Cash, cash equivalents, short-term investments, and marketable securities

9 Months Ended

Sep. 30, 2011

Cash, cash equivalents, short-term investments, and marketable securities [Abstract]

Cash, cash equivalents, short-term investments, and marketable securities

Note 6—Cash, cash equivalents, short-term investments, and marketable securities:

Cash and cash equivalents

The Company considers all highly-liquid investments with an original maturity of three months or less to be cash equivalents. Cash equivalents principally consist of investments in short-term money market funds and corporate commercial paper.

Available-for-sale securities

Investments in marketable securities that are being held for an indefinite period are classified as available-for-sale and are recorded at fair value based on market quotes using the specific identification method, with unrealized gains and losses recorded as a component of accumulated other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities, if any, are determined on a specific identification basis. The Company considers these investments to be available-for-sale as they may be sold to fund other investment opportunities as they arise.

The major categories of the Company’s cash equivalents and marketable securities are as follows:

Money market mutual funds

The Company invests in money market mutual funds that seek to maintain a stable net asset value of $1.00, while limiting overall exposure to credit, market, and liquidity risks.

Commercial paper

The Company invests in high-quality commercial paper issued by highly-rated corporations. By definition, the stated maturity on commercial paper obligations cannot exceed 270 days.

Short-term municipal bond fund

The dividends received by the Company are not taxable for U.S. Federal income tax purposes. The fund invests in municipal bonds that are near their maturity.

Corporate notes and bonds

The Company evaluates its corporate debt securities based upon a variety of factors including, but not limited to, the credit rating of the issuer. All of the Company’s corporate debt securities are rated as investment grade by the major rating agencies.

U.S. government agencies

These U.S. government guaranteed debt securities are rated as investment grade by the major rating agencies and are publicly traded and valued.

Cash, cash equivalents, short-term investments, and marketable securities consist of the following:

	September 30, 2011		December 31, 2010
Cash and cash equivalents:
Cash	$	17,114	$	31,795
Cash equivalents:
Commercial paper		7,998		—
Money market mutual funds		164,629		345,156
Total cash and cash equivalents		189,741		376,951
Short-term investments and marketable securities:
Short-term municipal bond fund		20,520		20,275
Commercial paper		13,971		—
Corporate notes and bonds		118,421		—
U.S. government agencies		13,154		—
Total short-term investments and marketable securities		166,066		20,275
Total cash, cash equivalents, short-term investments, and marketable securities	$	355,807	$	397,226

The Company’s investments at September 30, 2011 and December 31, 2010 were as follows:

	Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses
As of September 30, 2011:
Short-term municipal bond fund	$	20,436	$	84	$	—	$	20,520
Commercial paper		13,988		—		17		13,971
Corporate notes and bonds		118,535		70		184		118,421
U.S. government agencies		13,156		2		4		13,154
Total	$	166,115	$	156	$	205	$	166,066
As of December 31, 2010:
Short-term municipal bond fund	$	20,233	$	42	$	—	$	20,275
Total	$	20,233	$	42	$	—	$	20,275

The Company typically purchases its available-for-sale debt securities at a premium or discount. The premium or discount is amortized over the remaining term of each security using the interest method. Amortization is recorded as either a decrease to interest income for premiums or an increase to interest income for discounts. For the three and nine months ended September 30, 2011, net amortization of premiums and discounts resulted in reductions to interest income of $842 and $1,595, respectively.

Available-for-sale investments at September 30, 2011 had contractual maturities as follows:

	Due within 1 year		Due within 2 years		Total
Short-term municipal bond fund	$	20,520	$	—	$	20,520
Commercial paper		13,971		—		13,971
Corporate notes and bonds		42,096		76,325		118,421
U.S. government agencies		—		13,154		13,154
Total	$	76,587	$	89,479	$	166,066

The Company classifies investments maturing within one year as short-term investments. Investments maturing in excess of one year are classified as noncurrent.

As of September 30, 2011, no investments classified as available-for-sale have been in a continuous unrealized loss position for greater than twelve months. The Company believes that the unrealized losses on the available-for-sale portfolio as of September 30, 2011 are temporary in nature and are related to market interest rate fluctuations and not indicative of a deterioration in the creditworthiness of the issuers.