Fair Value Measurement

6 Months Ended

Jul. 29, 2017

Fair Value Measurement

Fair Value Measurement

5. Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market at the measurement date. Fair value is established according to a hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1:  Unadjusted quoted prices in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2:  Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3:  Unobservable inputs are used when little or no market data is available. Level 3 inputs are given the lowest priority in the fair value hierarchy.

As of July 29, 2017, the Company’s investment securities are classified as held-to-maturity since the Company has the intent and ability to hold the investments to maturity.  Such securities are carried at amortized cost plus accrued interest and consist of the following (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair Market
	Cost		Gains		Losses		Value
Short-term:
Obligations of the U.S. Treasury and U.S. government agencies (Level 1)	$	10,398	$	—	$	(12)	$	10,386
Obligations of states and municipalities (Level 2)		6,676		1		—		6,677
Bank certificates of deposit (Level 2)		15,595		—		—		15,595
	$	32,669	$	1	$	(12)	$	32,658
Long-term:
Obligations of the U. S. Treasury (Level 1)	$	14,971	$	—	$	(55)	$	14,916
Obligations of states and municipalities (Level 2)		60		—		—		60
Bank certificates of deposit (Level 2)		11,717		—		—		11,717
	$	26,748	$	—	$	(55)	$	26,693

The amortized cost and fair market value of investment securities as of July 29, 2017 by contractual maturity are as follows (in thousands):

			Fair
	Amortized		Market
	Cost		Value
Mature in one year or less	$	32,669	$	32,658
Mature after one year through five years		26,748		26,693
	$	59,417	$	59,351

As of January 28, 2017, the Company’s investment securities were classified as held-to-maturity and consisted of the following (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair Market
	Cost		Gains		Losses		Value
Short-term:
Obligations of the U. S. Treasury (Level 1)	$	9,995	$	1	$	—	$	9,996
Obligations of states and municipalities (Level 2)		14,816		2		(1)		14,817
Bank certificates of deposit (Level 2)		13,215		—		—		13,215
	$	38,026	$	3	$	(1)	$	38,028
Long-term:
Obligations of the U. S. Treasury (Level 1)	$	15,011	$	—	$	(51)	$	14,960
Bank certificates of deposit (Level 2)		11,680		—		—		11,680
	$	26,691	$	—	$	(51)	$	26,640

The amortized cost and fair market value of investment securities as of January 28, 2017 by contractual maturity were as follows (in thousands):

			Fair
	Amortized		Market
	Cost		Value
Mature in one year or less	$	38,026	$	38,028
Mature after one year through five years		26,691		26,640
	$	64,717	$	64,668

There were no changes among the levels in the twenty-six weeks ended July 29, 2017.

Fair market values of Level 2 investments are determined by management with the assistance of a third party pricing service.  Because quoted prices in active markets for identical assets are not available, these prices are determined by the third party pricing service using observable market information such as quotes from less active markets and quoted prices of similar securities.