Fair Value Measurements

12 Months Ended

Apr. 26, 2013

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 18.  Fair Value Measurements

Fair value is defined as the exit price or the amount that we would receive upon selling our assets in an orderly transaction to a  market participant as of the period ending on the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value. The hierarchy is broken down into three levels defined as follows:

—	Level 1	– Inputs are quoted prices in active markets for identical assets.
—	Level 2	– Inputs include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active and inputs that are observable for the asset, either directly or indirectly.
—	Level 3	– Inputs are unobservable inputs for the asset.

Observable inputs are inputs market participants would use in valuing the asset based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing our asset and are developed based upon the best information available in the circumstances. The categorization of assets within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 3 financial assets include investment securities for which there is limited market activity such that the determination of fair value requires significant judgment or estimation.

We have had no assets and liabilities measured at fair value on a recurring basis at April 26, 2013 and we had no transfers of our investments between levels during the fiscal year ended April 26, 2013.

Investment in Convertible Debt Security.

We invested in a convertible debt security issued by NeuroVista Corporation (“NeuroVista”) on August 20, 2010. NeuroVista is a privately-held company that was focused on the development of an implantable device intended to inform patients when seizures are likely to occur, as well as to alert caregivers when seizures do occur. We considered this security an ‘available-for-sale’ debt security measured at fair value on a recurring basis using Level 3 inputs as this investment was in a privately-held entity without quoted market prices. During the quarter ended July 27, 2012, we determined that we were unlikely to receive the return of our principal and accrued interest and performed a fair value analysis of the assets we expected to receive in foreclosure. We estimated the fair value of the debt instrument at $1,450,000, with the resulting impairment loss reported as other-than-temporary and separately stated in the consolidated statement of income. During the quarter ended October 26, 2012, NeuroVista advised us that an event of default had occurred under the terms of the convertible debt security, and we negotiated an agreement with NeuroVista pursuant to which NeuroVista granted us a security interest in all of its assets and we agreed to forbear in exercising our rights and remedies under the terms of the security agreement until December 17, 2012. In February 2013, we conducted a foreclosure sale of the assets subject to our security interest and took possession of the company’s tangible and intangible assets. We reassessed the fair value of the assets received in the forclosure sale using both market and cost techniques and estimated the fair value at $1,450,000, which resulted in no gain or loss on the settlement of the debt security. Inputs used in the market approach included pricing indications from transactions involving similar intangible and tangible assets. Inputs used in the replacement cost approach included estimates of labor cost needed to replicate the software and clinical trial data obtained in the foreclosure. See “Note 6.Investments” for further information regarding this convertible debt security.

The following table provides a reconciliation of the beginning and ending balance of the NeuroVista debt instrument measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	52 Weeks Ended		52 Weeks Ended		52 Weeks Ended
	April 26,		April 27,		April 29,
	2013		2012		2011
Beginning Balance	$	5,508,768	$	5,209,590	$	0
Net purchases / (settlements)		(1,450,000)		0		5,000,000
Interest accrual		0		299,178		209,590
Transfers in/(out) of Level 3		0		0		0
Other-than-temporary impairment included in net income		(4,058,768)		0		0
Total unrealized gains/(losses) included in other comprehensive income		0		0		0
Ending Balance	$	0	$	5,508,768	$	5,209,590

Investment in Equity Security. Our investment in equity consists of an investment in the convertible preferred stock of ImThera Medical, Inc., which we carry at cost, see “Note 6. Investments” for more details.  We do not mark-to-market this investment. Each reporting period we review all information available to us related to this investee to identify any significant adverse effect on the fair value of our investment. If we identify events or changes in circumstances that indicates a decrease in value of this investment that is other than temporary, we would recognize the loss. The inputs to our fair value measurements are considered Level 3 in the fair value hierarchy.

Convertible Notes. The Senior Subordinated Convertible Notes we issued in September 2005 were carried at historical cost and were fully retired in September 2012, see “Note 8. Convertible Notes.”