NOTE 4: Cash, Cash Equivalents, and Investments

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


	December 31,
	2013		2012
Cash	$	40,124	$	34,986
Cash equivalents		-		5,098
Money market instruments		520		5,076

Cash and cash equivalents		40,644		45,160

Corporate bonds		109,040		46,001
Asset-backed securities		53,559		17,666
Sovereign bonds		11,448		3,986
Municipal bonds		9,276		16,224
Agency bonds		1,499		7,482
Treasury bills		-		5,997
Covered bonds		-		5,618
Corporate stock		-		2,131

Short-term investments		184,822		105,105

Corporate bonds		109,909		100,072
Treasury bills		73,666		36,276
Asset-backed securities		21,820		34,710
Sovereign bonds		16,385		10,606
Municipal bonds		5,919		17,846
Agency bonds		-		29,441
Covered bonds		-		5,564
Limited partnership interest (accounted for using cost method)		1,956		3,740

Long-term investments		229,655		238,255

	$	455,121	$	388,520

The Company’s cash balance included foreign bank balances totaling $32,096,000 and $23,614,000 as of December 31, 2013 and 2012, respectively.

The Company’s investment portfolio includes corporate bonds, asset-backed securities, treasury bills, sovereign bonds, municipal bonds, and agency 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; sovereign bonds consist of direct debt issued by foreign governments; municipal bonds consist of debt securities issued by state and local government entities; and agency bonds consist of domestic or foreign obligations of government agencies and government sponsored enterprises that have government backing.

In 2012, the Company purchased equity securities, representing stock in a publicly-traded U.S. company, for $2,136,000. This balance was recorded in “Short-term investments” on the Consolidated Balance Sheets, as management considered this to be a trading security. In 2013, management liquidated all shares of this security at an aggregate fair value of $1,429,000, resulting in a realized loss of $702,000 recorded in “Investment income” on the Consolidated Statements of Operations in 2013. The Company recorded an unrealized loss of $5,000 related to this investment as of December 31, 2012.

The following tables summarize the Company’s available-for-sale investments as of December 31, 2013 (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Short-term:
Corporate bonds	$	108,824	$	281	$	(65	)	$	109,040
Asset-backed securities		54,061		13		(515	)		53,559
Sovereign bonds		11,445		16		(13	)		11,448
Municipal bonds		9,258		18		-			9,276
Agency bonds		1,500		-		(1	)		1,499
Long-term:
Corporate bonds		109,457		550		(98	)		109,909
Treasury bills		73,801		4		(139	)		73,666
Asset-backed securities		21,866		11		(57	)		21,820
Sovereign bonds		16,376		35		(26	)		16,385
Municipal bonds		5,901		22		(4	)		5,919

	$	412,489	$	950	$	(918)		$	412,521

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, 2013 (in thousands):


	Unrealized Loss Position For Less than 12 Months					Unrealized Loss Position For Greater than 12 Months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Treasury bills	$	61,966	$	(139	)	$	-	$	-		$	61,966	$	(139	)
Corporate bonds		58,258		(153	)		3,122		(10	)		61,380		(163	)
Asset-backed securities		35,138		(111	)		18,452		(461	)		53,590		(572	)
Sovereign bonds		15,434		(39	)		-		-			15,434		(39	)
Municipal bonds		2,581		(4	)		-		-			2,581		(4	)
Agency bonds		1,499		(1	)		-		-			1,499		(1	)

	$	174,876	$	(447	)	$	21,574	$	(471	)	$	196,450	$	(918	)

As of December 31, 2013, 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 $508,000 in 2013 and $1,990,000 in 2012, and gross realized losses on the sale of debt securities totaling $194,000 in 2013 and $295,000 in 2012. Gains and losses were immaterial in 2011. Prior to the sale of these securities, unrealized gains and losses for these debt securities, net of tax, were recorded in shareholders’ equity as other comprehensive income (loss). In 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 generating net gains and those funds were converted to U.S. Dollars. These funds were then used to purchase U.S. Dollar-denominated investments during 2012.

The following table presents the effective maturity dates of the Company’s available-for-sale investments as of December 31, 2013 (in thousands):


	<1 Year		1-2 Years		2-3 Years		3-4 Years		Total
Corporate bonds	$	109,040	$	64,080	$	42,686	$	3,143	$	218,949
Asset-backed securities		53,559		14,917		6,903		-		75,379
Treasury bills		-		16,003		57,663		-		73,666
Sovereign bonds		11,448		8,810		7,575		-		27,833
Municipal bonds		9,276		1,269		2,754		1,896		15,195
Agency bonds		1,499		-		-		-		1,499

	$	184,822	$	105,079	$	117,581	$	5,039	$	412,521

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 the commitment period expiring December 31, 2015. As of December 31, 2013, 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, 2015. Contributions and distributions are at the discretion of Venrock’s management. No contributions were made during 2013. The Company received stock distributions totaling $362,000 in 2013 and $2,193,000 in 2012. The Company immediately liquidated these stocks for proceeds of $347,000 and $2,128,000, respectively, resulting in realized losses of $15,000 and $65,000 in 2013 and 2012, respectively. Cash distributions in the amount of $1,422,000 were also received in 2013. All distributions are accounted for as return of capital. As of December 31, 2013, the carrying value of this investment was $1,956,000 compared to an estimated fair value of $4,315,000.