Cash, Cash Equivalents And Short-Term Marketable Securities

6 Months Ended

Oct. 02, 2011

Cash, Cash Equivalents And Short-Term Marketable Securities [Abstract]

Cash, Cash Equivalents And Short-Term Marketable Securities

NOTE 3. CASH, CASH EQUIVALENTS AND SHORT-TERM MARKETABLE SECURITIES

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. GAAP describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

Level 1 –	Quoted prices in active markets for identical assets or liabilities.
Level 2 –	Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 –	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our investment assets, measured at fair value on a recurring basis, as of October 2, 2011 are as follows (in thousands, except for percentages):

	Level 1		Level 2		Total
Assets:
Money market funds	$	2,691	$	—	$	2,691	1	%
U.S. Treasury securities		20,500		—		20,500	11	%
Asset-backed securities		—		21,602		21,602	11	%
Agency mortgage-backed securities		—		33,388		33,388	17	%
Agency pool mortgage-backed securities		—		2,868		2,868	1	%
Corporate bonds and notes		—		83,335		83,335	42	%
Government and agency bonds		—		33,713		33,713	17	%
Total investment assets	$	23,191	$	174,906	$	198,097	100	%

Our investment assets, measured at fair value on a recurring basis, as of March 27, 2011 were as follows (in thousands, except for percentages):

	Level 1		Level 2		Total
Assets:
Money market funds	$	7,403	$	—	$	7,403	4	%
U.S. Treasury securities		20,726		—		20,726	10	%
Asset-backed securities		—		24,242		24,242	13	%
Agency mortgage-backed securities		—		35,565		35,565	18	%
Agency pool mortgage-backed securities		—		3,522		3,522	2	%
Corporate bonds and notes		—		78,588		78,588	41	%
Government and agency bonds		—		23,317		23,317	12	%
Total investment assets	$	28,129	$	165,234	$	193,363	100	%

Our cash, cash equivalents and short-term marketable securities as of October 2, 2011 and March 27, 2011 are as follows (in thousands):

	October 2, 2011		March 27, 2011
Cash and cash equivalents
Cash at financial institutions	$	4,990	$	7,636
Cash equivalents
Money market funds		2,691		7,403
Total cash and cash equivalents	$	7,681	$	15,039
Available-for-sale securities
U.S. government and agency securities	$	54,213	$	44,043
Corporate bonds and notes		83,335		78,588
Asset-backed securities		21,602		24,242
Mortgage-backed securities		36,256		39,087
Total short-term marketable securities	$	195,406	$	185,960

Our marketable securities include municipal securities, corporate bonds and notes, asset-backed and mortgage-backed securities, corporate bonds and U.S. government and agency securities. We classify investments as available-for-sale at the time of purchase and re-evaluate such designation as of each balance sheet date. We amortize premiums and accrete discounts to interest income over the life of the investment. Our available-for-sale securities, which we intend to sell as necessary to meet our liquidity requirements, are classified as cash equivalents if the maturity date is 90 days or less from the date of purchase and as short-term marketable securities if the maturity date is greater than 90 days from the date of purchase.

All marketable securities are reported at fair value based on the estimated or quoted market prices as of each balance sheet date, with unrealized gains or losses, net of tax effect, recorded in accumulated other comprehensive income (loss) within stockholders' equity except those unrealized losses that are deemed to be other than temporary which would be reflected in the "Impairment charges on investments" line item on the condensed consolidated statements of operations.

Realized gains or losses on the sale of marketable securities are determined by the specific identification method and are reflected in the "Interest income and other, net" line item on the condensed consolidated statements of operations.

