Fair Value Measures

6 Months Ended

Dec. 01, 2012

Fair Value Measures [Abstract]

Fair Value Measures

8.   Fair Value Measures

The Company is required to categorize both financial and nonfinancial assets and liabilities based on the following fair value hierarchy.  The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable, and willing parties able to engage in the transaction. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor.

· Level 1 - Quoted prices in active markets for identical assets or liabilities

· Level 2 - Quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability

· Level 3 - Unobservable inputs for the asset or liability that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

The disclosure of fair value of certain financial assets and liabilities that are recorded at cost are as follows:

Cash and cash equivalents: The carrying amount approximates fair value due to the short maturity of these instruments.

Long-term debt: The carrying value of the Company’s long-term debt is at its stated value.  We have not elected to carry our long-term debt at fair value.  Except for the “Notes payable-Texas Egg Products, LLC,” fair values for debt are based on quoted market prices or published forward interest rate curves.   We believe that cost approximates fair value for the “Notes payable-Texas Egg Products, LLC.”  The fair value and carrying value of the Company’s borrowings under its credit facilities and long-term debt were as follows:

	December 1, 2012				June 2, 2012
	Carrying Value		Fair Value		Carrying Value		Fair Value
5.8 – 6.8% Notes payable	$	58,639	$	61,688	$	63,039	$	66,388
Series A Senior Secured Notes at 5.45%		11,576		11,825		12,629		12,905
Notes payable-Texas Egg Products, LLC *		257		257		552		552
	$	70,472	$	73,770	$	76,220	$	79,845

*  Cost approximates fair value of Texas Egg Products, LLC notes payable to non-affiliate equity members

Assets Measured at Fair Value on a Recurring Basis

Assets measured at fair value on a recurring basis consisted of the following types of instruments as of December 1, 2012:

	Fair Value Measurements at Reporting Date Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Instruments		Inputs		Inputs		Total
	(Level 1)		(Level 2)		(Level 3)		Balance
Investment securities available-for-sale
State municipal bonds	$	-	$	55,760	$	-	$	55,760
US government obligations		-		15,347		-		15,347
Corporate bonds		-		19,420		-		19,420
Certificates of deposit		-		8,730		-		8,730
Government agency bonds		-		7,764		-		7,764
Total assets measured at fair value	$	-	$	107,021	$	-	$	107,021

Assets measured at fair value on a recurring basis consisted of the following types of instruments as of June 2, 2012:

	Fair Value Measurements at Reporting Date Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Instruments		Inputs		Inputs		Total
	(Level 1)		(Level 2)		(Level 3)		Balance
Investment securities available-for-sale
State municipal bonds	$	-	$	104,866	$	-	$	104,866
US government obligations		-		20,783		-		20,783
Corporate bonds		-		16,244		-		16,244
Certificates of deposit		-		11,514		-		11,514
Government agency bonds		-		10,216		-		10,216
Total assets measured at fair value	$	-	$	163,623	$	-	$	163,623

Level 2: We classified our current investment securities – available-for-sale as level 2.   These securities consist of municipal bonds, US government obligations, corporate bonds, certificates of deposit, and government agency bonds which contain the aforementioned securities with maturities of three months or longer when purchased. We classified these securities as current because amounts invested are available for current operations. Observable inputs for these securities are yields, credit risks, default rates, and volatility.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis.

The Company also applies fair value accounting guidance to measure non-financial assets and liabilities associated with business acquisitions. These assets and liabilities are measured at fair value for the initial purchase price allocation and are not subject to recurring revaluations. The fair value of non-financial assets acquired is determined internally.  Our internal valuation methodology for non-financial assets takes into account the remaining estimated life of the assets acquired and what management believes is the market value for those assets. The fair value of our earn-out contingency takes into account commodity prices based on published forward commodity price curves and projected future egg prices as of the date of the estimate. These fair value measurementsare based on Level 3 inputs. Given the unobservable nature of these inputs, they are deemed to be Level 3.