3. CASH AND CASH EQUIVALENTS AND INVESTMENTS

The Company's cash and cash equivalents as of March 31, 2012, and April 2, 2011 are as follows (in thousands):

	March 31, 2012		April 2, 2011
Cash	$	3,407	$	8,377
Cash equivalents:
Money market funds		16,453		10,681
Government agency Bonds		-		4,500
Corporate bonds		-		253
Municipal bonds		-		151
Total cash and cash equivalents	$	19,860	$	23,962

The Company's portfolio of short-term and long-term investments as of March 31, 2012 and April 2, 2011 is as follows (in thousands):

	March 31, 2012
	Amortized		Unrealized		Unrealized			Carrying
	Cost		Gain		Loss			Value
Short-term investments:
Trading securities:	$	8,650	$	-	$	-		$	8,650
Available-for-sale securities:
Municipal bonds		32,250		39		(21	)		32,268
Corporate bonds		36,912		68		(33	)		36,947
Government agency bonds		25,984		33		(7	)		26,010
Certificates of deposits		7,267		4		(9	)		7,262
Total short-term investments	$	111,063	$	144	$	(70	)	$	111,137
Long-term investments:
Available-for sale securities	$	28,050	$	-	$	(2,150	)	$	25,900

	April 2, 2011
	Amortized		Unrealized		Unrealized			Carrying
	Cost		Gain		Loss			Value
Short-term investments:
Trading securities:	$	8,157	$	-	$	-		$	8,157
Available-for-sale securities:
Municipal bonds		62,617		2		(2	)		62,617
Discount notes		3,998		-		-			3,998
Corporate bonds		27,968		-		(44	)		27,924
Government agency bonds		6,317		-		(1	)		6,316
Certificates of deposits		749		-		(1	)		748
Total short-term investments	$	109,806	$	2	$	(48	)	$	109,760
Long-term investments:
Available-for sale securities	$	32,750	$	-	$	(2,550	)	$	30,200

The Company's short-term and long-term investments by contractual maturities are as follows (in thousands):

	March 31, 2012		April 2, 2011
Short-term investment:
Trading securities:
Due in one year or less	$	8,650	$	8,157
Available-for-sale securities:
Due in one year or less		62,504		62,919
Due in one to two years		29,903		38,684
Due in two to three years		2,682		-
Due in three to four years		7,398		-
Total short-term investments	$	111,137	$	109,760
Long-term investment:
Available-for-sale securities at fair value:
Due after ten years	$	25,900	$	30,200
Total long-term investments	$	25,900	$	30,200

Short-term investments classified as trading securities for fiscal years 2012 and 2011 consisted entirely of investments in mutual funds held by the NQDCP. Unrealized gain on trading securities was $250,000 for the fiscal year ended March 31, 2012, compared to $689,000 for the fiscal year ended April 2, 2011.

The Company's available-for-sale portfolio in fiscal 2012 was comprised of municipal bonds, corporate bonds, ARS, government agency bonds and certificates of deposits.

During the fiscal year ended March 31, 2012, the Company disposed of short-term available-for-sale securities totaling $166,681,000 at par. During the fiscal years ended April 2, 2011 and April 3, 2010, the Company disposed of short-term available-for-sale securities totaling $142,098,000 and $44,278,000, respectively. The realized gains and losses of these transactions were immaterial.

Historically, given the liquidity created by auctions, the Company's ARS were presented as current assets under short-term investments on the Company's balance sheet. However, since the fourth quarter of fiscal 2008 the ARS held by the Company have experienced failed auctions due to sales orders exceeding purchase orders, so the Company's ARS are considered illiquid until there is a successful auction for them.

Accordingly, ARS with a par value of $28,050,000 and $32,750,000 were classified as non-current assets and were presented in long-term investments at fair value of $25,900,000 and $30,200,000, respectively.

The ARS are investments with contractual maturities generally between 20 to 29 years. They are in the form of auction rate bonds, whose interest rates had historically been reset every seven to thirty-five days through an auction process. At the end of each reset period, investors could sell or continue to hold the securities at par. These ARS held by the Company are primarily backed by pools of student loans and a significant portion are collateralized and guaranteed by the United States Department of Education. Until recently, the ARS held by the Company were rated by the major independent rating agencies as AAA. However in February 2012, one of the securities was downgraded to AA+ by S&P and in June 2012 to A- by Fitch. The Company believes this downgrade has no impact on the fair value of this ARS.

As of March 31, 2012, all of the Company's long-term investment securities were reported at fair value. Due to the lack of availability of observable market quotes on the Company's investment portfolio of ARS, the fair value was estimated based on a discounted cash flow model. The assumptions used in the discounted cash flow model include estimates for interest rates, timing and amounts of cash flows, liquidity of the underlying security, expected holding periods, and contractual terms of the security.

The Company concluded that the decline in the fair value of ARS investments as of March 31, 2012, was not other than temporary in part due to the following:

-	the decline in the fair value is due to unusual general market conditions;

-	these investments are of high credit quality and a significant portion of them are collateralized and are guaranteed by the US Department of Education;
-	as of March 31, 2012, there have been no defaults on the ARS held by the Company;
-	except for one ARS holding of $12,800,000 whose rating was reduced to AA+ by S&P in February 2012 and to A- by Fitch in June, 2012, their AAA or Aaa credit ratings have not been reduced as of or subsequent to March 31, 2012;
-	the Company has the intent and ability to hold these investments until the anticipated recovery in market value occurs; and
-	to the extent the Company's ARS have been redeemed, they were redeemed at par value. The Company received redemptions of $4,700,000, $36,450,000 and $19,250,000, all at par value in fiscal 2012, 2011 and 2010, respectively. Subsequent to March 31, 2012, two of our ARS were redeemed at par value for $12,750,000.

If uncertainties in the credit and capital markets continue or these markets deteriorate further, the Company may incur additional impairments to its ARS holdings. The Company will continue to monitor its ARS holdings and may be required to record an impairment charge through the income statement if the decline in fair value is determined to be other-than-temporary or the credit ratings of its ARS holdings decline. We have not recorded any losses due to deteriorated credit quality.