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Fair Value of Financial Instruments
 6 Months Ended
Oct. 30, 2011
Fair Value of Financial Instruments
9. Fair Value of Financial Instruments

ASC Topic 820 establishes a fair value hierarchy that distinguishes between assumptions based on market data (observable inputs) and the company’s assumptions (unobservable inputs). Determining where an asset or liability falls within that hierarchy depends on the lowest level input that is significant to the fair value measurement as a whole. An adjustment to the pricing method used within either level 1 or level 2 inputs could generate a fair value measurement that effectively falls in a lower level in the hierarchy. The hierarchy consists of three broad levels as follows:

Level 1 – Quoted market prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than level 1 inputs that are either directly or indirectly observable, and

Level 3 – Unobservable inputs developed using the company’s estimates and assumptions, which reflect those that market participants would use.
 
The following table presents information about assets and liabilities measured at fair value on a recurring basis:

Fair value measurements at October 30, 2011 using:
       
   
Quoted prices in
 active markets
 for identical
 assets
    
Significant other
 observable inputs
    
Significant
 unobservable
 inputs
        
                         
(amounts in thousands) 
  
Level 1
    
Level 2
    
Level 3
    
Total
  
                         
Assets:
                        
Low Duration Bond Fund
   $ 2,007       N/A       N/A     $ 2,007  
Limited Term Bond Fund
     2,024       N/A       N/A       2,024  
Intermediate Term Bond Fund
     1,022       N/A       N/A       1,022  

Fair value measurements at May 1, 2011 using:
 
   
Quoted prices in
 active markets
 for identical
 assets
    
Significant other
 observable inputs
    
Significant
 unobservable
 inputs
        
                         
(amounts in thousands) 
  
Level 1
    
Level 2
    
Level 3
     Total  
                         
Assets:
                        
Low Duration Bond Fund
   $ 1,003       N/A       N/A     $ 1,003  

The determination of where an asset or liability falls in the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter based on various factors and it is possible that an asset or liability may be classified differently from quarter to quarter. However, we expect that changes in classifications between different levels will be rare.

Short-term investments include short-term bond funds and deposit accounts that have maturities of less than one year. Our short-term bond funds are classified as available-for-sale and their unrealized gains or losses are included in other comprehensive income. Our short-term bond funds were recorded at their fair value of $5.0 million and $1.0 million at October 30, 2011 and May 1, 2011, respectively. At October 30, 2011 and May 1, 2011, the fair value of our short-term bond funds approximates its cost basis.
 
The carrying amount of cash and cash equivalents, short-term investments that pertain to interest bearing deposit accounts, accounts receivable, other current assets, accounts payable and accrued expenses approximates fair value because of the short maturity of these financial instruments.