Investments

12 Months Ended

Jun. 26, 2011

Investments, Debt and Equity Securities [Abstract]

Investments

4. Investments

Available-for-sale investments are carried at fair value, inclusive of unrealized gains and losses, and net of discount accretion and premium amortization computed using the level yield method. Net unrealized gains and losses are included in other comprehensive income (loss) net of applicable income taxes. Gains or losses on sales of available-for-sale investments are recognized on the specific identification basis.

Available-for-sale securities as of June 26, 2011 are summarized as follows (in thousands):

	Amortized Costs		Gross Unrealized Gain		Gross Unrealized Loss		Net Unrealized Gain		Market Value
Short-Term Investments:
Corporate debt	$	55,964	$	51	$	—	$	51	$	56,015
U.S. government and agency obligations		129,352	$	174		—		174		129,526
Total short-term investments	$	185,316	$	225	$	—	$	225	$	185,541
Long-Term Investments:
U.S. government and agency obligations	$	12,501	$	43	$	—	$	43	$	12,544
Asset-backed securities		594		187		—		187		781
Total long-term investments	$	13,095	$	230	$	—	$	230	$	13,325
Equity securities	$	12,963	$	9,473	$	—	$	9,473	$	22,436

Available-for-sale securities as of June 27, 2010 are summarized as follows (in thousands):

	Amortized Costs		Gross Unrealized Gain		Gross Unrealized Loss			Net Unrealized Gain		Market Value
Short-Term Investments:
U.S. government and agency obligations	$	308,469	$	919	$	(4	)	$	915	$	309,384
Total short-term investments	$	308,469	$	919	$	(4	)	$	915	$	309,384
Long-Term Investments:
U.S. government and agency obligations	$	20,043	$	378	$	(3	)	$	375	$	20,418
Mortgage-backed securities		9,089		2,689		—			2,689		11,778
Asset-backed securities		9,030		2,529		(4	)		2,525		11,555
Total long-term investments	$	38,162	$	5,596	$	(7	)	$	5,589	$	43,751
Equity securities	$	14,397	$	3,791	$	—		$	3,791	$	18,188

The Company manages its total portfolio to encompass a diversified pool of investment-grade securities. The investment policy is to manage its total cash and investments balances to preserve principal and maintain liquidity while maximizing the returns on the investment portfolio.

The Company holds as strategic investments the common stock of three publicly traded foreign companies and the common stock and preferred stock of a privately held domestic company. The common stock and preferred stock of the privately held domestic company are carried at cost of $1.5 million in other assets.  In addition, the Company has a note payable from a privately held company which it carries at cost of $0.4 million.  These investments are carried at cost as the Company has determined that it is not practicable to estimate the fair value of these investments given that the issuers are start-up companies whose securities are not publicly traded.  As of June 26, 2011, there have been no developments which would indicate the value of these investments has been impaired.  The common stock of the three publicly traded foreign companies are shown as “Equity Securities” in the table above and are included in other assets on the consolidated balance sheets.  The common shares of the publicly traded companies are traded on either the Tokyo Stock Exchange or the Taiwan Stock Exchange.  The Company holds an option on one of the strategic investments to put the associated number of common shares back to the issuer at a fixed price in local currency.  The put option became effective September 1, 2009 and is reported at fair value.  As of June 26, 2011, the fair value of the option was $2.8 million, with changes in fair value recorded in other (income)/expense, net (See Note 5, “Derivative Financial Instruments”).  Dividend income from these investments was $0.1 million, $0.1 million, and $0.3 million for the fiscal years ended June 26, 2011, June 27, 2010, and June 28, 2009, respectively.

The Company evaluates securities for other-than-temporary impairment on a quarterly basis. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include the length of time and extent to which the market value has been less than cost; the financial condition and near-term prospects of the issuer of the securities; and the intent and ability of the Company to retain the security in order to allow for an anticipated recovery in fair value. If, based upon the analysis, it is determined that the impairment is other-than-temporary, the security is written down to fair value, and a loss is recognized through earnings. Other-than-temporary impairments relating to certain available-for-sale securities for the fiscal year ended June 26, 2011, June 27, 2010 and June 28, 2009 were $1.4 million, $3.4 million and $39.2 million, respectively.

During fiscal 2011, the Company determined that two equity investments were other-than-temporarily impaired and recorded impairment charges of $1.4 million.  During fiscal year 2010, the Company recorded impairment charges related to the mortgage-backed and asset-backed securities of $0.9 million and $2.5 million related to two equity investments, respectively.  During fiscal year 2009, the Company determined that mortgage-backed securities, asset-backed securities, and corporate bonds with stated maturities ranging from 1 to 27 years (expected maturity from 3 months to 20 years) and an equity investment were other-than-temporarily impaired and, as a result, recorded impairment charges of $33.3 million related to its investment in mortgage-back securities and asset-backed securities and $5.9 million related to its equity investment.

