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Fair Value of Financial Instruments | 6 Months Ended
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Oct. 28, 2018
Fair Value Disclosures [Abstract] |
Fair Value of Financial Instruments | 14. 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 measured at fair value on a recurring basis:
|  | Fair value measurements at October 28, 2018 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: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Premier Money Market Fund |  | $ | 6,943 |  |  |  | N/A |  |  |  | N/A |  |  | $ | 6,943 |
Large Blend Fund |  |  | 422 |  |  |  | N/A |  |  |  | N/A |  |  |  | 422 |
Growth Allocation Fund |  |  | 175 |  |  |  | N/A |  |  |  | N/A |  |  |  | 175 |
Moderate Allocation Fund |  |  | 114 |  |  |  | N/A |  |  |  | N/A |  |  |  | 114 |
Other |  |  | 197 |  |  |  | N/A |  |  |  | N/A |  |  |  | 197 |
|  | Fair value measurements at October 29, 2017 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: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Premier Money Market Fund |  | $ | 6,153 |  |  |  | N/A |  |  |  | N/A |  |  | $ | 6,153 |
Low Duration Bond Fund |  |  | 1,087 |  |  |  | N/A |  |  |  | N/A |  |  |  | 1,087 |
Intermediate Term Bond Fund |  |  | 765 |  |  |  | N/A |  |  |  | N/A |  |  |  | 765 |
Strategic Income Fund |  |  | 626 |  |  |  | N/A |  |  |  | N/A |  |  |  | 626 |
Large Blend Fund |  |  | 393 |  |  |  | N/A |  |  |  | N/A |  |  |  | 393 |
Growth Allocation Fund |  |  | 153 |  |  |  | N/A |  |  |  | N/A |  |  |  | 153 |
Moderate Allocation Fund |  |  | 107 |  |  |  | N/A |  |  |  | N/A |  |  |  | 107 |
Other |  |  | 115 |  |  |  | N/A |  |  |  | N/A |  |  |  | 115 |
|  | Fair value measurements at April 29, 2018 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: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Premier Money Market Fund |  | $ | 6,492 |  |  |  | N/A |  |  |  | N/A |  |  | $ | 6,492 |
Low Duration Bond Fund |  |  | 1,085 |  |  |  | N/A |  |  |  | N/A |  |  |  | 1,085 |
Intermediate Term Bond Fund |  |  | 747 |  |  |  | N/A |  |  |  | N/A |  |  |  | 747 |
Strategic Income Fund |  |  | 619 |  |  |  | N/A |  |  |  | N/A |  |  |  | 619 |
Large Blend Fund |  |  | 402 |  |  |  | N/A |  |  |  | N/A |  |  |  | 402 |
Growth Allocation Fund |  |  | 169 |  |  |  | N/A |  |  |  | N/A |  |  |  | 169 |
Moderate Allocation Fund |  |  | 113 |  |  |  | N/A |  |  |  | N/A |  |  |  | 113 |
Other |  |  | 150 |  |  |  | N/A |  |  |  | N/A |  |  |  | 150 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
EURO Foreign Currency |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash Flow Hedge |  |  | N/A |  |  | $ | 55 |  |  |  | N/A |  |  | $ | 55 |
Our EURO foreign exchange contract was recorded at a fair value provided by our bank and is classified within level 2 of the fair value hierarchy. Most derivative contracts are not listed on an exchange and require the use of valuation models. In accordance with ASC Topic 820, we attempted to maximize the use of observable inputs used in the valuation models used to determine the fair value of this contract. Derivative contracts valued based on valuation models with significant unobservable inputs and that are not actively traded, are classified within level 3 of the fair value hierarchy. 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 – Available for Sale There were no short-term investments classified as available for sale held at October 28, 2018. At October 29, 2017 and April 29, 2018, our short-term investments classified as available for sale totaled $2.5 million and consisted of short-term bond funds. Since these short-term bond funds were classified as available for sale, these investments were recorded at their fair market value and their unrealized gains or losses are included in other comprehensive income (loss). Our short-term bond investments had an accumulated unrealized loss totaling $36,000 and $91,000 at October 29, 2017, and April 29, 2018, respectively. At October 29, 2017, and April 29, 2018, the fair value of our short-term bond funds approximated its cost basis. Short-Term and Long-Term Investments - Held-To-Maturity Our investments classified as held-to-maturity consist of investment grade U.S. Corporate bonds with maturities that ranged from 2 to 2.5 years. The purpose of these investments was to earn a higher rate of return on our excess cash located in the Cayman Islands. These investments are classified as held-to-maturity as we have the positive intent and ability to hold these investments until maturity. Our held-to-maturity investments are recorded as either current or noncurrent on our Consolidated Balance Sheets, based on contractual maturity date in relation to the respective reporting period and recorded at amortized cost. At October 28, 2018, October 29, 2017 and April 29, 2018, our held-to-maturity investments recorded at amortized cost totaled $26.7 million, $30.9 million, and $30.8 million, respectively. The fair value of our held-to-maturity