The following tables set forth information regarding the Company's financial assets that are measured at fair value (in thousands) as of February 2, 2013 and January 28, 2012.

			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	February 2, 2013		Assets		Inputs		Inputs
Description	February 2, 2013			Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	151,377	$	-	$	151,377	$	-
Corporate Bonds		8,035		-		8,035		-
Auction Rate Securities (ARS)		3,450		-		-		3,450
U.S. Treasury Notes		3,906		3,906		-		-
Cash Surrender Value of Life Insurance		2,051		-		-		2,051
Privately Managed Funds		561		-		-		561
Corporate Equities		474		474		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	169,954	$	4,480	$	159,412	$	6,062

Liabilities:
Deferred Compensation		(2,178)		-		-		(2,178)
Total Liabilities	$	(2,178)	$	-	$	-	$	(2,178)
















			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	January 28, 2012		Assets		Inputs		Inputs
Description	January 28, 2012			Level 1		Level 2		Level 3

State/Municipal Bonds	$	152,650	$	-	$	152,650	$	-
Corporate Bonds		27,732		-		27,732		-
Auction Rate Securities (ARS)		3,450		-		-		3,450
Variable Rate Demand Notes (VRDN)		26,472		26,472		-		-
U.S. Treasury Notes		3,174		3,174		-		-
Privately Managed Funds		1,604		-		-		1,604
Corporate Equities		443		443		-		-
Certificates of Deposit		100		100		-		-
Total	$	215,625	$	30,189	$	180,382	$	5,054

The Company's investment portfolio was primarily invested in corporate bonds and tax-exempt and taxable governmental debt securities held in managed accounts with underlying ratings of A or better at February 2, 2013. At January 28, 2012, the Company also held tax-exempt variable rate demand notes (“VRDN”). At February 2, 2013, the securities had contractual maturities which range from 13 days to 28 years. Although the Company's investments in VRDN's had underlying securities with contractual maturities longer than one year, the VRDN's themselves have interest rate resets of 7 days and were considered short-term investments. These securities are classified as available-for-sale and are recorded as Short-term investments, Restricted investments and Other assets on the accompanying Consolidated Balance Sheets at estimated fair value, with unrealized gains and losses reported net of taxes in Accumulated other comprehensive income.

Additionally, at February 2, 2013, the Company had $0.6 million of privately managed funds, $0.5 million of corporate equities and a single auction rate security (“ARS”) of $3.5 million which continues to fail its auction. At January 28, 2012, the Company had $1.6 million of privately managed funds, $0.4 million of corporate equities and a single ARS of $3.5 million. All of these assets are recorded within Other assets in the Consolidated Balance Sheets.

Level 1 category securities are measured at fair value using quoted active market prices. Level 2 investment securities include corporate and municipal bonds for which quoted prices may not be available on active exchanges for identical instruments. Their fair value is principally based on market values determined by management with assistance of a third party pricing service. Since quoted prices in active markets for identical assets are not available, these prices are determined by the pricing service using observable market information such as quotes from less active markets and/or quoted prices of securities with similar characteristics, among other factors.

The ARS of $3,450,000 par value was issued by the Wake County, NC Industrial Facilities & Pollution Control Financing Authority. The security is an obligation of Carolina Power & Light Company and has a credit rating of AAA. The Company has collected all interest payments when due since the security was purchased and continues to expect that it will receive all interest due on the security in full and on a timely basis in the future.

The Company's failed ARS is recorded at par value which approximates fair value using Level 3 inputs at each reporting period. Because there is no active market for this particular ARS, its fair value was determined to approximate par value based on an estimate of fair value through the use of a discounted cash flow analysis. The terms used in the analysis were based on management's estimate of the timing of future liquidity, which assumes that the security will be called or refinanced by the issuer or settled with a broker dealer prior to maturity. The discount rates used in the discounted cash flow analysis were based on market rates for similar liquid tax exempt securities with comparable ratings and maturities. Due to the uncertainty surrounding the timing of future liquidity, the Company also considered a liquidity/risk value reduction. In estimating the fair value of this ARS, the Company also considered the financial condition and near-term prospects of the issuer, the probability that the Company will be unable to collect all amounts due according to the contractual terms of the security and whether the security has been downgraded by a rating agency. The Company's valuation is sensitive to market conditions and management's judgment and can change significantly based on the assumptions used.

The Company's privately managed funds consist of two types of funds. The privately managed funds cannot be redeemed at net asset value at a specific date without advance notice. As a result, the Company has classified the investments as Level 3.

Deferred compensation plan assets consist of life insurance policies. These life insurance policies are valued based on the cash surrender value of the insurance contract, which is determined based on such factors as the fair value of the underlying assets and discounted cash flow and are therefore classified within level 3 of the valuation hierarchy. The level 3 liability associated with the life insurance policies represents a deferred compensation obligation, the value of which is tracked via underlying insurance funds. These funds are designed to mirror existing mutual funds and money market funds that are observable and actively traded. Cash surrender values are provided by third parties and reviewed for reasonableness by the Company.

		Fair Value Measurements Using Significant
		Unobservable Asset Inputs (Level 3)
	Available-For-Sale		Other
	Debt Securities		Investments		Cash
	ARS		Private Equity		Surrender Value		Total
Beginning Balance at January 28, 2012	$	3,450	$	1,604	$	-	$	5,054
Redemptions		-		(1,041)		-		(1,041)
Additions		-		-		1,932		1,932
Total gains or (losses)
Included in earnings (or changes in net assets)		-		-		119		119
Included in other comprehensive income		-		(2)		-		(2)
Ending Balance at February 2, 2013	$	3,450	$	561	$	2,051	$	6,062

		Fair Value Measurements Using Significant
		Unobservable Liability Inputs (Level 3)
		Deferred
		Compensation	Total
Beginning Balance at January 28, 2012	$	-	$	-
Additions		(2,001)		(2,001)
Total (gains) or losses
Included in earnings (or changes in net assets)		(177)		(177)
Ending Balance at February 2, 2013	$	(2,178)	$	(2,178)

		Fair Value Measurements Using Significant
		Unobservable Asset Inputs (Level 3)
	Available-For-Sale		Other
	Debt Securities		Investments
	ARS		Private Equity		Total
Beginning Balance at January 29, 2011	$	3,450	$	1,925	$	5,375
Redemptions		-		(321)		(321)
Total gains or (losses)
Included in earnings (or changes in net assets)		-		-
Included in other comprehensive income		-		-		-
Ending Balance at January 28, 2012	$	3,450	$	1,604	$	5,054

Quantitative information regarding the significant unobservable inputs related to the ARS as of February 2, 2013 were as follows:

Fair Value

Valuation Technique

Unobservable Inputs

$3,450

Net present value

Total Term

9.66 Years

of cash flows

Yield

0.23%

Comparative bond discount rate

0.21%

Significant increases or decreases in certain of the inputs could result in a lower fair value measurement. For example, a decrease in the yield, or an increase to the comparative bond discount rate could result in a lower fair value.