5. Investments

We account for investments in marketable securities at fair value, with the unrealized gain or loss, less deferred income taxes, included in Other comprehensive income (loss) and shown as a separate component of stockholders’ equity. We base realized gains and losses on specific identification of the security sold. At September 28, 2012, and December 30, 2011, available-for-sale marketable securities consisted of the following:


	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
September 28, 2012
U.S. government debt obligations	$	151.9	$	0.5	$	—		$	152.4
Corporate debt obligations guaranteed by FDIC		21.1		—		—			21.1
Corporate debt obligations		186.4		2.3		(0.1	)		188.6
Mortgaged backed debt obligations guaranteed by GNMA		97.2		0.8		(0.3	)		97.7
Certificates of deposit guaranteed by FDIC		3.2		—		—			3.2
Foreign government debt obligations		222.1		2.9		(0.3	)		224.7
Foreign corporate debt obligations		118.4		0.8		—			119.2

Total	$	800.3	$	7.3	$	(0.7	)	$	806.9

December 30, 2011
U.S. government debt obligations	$	195.2	$	0.5	$	—		$	195.7
Corporate debt obligations guaranteed by FDIC		66.6		0.2		—			66.8
Corporate debt obligations		201.4		0.8		(0.7	)		201.5
Mortgaged backed debt obligations guaranteed by GNMA		90.9		0.4		(0.1	)		91.2
Certificates of deposit guaranteed by FDIC		1.5		—		—			1.5
Foreign government debt obligations		221.5		1.5		—			223.0
Foreign corporate debt obligations		64.1		0.2		(0.1	)		64.2

Total	$	841.2	$	3.6	$	(0.9	)	$	843.9

The following table summarizes the maturities of our available-for-sale marketable securities at September 28, 2012:


	Amortized Cost		Fair Value
Less than 12 months	$	262.8	$	264.5
Due in 1 to 5 years		438.3		442.8
Due after 5 years		99.2		99.6

Total	$	800.3	$	806.9

Gross unrealized gains and losses related to fixed-income securities were caused by interest rate fluctuations. We review investments held with unrealized losses to determine if the loss is other-than-temporary. We evaluated near-term prospects of the security in relation to the severity and duration of the unrealized loss. We also assessed our intent to sell the security, whether it is more likely than not that the security will be required to be sold before recovery, or the security is not expected to recover its entire amortized cost basis. Based on our review, we do not intend to sell these securities and believe that they will recover their entire amortized cost basis; therefore, we do not consider these investments to be other-than-temporarily impaired at September 28, 2012. No other-than-temporary impairments were recorded in the third quarter or first nine months of 2012. We recognized an other-than-temporary impairment of $1.2 million in the first nine months of 2011.

Investments in marketable securities with unrealized losses at September 28, 2012, and December 30, 2011, were as follows:


	Unrealized Loss Less than 12 months					Unrealized Loss Greater than 12 months				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 28, 2012
Corporate debt obligations	$	16.2	$	(0.1	)	$	—	$	—	$	16.2	$	(0.1	)
Mortgaged backed debt obligations guaranteed by GNMA		29.4		(0.3	)		—		—		29.4		(0.3	)
Foreign government debt obligations		22.2		(0.3	)		—		—		22.2		(0.3	)

Total	$	67.8	$	(0.7	)	$	—	$	—	$	67.8	$	(0.7	)

December 30, 2011
Corporate debt obligations	$	81.0	$	(0.7	)	$	—	$	—	$	81.0	$	(0.7	)
Mortgaged backed debt obligations guaranteed by GNMA		31.4		(0.1	)		—		—		31.4		(0.1	)
Foreign corporate debt obligations		24.1		(0.1	)		—		—		24.1		(0.1	)

Total	$	136.5	$	(0.9	)	$	—	$	—	$	136.5	$	(0.9	)

The following table presents gross realized gains and losses related to fixed income investments for the three months and nine months ending September 28, 2012, and September 30, 2011:


	Third Quarter						Nine Months
	9/28/12			9/30/11			9/28/12			9/30/11
Gross realized gains	$	1.0		$	1.7		$	1.5		$	3.1
Gross realized losses		(0.2	)		(1.4	)		(0.7	)		(3.2	)

Total	$	0.8		$	0.3		$	0.8		$	(0.1	)

As a result of the acquisition of Advanced Fibre Communications, Inc. (AFC) in 2004, we acquired 10.6 million shares of Cisco common stock, shown as Other marketable securities in Current Assets. AFC owned this stock as a result of its investment in privately held Cerent Corporation, which was acquired by Cisco in 1999 through the exchange of AFC’s ownership in Cerent Corporation for Cisco stock. In 2000, AFC entered into two three-year hedge contracts, pledging all of the Cisco stock to secure the obligations under the contracts and recognizing unrealized gains in their financial statements. When the hedge contracts matured in 2003, AFC entered into stock loan agreements with a lender, borrowing 10.6 million shares of Cisco stock to settle the hedge contracts. As a result, AFC received cash proceeds for which a significant portion of the net gains were deferred for income tax purposes, and a deferred tax liability was established. Since the same number of shares was borrowed, AFC’s net position in Cisco was reduced to zero, eliminating any market risk exposure. This structure is maintained to preserve the deferral of a potentially significant sum of cash tax payments. In the future, however, we may settle all or a portion of this arrangement to the extent we are able to minimize any adverse impact to our cash balance and/or tax provision.

The deferred tax liability was $195.2 million as of September 28, 2012, and December 30, 2011, and is netted against other tax items in Income Taxes in the current liabilities section of our Consolidated Balance Sheets. The aggregate amount of the fair values of those stock loans is reflected as a current liability on the balance sheets as of September 28, 2012, and December 30, 2011. The values of both the asset and liability move in tandem with each other since each is based on the number of shares we hold at the current stock price. At September 28, 2012, Other marketable securities and Loan related to other marketable securities was $201.6 million at a market price of $19.10 per share and $190.9 million at a market price of $18.08 per share at December 30, 2011. The fees associated with the stock loan agreement were $0.2 million in the third quarter of 2012, $0.3 million in the third quarter of 2011, $0.9 million in the first nine months of 2012 and $0.8 million in the first nine months of 2011.

In addition to the above investments, we maintain investments in partnerships and start-up technology companies. We record these investments in Other Assets, at cost. These investments totaled $2.5 million at September 28, 2012, and $3.2 million at December 30, 2011. We review each investment quarterly, including historical and projected financial performance, expected cash needs and recent funding events. We recognize other-than-temporary impairments if the market value of the investment is below its cost basis for an extended period of time or if the issuer has experienced significant financial declines or difficulties in raising capital to continue operations. No other-than-temporary impairments were recorded in the third quarter and first nine months of 2012. Other-than-temporary impairments were $0.6 million for the third quarter and first nine months of 2011.