3. INVESTMENTS

The Company invests available cash primarily in investment grade commercial paper, corporate notes and government securities. The Company's short-term investments balance of $50.5 million as of December 31, 2011 is comprised of U.S. Treasury securities of $4.5 million, corporate notes and bonds of $37.0 million and commercial paper of $9.0 million. The Company's investments are classified as available-for-sale securities and are carried at fair market value with unrealized gains and losses recorded in accumulated other comprehensive income (loss).

Until July 1, 2010, the Company held auction-rate securities as part of its investment portfolio. The auction-rate securities were trading securities recorded at fair value and unrealized gains and losses were reported as part of gain on investments in the consolidated statements of operations. In February 2008, the Company began experiencing failed auctions of its entire auction-rate securities portfolio, resulting in its inability to sell these securities in the short term. The Company held put options associated with an agreement with UBS, AG related to the auction-rate securities purchased through them. The Company exercised these put options on June 30, 2010 with a settlement date of July 1, 2010. The ARS Put Options provided the Company with the opportunity to recover the estimated unrealized loss on its ARS investments. The Company recorded the fair value of the ARS Put Options upon receipt and valued the put options at their estimated fair value using a discounted cash flow model that weighs various factors, including interest rates and expected holding period. Unrealized gains and losses related to the ARS Put Options were recognized in earnings. During the year ended December 31, 2010, the Company recorded a gain of $63,000 representing the changes in fair value of the auction-rate securities. The Company also recorded during the year ended December 31, 2010, a loss of $55,000 representing the changes in fair value of the put options. During the year ended December 31, 2009, the Company recorded a loss of $460,000, representing the changes in fair value of the put options. The Company also recorded a gain of $506,000, representing the change in fair value of the auction-rate securities, for the year ended December 31, 2009. Both the gain and loss from recording the change in fair value of the put options and auction-rate securities were recorded in gain on investments in the consolidated statements of operations. The Company's investment policy no longer allows auction rate securities as an approved investment.

The Company's long-term investment at December 31, 2011 consists of a $2.0 million investment in Peregrine Semiconductor, Corp. (a customer) Series D-1 Preferred shares and is accounted for as a cost method investment. The value is adjusted for impairment based on review of Peregrine's financial position. No impairment was noted as of December 31, 2011.

The following table presents the amortized cost, and gross unrealized gains and losses on all securities at December 31, 2011:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Short-term Investments:
U.S. Treasury securities and agency (taxable)	$	4,500	$	—	$	—	$	4,500
Corporate Notes/Bonds (taxable)		37,085		—		37		37,048
Commercial Paper (taxable)		8,992		—		12		8,980

Total short-term investments	$	50,577	$	—	$	49	$	50,528

Long-term Investments:
Peregrine Semiconductor, Corp. Series D-1 Preferred shares	$	2,000	$	—	$	—	$	2,000

The following table presents the amortized cost, and gross unrealized gains and losses on all securities at December 31, 2010:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)
Short-term Investments:
U.S. Treasury securities and agency (taxable)	$	9,499	$	—	$	3	$	9,496
Corporate Notes/Bonds (taxable)		38,080		1		—		38,081
Commercial Paper (taxable)		18,559		—		5		18,554

Total short-term investments	$	66,138	$	1	$	8	$	66,131

Long-term Investments:
Peregrine Semiconductor, Corp. Series D-1 Preferred shares	$	2,000	$	—	$	—	$	2,000

The Company values its investments at fair value, defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) 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. The standard 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 which are the following:

•

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.

The Company's fixed income available-for-sale securities consist of high quality, investment grade commercial paper, corporate notes and government securities. The Company values these securities based on pricing from pricing vendors, who may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. The valuation techniques used to measure the fair value of the Company's financial instruments having Level 2 inputs were derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques.

The following table summarizes the Company's financial assets measured at fair value on a recurring basis as of December 31, 2011:


	Level 1		Level 2		Level 3		Total
Cash Equivalents:
Money market funds	$	839	$	—	$	—	$	839
Investments:
Available-for-sales securities—current:
U.S. Treasury securities and agency		—		4,500		—		4,500
Corporate notes/bonds		—		37,048		—		37,048
Commercial paper		—		8,980		—		8,980

Total	$	839	$	50,528	$	—	$	51,367

The following table summarizes the Company's financial assets measured at fair value on a recurring basis as of December 31, 2010:


	Level 1		Level 2		Level 3		Total
Cash Equivalents:
Money market funds	$	10,042	$	—	$	—	$	10,042
Investments:
Available-for-sales securities—current:
U.S. Treasury securities and agency		—		9,496		—		9,496
Corporate notes/bonds		—		38,081		—		38,081
Commercial paper		—		18,554		—		18,554

Total	$	10,042	$	66,131	$	—	$	76,173

In addition to the debt securities noted above, the Company had approximately $3.5 million and $6.0 million of time deposits included in cash and cash equivalents as of December 31, 2011 and 2010, respectively.