Adaptec 2011 Annual Report Download - page 71

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Table of Contents
December 26, 2010
(in thousands)
Amortized
Cost
Gross
Unrealized
Gains*
Gross
Unrealized
Losses * Fair Value
Cash equivalents:
Corporate bonds and notes $ 30,321 $ — $ — $ 30,321
US treasury and government agency notes 75,346 — — 75,346
Money market funds 125,940 21 — 125,961
Foreign government and agency notes 802 — — 802
US states and municipal securities 8,800 — — 8,800
Total cash equivalents 241,209 21 — 241,230
Short-term investments:
Corporate bonds and notes 36,139 2,483 (1) 38,621
US treasury and government agency notes 1,193 261 — 1,454
Foreign government and agency notes 7,435 279 — 7,714
US states and municipal securities 6,940 72 — 7,012
Total short-term investments 51,707 3,095 (1) 54,801
Long-term investment securities:
Corporate bonds and notes 169,590 1,338 (367) 170,561
US treasury and government agency notes 47,877 188 (198) 47,867
Foreign government and agency notes 15,065 158 — 15,223
US states and municipal securities 1,720 — (2) 1,718
Total long-term investment securities 234,252 1,684 (567) 235,369
Total $ 527,168 $ 4,800 $ (568) $ 531,400
* Gross unrealized gains include accrued interest on investments of $2.7 million. The remainder of the gross unrealized gains and losses are included in
the consolidated balance sheet as other comprehensive income.
In relation to the unrealized losses summarized in the tables above, as of December 31, 2011 and December 26, 2010, the fair value of certain of the
Company's available-for-sale securities was less than their cost basis. Management reviewed various factors in determining whether to recognize an
impairment charge related to these unrealized losses, including the current financial and credit market environment, the financial condition and near-term
prospects of the issuer of the investment security, the magnitude of the unrealized loss compared to the cost of the investment, length of time the investment
has been in a loss position and the Company's intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery of
market value. As of December 31, 2011, the Company determined that the unrealized losses are temporary in nature and recorded them as a component of
Accumulated other comprehensive income (loss).
The investments in the Reserve Funds, classified as cash and cash equivalents on the Consolidated Balance Sheet, were recorded at a fair value of nil at
December 31, 2011 (2010—$22.4 million) and relate to shares of the Reserve International Liquidity Fund, Ltd. (the "International Fund") and the Reserve
Primary Fund (the "Primary Fund", together the "Reserve Funds"). The Reserve Funds were AAA-rated money market funds which announced redemption
delays and suspended trading in September 2008, during the severe disruption in financial markets. The Company assessed the fair value of its money market
funds, including by consideration of Level 2 and Level 3 inputs (see Note 4. Fair Value Measurements) for the Reserve Funds and their underlying securities.
Based on this assessment, the Company recorded an impairment of the Reserve Funds of $11.8 million during the third quarter of 2008, incorporating the
Reserve Funds' valuation at zero for debt securities of Lehman Brothers held, and a net asset value of $0.97 per share as communicated by the Primary Fund.
In 2008, the Company reclassified its investment in shares of the Reserve Funds from Level 1 to Level 3 of the fair value hierarchy due to the inherent
subjectivity and significant judgment related to the fair value of the shares of the Reserve Funds
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