Fair Value Measurements - Notes to Financial Statements

6 Months Ended

12 Months Ended

Aug. 04, 2018

Feb. 03, 2018

NOTE 7 – FAIR VALUE MEASUREMENTS:

The following tables set forth information regarding the Company’s financial assets and liabilities that are measured at fair value (in thousands) as of August 4, 2018 and February 3, 2018

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	August 4, 2018		Assets		Inputs		Inputs
Description	August 4, 2018		Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	65,349	$	-	$	65,349	$	-
Corporate Bonds		90,498		-		90,498		-
U.S. Treasury Notes		4,577		4,577		-		-
Cash Surrender Value of Life Insurance		9,249		-		-		9,249
Asset-backed Securities (ABS)		23,316		-		23,316		-
Corporate Equities		745		745		-		-
Certificates of Deposit		505		505		-		-
Total Assets	$	194,239	$	5,827	$	179,163	$	9,249

Liabilities:
Deferred Compensation		(9,146)		-		-		(9,146)
Total Liabilities	$	(9,146)	$	-	$	-	$	(9,146)

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 August 4, 2018 and February 3, 2018. The state, municipal and corporate bonds have contractual maturities which range from 11 days to 29.0 years. The U.S. Treasury Notes and Certificates of Deposit have contractual maturities of two months. These securities are classified as available-for-sale and are recorded as Short-term investments, Restricted cash and 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. The asset-backed securities are bonds comprised of auto loans and bank credit cards that carry AAA ratings. The auto loan asset-backed securities are backed by static pools of auto loans that were originated and serviced by captive auto finance units, banks or finance companies. The bank credit card asset-backed securities are backed by revolving pools of credit card receivables generated by account holders of cards from American Express, Citibank, JPMorgan Chase, Capital One, and Discover.

Additionally, at August 4, 2018, the Company had $0.7 million of corporate equities and deferred compensation plan assets of $9.2 million. At February 3, 2018, the Company had $0.8 million of corporate equities and deferred compensation plan assets of $8.9 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 bonds, municipal bonds and asset-backed securities 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.

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 and liabilities measured using Level 3 inputs as of August 4, 2018 and February 3, 2018 (in thousands):

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
		February 3, 2018	Assets		Inputs		Inputs
Description		February 3, 2018	Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	95,983	$	-	$	95,983	$	-
Corporate Bonds		22,535		-		22,535		-
U.S. Treasury Notes		404		404		-		-
Cash Surrender Value of Life Insurance		8,900		-		-		8,900
Asset-backed Securities (ABS)		318		-		318		-
Corporate Equities		798		798		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	129,038	$	1,302	$	118,836	$	8,900

Liabilities:
Deferred Compensation		(8,951)		-		-		(8,951)
Total Liabilities	$	(8,951)	$	-	$	-	$	(8,951)