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 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 January 27, 2013, all of the Company’s long-term investments mature on various dates through fiscal year 2015.

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



	January 27, 2013						January 29, 2012
(in thousands)	Market Value		Adjusted Cost		Gross Unrealized Gain		Market Value		Adjusted Cost		Gross Unrealized Gain
Agency securities	$	7,907	$	7,900	$	7	$	26,132	$	26,110	$	22
Corporate issues	—		—		—		4,511		4,484		27
Bank time deposits	4,973		4,973		—		70,000		70,000		—
Total investments	$	12,880	$	12,873	$	7	$	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 available for sale investments:



	January 27, 2013				January 29, 2012
(in thousands)	Market Value		Adjusted Cost		Market Value		Adjusted Cost
Within 1 year	$	4,973	$	4,973	$	83,121	$	83,085
After 1 year through 5 years	7,907		7,900		17,522		17,509
Total investments	$	12,880	$	12,873	$	100,643	$	100,594

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” on the 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:



	Fiscal Year Ended
(in thousands)	January 27, 2013			January 29, 2012			January 30, 2011
Unrealized loss, net of tax	$	(32	)	$	(204	)	$	(76	)
Decrease to deferred tax liability	$	(10	)	$	(58	)	$	(41	)

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



	Fiscal Year Ended
(in thousands)	January 27, 2013		January 29, 2012		January 30, 2011
Interest income	$	404	$	1,213	$	1,051

During fiscal year 2013, the Company acquired an investment in a privately traded company for total cash consideration of $2.5 million. The Company accounts for the investment in equity interests under the cost method of accounting since it does not have the ability to exercise significant influence over the investee. The investment in equity interests is included in “Other assets” on the consolidated balance sheet as of January 27, 2013.