Investments

9 Months Ended

Mar. 25, 2012

Investments, Debt and Equity Securities [Abstract]

Investments

2. 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 and are included in other income or interest income depending upon the type of security.

Available-for-sale securities as of March 25, 2012 are summarized as follows (in thousands):

	Amortized Costs		Gross Unrealized Gain		Gross Unrealized Loss			Net Unrealized Gain/(Loss)			Market Value
Short-Term Investments:
Corporate debt	$	26,261	$	24	$	—		$	24		$	26,285
U.S. government and agency obligations		99,832		33		(16	)		17			99,849
Total short-term investments	$	126,093	$	57	$	(16	)	$	41		$	126,134
Long-Term Investments:
U.S. government and agency obligations	$	21,158	$	5	$	(19	)	$	(14	)	$	21,144
Total long-term investments	$	21,158	$	5	$	(19	)	$	(14	)	$	21,144
Equity securities	$	12,113	$	4,893	$	(254	)	$	4,639		$	16,752

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

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 and preferred stock of a privately held domestic company. The common stock and preferred stock of the privately held domestic company has been carried at cost of $1.5 million in other assets.  In addition, the Company has a note receivable from another 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.

During the second quarter of fiscal year 2012, the privately held domestic company in which the Company has an equity investment experienced a negative change in financial condition.  The Company then evaluated that the investment was permanently impaired and recorded an impairment charge of $1.5 million during the second quarter of fiscal year 2012.  As of March 25, 2012, there have been no developments which would indicate the note receivable from the other privately held company has been impaired.

The company also holds as strategic investments the common stock of three publicly traded foreign companies.  The common stock of the three 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 (which is described as the Put Option in Note 1).  The Put Option became effective September 1, 2009 and is reported at fair value.  As of March 25, 2012, the fair value of the Put Option was $2.8 million, with changes in fair value recorded in other (income)/expense, net (See Note 3, “Derivative Financial Instruments”).  The Company received dividend income from these equity investments of $0.1 million during the nine months ended March 25, 2012, and $0.1 million for the three and nine months ended March 27, 2011, respectively.  The Company did not receive any dividend income from these equity investments during the three months ended March 25, 2012.

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.

The following table provides the Company’s other-than-temporary impairments for equity securities for the three and nine months ended March 25, 2012 and March 27, 2011 (in thousands):

	Three Months Ended				Nine Months Ended
	March 25, 2012		March 27, 2011		March 25, 2012		March 27, 2011
Privately held domestic company-common and preferred stock	$	―	$	―	$	1,504	$	―
Publicly traded foreign company(s)-common stock		―		413		850		951
Asset-backed security		―		―		29		―
Total other-than-temporary impairments	$	―	$	413	$	2,383	$	951

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. The gross unrealized loss position is measured and determined at each fiscal quarter end (in thousands):

	Securities held in a loss position for less than 12 months at March 25, 2012					Securities held in a loss position for 12 months or more at March 25, 2012				Total in a loss position at March 25, 2012
	Market Value		Gross Unrealized Losses			Market Value		Gross Unrealized Losses		Market Value		Gross Unrealized Losses
U.S. government and agency obligations	$	69,421	$	(35	)	$	—	$	—	$	69,421	$	(35	)
Equity securities		3,807		(254	)		—		—		3,807		(254	)
Total	$	73,228	$	(289	)	$	—	$	—	$	73,228	$	(289	)

As of March 25, 2012, the Company evaluated whether the gross unrealized losses of $0.3 million were other-than-temporarily impaired.  The Company determined there was no indication of other-than-temporary impairment with regards to gross unrealized losses, which were primarily attributed to one of the Company’s equity investments.  The determination was based on the fact the Company has evaluated the near-term prospects of the equity investment in relation to the severity and duration of the impairment, and based on that evaluation, it has the ability and intent to hold these investments until a recovery of fair value.

As of June 26, 2011, the Company had no available-for-sale investments that were in a gross unrealized loss position.

The amortized cost and estimated fair value of investments at March 25, 2012, by contractual maturity, are as follows (in thousands):

Contractual Maturity	Amortized Cost		Estimated Market Value
Due in 1 year or less	$	126,093	$	126,134
Due in 1-2 years		21,158		21,144
Due in 2-5 years		—		—
Due after 5 years		—		—
Total investments	$	147,251	$	147,278

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 prior to the contractual maturity dates indicated in the table above.

During the three and nine months ended March 25, 2012, available-for-sale securities were sold for total proceeds of $12.2 million and $27.1 million, respectively, and for the three and nine months ended March 27, 2011 were sold for total proceeds of $98.8 million and $118.9 million, respectively.  Gross realized gains for the three and nine months ended March  25, 2012 were $0.0 million and $0.1 million, respectively, and for the three and nine months ended March 27, 2011 were $2.3 million and $6.3 million, respectively.  Gross realized losses for the three and nine months ended March 25, 2012 were $0.1 million.  There were no gross realized losses for the comparable prior year fiscal periods.  The cost of marketable securities sold was determined using the first-in, first-out method.

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 $(0.0) million and $(0.2) million for the three and nine months ended March 25, 2012, respectively, and $1.5 million and $3.5 million for the three and nine months ended March 27, 2011, respectively, from accumulated other comprehensive income to earnings either as a component of interest income, net, or other expense, net, 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 as of March 25, 2012 and June 26, 2011 (in thousands):

	March 25, 2012
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Corporate debt	$	26,285	$	—	$	26,285	$	—
U.S. government and agency obligations		120,993		63,615		57,378		—
Equity securities-strategic investments		16,752		16,752		—		—
Total securities at fair value	$	164,030	$	80,367	$	83,663	$	—

	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