Note 6. Cash, Cash Equivalents and Short Term Marketable Securities

12 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Text Block]

NOTE 6.    CASH, CASH EQUIVALENTS AND SHORT-TERM MARKETABLE SECURITIES

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. GAAP describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our cash and investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

The fair value of contingent consideration arising from the acquisition of Altior (See “Note 4—Business Combinations”) is classified within Level 3 of the fair value hierarchy since it is based on a probability-based approach that includes significant unobservable inputs.

There were no transfers between Level 1, Level 2, and Level 3 during the year ended March 31, 2013.

Our investment assets, measured at fair value on a recurring basis, as of the dates indicated below were as follows (in thousands, except for percentages):

	March 31, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	5,042	$	—	$	—	$	5,042	3	%
U.S. government and agency securities		22,460		19,261		—		41,721	21	%
State and local government securities		—		2,935		—		2,935	1	%
Corporate bonds and securities		274		91,955		—		92,229	47	%
Asset-backed securities		—		30,966		—		30,966	16	%
Mortgage-backed securities		—		22,736		—		22,736	12	%
Total investment assets	$	27,776	$	167,853	$	—	$	195,629	100	%
Liabilities:
Acquisition-related contingent consideration	$	—	$	—	$	10,138	$	10,138	100	%

	April 1, 2012
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	3,088	$	—	$	—	$	3,088	2	%
U.S. government and agency securities		16,282		27,954		—		44,236	23	%
State and local government securities		—		590		—		590	—
Corporate bonds and securities		—		69,234		—		69,234	36	%
Asset-backed securities		—		26,364		—		26,364	14	%
Mortgage-backed securities		—		47,244		—		47,244	25	%
Total investment assets	$	19,370	$	171,386	$	—	$	190,756	100	%

Our cash, cash equivalents and short-term marketable securities as of the dates indicated below were as follows (in thousands):

	March 31, 2013		April 1, 2012
Cash and cash equivalents
Cash in financial institutions	$	9,676	$	5,626
Cash equivalents
Money market funds		5,042		3,088
Total cash and cash equivalents	$	14,718	$	8,714
Short-term marketable securities
U.S. government and agency securities	$	41,721	$	44,236
State and local government securities		2,935		590
Corporate bonds and securities		92,229		69,234
Asset-backed securities		30,966		26,364
Mortgage-backed securities		22,736		47,244
Total short-term marketable securities	$	190,587	$	187,668

 Our marketable securities include U.S. government and agency securities, state and local government securities, corporate bonds and securities, and asset-backed and mortgage-backed securities. We classify investments as available-for-sale at the time of purchase and re-evaluate such designation as of each balance sheet date. We amortize premiums and accrete discounts to interest income over the life of the investment. Our available-for-sale securities, which we intend to sell as necessary to meet our liquidity requirements, are classified as cash equivalents if the maturity date is 90 days or less from the date of purchase and as short-term marketable securities if the maturity date is greater than 90 days from the date of purchase.

All marketable securities are reported at fair value based on the estimated or quoted market prices as of each balance sheet date, with unrealized gains or losses, net of tax effect, recorded in the consolidated statements of other comprehensive income except those unrealized losses that are deemed to be other than temporary which are reflected in the impairment charges on investments line item on the consolidated statements of operations.

The fair value of contingent consideration was determined based on a probability-based approach which includes projected revenues, percentage probability of occurrence and discount rate to present value the payments. A significant increase (decrease) in the projected revenue, discount rate or probability of occurrence in isolation could result in a significantly higher (lower) fair value measurement.

The following table presents quantitative information about the inputs and valuation methodologies used for our fair value measurements classified in Level 3 of the fair value hierarchy as of March 31, 2013.

	Fair Value (in thousands)		Valuation Technique	Significant Unobservable Input	Range (in thousands)
As of March 31, 2013
Acquisition-related contingent consideration	$	10,138	Combination of income and marketable approach	Revenue (in “000’s)	$18,817	-	$37,633
				Discount rate (in %)		5%
				Probability of occurrence (in %)	40%	-	65%

Realized gains (losses) on the sale of marketable securities are determined by the specific identification method and are reflected in the interest income and other, net line item on the consolidated statements of operations.