Our net realized gains (losses) on marketable securities were as follows for the periods indicated (in thousands):

	Three Months Ended						Six Months Ended
	October 2, 2011			September 26, 2010			October 2, 2011			September 26, 2010
Gross realized gains	$	94		$	308		$	264		$	515
Gross realized losses		(213	)		(238	)		(426	)		(467	)
Net realized gains (losses)	$	(119	)	$	70		$	(162	)	$	48

The following table summarizes our investments in marketable securities as of October 2, 2011 and March 27, 2011 (in thousands):

	October 2, 2011
	Amortized Cost		Unrealized								Fair Value
			Gross Gains  (1)		Gross Losses  (1)			Net Gain (Loss) (1)
Money market funds	$	2,691	$	—	$	—		$	—		$	2,691
U.S. government and agency securities		53,781		445		(13	)		432			54,213
Corporate bonds and notes		83,607		320		(592	)		(272	)		83,335
Asset and mortgage-backed securities		57,797		278		(217	)		61			57,858
Total investments	$	197,876	$	1,043	$	(822	)	$	221		$	198,097

	March 27, 2011
	Amortized Cost		Unrealized								Fair Value
			Gross Gains  (1)		Gross Losses  (1)			Net Gain (Loss) (1)
Money market funds	$	7,403	$	—	$	—		$	—		$	7,403
U.S. government and agency securities		44,117		145		(219	)		(74	)		44,043
Corporate bonds and notes		77,957		694		(63	)		631			78,588
Asset and mortgage-backed securities		63,370		172		(213	)		(41	)		63,329
Total investments	$	192,847	$	1,011	$	(495	)	$	516		$	193,363

(1) Gross of tax impact

The asset-backed securities are comprised primarily of premium tranches of vehicle loans and credit card receivables, while our mortgage-backed securities are primarily from Federal agencies. We do not own auction rate securities nor do we own securities that are classified as subprime. As of the date of this Form 10-Q, we have sufficient liquidity and do not intend to sell these securities to fund normal operations nor realize any significant losses in the short term.

We periodically review our investments in unrealized loss positions for other-than-temporary impairments. This evaluation includes, but is not limited to, significant quantitative and qualitative assessments and estimates regarding credit ratings, collateralized support, the length of time and significance of a security's loss position, our intent to not sell the security, and whether it is more likely than not that we will not have to sell the security before recovery of its cost basis. For the three and six months ended October 2, 2011, there were no investments identified with other than temporary declines in value. Other-than-temporary declines in value of our investments are reported in the "Impairment charges on investments" line item in the condensed consolidated statements of operations. In the three months ended September 27, 2009, an investment in GSAA Home Equity with a cost of $425,000 was downgraded from an AAA rating to a CCC rating. As a result of the reduction in the rating, quantitative analysis showing an increase in the default rate and decrease in prepayment rate of the investment, we recorded an other-than-temporary impairment charge of $91,000 during the three months ended September 27, 2009. In the three months ended September 26, 2010, due to further decline in the investment, we recorded an additional other-than-temporary impairment charge of $62,000.

The amortized cost and estimated fair value of cash equivalents and marketable securities classified as available-for-sale at October 2, 2011 and March 27, 2011, respectively, by expected maturity were as follows (in thousands):

	October 2, 2011				March 27, 2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Less than 1 year	$	59,163	$	58,862	$	78,378	$	78,684
Due in 1 to 5 years		138,713		139,235		114,469		114,679
Total	$	197,876	$	198,097	$	192,847	$	193,363

The following table summarizes the gross unrealized losses and fair values of our investments in an unrealized loss position as of October 2, 2011 and March 27, 2011, respectively, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	October 2, 2011
	Less than 12 months					12 months or greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government and agency securities	$	8,382	$	(12	)	$	—	$	—		$	8,382	$	(12	)
Corporate bonds and commercial paper		33,949		(593	)		2,333		(20	)		36,282		(613	)
Asset and mortgage-backed securities		19,055		(100	)		5,204		(97	)		24,259		(197	)
Total	$	61,386	$	(705	)	$	7,537	$	(117	)	$	68,923	$	(822	)

	March 27, 2011
	Less than 12 months					12 months or greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government and agency securities	$	25,936	$	(219	)	$	325	$	(4	)	$	26,261	$	(223	)
Corporate bonds and commercial paper		16,516		(63	)		1,948		(9	)		18,464		(72	)
Asset and mortgage-backed securities		34,143		(200	)		—		—			34,143		(200	)
Total	$	76,595	$	(482	)	$	2,273	$	(13	)	$	78,868	$	(495	)