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 United States (“U.S.”) government obligations. Temporary and long-term investments consist of government, bank and corporate obligations, 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 “Non-operating income (expense), net” within the condensed consolidated 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.

As of October 26, 2014, all of the Company’s long-term investments mature on various dates through fiscal year 2016.

The following table summarizes the Company’s available-for-sale investments:



	October 26, 2014						January 26, 2014
(in thousands)	Market Value		Adjusted Cost		Gross Unrealized Gain		Market Value		Adjusted Cost		Gross Unrealized Gain
Agency securities	$	550	$	550	$	—	$	3,674	$	3,673	$	1
Total investments	$	550	$	550	$	—	$	3,674	$	3,673	$	1

Agency securities are specific securities that are issued by U.S. 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 available-for-sale investments:



	October 26, 2014				January 26, 2014
(in thousands)	Market Value		Adjusted Cost		Market Value		Adjusted Cost
Within 1 year	$	—	$	—	$	—	$	—
After 1 year through 5 years	550		550		3,674		3,673
Total investments	$	550	$	550	$	3,674	$	3,673

Unrealized gains and losses are the result of fluctuations in the market value of the Company’s available-for-sale investments and are included in “Accumulated other comprehensive income” within the condensed consolidated 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 26, 2014		October 27, 2013		October 26, 2014		October 27, 2013
Unrealized gain (loss), net of tax	$	—	$	2	$	—	$	(4	)
Increase (decrease) to deferred tax liability	—		1		—		(1		)

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



	Three Months Ended				Nine Months Ended
(in thousands)	October 26, 2014		October 27, 2013		October 26, 2014		October 27, 2013
Interest income	$	13	$	81	$	33	$	272

The Company has investments in two privately held companies. The Company accounts for these equity investments under the cost method of accounting since it does not have the ability to exercise significant influence over the investees. These equity investment interests are included in “Other assets” within the condensed consolidated balance sheets as of October 26, 2014 and January 26, 2014, respectively.



(in thousands)	Equity Investment
Balance at January 26, 2014	$	5,000
Additions	3,648
Balance at October 26, 2014	$	8,648