3. INVESTMENTS

The Company accounts for its investments in accordance with the FASB's guidance relating to accounting for certain investments in debt and equity securities and related pronouncements and classifies all debt and equity securities as available-for-sale.

As of January 31, 2011 and 2010, all the investments in ARS disclosed below (all of which were held by CTI as of such date) were restricted pursuant to the settlement agreement of the consolidated shareholder class action CTI entered into on December 16, 2009 and amended on June 19, 2010. As of January 31, 2010, all cash proceeds from sales and redemptions of ARS held in an account with UBS received prior to the settlement agreement and from sales and redemptions of ARS received after the original date of the settlement agreement, prior to amendment, were restricted. As of January 31, 2011, all cash proceeds from sales and redemptions of ARS (other than ARS that were held in an account with UBS) (including interest thereon) were restricted (see Note 26, Commitments and Contingencies).

Auction Rate Securities

The Company invested in ARS supported by corporate issuers and student loans. The ARS portfolio supported by corporate issuers consists of collateralized debt obligations and Regulation XXX securities (insurance industry-related ARS). The Company's ARS supported by corporate issuers were rated between AAA and AA- by Standard & Poor's ("S&P") and Aaa and A3 by Moody's Investor Service ("Moody's") when purchased. These corporate issued holdings were downgraded since the original purchase date, and the remaining two securities were rated A by S&P and C by Moody's, respectively, as of January 31, 2011.

The ARS portfolio supported by student loans is substantially guaranteed by the Federal government under the Federal Family Education Loan Program. The Company's ARS supported by student loans were all rated AAA by S&P and Aaa by Moody's when purchased. The ARS supported by student loans were all rated between AAA and BB+ by S&P and between Aaa and Ba1 by Moody's as of January 31, 2011.

Classification

In August 2010, the Company began to forecast that it will sell its remaining ARS during the fourth quarter of the fiscal year ending January 31, 2012 after the expiration of the restrictions on sales of ARS and the use of proceeds from sales thereof following the final payment under the settlement agreement of the consolidated shareholder class action due on or before November 15, 2011. Accordingly, the ARS are classified as current assets as of January 31, 2011.

Beginning in the third quarter of the fiscal year ended January 31, 2008, auctions for ARS began to fail. Although auctions began to fail, the ARS largely continued to pay interest and dividends at their stated terms through January 31, 2011. The ARS principal amounts associated with these failed auctions would not be accessible to the Company until either: (i) a successful auction occurs, (ii) an active secondary market develops, (iii) the security is called, or (iv) the security matures. Therefore, the Company believed it may not be able to access the underlying principal amounts at par within a twelve-month period. Accordingly, the Company re-classified those ARS that experienced failed auctions from short-term investments to long-term assets beginning in the period of failure. As of January 31, 2010, the Company classified all ARS as long-term investments except for ARS subject to the UBS Put, which was required to be exercised under the settlement agreement of the consolidated shareholder class action on June 30, 2010 and which was exercised by CTI on such date.

The Company sold $112.2 million and $29.9 million of aggregate principal amount of ARS during the fiscal years ended January 31, 2011 and 2010 resulting in gains of $23.8 million and $10.8 million, respectively, recognized in "Other income (expense), net." Such gains represent a recovery of previously recognized other-than-temporary impairments as the fair market value of the ARS recovered toward par value.

As of January 31, 2011, proceeds from the sales and redemptions of ARS, including interest received subsequent to the date of the settlement agreement of the consolidated shareholder class action, of $33.4 million were classified within the consolidated balance sheet as "Restricted cash and bank time deposits." As of January 31, 2010, $9.0 million from the sales of ARS subject to the UBS Put, were classified in "Restricted cash and bank time deposits" and sales proceeds of $17.1 million from all other ARS, including interest received subsequent to the date of settlement agreement, were classified within "Other assets" as long-term restricted cash.

Other-Than-Temporary Impairment

As a result of historic auction failures and declines in credit quality, the fair value of the ARS had declined. The fair value of the ARS was determined on a quarterly basis by the Company utilizing a discounted cash flow model, which considers, among other factors, assumptions about the (i) underlying collateral, (ii) credit risk associated with the issuer, and (iii) contractual maturity. The discounted cash flow model considers contractual future cash flows, representing both interest and principal payments. Future interest payments were projected using U.S. Treasury and swap curves over the remaining term of the ARS in accordance with the terms of each specific security and principal payments were assumed to be made at an estimated contractual maturity date taking into account applicable prepayments. Yields used to discount these payments were determined based on the specific characteristics of each security. Key considerations in the determination of the appropriate discount rate include the securities' remaining term to maturity, capital structure subordination, quality and level of collateralization, complexity of the payout structure, credit rating of the issuer, and the presence or absence of additional insurance enhancement from monoline insurers.

For ARS that the Company determined that it could not assert that it intended to hold such ARS until their fair value recovered to amortized cost, the Company recorded other-than-temporary impairment charges of $0.4 million, $6.9 million and $86.5 million on a pre-tax basis during the fiscal years ended January 31, 2011, 2010 and 2009, respectively. These other-than-temporary impairment charges were recorded as a component of "Other income (expense), net" in the consolidated statements of operations (see Note 21, Other Income (Expense), Net).

The carrying amount of the Company's ARS as of January 31, 2011 was $72.4 million with a corresponding principal amount of $94.4 million classified as short-term, available-for-sale investments in "Auction Rate Securities." The carrying amount of the Company's ARS as of January 31, 2010 was $114.7 million, of which $35.8 million is classified as short-term, available-for-sale investments in "Auction Rate Securities" and $78.8 million is classified as long-term, available-for-sale investments in "Auction rate securities" with corresponding aggregate principal amounts of $42.6 million and $164.0 million, respectively.

