Fair Value

9 Months Ended

Dec. 29, 2012

Fair Value [Abstract]

Fair Value

Note 2 – Fair Value

The Company measures its cash equivalents, short-term investments and long-term investments at fair value.  Fair value is defined as the price that would be received from selling an asset and paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

A three-tiered fair value hierarchy has been established as the basis for considering the above assumptions and determining the inputs used in the valuation methodologies in measuring fair values.  The three levels of inputs are defined as follows:

Level 1 – Unadjusted quoted market prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2 – Observable inputs such as quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in inactive markets.

Level 3 – Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the factors that market participants would use.

The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. If a financial instrument uses an input that is significant to the fair value calculation, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation.  The Company’s financial assets and liabilities measured at fair value on a recurring basis include cash equivalents and investment securities,both short-term and long-term.

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short maturities.

The Company’s money market investments, certificates of deposit purchased directly from the bank, and Non-Qualified Deferred Compensation (NQDCP) assets and liabilities are valued using Level 1 inputs. Fixed income available-for-sale portfolio, mainly consisting of municipal bonds, US government agency bonds, corporate bonds, commercial paper and certificates of deposits bought in the secondary market, are valued using Level 2 inputs.

The Company’s long-term investments consist entirely of auction rate securities (“ARS”) which are collateralized bystudent loans.Of its two ARS holdings, the credit rating of one with a par value of$12,800,000 was reduced to AA+ by S&P in February 2012 and to A with a negative outlook by Fitch in June 2012,  however, it is still investment grade.  Therefore, the Company has concluded that the decline in fair value of this ARS investment as of December 29, 2012 is temporary. The other ARS investment with a par value of $2,250,000 still holds an AAA and Aaa credit rating.The credit ratings of neither ARS holding have been otherwisedowngraded as of or subsequent to December 29, 2012.  Due to the lack of availability of observable market quotes for the Company’s investment portfolio of these ARS, the fair value was estimated based on a discounted cash flow model using Level 3 inputs. The assumptions used in the discounted cash flow model include estimates for interest rates, timing and amounts of cash flows, liquidity of the underlying security, expected holding periods, and contractual terms of the security. In light of the current market condition for ARS, the Company developed different scenarios for the significant inputs used in the discounted cash flow model, including but not limited to a liquidity discount of  125 and 150 basis points per year for the current ARS market, and the timing of recovery of the ARS market from three to five years.  The Company concluded that the fair value of those of its ARS which were classified as level 3 assets was $13,500,000 as of December 29, 2012 net of a temporary impairment of $1,550,000 to par value.

The Company also considered the quality, amount of collateral, and US government guarantee for the ARS and looked to other marketplace transactions and information received from third party brokers in order to assess whether the fair value based on the discounted cash flow model is reasonable. The valuation of the Company’s investment portfolio is subject to uncertainties that are difficult to predict. Factors that may affect the Company’s valuation include changes to credit ratings of the securities as well as the underlying assets supporting those securities, rates of default of the underlying assets, underlying collateral values, discount rates, counterparty risk and ongoing strength, and quality of market credit and liquidity. Significant inputs to the investment valuations are unobservable in the active markets and therefore the Company’s ARS are classified as Level 3 in the hierarchy.

The following tables summarize assets and liabilities measured at fair value on a recurring basis as ofDecember 29, 2012 and March 31, 2012,  excluding accrued interest (in thousands):

	December 29, 2012
	Fair value measurements
Assets	Level 1			Level 2			Level 3		Total
Money market funds	$	8,722	(1)	$	-		$	-	$	8,722
Municipal bonds		-			57,173			-		57,173
Corporate bonds		-			26,469			-		26,469
Government agency bonds		-			19,705			-		19,705
Certificates of deposits		3,000			4,609			-		7,609
Commercial paper		-			600	(2)		-		600
Equity mutual funds related to NQDCP		9,078			-			-		9,078
Long-term investments in ARS		-			-			13,500		13,500
Total assets at fair value	$	20,800		$	108,556		$	13,500	$	142,856
Liabilities
Obligation related to NQDCP	$	9,078		$	-		$	-	$	9,078
	March 31, 2012
	Fair value measurements
Assets	Level 1			Level 2			Level 3		Total
Money market funds	$	16,453	(1)	$	-		$	-	$	16,453
Municipal bonds		-			32,268			-		32,268
Corporate bonds		-			36,947			-		36,947
Government agency bonds		-			26,010			-		26,010
Certificates of deposits		3,000			4,262			-		7,262
Equity mutual funds related to NQDCP		8,650			-			-		8,650
Long-term investments in ARS		-			-			25,900		25,900
Total assets at fair value	$	28,103		$	99,487		$	25,900	$	153,490
Liabilities
Obligation related to NQDCP	$	8,650		$	-		$	-	$	8,650

^{_________________________}

(1) Money market funds of $8,722,000 and $16,453,000 were classified as cash equivalents as of December 29, 2012 and March 31, 2012, respectively.

(2) Commercial paper of $600,000 was classified as cash equivalents as of December 29, 2012.

There were no significant transfers between Level 1, Level 2 and Level 3 during the three and nine months ended December 29, 2012 or December 31, 2011. The following table includes the activity for Auction Rate Securities that are classified as Level 3 of the valuation hierarchy (in thousands):

	Three Months Ended				Nine Months Ended
	December 29,		December 31,		December 29,		December 31,
	2012		2011		2012		2011
Beginning balance of ARS classified as Level 3	$	13,700	$	28,200	$	25,900	$	30,200
Total unrealized gains included in other comprehensive income		50		100		600		500
Redemptions of investments in ARS		(250)		(2,300)		(13,000)		(4,700)
Ending balance of ARS classified as Level 3	$	13,500	$	26,000	$	13,500	$	26,000

The Company transfers investments into and out of levels within the fair value hierarchy based on the change in circumstances at the end of the fiscal month.

During the nine months ended December 29, 2012, the Company received $13,000,000relating to ARS with a carrying value at the time of $11,984,000, redeemed at par value. See Note 3 for further discussion of the Company’s ARS.