Note 5 - Fair Value

9 Months Ended

Jan. 01, 2017

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE 5. 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.

There were no transfers between Level

1

and Level

2

during the

nine

months ended

January

1,

2017.

Exar had no assets or liabilities utilizing Level

3

inputs as of

January

1,

2017

or

March

27,

2016.

Our investment assets, measured at fair value on a recurring basis, consisted of the following as of the dates indicated below (in thousands):

	January 1, 2017
	Level 1		Level 2		Total
Assets:
Money market funds	$	65,114	$	-	$	65,114
U.S. government and agency securities		11,041		10,120		21,161
Corporate bonds and securities		-		96,993		96,993
State and local government securities		-		4,195		4,195
Certificates of deposit		-		3,272		3,272
Total investment assets	$	76,155	$	114,580	$	190,735

	March 27, 2016
	Level 1		Level 2		Total
Assets:
Money market funds	$	4	$	-	$	4
Common shares of CounterPath		-		43		43
Total investment assets	$	4	$	43	$	47

In

June

2016,

we donated the

93,000

common shares of CounterPath Corporation (“CounterPath”) received in the

first

quarter of fiscal year

2015

resulting from the dissolution of Skypoint Telecom Fund II (US), LP, in which we were a limited partner, and wrote off the related

$50,000

carrying value.

Our cash and cash equivalents as of the dates indicated below were as follows (in thousands):

	January 1,		March 27,
	2017		2016
Cash and cash equivalents
Cash in financial institutions	$	36,909	$	55,066
Money market funds		65,114		4
Total cash and cash equivalents	$	102,023	$	55,070

Our marketable securities include U.S. government and agency securities, state and local government securities, corporate bonds and securities, and certificates of deposit. 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.

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

three

months and

nine

months ended

January

1,

2017

and

December

27,

2015,

there were no net realized gains (losses) on the sale of marketable securities.

The following table summarizes our investments in marketable securities as of

January

1,

2017

(in thousands):

	January 1, 2017
	Amortized		Unrealized Gross		Unrealized Gross
	Cost		Gains		Losses			Fair Value
Money market funds	$	65,114	$	-	$	-		$	65,114
U.S. government and agency securities		21,161		13		(13	)		21,161
Corporate bonds and securities		97,133		19		(159	)		96,993
State and local government securities		4,196		1		(2	)		4,195
Certificates of deposit		3,272		-		-			3,272
Total investments	$	190,876	$	33	$	(174	)	$	190,735

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

months and

nine

months ended

January

1,

2017,

no investments were 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

January

1,

2017

(in thousands):

	January 1, 2017
	Amortized Cost		Fair Value
Less than 1 year	$	93,565	$	93,519
Due in 1 to 5 years		97,311		97,216
Total	$	190,876	$	190,735

The following table summarizes the gross unrealized losses and fair values of our investments in an unrealized loss position as of

January

1,

2017,

aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	January 1, 2017
	Less than 12 months					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Corporate bonds and securities	$	77,362	$	(159	)	$	77,362	$	(159	)
U.S. government and agency securities		15,379		(13	)		15,379		(13	)
State and local government securities		1,471		(2	)		1,471		(2	)
Total	$	94,212	$	(174	)	$	94,212	$	(174	)