|
3. Cash, Cash Equivalents and Investments
The Company’s cash equivalents and short-term investments as of September 29, 2012 consisted of corporate bonds, money market funds, municipal bonds, U.S. Treasury bills, variable-rate demand notes, U.S. government bonds, asset-backed securities and international government bonds. 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 September 29, 2012, the Company held $12.5 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 $10.5 million were guaranteed by the U.S. government and the remaining $2.0 million were privately insured. As of September 29, 2012, $4.5 million of the auction-rate securities had credit ratings of AAA, $6.0 million had credit ratings of AA and $2.0 million had a credit rating of A. These securities have contractual maturity dates ranging from 2033 to 2046 and with current yields of 0.3% to 1.7% per year at September 29, 2012. 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 September 29, 2012.
The Company’s cash, cash equivalents and investments consist of the following (in thousands):
|
|
|
September 29, 2012 |
|
|
|
|
Cost |
|
Gross
Unrealized
Losses |
|
Gross
Unrealized
Gains |
|
Fair Value |
|
|
Cash and Cash Equivalents: |
|
|
|
|
|
|
|
|
|
|
Cash on hand |
|
$ |
54,887 |
|
$ |
— |
|
$ |
— |
|
$ |
54,887 |
|
|
Available-for-sale securities: |
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
54,619 |
|
— |
|
— |
|
54,619 |
|
|
U.S. Treasury bills |
|
15,999 |
|
— |
|
— |
|
15,999 |
|
|
Total available-for-sale securities |
|
70,618 |
|
— |
|
— |
|
70,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents |
|
$ |
125,505 |
|
$ |
— |
|
$ |
— |
|
$ |
125,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Investments: |
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities: |
|
|
|
|
|
|
|
|
|
|
Corporate bonds |
|
$ |
62,824 |
|
$ |
(1 |
) |
$ |
326 |
|
$ |
63,149 |
|
|
Municipal bonds |
|
29,952 |
|
(2 |
) |
60 |
|
30,010 |
|
|
Variable-rate demand notes |
|
19,280 |
|
— |
|
1 |
|
19,281 |
|
|
U.S. government bonds |
|
12,642 |
|
— |
|
28 |
|
12,670 |
|
|
Asset-backed securities |
|
11,978 |
|
— |
|
19 |
|
11,997 |
|
|
U.S. Treasury bills |
|
8,499 |
|
— |
|
— |
|
8,499 |
|
|
International government bonds |
|
2,950 |
|
— |
|
17 |
|
2,967 |
|
|
Total short-term investments |
|
$ |
148,125 |
|
$ |
(3 |
) |
$ |
451 |
|
$ |
148,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term Investments: |
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities: |
|
|
|
|
|
|
|
|
|
|
Auction rate securities |
|
$ |
12,525 |
|
$ |
(1,107 |
) |
$ |
— |
|
$ |
11,418 |
|
|
Total long-term investments |
|
$ |
12,525 |
|
$ |
(1,107 |
) |
$ |
— |
|
$ |
11,418 |
|
|
|
|
December 31, 2011 |
|
|
|
|
Cost |
|
Gross
Unrealized
Losses |
|
Gross
Unrealized
Gains |
|
Fair Value |
|
|
Cash and Cash Equivalents: |
|
|
|
|
|
|
|
|
|
|
Cash on hand |
|
$ |
44,113 |
|
$ |
— |
|
$ |
— |
|
$ |
44,113 |
|
|
Available-for-sale securities: |
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
