Fair Value of Financial Instruments

3 Months Ended

Jul. 03, 2016

Note 3.Fair Value of Financial Instruments

The Company’s financial instruments consist principally of cash and cash equivalents, marketable securities, accounts receivable and accounts payable. The carrying value of cash equivalents, accounts receivable and accounts payable approximates fair value because of the nature and short-term maturity of these financial instruments.

A summary of the assets measured at fair value on a recurring basis as of July 3, 2016 and April 3, 2016 are as follows:

	Fair Value Measurements Using
	Level 1		Level 2		Total
	(In thousands)
July 3, 2016
Cash and cash equivalents	$	119,618	$	—	$	119,618
Marketable securities:
U.S. government and agency securities		97,816		—		97,816
Corporate debt obligations		—		112,262		112,262
Mortgage-backed securities		—		16,462		16,462
Municipal bonds		—		10,691		10,691
Other debt securities		—		8,426		8,426
		97,816		147,841		245,657
	$	217,434	$	147,841	$	365,275

April 3, 2016
Cash and cash equivalents	$	125,408	$	—	$	125,408
Marketable securities:
U.S. government and agency securities		98,313		—		98,313
Corporate debt obligations		—		98,311		98,311
Mortgage-backed securities		—		17,977		17,977
Municipal bonds		—		10,419		10,419
Other debt securities		—		4,419		4,419
		98,313		131,126		229,439
	$	223,721	$	131,126	$	354,847

The Company’s investments classified within Level 2 were primarily valued based on valuations obtained from a third-party pricing service. To estimate fair value, the pricing service utilizes industry-standard valuation models, including both income and market-based approaches for which all significant inputs are observable either directly or indirectly. The Company obtained documentation from the pricing service as to the methodology and summary of inputs used for the various types of securities. The pricing service maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. These observable inputs include reported trades and broker/dealer quotes of the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs. The Company compares valuation information from the pricing service with other pricing sources to validate the reasonableness of the valuations.

- Definition

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