Note 3 – Cash and Cash Equivalents and Investments

The Company’s cash equivalents consist primarily of investments in money market funds as follows (in thousands):



	September 28, 2013		March 30, 2013
Cash	$	2,419	$	2,938
Cash equivalents:
Money market funds		7,744		13,476
Total cash and cash equivalents	$	10,163	$	16,414

The Company’s portfolio of short-term and long-term investments is as follows (in thousands):



	September 28, 2013
		Amortized		Unrealized		Unrealized		Carrying
		Cost		Gain		Loss		Value
Short-term investments:
Trading securities:
Equity mutual funds related to NQDCP	$	10,193	$	-	$	-	$	10,193
Available-for-sale securities:
Municipal bonds		91,926		160		(143)		91,943
Corporate bonds		33,474		61		(67)		33,468
Certificates of deposits		8,115		3		-		8,118
Auction Rate Securities		2,100		-		-		2,100
Commercial papers		749		-		-		749
Total short-term investments	$	146,557	$	224	$	(210)	$	146,571

	March 30, 2013
		Amortized		Unrealized		Unrealized		Carrying
		Cost		Gain		Loss		Value
Short-term investments:
Trading securities:
Equity mutual funds related to NQDCP	$	9,673	$	-	$	-	$	9,673
Available-for-sale securities:
Municipal bonds		58,524		156		(22)		58,658
Corporate bonds		25,667		161		(3)		25,825
Government agency bonds		16,106		82		(1)		16,187
Certificates of deposits		7,758		5		(4)		7,759
Commercial Papers		5,743		2		-		5,745
Total short-term investments	$	123,471	$	406	$	(30)	$	123,847

Long-term investments:
ARS available-for sale securities	$	15,050	$	-	$	(1,250)	$	13,800

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



	September 28, 2013		March 30, 2013
Short-term investment:
Trading securities:
Due in one year or less	$	10,193	$	9,673
Available-for-sale securities:
Due in 12 months or less		46,386		45,190
Due in 12 to 24 months		54,110		23,019
Due in 24 to 36 months		25,691		32,345
Due in 36 to 49 months		10,191		13,620
Total short-term investments	$	146,571	$	123,847
Long-term investment:
Available-for-sale securities at fair value:
Due after ten years	$	-	$	13,800
Total long-term investments	$	-	$	13,800

Short-term investments classified as trading securities consisted entirely of investments in mutual funds held by the Company’s NQDCP. Unrealized gains (losses) on trading securities are recorded in the Condensed Consolidated Statements of Income. Unrealized gains on trading securities were $427,000 and $408,000 for the three and six months ended September 28, 2013 compared to $291,000 and $194,000, respectively, for the same periods of the prior fiscal year.

The Company’s available-for-sale portfolio as of September 28, 2013 was comprised of municipal bonds, corporate bonds, commercial paper, certificates of deposits and ARS. Unrealized gains (losses) on available-for-sale securities are recorded in other comprehensive income (loss) as increases (declines) in fair values and are considered to be temporary.

Realized gains (losses) on the sale of available-for-sale securities are determined by the specific identification method and are reflected in the interest income line item on the condensed consolidated statements of income. During the three and six months ended September 28, 2013, the Company disposed of short-term available-for-sale securities totaling $13,818,000 and $63,830,000, compared to $18,837,000 and $44,602,000, respectively, for the same periods of the prior fiscal year. The realized gains of these transactions were $1,000 and $153,000 for the three and six months ended September 28, 2013. For the three and six months ended September 29, 2012, such gain was immaterial.

Subsequent to September 28, 2013, an ARS with a par value of $2,100,000 was fully redeemed at par value. Therefore, this ARS was classified as a current asset with a book value of $2,100,000 and was presented as a short-term investment on the Company’s balance sheet as of September 28, 2013.

The Company loaned $300,000 on December 21, 2012 and $200,000 on October 28, 2013 (subsequent to this quarter end) under convertible promissory notes to a private startup company developing products based on a new technology. This private startup company uses the Company's ICs for its prototype systems. Sales to date have not been material for the Company. The $300,000 loan was recorded as a long term asset as of September 28, 2013 since the due date was extended from December 31, 2013 in connection with the additional $200,000 loan. These unsecured loans accrue simple interest at a 5% annual rate with principal and accrued interest convertible at the option of the Company to preferred stock with the loans maturing on December 31, 2014. The loans convert automatically into preferred stock, and the Company is required to invest another $1,500,000 if the private company is able to timely conduct a financing meeting certain criteria. The Company did not own any stock in the private company as of September 28, 2013.