50,851 |
|
— |
|
— |
|
50,851 |
|
|
Total cash and cash equivalents |
|
$ |
94,964 |
|
$ |
— |
|
$ |
— |
|
$ |
94,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Investments: |
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities: |
|
|
|
|
|
|
|
|
|
|
Corporate bonds |
|
$ |
75,189 |
|
$ |
(363 |
) |
$ |
234 |
|
$ |
75,060 |
|
|
Municipal bonds |
|
56,915 |
|
(12 |
) |
81 |
|
56,984 |
|
|
Variable-rate demand notes |
|
41,280 |
|
— |
|
— |
|
41,280 |
|
|
U.S. government agency |
|
19,820 |
|
(12 |
) |
28 |
|
19,836 |
|
|
U.S. Treasury bills |
|
8,600 |
|
— |
|
— |
|
8,600 |
|
|
Asset-backed securities |
|
5,743 |
|
(5 |
) |
1 |
|
5,739 |
|
|
U.S. government bonds |
|
2,507 |
|
— |
|
— |
|
2,507 |
|
|
Certificates of deposit |
|
1,570 |
|
— |
|
— |
|
1,570 |
|
|
International government bonds |
|
950 |
|
— |
|
— |
|
950 |
|
|
Total short-term investments |
|
$ |
212,574 |
|
$ |
(392 |
) |
$ |
344 |
|
$ |
212,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term Investments: |
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities: |
|
|
|
|
|
|
|
|
|
|
Auction rate securities |
|
$ |
19,225 |
|
$ |
(1,748 |
) |
$ |
— |
|
$ |
17,477 |
|
|
Total long-term investments |
|
$ |
19,225 |
|
$ |
(1,748 |
) |
$ |
— |
|
$ |
17,477 |
|
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 September 29, 2012 |
|
Fair
Value |
|
Gross
Unrealized
Losses |
|
Fair
Value |
|
Gross
Unrealized
Losses |
|
Fair
Value |
|
Gross
Unrealized
Losses |
|
|
Auction rate securities |
|
$ |
— |
|
$ |
— |
|
$ |
11,418 |
|
$ |
(1,107 |
) |
$ |
11,418 |
|
$ |
(1,107 |
) |
|
Municipal bonds |
|
5,217 |
|
(2 |
) |
— |
|
— |
|
5,217 |
|
(2 |
) |
|
Corporate bonds |
|
1,119 |
|
(1 |
) |
— |
|
— |
|
1,119 |
|
(1 |
) |
|
|
|
$ |
6,336 |
|
$ |
(3 |
) |
$ |
11,418 |
|
$ |
(1,107 |
) |
$ |
17,754 |
|
$ |
(1,110 |
) |
|
|
|
Less Than 12 Months |
|
12 Months or Greater |
|
Total |
|
|
As of December 31, 2011 |
|
Fair
Value |
|
Gross
Unrealized
Losses |
|
Fair
Value |
|
Gross
Unrealized
Losses |
|
Fair
Value |
|
Gross
Unrealized
Losses |
|
|
Corporate bonds |
|
$ |
25,438 |
|
$ |
(363 |
) |
$ |
— |
|
$ |
— |
|
$ |
25,438 |
|
$ |
(363 |
) |
|
Auction rate securities |
|
— |
|
— |
|
17,477 |
|
(1,748 |
) |
17,477 |
|
(1,748 |
) |
|
Municipal bonds |
|
10,437 |
|
(12 |
) |
— |
|
— |
|
10,437 |
|
(12 |
) |
|
U.S. government agency |
|
5,772 |
|
(12 |
) |
— |
|
— |
|
5,772 |
|
(12 |
) |
|
Asset-backed securities |
|
4,539 |
|
(5 |
) |
— |
|
— |
|
4,539 |
|
(5 |
) |
|
|
|
$ |
46,186 |
|
$ |
(392 |
) |
$ |
17,477 |
|
$ |
(1,748 |
) |
$ |
63,663 |
|
$ |
(2,140 |
) |
The gross unrealized losses as of September 29, 2012 and December 31, 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 September 29, 2012 (in thousands):
|
|
|
Cost |
|
Fair
Value |
|
|
Due in one year or less |
|
$ |
115,773 |
|
$ |
115,842 |
|
|
Due after one year through ten years |
|
85,140 |
|
85,519 |
|
|
Due after ten years |
|
30,355 |
|
29,248 |
|
|
|
|
$ |
231,268 |
|
$ |
230,609 |
|
|