Cash, Cash Equivalents and Investments

9 Months Ended

Sep. 29, 2012

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 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