investments at October 28, 2018, October 29, 2017, and April 29, 2018 totaled $ 26.6 million, $30.8 million, and $30.6 million, respectively. Our U.S. corporate bonds are classified as level 2 as they are traded over the counter within a broker network and not on an active market. The fair value of our U.S. corporate bonds is determined based on a published source that provides an average bid price. The average bid price is based on various broker prices that are determined based on market conditions, interest rates, and the rating of the respective U.S. corporate bond. Long-Term Investments - Rabbi Trust We have a Rabbi Trust to set aside funds for participants of our deferred compensation plan (the “Plan”) which enables the participants to credit their contributions to various investment options of the Plan. The investments associated with the Rabbi Trust consist of a money market fund and various mutual funds that are classified as available for sale. These long-term investments are recorded at their fair values of $7.9 million, $6.9 million, and $7.3 million at October 28, 2018, October 29, 2017 and April 29, 2018, respectively. Our long-term investments had an accumulated unrealized gain of $62,000, $96,000, and $61,000 at October 28, 2018, October 29, 2017, and April 29, 2018, respectively. The fair value of our long-term investments associated with our Rabbi Trust approximates its cost basis. Other The carrying amount of our cash and cash equivalents, accounts receivable, other current assets, accounts payable, and accrued expenses approximates fair value because of the short maturity of these financial instruments. Nonrecurring Basis At October 28, 2018, we had no assets that were required to be measured at fair value on a nonrecurring basis other than the assets acquired from eLuxury (see note 3) that were acquired at fair value:
|  | Fair value measurements at October 28, 2018 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: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | N/A |  |  |  | N/A |  |  | $ | 13,653 |  |  | $ | 13,653 |
Tradename |  |  | N/A |  |  |  | N/A |  |  |  | 6,549 |  |  |  | 6,549 |
Equipment |  |  | N/A |  |  |  | N/A |  |  |  | 2,179 |  |  |  | 2,179 |
Inventory |  |  | N/A |  |  |  | N/A |  |  |  | 1,804 |  |  |  | 1,804 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent Consideration – Earn-Out Obligation |  |  | N/A |  |  |  | N/A |  |  | $ | 5,706 |  |  | $ | 5,706 |
The tradename was recorded at fair market value using the royalty from relief method that used significant unobservable inputs and were classified as level 3. The contingent consideration – earn-out obligation was recorded at fair market value using Black Sholes pricing model. Additionally, we acquired certain current assets such as accounts receivable and prepaid expenses and assumed certain liabilities such as accounts payable and accrued expenses. Based on the nature of these items and their short maturity, the carrying amount of these items approximated their fair values. See note 3 for the preliminary allocation of the acquisition cost to the assets acquired and liabilities assumed based on their fair values. At April 29, 2018, we had no assets that were required to be measured at fair value on a nonrecurring basis other than the assets acquired from Read (see note 3) that were acquired at fair value:
|  | Fair value measurements at April 29, 2018 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: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer Relationships |  |  | N/A |  |  |  | N/A |  |  | $ | 2,247 |  |  | $ | 2,247 |
Goodwill |  |  | N/A |  |  |  | N/A |  |  |  | 2,107 |  |  |  | 2,107 |
Inventory |  |  | N/A |  |  |  | N/A |  |  |  | 1,128 |  |  |  | 1,128 |
Tradename |  |  | N/A |  |  |  | N/A |  |  |  | 683 |  |  |  | 683 |
Equipment |  |  | N/A |  |  |  | N/A |  |  |  | 379 |  |  |  | 379 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
None |  |  | N/A |  |  |  | N/A |  |  |  | N/A |  |  |  | N/A |
These customer relationships were recorded at fair market value using a multi-period excess earnings valuation model that used significant unobservable inputs and were classified as level 3. The tradename was recorded at fair market value using the royalty from relief method that used significant unobservable inputs and were classified as level 3. Additionally, we acquired certain current assets such as accounts receivable and other assets and assumed certain liabilities such as deferred revenue, accounts payable and accrued expenses. Based on the nature of these items and their short maturity, the carrying amount of these items approximated their fair values. See note 3 for the allocation of the acquisition cost to the assets acquired and liabilities assumed based on their fair values.

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- 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 Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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