Investments

Investments that have original maturities of three months or less are accounted for as cash equivalents. This includes money market funds, time deposits and U.S. government obligations. Temporary and long-term investments consist of government, bank and corporate obligations, and bank time deposits with original maturity dates in excess of three months. Temporary investments have original maturities in excess of three months, but mature within twelve months of the balance sheet date. Long-term investments have original maturities in excess of twelve months. The Company determines the cost of securities sold based on the specific identification method. Realized gains or losses are reported in “Interest income and other expense, net” on the Unaudited Consolidated Condensed Statements of Income.

The Company classifies its investments as “available for sale” because it may sell some securities prior to maturity. The Company’s investments are subject to market risk, primarily interest rate and credit risks. The Company’s investments are managed by a limited number of outside professional managers that operate within investment guidelines set by the Company. These guidelines include specified permissible investments, minimum credit quality ratings and maximum average duration restrictions and are intended to limit market risk by restricting the Company’s investments to high quality debt instruments with relatively short-term maturities.

The following table summarizes the Company’s investments:



	October 28, 2012						January 29, 2012
(in thousands)	Market Value		Adjusted Cost		Gross Unrealized Gain		Market Value		Adjusted Cost		Gross Unrealized Gain
Agency securities	$	8,012	$	8,000	$	12	$	26,132	$	26,110	$	22
Corporate issues	—		—		—		4,511		4,484		27
Bank time deposits	5,017		5,017		—		70,000		70,000		—
Total investments	$	13,029	$	13,017	$	12	$	100,643	$	100,594	$	49

Agency securities are specific securities that are issued by United States government agencies such as Ginnie Mae, Fannie Mae, Freddie Mac or the Federal Home Loan Banks. Due to the expectation of federal backing, these securities usually hold the highest credit rating possible.

The following table summarizes the maturities of the Company’s investments:



	October 28, 2012				January 29, 2012
(in thousands)	Market Value		Adjusted Cost		Market Value		Adjusted Cost
Within 1 year	$	5,017	$	5,017	$	83,121	$	83,085
After 1 year through 5 years	8,012		8,000		17,522		17,509
Total investments	$	13,029	$	13,017	$	100,643	$	100,594

Unrealized gains and losses are the result of fluctuations in the market value of the Company’s investments and are included in “Accumulated other comprehensive income” on the Unaudited Consolidated Condensed Balance Sheets. The following table summarizes net unrealized losses arising in the periods presented in addition to the tax associated with these comprehensive income items:



	Three months ended						Nine months ended
(in thousands)	October 28, 2012			October 30, 2011			October 28, 2012			October 30, 2011
Unrealized loss, net of tax	$	(2	)	$	(63	)	$	(29	)	$	(164	)
Decrease to deferred tax liability	(2		)	(19		)	(8		)	(48		)

The following table summarizes interest income generated from investments and cash and cash equivalents:



	Three months ended				Nine months ended
(in thousands)	October 28, 2012		October 30, 2011		October 28, 2012		October 30, 2011
Interest income	$	79	$	337	$	331	$	917