Our net realized gains (losses) on marketable securities for the periods indicated below were as follows (in thousands):

	Fiscal Years Ended
	March 31, 2013			April 1, 2012			March 27, 2011
Gross realized gains	$	871		$	799		$	1,271
Gross realized losses		(953	)		(1,098	)		(1,173	)
Net realized gains (losses)	$	(82	)	$	(299	)	$	98

The following table summarizes our investments in marketable securities as of the dates indicated below (in thousands):

	March 31, 2013
	Amortized Cost		Unrealized Gross Gains(1)		Unrealized Gross Losses(1)			Fair Value
Money market funds	$	5,042	$	—	$	—		$	5,042
U.S. government and agency securities		41,694		27		—			41,721
State and local government securities		2,927		10		(2	)		2,935
Corporate bonds and securities		92,059		215		(45	)		92,229
Asset-backed securities		30,932		61		(27	)		30,966
Mortgage-backed securities		22,646		194		(104	)		22,736
Total investments	$	195,300	$	507	$	(178	)	$	195,629

	April 1, 2012
	Amortized Cost		Unrealized Gross Gains(1)		Unrealized Gross Losses(1)			Fair Value
Money market funds	$	3,088	$	—	$	—		$	3,088
U.S. government and agency securities		44,077		189		(30	)		44,236
State and local government securities		610		—		(20	)		590
Corporate bonds and securities		68,857		410		(33	)		69,234
Asset-backed securities		26,353		55		(44	)		26,364
Mortgage-backed securities		47,117		286		(159	)		47,244
Total investments	$	190,102	$	940	$	(286	)	$	190,756

(1) Gross of tax impact

Our asset-backed securities are comprised primarily of premium tranches of vehicle loans and credit card receivables, while our mortgage-backed securities are primarily from Federal agencies. We do not own auction rate securities nor do we own securities that are classified as subprime. As of March 31, 2013, we have sufficient liquidity and do not intend to sell these securities to fund normal operations or realize any significant losses in the short term; however, these securities are available for use, if needed, for current operations.

Management determines the appropriate classification of cash equivalents or short-term marketable securities at the time of purchase and reevaluates such classification as of each balance sheet date. The investments are adjusted for amortization of premiums and accretion of discounts to maturity and such accretion/amortization, which is immaterial for all periods presented, is included in the interest income and other, net line in the consolidated statements of operations. Cash equivalents and short-term marketable securities are reported at fair value with the related unrealized gains and losses included in the accumulated other comprehensive losses line in the consolidated balance sheets. As of March 31, 2013, there was approximately $0.5 million of unrealized losses, net of tax from our Level 1 and Level 2 investments.

We periodically review our investments in unrealized loss positions for other-than-temporary impairments. This evaluation includes, but is not limited to, significant quantitative and qualitative assessments and estimates regarding credit ratings, collateralized support, the length of time and significance of a security’s loss position, our intent not to sell the security, and whether it is more likely than not that we will not have to sell the security before recovery of its cost basis. For fiscal year 2013, there were no investments identified with other-than-temporary declines in value.

In fiscal year 2010, an investment in GSAA Home Equity with a cost of $425,000 was downgraded from an AAA rating to a CCC rating. As a result of the reduction in the rating, quantitative analysis showing an increase in the default rate and decrease in prepayment rate of the investment, we recorded an other-than-temporary impairment charge of $91,000 during the second quarter of fiscal year 2010. In the second quarter of fiscal year 2011, due to further decline in the investment, we recorded an additional other-than-temporary impairment charge of $62,000. In the third quarter of fiscal year 2011, we sold this investment resulting in an immaterial loss from its adjusted basis.

The amortized cost and estimated fair value of cash equivalents and marketable securities classified as available-for-sale by expected maturity as of the dates indicated below were as follows (in thousands):

	March 31, 2013				April 1, 2012
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Less than 1 year	$	61,011	$	61,029	$	48,978	$	49,011
Due in 1 to 5 years		134,289		134,600		141,124		141,745
Total	$	195,300	$	195,629	$	190,102	$	190,756

The following table summarizes the gross unrealized losses and fair values of our investments in an unrealized loss position as of the dates indicated below, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	March 31, 2013
	Less than 12 months					12 months or greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
State and local government securities		—		—			404		(2	)		404		(2	)
Corporate bonds and securities		29,609		(42	)		497		(3	)		30,106		(45	)
Asset-backed securities		10,008		(17	)		1,241		(10	)		11,249		(27	)
Mortgage-backed securities		2,911		(39	)		3,263		(65	)		6,174		(104	)
Total	$	42,528	$	(98	)	$	5,405	$	(80	)	$	47,933	$	(178	)

	April 1, 2012
	Less than 12 months					12 months or greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government and agency securities	$	15,585	$	(30	)	$	—	$	—		$	15,585	$	(30	)
State and local government securities		590		(20	)		—		—			590		(20	)
Corporate bonds and securities		11,685		(33	)		—		—			11,685		(33	)
Asset-backed securities		3,516		(5	)		3,786		(39	)		7,302		(44	)
Mortgage-backed securities		16,435		(108	)		2,417		(51	)		18,852		(159	)
Total	$	47,811	$	(196	)	$	6,203	$	(90	)	$	54,014	$	(286	)