unrealized Gains		Fair Value
Cash and Cash Equivalents:
Cash on hand	$	40,644						$	40,644
Available-for-sale securities:
U.S. Treasury bills	50,096		$	—		$	1	50,097
Money market funds	45,167		—			—		45,167
Commercial paper	2,659		—			—		2,659
Total available-for-sale securities	97,922		—			1		97,923
Total cash and cash equivalents	$	138,566	$	—		$	1	$	138,567
Short-term Investments:
Available-for-sale securities:
Corporate bonds	$	88,183	$	(46	)	$	381	$	88,518
Variable-rate demand notes	39,425		—			—		39,425
Municipal bonds	38,408		(18		)	24		38,414
U.S. government agency	34,635		(5		)	50		34,680
International government bonds	10,792		—			38		10,830
U.S. Treasury bills	6,998		—			1		6,999
Certificates of deposit	5,744		(2		)	—		5,742
Commercial paper	2,687		—			—		2,687
Total short-term investments	$	226,872	$	(71	)	$	494	$	227,295
Long-term Investments:
Available-for-sale securities:
Auction rate securities	$	19,725	$	(2,225	)	$	—	$	17,500
Total long-term investments	$	19,725	$	(2,225	)	$	—	$	17,500

The available-for-sale investments that were in a continuous unrealized loss position, aggregated by length of time that individual securities have been in a continuous loss position, were as follows (in thousands):

	Less Than 12 Months					12 Months or Greater					Total
As of October 1, 2011	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Corporate bonds	$	34,577	$	(282	)	$	—	$	—		$	34,577	$	(282	)
Auction rate securities	—		—			17,840		(1,435		)	17,840		(1,435		)
Municipal bonds	6,181		(5		)	—		—			6,181		(5		)
U.S. government agency	5,003		(1		)	—		—			5,003		(1		)
Certificates of deposit	1,569		(1		)	—		—			1,569		(1		)
Asset-backed securities	1,244		(1		)	—		—			1,244		(1		)
	$	48,574	$	(290	)	$	17,840	$	(1,435	)	$	66,414	$	(1,725	)

	Less Than 12 Months					12 Months or Greater					Total
As of January 1, 2011	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Municipal bonds	$	22,272	$	(18	)	$	—	$	—		$	22,272	$	(18	)
Corporate bonds	17,538		(44		)	1,298		(2		)	18,836		(46		)
Auction rate securities	—		—			17,500		(2,225		)	17,500		(2,225		)
U.S. government agency	17,007		(5		)	—		—			17,007		(5		)
Certificates of deposit	1,569		(2		)	—		—			1,569		(2		)
	$	58,386	$	(69	)	$	18,798	$	(2,227	)	$	77,184	$	(2,296	)

The gross unrealized losses as of October 1, 2011 and January 1, 2011 were due primarily to the illiquidity of the Company’s auction-rate securities and, to a lesser extent, to changes in market interest rates.

The following summarizes the contractual underlying maturities of the Company’s available-for-sale investments at October 1, 2011 (in thousands):

	Cost		Fair Value
Due in one year or less	$	158,008	$	158,118
Due after one year through ten years	71,265		71,225
Due after ten years	31,175		29,740
	$	260,448	$	259,083