2. Investments

Investments consist of the following (in thousands):

	July 27, 2013		April 30, 2013
Short-term investments:
Held-to-maturity securities:
Municipal securities	$	64,474	$	73,241
Total short-term investments	$	64,474	$	73,241
Long-term investments:
Held-to-maturity securities:
Municipal securities	$	56,484	$	54,158
Available-for-sale securities:
Auction rate securities	5,444		5,687
Convertible bonds	5,667		9,071
Total long-term investments	$	67,595	$	68,916

Held-To-Maturity Securities

At July 27, 2013 and April 30, 2013, the balance of held-to-maturity securities consisted of state and local government municipal securities. Interest earned from these investments is recorded in interest income.

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the held-to-maturity investments as of July 27, 2013, were as follows (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Municipal securities	$	120,958	$	75	$	(32	)	$	121,001
Total held-to-maturity investments	$	120,958	$	75	$	(32	)	$	121,001

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the held-to-maturity investments as of April 30, 2013, were as follows (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Municipal securities	$	127,399	$	49	$	(23	)	$	127,425
Total held-to-maturity investments	$	127,399	$	49	$	(23	)	$	127,425

The amortized cost and fair value of the held-to-maturity securities by contractual maturity at July 27, 2013, were as follows (in thousands):

	Cost		Fair Value

Due within one year	$	64,474	$	64,503
Due after one year through three years	56,484		56,498
Total	$	120,958	$	121,001

Available-For-Sale Securities

Auction Rate Securities

As of July 27, 2013, the entire balance of available-for-sale auction rate securities consisted of three investment grade auction rate municipal bonds with maturities ranging from 6 to 21 years. These investments have characteristics similar to short-term investments, because at pre-determined intervals, generally ranging from 30 to 35 days, there is a new auction process at which the interest rates for these securities are reset to current interest rates. At the end of such period, the Company chooses to roll-over its holdings or redeem the investments for cash. A market maker facilitates the redemption of the securities and the underlying issuers are not required to redeem the investment within 365 days. Interest earned from these investments is recorded in interest income.

During the fourth quarter of the fiscal year ended April 30, 2008, the Company began experiencing failed auctions on some of its auction rate securities. A failed auction occurs when a buyer for the securities cannot be obtained and the market maker does not buy the security for its own account. The Company continues to earn interest on the investments that failed to settle at auction, at the maximum contractual rate until the next auction occurs. In the event the Company needs to access funds invested in these auction rate securities, the Company may not be able to liquidate these securities at the fair value recorded on July 27, 2013 until a future auction of these securities is successful or a buyer is found outside of the auction process.

As a result of the failed auctions, the fair values of these securities are estimated utilizing a discounted cash flow analysis as of July 27, 2013. The analysis considers, among other items, the collateralization underlying the security investments, the creditworthiness of the counterparty, the timing of expected future cash flows, and the estimated date upon which the security is expected to have a successful auction.

Based on the Company’s ability to access its cash and cash equivalents, expected operating cash flows, and other sources of cash, the Company does not anticipate the current lack of liquidity of these investments will affect its ability to operate the business in the ordinary course. The Company believes the current lack of liquidity of these investments is temporary and expects that the securities will be redeemed or refinanced at some point in the future. The Company will continue to monitor the value of its auction rate securities at each reporting period for a possible impairment if a further decline in fair value occurs. The auction rate securities have been in an unrealized loss position for more than 12 months. The Company has the ability and the intent to hold these investments until a recovery of fair value, which may be at maturity and as of July 27, 2013, the Company did not consider these investments to be other-than-temporarily impaired.

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the available-for-sale investments as of July 27, 2013, were as follows (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Auction rate securities	$	6,575	$	—	$	(1,131	)	$	5,444
Total available-for-sale investments	$	6,575	$	—	$	(1,131	)	$	5,444

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the available-for-sale investments as of April 30, 2013, were as follows (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Auction rate securities	$	6,750	$	—	$	(1,063	)	$	5,687
Total available-for-sale investments	$	6,750	$	—	$	(1,063	)	$	5,687

The amortized cost and fair value of the auction rate securities by contractual maturity at July 27, 2013, were as follows (in thousands):

	Cost		Fair Value

Due after five through 10 years	$	1,350	$	1,242
Due after 10 years	5,225		4,202
Total	$	6,575	$	5,444

Convertible Bonds

As of July 27, 2013, the entire balance of available-for-sale convertible bonds consisted of two convertible bonds. The two convertible bonds were issued by CybAero AB (“CybAero”), a publicly traded company in Sweden that develops and manufactures unmanned aerial vehicles. Each bond is in the amount of 10 million Swedish Kronor (“SEK”) and is convertible into 1 million CybAero shares at the conversion price of 10 SEK per share. The maturity date of each of the bonds is November 30, 2017 and each bond bears an annual interest rate of 5%.

The Company can exercise its conversion right at any time through October 31, 2017. CybAero can prepay the bonds with three months’ notice to the Company and the Company may exercise its conversion rights during such three-month period. If certain conditions are satisfied after November 30, 2015, CybAero can require the Company to convert the two bonds in their entirety into CybAero shares.

The convertible bonds each contain an embedded conversion feature which is bifurcated from the bond. The changes in the fair value of the embedded conversion feature are recorded in other income (expense) in the statement of operations. Unrealized gains and losses associated with the bonds are excluded from earnings and reported as a separate component of stockholders’ equity, net of deferred income taxes.

On May 14, 2013, CybAero effected a reverse stock split whereby every ten shares of CybAero were converted into one share. All amounts discussed as of July 27, 2013 reflect this reverse stock split.

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the available-for-sale convertible bonds as of July 27, 2013, were as follows (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Convertible bonds	$	3,037	$	2,781	$	(151	)	$	5,667
Total available-for-sale investments	$	3,037	$	2,781	$	(151	)	$	5,667

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the available-for-sale convertible bonds as of April 30, 2013, were as follows (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Convertible bonds	$	3,037	$	6,173	$	(139	)	$	9,071
Total available-for-sale investments	$	3,037	$	6,173	$	(139	)	$	9,071

The amortized cost and fair value of the convertible bonds by contractual maturity at July 27, 2013, were as follows (in thousands):

	Cost		Fair Value

Due within five years	$	3,037	$	5,667
Total	$	3,037	$	5,667