Fair Value of Financial Instruments

9 Months Ended

Jan. 27, 2013

Fair Value of Financial Instruments

9.  Fair Value of Financial Instruments

ASC Topic 820 establishes a fair value hierarchy that distinguishes between assumptions based on market data (observable inputs) and the company’s assumptions (unobservable inputs). Determining where an asset or liability falls within that hierarchy depends on the lowest level input that is significant to the fair value measurement as a whole. An adjustment to the pricing method used within either level 1 or level 2 inputs could generate a fair value measurement that effectively falls in a lower level in the hierarchy. The hierarchy consists of three broad levels as follows:

Level 1 – Quoted market prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than level 1 inputs that are either directly or indirectly observable, and

Level 3 – Unobservable inputs developed using the company’s estimates and assumptions, which reflect those that market participants would use.

The following table presents information about assets and liabilities measured at fair value on a recurring basis:

	Fair value measurements at January 27, 2013 using:
	Quoted prices in  active markets  for identical  assets		Significant other  observable inputs		Significant  unobservable  inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Low Duration Bond Fund	$	2,066		N/A		N/A	$	2,066
Limited Term Bond Fund		2,070		N/A		N/A		2,070
Intermediate Term Bond Fund		1,101		N/A		N/A		1,101

	Fair value measurements at April 29, 2012 using:
	Quoted prices in  active markets  for identical  assets		Significant other  observable inputs		Significant  unobservable  inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Low Duration Bond Fund	$	2,049		N/A		N/A	$	2,049
Limited Term Bond Fund		2,037		N/A		N/A		2,037
Intermediate Term Bond Fund		1,058		N/A		N/A		1,058

The determination of where an asset or liability falls in the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter based on various factors and it is possible that an asset or liability may be classified differently from quarter to quarter. However, we expect that changes in classifications between different levels will be rare.

Short-term investments include short-term bond funds and deposit accounts that have maturities of less than one year. Our short-term bond funds are classified as available-for-sale and their unrealized gains or losses are included in other comprehensive income. Our short-term bond funds were recorded at their fair value of $5.2 million and $5.1 million at January 27, 2013 and April 29, 2012, respectively. Our short-term bond funds had accumulated unrealized gains totaling $26,000 and $16,000 at January 27, 2013 and April 29, 2012. At January 27, 2013 and April 29, 2012, the fair value of our short-term bond funds approximated its cost basis.

The carrying amount of cash and cash equivalents, short-term investments that pertain to interest bearing deposit accounts, accounts receivable, other current assets, accounts payable and accrued expenses approximates fair value because of the short maturity of these financial instruments.