XML 45 R10.htm IDEA: XBRL DOCUMENT

Note 4 - Fair Value

6 Months Ended

Sep. 29, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 4.

FAIR VALUE

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 acquisitions of Altior and Cadeka 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 fiscal quarter ended September 29, 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):

		September 29, 2013
		Level 1				Level 2				Level 3				Total
Assets:
Money market funds		$	2,428			$	—			$	—			$	2,428				1	%
U.S. government and agency securities			19,333				28,067				—				47,400				27	%
State and local government securities			—				2,832				—				2,832				2	%
Corporate bonds and securities			3				85,387				—				85,390				48	%
Asset-backed securities			—				28,490				—				28,490				16	%
Mortgage-backed securities			—				10,750				—				10,750				6	%
Total investment assets		$	21,764			$	155,526			$	—			$	177,290				100	%

Liabilities:
Acquisition-related contingent consideration – Altior		$	—			$	—			$	7,643			$	7,643				62	%
Acquisition-related contingent consideration – Cadeka		$	—			$	—			$	4,660			$	4,660				38	%
Total liabilities		$	—			$	—			$	12,303			$	12,303				100	%

		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 – Altior		$	—			$	—			$	10,138			$	10,138				100	%

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

		September 29, 2013				March 31, 2013
Cash and cash equivalents
Cash at financial institutions		$	7,623			$	9,676

Cash equivalents
Money market funds			2,428				5,042
Total cash and cash equivalents		$	10,051			$	14,718

Available-for-sale securities
U.S. government and agency securities		$	47,400			$	41,721
State and local government securities			2,832				2,935
Corporate bonds and securities			85,390				92,229
Asset-backed securities			28,490				30,966
Mortgage-backed securities			10,750				22,736
Total short-term marketable securities		$	174,862			$	190,587

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 condensed 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 condensed 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 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 September 29, 2013.

		Fair Value (in thousands)			Valuation Technique		Significant Unobservable Input
As of September 29, 2013

Acquisition-related contingent consideration – Altior		$	7,643		Combination of income and marketable approach		Revenue and Probability of Achievement

Acquisition-related contingent consideration – Cadeka		$	4,660		Combination of income and marketable approach		Revenue and Probability of Achievement

We calculate the fair value of the contingent consideration on a quarterly basis based on additional information as it becomes available. Any change in the fair value adjustment is recorded in the earnings of that period.

The change in the fair value of our Altior purchase consideration liability is as follows:

		September 29, 2013
As of March 31, 2013		$	10,138
Less: Adjustment to purchase consideration			(2,495	)
As of September 29, 2013		$	7,643

We have focused our resources on developing and marketing our coprocessor products with the Altior software technology incorporated. These products, when compared to the Altior legacy FPGA-based products, will earn credit under the asset purchase agreement at a lower rate, resulting in a lower probability of meeting certain near-term earn-out targets. As a result, the fair value of the contingent consideration for Altior acquisition was reduced by $2.5 million and credited to operating expense for the three months ended September 29, 2013.

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 condensed consolidated statements of operations.

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

		Three Months Ended								Six Months Ended
		September 29, 2013				September 30, 2012				September 29, 2013				September 30, 2012
Gross realized gains		$	164			$	144			$	382			$	384
Gross realized losses			(131	)			(259	)			(408	)			(537	)
Net realized income (losses)		$	33			$	(115	)		$	(26	)		$	(153	)

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

		September 29, 2013
		Amortized Cost				Unrealized Gross Gains ⁽¹⁾				Unrealized Gross Losses ⁽¹⁾				Fair Value
Money market funds		$	2,428			$	—			$	—			$	2,428
U.S. government and agency securities			47,402				15				(17	)			47,400
State and local government securities			2,837				1				(6	)			2,832
Corporate bonds and securities			85,413				58				(81	)			85,390
Asset-backed securities			28,528				14				(52	)			28,490
Mortgage-backed securities			10,797				21				(68	)			10,750
Total investments		$	177,405			$	109			$	(224	)		$	177,290

		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

(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 September 29, 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 condensed 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 condensed consolidated balance sheets. As of September 29, 2013, there was approximately $0.9 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 the three and six months ended September 29, 2013 and September 30, 2012, respectively, there were no investments identified with other than temporary declines in value.

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):

		September 29, 2013								March 31, 2013
		Amortized Cost				Fair Value				Amortized Cost				Fair Value
Less than 1 year		$	57,231			$	57,215			$	61,011			$	61,029
Due in 1 to 5 years			120,174				120,075				134,289				134,600
Total		$	177,405			$	177,290			$	195,300			$	195,629

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):

		September 29, 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
U.S. government and agency securities		$	21,759			$	(17	)		$	—			$	—			$	21,759			$	(17	)
State and local government securities			1,515				(5	)			315				(1	)			1,830				(6	)
Corporate bonds and securities			48,977				(80	)			758				(1	)			49,735				(81	)
Asset-backed securities			15,817				(44	)			2,143				(8	)			17,960				(52	)
Mortgage-backed securities			249				(2	)			7,161				(66	)			7,410				(68	)
Total		$	88,317			$	(148	)		$	10,377			$	(76	)		$	98,694			$	(224	)

		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	)

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References+ Details