4. Investments

Investments in marketable securities

At June 28, 2013, and December 28, 2012, available-for-sale marketable securities consisted of the following:


June 28, 2013	Amortized Cost		Unrealized Gain		Unrealized Loss			Fair Value
U.S. government debt obligations	$	52.8	$	—	$	(0.8	)	$	52.0
Corporate debt obligations		58.2		—		(0.5	)		57.7
Mortgaged backed debt obligations guaranteed by GNMA		105.4		0.2		(1.5	)		104.1
Certificates of deposit guaranteed by FDIC		1.2		—		—			1.2
Foreign government debt obligations		26.4		—		—			26.4
Foreign corporate debt obligations guaranteed by foreign governments		33.0		0.1		—			33.1

Total	$	277.0	$	0.3	$	(2.8	)	$	274.5

December 28, 2012
U.S. government debt obligations	$	31.1	$	—	$	—		$	31.1
Corporate debt obligations		9.5		0.1		—			9.6
Mortgaged backed debt obligations guaranteed by GNMA		54.9		0.6		—			55.5
Certificates of deposit guaranteed by FDIC		1.2		—		—			1.2
Foreign government debt obligations		159.3		1.8		—			161.1
Foreign corporate debt obligations guaranteed by foreign governments		121.5		0.7		—			122.2

Total	$	377.5	$	3.2	$	—		$	380.7

The following table summarizes the maturities of our available-for-sale marketable securities at June 28, 2013:


	Amortized Cost		Fair Value
Less than 12 months	$	65.3	$	65.4
Due in 1 to 5 years		106.4		105.0
Due after 5 years		105.3		104.1

Total	$	277.0	$	274.5

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 June 28, 2013. No other-than-temporary impairments were recorded in the second quarter or first six months of 2013 and 2012.

Gross unrealized gains and losses related to fixed-income securities were caused by interest rate fluctuations. No other-than-temporary impairments were recorded in the second quarter or first six months of 2013 and 2012.

Investments in marketable securities with unrealized losses at June 28, 2013, were as follows:


	Unrealized Loss Less than 12 months					Unrealized Loss Greater than 12 months				Total
June 28, 2013	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. government debt obligations	$	41.0	$	(0.8	)	$	—	$	—	$	41.0	$	(0.8	)
Corporate debt obligations		51.6		(0.5	)		—		—		51.6		(0.5	)
Mortgaged backed debt obligations guaranteed by GNMA		82.1		(1.5	)		—		—		82.1		(1.5	)

Total	$	174.7	$	(2.8	)	$	—	$	—	$	174.7	$	(2.8	)

Investments in marketable securities with unrealized losses at December 28, 2012, were negligible.

The following table presents gross realized gains and losses related to fixed income investments:


	Second Quarter						Six Months
	6/28/13			6/29/12			6/28/13			6/29/12
Gross realized gains	$	0.1		$	0.2		$	1.7		$	0.5
Gross realized losses		(0.3	)		(0.2	)		(0.7	)		(0.5	)

Total	$	(0.2	)	$	—		$	1.0		$	—

Other marketable securities and Loan related to other marketable securities

With 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 in our Consolidated Balance Sheets. Our Cisco common stock is classified as a trading security. In addition, we have a share loan arrangement with a financial institution for the same number of shares of Cisco common stock shown as Loan related to other marketable securities in Current Liabilities in our Consolidated Balance Sheets, which is due on demand.

As a result, we own the same number of Cisco shares as we have borrowed under the share loan arrangement; thereby, eliminating any market risk exposure associated with the share loan arrangement as increases (or decreases) in the value of Cisco stock are off-set equally by increases (or decreases) in the value of the shares of Cisco stock we own. In the event the counter-party financial institution to the share loan arrangement demands return of the borrowed Cisco shares, we will settle the obligation with our Cisco shares or with shares borrowed from another lender.

Other marketable securities and Loan related to other marketable securities was $244.1 million at a market price of $24.34 per share at June 28, 2013, and $195.1 million at a market price of $19.45 per share at December 28, 2012. The fees associated with the stock loan agreement of $0.3 million in the second quarter of 2013 and 2012, and $0.6 million in the first six months of 2013 and 2012, are included in Interest income, net in the Consolidated Statements of Operations.

Additionally, in connection with our acquisition of AFC, we recorded a tax liability associated with a deferred gain relating to a settled hedging arrangement on the acquired Cisco shares. The deferred tax liability was $184.0 million as of June 28, 2013, and as of December 28, 2012.

The Cisco shares and related loan discussed above are maintained by us in order to defer recognition of the tax gain for income tax purposes. In the fourth quarter of 2012, we settled 0.6 million shares, reducing the number of borrowed shares to 10.0 million. In the future we may settle all or a portion of the remaining borrowed shares to the extent we are able to offset the gain by utilizing net operating loss or tax credit carryforwards. To the extent we cannot offset all or a portion of the gain, we may incur cash tax payments that could significantly reduce our cash and cash equivalents.

Long-term equity investments

In addition to the above investments, we maintain investments in partnerships and start-up technology companies. We include these investments in Other Assets, at cost. These investments totaled $1.6 million at June 28, 2013, and $1.8 million at December 28, 2012. 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. We did not record other–than-temporary impairments for the second quarters and six months ended June 28, 2013, and June 29, 2012. Gains on the sale of long-term equity investments and other-than-temporary impairments are included in Other expense, net in the Consolidated Statements of Operations.