XML 59 R17.htm IDEA: XBRL DOCUMENT v2.4.0.8
Fair Value of Financial Instruments
 3 Months Ended
Aug. 03, 2014
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments
10. 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.

Recurring Basis

The following table presents information about assets and liabilities measured at fair value on a recurring basis:
 

Fair value measurements at August 3, 2014 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:
Limited Term Bond Fund
 $ 2,578 N/A N/A $ 2,578
Low Duration Bond Fund
 2,078 N/A N/A 2,078
Premier Money Market Fund
 1,712 N/A N/A 1,712
Intermediate Term Bond Fund
 1,655 N/A N/A 1,655
Other
 37 N/A N/A 37

 

 
Fair value measurements at July 28, 2013 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:
Limited Term Bond Fund
 $ 2,545 N/A N/A $ 2,545
Low Duration Bond Fund
 2,050 N/A N/A 2,050
Intermediate Term Bond Fund
 1,579 N/A N/A 1,579

 

 

 
Fair value measurements at April 27, 2014 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:
Limited Term Bond Fund
 $ 2,576 N/A N/A $ 2,576
Low Duration Bond Fund
 2,077 N/A N/A 2,077
Intermediate Term Bond Fund
 1,641 N/A N/A 1,641
Premier Money Market Fund
 755 N/A N/A 755
Other
 10 N/A N/A 10

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.

Our short-term investments include short-term bond funds, are classified as available-for-sale, and their unrealized gains or losses are included in other comprehensive income (loss). Our short-term bond funds were recorded at their fair value of $6.3 million, $6.2 million and $6.3 million at August 3, 2014, July 28, 2013, and April 27, 2014, respectively. Our short-term bond funds had an accumulated unrealized loss totaling $70,000, $81,000, and $60,000 at August 3, 2014, July 28, 2013, and April 27, 2014, respectively. At August 3, 2014, July 28, 2013, and April 27, 2014, the fair value of our short-term bond funds approximated its cost basis.

Effective, January 1, 2014, we established a Rabbi Trust to set aside funds for participants of our deferred compensation plan (the “Plan”) and enable the participants to credit their contributions to various investment options of the Plan. The investments associated with the Rabbi Trust consist of investments in a money market fund and various mutual funds that are classified as available for sale. Our long-term investments are recorded at its fair value of $1.7 million and $765,000 at August 3, 2014 and April 27, 2014, respectively. The fair value of our long-term investments approximates its cost basis.
The carrying amount of cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued expenses, and line of credit approximates fair value because of the short maturity of these financial instruments.

Nonrecurring Basis

During the three months ended August 3, 2014, we did not have any financial assets that were required to be measured at fair value on a nonrecurring basis.

During fiscal 2014, we did not have any financial assets that were required to be measured at fair value on a nonrecurring basis other than the assets acquired from Bodet & Horst (see note 3) that were acquired at fair value.
 
Fair value measurements at April 27, 2014 and July, 28, 2013 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:
Equipment
 $ - $ 890 $ - $ 890
Non-compete Agreement
 - - 882 882
Customer Relationships
 - - 868 868

The equipment was classified as level 2 as the fair value was determined using quoted market prices from a third party. The non-compete was recorded at its fair value using a discounted cash flow valuation model that used significant unobservable inputs and was classified as level 3. The customer relationships were recorded at a fair value using a multi-period excess earnings valuation model that used significant unobservable inputs and was classified as level 3.