Note 6 - Fair Value

12 Months Ended

Mar. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

NOTE 6.    FAIR VALUE

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 and Cadeka (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 30, 2014.

 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 30, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	4,636	$	—	$	—	$	4,636
U.S. government and agency securities		9,378		13,134		—		22,512
State and local government securities		—		2,772		—		2,772
Corporate bonds and securities		5		71,248		—		71,253
Asset-backed securities		—		27,635		—		27,635
Mortgage-backed securities		—		28,248		—		28,248
Total investment assets	$	14,019	$	143,037	$	—	$	157,056
Liabilities:
Acquisition-related contingent consideration – Altior	$	—	$	—	$	2,973	$	2,973
Acquisition-related contingent consideration – Cadeka	$	—	$	—	$	1,370	$	1,370
Total liabilities	$	—	$	—	$	4,343	$	4,343

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

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 March 30, 2014.

	Fair Value (in thousands)		Valuation Technique	Significant Unobservable Input	Range
As of March 30, 2014
Acquisition-related contingent consideration – Altior	$	2,973	Combination of income and market approach	Revenue (in “000’s)	$6,725	-	$20,175
				Probability of Achievement	1%	-	66%
Acquisition-related contingent consideration – Cadeka	$	1,370	Combination of income and market approach	Revenue (in “000’s)	$4,800	-	$18,000
				Probability of Achievement	2%	-	50%

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 (in thousands):

	Amount
As of original recognition in year ended and as of March 31, 2013	$	10,138
Less: Adjustment to purchase consideration		(7,165	)
As of March 30, 2014	$	2,973

The change in the fair value of our Cadeka purchase consideration liability is as follows (in thousands):

	Amount
As of March 31, 2013	$	—
Purchase contingent consideration		4,660
Less: Adjustment to purchase consideration		(3,290	)
As of March 30, 2014	$	1,370

In fiscal year 2014 the fair value of the contingent considerations for Altior and Cadeka acquisitions were decreased by $7.2 million and $3.3 million, respectively, due to changes in probability of achieving revenue targets and impact of change in present value of the amount payable due to passage of time.

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

	March 30, 2014		March 31, 2013
Cash and cash equivalents
Cash in financial institutions	$	9,978	$	9,676
Money market funds		4,636		5,042
Total cash and cash equivalents	$	14,614	$	14,718
Short-term marketable securities
U.S. government and agency securities	$	22,512	$	41,721
State and local government securities		2,772		2,935
Corporate bonds and securities		71,253		92,229
Asset-backed securities		27,635		30,966
Mortgage-backed securities		28,248		22,736
Total short-term marketable securities	$	152,420	$	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 consolidated statements of other comprehensive income except those unrealized losses that are deemed to be other than temporary which are reflected in the impairment of long term investment line item on the consolidated statements of operations.

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 30, 2014			March 31, 2013			April 1, 2012
Gross realized gains	$	748		$	871		$	799
Gross realized losses		(547	)		(953	)		(1,098	)
Net realized gains (losses)	$	201		$	(82	)	$	(299	)

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

	March 30, 2014
	Amortized Cost		Unrealized Gross Gains(1)		Unrealized Gross Losses(1)			Fair Value
Money market funds	$	4,636	$	—	$	—		$	4,636
U.S. government and agency securities		22,550		1		(39	)		22,512
State and local government securities		2,762		10		—			2,772
Corporate bonds and securities		71,309		32		(88	)		71,253
Asset-backed securities		27,661		22		(48	)		27,635
Mortgage-backed securities		28,362		24		(138	)		28,248
Total investments	$	157,280	$	89	$	(313	)	$	157,056

	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 of $828 for fiscal years 2014 and 2013

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 30, 2014, 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 30, 2014, there was approximately $1.1 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 2014, 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):

	March 30, 2014				March 31, 2013
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Less than 1 year	$	49,539	$	49,504	$	61,011	$	61,029
Due in 1 to 5 years		107,741		107,552		134,289		134,600
Total	$	157,280	$	157,056	$	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):

	March 30, 2014
	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	$	18,245	$	(39	)	$	—	$	—		$	18,245	$	(39	)
Corporate bonds and securities		48,379		(87	)		596		(1	)		48,975		(88	)
Asset-backed securities		7,118		(12	)		5,478		(36	)		12,596		(48	)
Mortgage-backed securities		19,682		(120	)		983		(18	)		20,665		(138	)
Total	$	93,424	$	(258	)	$	7,057	$	(55	)	$	100,481	$	(313	)

	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	)