In connection with the Company's quarterly fiscal year 2010 reviews of its available-for-sale securities, the Company noted that the issuer of one of the Company’s equity investments had initiated a reorganization.  As a result of this reorganization, the Company did not believe the security will recover its value.  The Company determined that the security was other-than-temporarily impaired and recorded an impairment charge of $1.3 million during the fourth quarter of fiscal year 2010.  During fiscal year 2011, the Company performed a similar analysis of this investment and recorded an additional impairment charge of $0.5 million in the first quarter of fiscal 2011. In addition, the Company determined, during the first quarter of fiscal year 2010 that another of its equity investments was significantly below the original purchase cost and had been for a prolonged period of time. The Company has the intent and ability to hold this investment indefinitely. However, in the Company's judgment, the security's value may not recover to its purchase cost. Accordingly, the Company has determined that this investment was other-than-temporarily impaired due to the prolonged downturn in the overall market and recorded impairment charges of $1.2 million in fiscal year 2010 and $0.9 million in fiscal year 2011. In reaching its conclusion, the Company reviewed the financial statements of the issuer investment activity in the issuer and price trends for the security.  During the third quarter of fiscal year 2009 the Company performed a similar analysis of another equity investment and determined that the investment was other-than-temporarily impaired and recorded an impairment charge of $5.9 million.

 As of June 26, 2011, the Company had no available-for-sale investments that were in gross unrealized loss position.  The following table summarizes the fair value and gross unrealized losses related to available-for-sale investments, aggregated by type of investment and length of time that individual securities have been held as of June 27, 2010. The unrealized loss position is measured and determined at each fiscal year end (in thousands):

	Securities held in a loss position for less than 12 months at June 27, 2010					Securities held in a loss position for 12 months or more at June 27, 2010				Total in a loss position at June 27, 2010
	Market Value		Gross Unrealized Losses			Market Value		Gross Unrealized Losses		Market Value		Gross Unrealized Losses
U.S. government and agency obligations	$	27,245	$	(7	)	$	—	$	—	$	27,245	$	(7	)
Total	$	27,245	$	(7	)	$	—	$	—	$	27,245	$	(7	)

The amortized cost and estimated fair value of investments at June 26, 2011, by contractual maturity, are as follows (in thousands):

Contractual Maturity (1)	Amortized Cost		Estimated Market Value
Due in 1 year or less	$	185,316	$	185,541
Due in 1-2 years		12,501		12,544
Due in 2-5 years		—		—
Due after 5 years		594		781
Total investments	$	198,411	$	198,866

(1) Contractual maturity for asset-backed securities was based on initial contractual maturity dates.

In accordance with the Company’s investment policy which limits the length of time that cash may be invested, the expected disposal dates may be less than the contractual maturity dates as indicated in the table above.

Gross realized gains and (losses) were $8.2 million and $(0.3) million, respectively, for the fiscal year ended June 26, 2011.  Gross realized gains and (losses) were $6.5 million and $0 million, respectively, for the fiscal year ended June 27, 2010.  Gross realized gains and (losses) were $5.8 million and $(9.2) million, respectively, for the fiscal year ended June 28, 2009. The cost of marketable securities sold was determined by the first-in, first-out method.

During the fiscal years ended June 26, 2011, June 27, 2010 and June 28, 2009 as a result of sales of available-for-sale securities and recognition of other-than-temporary impairments on available-for-sale securities, the Company reclassified $5.6 million, $1.8 million and $37.1 million, respectively, from accumulated other comprehensive income to earnings either as a component of interest expense (income) or other expense depending on the nature of the gain (loss).

Fair Value of Investments

The following tables present the balances of investments measured at fair value on a recurring basis (in thousands):

	As of June 26, 2011
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Corporate debt	$	56,015	$	—	$	56,015	$	—
U.S. government and agency obligations		142,070		79,822		62,248		—
Asset-backed securities		781		—		—		781
Equity securities-strategic investments		22,436		22,436		—		—
Total securities at fair value	$	221,302	$	102,258	$	118,263	$	781

The following tables present the balances of investments measured at fair value on a recurring basis (in thousands):

	As of June 27, 2010
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. government and agency obligations	$	329,802	$	233,049	$	96,753	$	—
Mortgage-backed securities		11,778		—		—		11,778
Asset-backed securities		11,555		—		—		11,555
Equity securities-strategic investments		18,188		18,184		—		4
Total securities at fair value	$	371,323	$	251,233	$	96,753	$	23,337