UBS Put

In November 2008, CTI accepted an offer from UBS AG ("UBS") providing rights related to $51.6 million in aggregate principal amount of ARS that were held in an account with UBS (the "UBS Put"). Under the terms of the UBS Put, CTI had the right, but not the obligation, to sell its eligible ARS at par value to UBS at any time during the period of June 30, 2010 through July 2, 2012. Additionally, UBS had the right, at its discretion and at any time until July 2, 2012, to purchase the ARS from CTI at par value, which is defined as the price equal to the principal amount of the ARS plus accrued but unpaid dividends or interest, if any. Under the terms of the settlement agreement of the consolidated shareholder class action, CTI was required to exercise the UBS Put on June 30, 2010, and apply the proceeds from such exercise toward amounts payable under such settlement. Effective June 30, 2010, CTI exercised the UBS Put for the balance of the ARS that were subject to the UBS Put. UBS purchased from CTI, pursuant to its purchase right and upon exercise of the UBS Put by CTI, approximately $42.6 million and $9.0 million aggregate principal amount of ARS during the fiscal years ended January 31, 2011 and 2010, respectively.

In the fiscal year ended January 31, 2009, the Company recorded the UBS Put at its then fair value of $13.6 million in "Other assets" with a corresponding gain recorded in "Other income (expense), net." The Company did not elect the fair value option under the FASB's guidance. Consequently, the UBS Put was carried at historical cost and assessed for impairment. The Company evaluated the UBS Put for impairment based on redemptions and changes in fair value of the related ARS subject to the UBS Put and during the fiscal years ended January 31, 2011 and 2010 recorded $6.7 million and $6.9 million, respectively, of pre-tax impairment charges, which were classified in "Other income (expense), net." Due to its exercise on June 30, 2010, the Company had no recorded amounts in connection with the UBS Put as of January 31, 2011. As of January 31, 2010, the UBS Put's carrying value was $6.7 million (recorded in "Prepaid expenses and other current assets") and the fair value of the related ARS was $35.8 million before consideration of the UBS Put, with a corresponding principal amount of $42.6 million.

The following is a summary of available-for-sale securities as of January 31, 2011 and 2010:


	January 31, 2011
			Included in Accumulated Other Comprehensive (Loss) Income
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Cumulative Impairment Charges			Estimated Fair Value
	(In thousands)
Short-term:
Auction rate securities-Student loans	$	71,900	$	16,044	$	—	$	(24,181	)	$	63,763
Auction rate securities-Corporate issuers		22,500		5,619		—		(19,441	)		8,678

Total short-term investments	$	94,400	$	21,663	$	—	$	(43,622	)	$	72,441


	January 31, 2010
			Included in Accumulated Other Comprehensive (Loss) Income
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Cumulative Impairment Charges			Estimated Fair Value
	(In thousands)
Short-term:
Auction rate securities-Student loans	$	42,550	$	11,136	$	—	$	(17,840	)	$	35,846

Total short-term investments	$	42,550	$	11,136	$	—	$	(17,840	)	$	35,846

Long-term:
Auction rate securities-Corporate issuers	$	91,200	$	6,973	$	—	$	(79,509	)	$	18,664
Auction rate securities-Student loans		72,800		11,946		—		(24,606	)		60,140

Total long-term investments	$	164,000	$	18,919	$	—	$	(104,115	)	$	78,804

The ARS have stated maturities in excess of 5 years.

Investments with original maturities of three months or less, when purchased, are included in cash and cash equivalents, in "Restricted cash and bank time deposits" or in long-term restricted cash (long-term restricted cash is classified within "Other assets") in the consolidated balance sheets. Such investments are not reflected in the tables above for January 31, 2011 or 2010, and include commercial paper and money market funds totaling $195.8 million and $236.6 million as of January 31, 2011 and 2010, respectively. There were no unrealized gains (losses) as of January 31, 2011 and 2010.

There were no investments in unrealized loss positions as of January 31, 2011 and 2010.

The Company sold investments for proceeds of $57.3 million, $175.2 million and $438.1 million in the fiscal years ended January 31, 2011, 2010 and 2009, respectively.

The gross realized gains and losses on the Company's investments are as follows, for the fiscal years presented below:


(In thousands)	Gross Realized Gains		Gross Realized Losses
January 31, 2011	$	23,810	$	—

January 31, 2010	$	10,788	$	—

January 31, 2009	$	6,412	$	3,014

The components of other comprehensive income (loss) related to available-for-sale securities are as follows:


	Fiscal Years Ended January 31,
	2011			2010			2009
	(In thousands )
Accumulated OCI related to available for sale securities, beginning of year	$	25,663		$	10,302		$	753

Unrealized gains on available-for-sale securities		6,950			20,048			12,775
Reclassification adjustment for (gains) losses included in net loss		(15,483	)		(3,582	)		2,010

Unrealized (losses) gains on available-for-sale securities, before tax		(8,533	)		16,466			14,785

Other comprehensive income (loss) attributable to noncontrolling interest		26			53			(38	)

Deferred income tax benefit (provision)		715			(1,158	)		(5,198	)

Unrealized (losses) gains on available-for-sale securities, net of tax		(7,792	)		15,361			9,549

Accumulated OCI related to available for sale securities, end of year	$	17,871		$	25,663		$	10,302