NOTE 3: Cash, Cash Equivalents, and Investments

Cash, cash equivalents, and investments consisted of the following (in thousands):


	December 31,
	2012		2011
Cash	$	34,986	$	36,404
Cash equivalents		5,098		—
Money market instruments		5,076		1,699

Cash and cash equivalents		45,160		38,103

Corporate bonds		46,001		55,570
Asset-backed securities		17,666		—
Municipal bonds		16,224		54,036
Agency bonds		7,482		27,545
Treasury bills		5,997		1,945
Covered bonds		5,618		1,319
Sovereign bonds		3,986		4,016
Corporate stock		2,131		—

Short-term investments		105,105		144,431

Corporate bonds		100,072		59,902
Treasury bills		36,276		—
Asset-backed securities		34,710		—
Agency bonds		29,441		12,335
Municipal bonds		17,846		69,680
Sovereign bonds		10,606		22,355
Covered bonds		5,564		4,701
Limited partnership interest (accounted for using cost method)		3,740		5,933

Long-term investments		238,255		174,906

	$	388,520	$	357,440

The Company’s cash balance included foreign bank balances totaling $23,614,000 and $29,452,000 as of December 31, 2012 and 2011, respectively.

In the third quarter of 2012, management changed the domicile of the subsidiary that held the Company’s Euro-denominated investment portfolio and also changed that subsidiary’s functional currency from the Euro to the U.S. Dollar. As a result of these changes, the investment portfolio was liquidated, primarily during the second quarter of 2012, and those funds were converted to U.S. Dollars. These funds were then used to purchase U.S. Dollar-denominated investments during the third quarter of 2012 once the change of domicile was complete.

The Company’s investment portfolio includes corporate bonds, asset-backed securities, treasury bills, agency bonds, municipal bonds, sovereign bonds, and covered bonds. Corporate bonds consist of debt securities issued by both domestic and foreign companies; asset-backed securities consist of debt securities collateralized by pools of receivables or loans with credit enhancement; treasury bills consist of debt securities issued by both the U.S. and foreign governments; agency bonds consist of domestic or foreign obligations of government agencies and government sponsored enterprises that have government backing; municipal bonds consist of debt securities issued by state and local government entities; sovereign bonds consist of direct debt issued by foreign governments; and covered bonds consist of debt securities backed by governments, mortgages, or public sector loans.

During the fourth quarter of 2012, the Company purchased equity securities, representing stock in a publicly-traded U.S. company, for $2,136,000. As of December 31, 2012, this security had an aggregate fair value of $2,131,000, resulting in an unrealized loss of $5,000.

The following tables summarize the Company’s available-for-sale investments as of December 31, 2012 (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term:
Corporate bonds	$	45,965	$	68	$	(32	)	$	46,001
Asset-backed securities		17,668		16		(18	)		17,666
Municipal bonds		16,198		26		—			16,224
Agency bonds		7,489		—		(7	)		7,482
Treasury bills		5,996		1		—			5,997
Covered bonds		5,637		2		(21	)		5,618
Sovereign bonds		4,000		—		(14	)		3,986

Long-term:
Corporate bonds		99,464		647		(39	)		100,072
Treasury bills		36,277		8		(9	)		36,276
Asset-backed securities		34,831		32		(153	)		34,710
Agency bonds		29,411		54		(24	)		29,441
Municipal bonds		17,726		121		(1	)		17,846
Sovereign bonds Asset-backed securities		10,589		20		(3	)		10,606
Covered bonds		5,555		9		—			5,564

	$	336,806	$	1,004	$	(321	)	$	337,489

The following table summarizes the Company’s gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of December 31, 2012 (in thousands):


	Unrealized Loss Position For Less than 12 Months .
	Fair Value		Unrealized Losses
Corporate bonds	$	41,958	$	(71	)
Asset-backed securities		33,513		(171	)
Agency bonds		20,270		(31	)
Treasury bills		15,977		(9	)
Sovereign bonds		6,322		(17	)
Covered bonds		4,358		(21	)
Municipal bonds		1,484		(1	)

	$	123,882	$	(321	)

As of December 31, 2012, the Company did not recognize an other-than-temporary impairment of these investments. In its evaluation, management considered the type of security, the credit rating of the security, the length of time the security has been in a loss position, the size of the loss position, our intent and ability to hold the security to expected recovery of value, and other meaningful information. The Company does not intend to sell, and is unlikely to be required to sell, any of these available-for-sale investments before its effective maturity or market price recovery.

The Company recorded gross realized gains on the sale of debt securities totaling $1,990,000 in 2012 and $82,000 in 2011, and gross realized losses on the sale of debt securities totaling $295,000 in 2012 and $263,000 in 2011. Gains and losses were immaterial in 2010. In 2012, the realized gain was primarily due to the liquidation of the Company’s Euro-denominated investment portfolio. Prior to the sale of these securities, unrealized gains and losses for these debt securities, net of tax, were recorded in shareholders’ equity as a component of other comprehensive income (loss).

The following table presents the effective maturity dates of the Company’s available-for-sale investments as of December 31, 2012 (in thousands):


	<1 Year		1-2 Years		2-3 Years		3-4 Years		4-5 Years		5-8 Years		Total
Corporate bonds	$	46,001	$	14,188	$	71,828	$	10,180	$	3,109	$	767	$	146,073
Asset-backed securities		17,666		26,727		7,983		—		—		—		52,376
Treasury bills		5,997		17,307		18,969		—		—		—		42,273
Agency bonds		7,482		17,156		8,196		3,147		942		—		36,923
Municipal bonds		16,224		12,902		2,442		1,084		1,418		—		34,070
Sovereign bonds		3,986		757		3,240		6,609		—				14,592
Covered bonds		5,618		1,424		2,346		1,794		—		—		11,182

	$	102,974	$	90,461	$	115,004	$	22,814	$	5,469	$	767	$	337,489

In 2000, the Company became a Limited Partner in Venrock Associates III, L.P. (Venrock), a venture capital fund. The Company has committed to a total investment in the limited partnership of up to $20,500,000, with an expiration date of December 31, 2013. As of December 31, 2012, the Company contributed $19,886,000 to the partnership. The remaining commitment of $614,000 can be called by Venrock at any time before December 31, 2013. Contributions and distributions are at the discretion of Venrock’s management. No contributions were made during 2012. The Company received stock distributions totaling $2,193,000 during 2012, which were accounted for as a return of capital. These shares were sold, shortly after the distributions, for $2,128,000, resulting in realized losses of $65,000. As of December 31, 2012, the carrying value of this investment was $3,740,000 compared to an estimated fair value of $6,932,000.