The following tables set forth information regarding the Company's financial assets that are measured at fair value (in thousands) as of May 3, 2014, February 1, 2014 and May 4, 2013.

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
		May 3, 2014	Assets		Inputs		Inputs
Description		May 3, 2014	Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	155,428	$	-	$	155,428	$	-
Corporate Bonds		4,598		-		4,598		-
Auction Rate Securities (ARS)		3,140		-		-		3,140
U.S. Treasury Notes		1,503		1,503		-		-
Cash Surrender Value of Life Insurance		3,568		-		-		3,568
Privately Managed Funds		358		-		-		358
Corporate Equities		595		595		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	169,290	$	2,198	$	160,026	$	7,066

Liabilities:
Deferred Compensation		(3,852)		-		-		(3,852)
Total Liabilities	$	(3,852)	$	-	$	-	$	(3,852)

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 May 3, 2014, February 1, 2014 and May 4, 2013. The state, municipal and corporate bonds have contractual maturities which range from 12 days to 12.6 years. The U.S. Treasury Notes and Certificates of Deposit have contractual maturities which range from 4 months to 1.4 years. These securities are classified as available-for-sale and are recorded as Short-term investments, Restricted investments and Other assets on the accompanying Condensed Consolidated Balance Sheets. These assets are carried at fair value with unrealized gains and losses reported net of taxes in Accumulated other comprehensive income.

Additionally, at May 3, 2014, the Company had $0.4 million of privately managed funds, $0.6 million of corporate equities and a single auction rate security (“ARS”) of $3.1 million which continues to fail its auction, and deferred compensation plan assets of $3.6 million. At February 1, 2014, the Company had $0.4 million of privately managed funds, $0.6 million of corporate equities, a single ARS of $3.1 million and deferred compensation plan assets of $3.0 million. At May 4, 2013, the Company had $0.5 million of privately managed funds, $0.5 million of corporate equities, a single ARS of $3.5 million and deferred compensation plan assets of $2.4 million. All of these assets are recorded within Other assets in the Condensed 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 Duke Energy Progress and has a credit rating of A. 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 $3,139,500 which approximates fair value using Level 3 inputs. Because there is no active market for this particular ARS, its fair value was analyzed through the use of a discounted cash flow analysis and observations from previous trades. 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 recent trading activity, 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.

The following tables summarize the change in fair value of the Company's financial assets measured using Level 3 inputs as of May 3, 2014 and May 4, 2013 (dollars in thousands):

		Fair Value Measurements Using Significant
		Unobservable Asset Inputs (Level 3)
	Available-For-Sale					Cash
	Debt Securities		Other Investments			Surrender
	ARS		Private Equity			Value	Total
Beginning Balance at February 1, 2014	$	3,140	$	392	$	2,957	$	6,489
Redemptions		-		(42)		-		(42)
Additions		-		-		519		519
Total gains or (losses)
Included in interest and other
income (or changes in net assets)		-		1		92		93
Included in other comprehensive income		-		7		-		7
Ending Balance at May 3, 2014	$	3,140	$	358	$	3,568	$	7,066


	Fair Value Measurements Using Significant
	Unobservable Liability Inputs (Level 3)
	Deferred
	Compensation			Total
Beginning Balance at February 1, 2014	$	(3,298)	$	(3,298)
Additions		(345)		(345)
Total (gains) or losses
Included in interest and other
income (or changes in net assets)		(209)		(209)
Included in other comprehensive income		-		-
Ending Balance at May 3, 2014	$	(3,852)	$	(3,852)


	Fair Value Measurements Using Significant
	Unobservable Asset Inputs (Level 3)
	Available-For-Sale					Cash
	Debt Securities		Other Investments			Surrender
	ARS		Private Equity			Value		Total
Beginning Balance at February 2, 2013	$	3,450	$	561	$	2,051	$	6,062
Redemptions		-		(45)		-		(45)
Additions						292		292
Total gains or (losses)
Included in interest and other
income (or changes in net assets)		-		7		68		75
Included in other comprehensive income		-		-		-		-
Ending Balance at May 4, 2013	$	3,450	$	523	$	2,411	$	6,384

	Fair Value Measurements Using Significant
	Unobservable Liability Inputs (Level 3)
	Deferred
	Compensation			Total
Beginning Balance at February 2, 2013	$	(2,178)	$	(2,178)
Additions		(223)		(223)
Total (gains) or losses
Included in interest and other
income (or changes in net assets)		(92)		(92)
Ending Balance at May 4, 2013	$	(2,493)	$	(2,493)

Quantitative information regarding the significant unobservable inputs related to the ARS as of May 3, 2014 and May 4, 2013 were as follows:

May 3, 2014

Fair Value

Valuation Technique

Unobservable Inputs

$3,140

Net present value

Total Term

8.4 Years

of cash flows

Yield

0.18%

Comparative bond discount rate

0.14%

May 4, 2013

Fair Value

Valuation Technique

Unobservable Inputs

$3,450

Net present value

Total Term

9.4 Years

of cash flows

Yield

0.28%

Comparative bond discount rate

0.14%

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.