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Fair Value Measurements - Notes to Financial Statements

9 Months Ended

Oct. 31, 2020

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 October 31, 2020 and February 1, 2020:

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	October 31, 2020		Assets		Inputs		Inputs
Description	October 31, 2020		Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	29,034	$	-	$	29,034	$	-
Corporate Bonds		63,167		-		63,167		-
U.S. Treasury/Agencies Notes and Bonds		20,265		-		20,265		-
Cash Surrender Value of Life Insurance		10,538		-		-		10,538
Asset-backed Securities (ABS)		19,996		-		19,996		-
Corporate Equities		1,515		1,515		-		-
Certificates of Deposit		-		-		-		-
Total Assets	$	144,515	$	1,515	$	132,462	$	10,538

Liabilities:
Deferred Compensation		(10,428)		-		-		(10,428)
Total Liabilities	$	(10,428)	$	-	$	-	$	(10,428)

			Quoted
			Prices in
			Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
		February 1, 2020	Assets		Inputs		Inputs
Description		February 1, 2020	Level 1		Level 2		Level 3
Assets:
State/Municipal Bonds	$	36,014	$	-	$	36,014	$	-
Corporate Bonds		90,798		-		90,798		-
U.S. Treasury/Agencies Notes and Bonds		37,410		-		37,410		-
Cash Surrender Value of Life Insurance		10,517		-		-		10,517
Asset-backed Securities (ABS)		37,384		-		37,384		-
Corporate Equities		732		732		-		-
Certificates of Deposit		100		100		-		-
Total Assets	$	212,955	$	832	$	201,606	$	10,517

Liabilities:
Deferred Compensation		(10,391)		-		-		(10,391)
Total Liabilities	$	(10,391)	$	-	$	-	$	(10,391)

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 October 31, 2020 and February 1, 2020. The state, municipal and corporate bonds have contractual maturities which range from two weeks to five years. The U.S. Treasury Notes and Certificates of Deposit have contractual maturities which range from two weeks to three years. These securities are classified as available-for-sale and are recorded as Short-term investments, Restricted cash and Restricted short-term investments 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 October 31, 2020, the Company had $1.5 million of corporate equities and deferred compensation plan assets of $10.5 million. At February 1, 2020, the Company had $0.7 million of corporate equities and deferred compensation plan assets of $10.5 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’ net asset values, as recorded in Other noncurrent liabilities in the Condensed Consolidated Balance Sheet. These funds are designed to mirror mutual funds and money market funds that are observable and actively traded.

The following tables summarize the change in fair value of the Company’s financial assets and liabilities measured using Level 3 inputs as of October 31, 2020 and February 1, 2020 (in thousands):

	Fair Value
	Measurements Using
	Significant Unobservable
	Asset Inputs (Level 3)
	Cash Surrender Value
Beginning Balance at February 1, 2020	$	10,517
Additions		-
Total gains or (losses)
Included in interest and other income (or changes in net assets)		21
Included in other comprehensive income		-
Ending Balance at October 31, 2020	$	10,538

	Fair Value
	Measurements Using
	Significant Unobservable
	Liability Inputs (Level 3)
	Deferred Compensation
Beginning Balance at February 1, 2020	$	(10,391)
Additions		157
Total (gains) or losses
Included in interest and other income (or changes in net assets)		(194)
Included in other comprehensive income		-
Ending Balance at October 31, 2020	$	(10,428)

	Fair Value
	Measurements Using
	Significant Unobservable
	Asset Inputs (Level 3)
	Cash Surrender Value
Beginning Balance at February 2, 2019	$	9,093
Additions		748
Total gains or (losses)
Included in interest and other income (or changes in net assets)		676
Included in other comprehensive income		-
Ending Balance at February 1, 2020	$	10,517

	Fair Value
	Measurements Using
	Significant Unobservable
	Liability Inputs (Level 3)
	Deferred Compensation
Beginning Balance at February 2, 2019	$	(8,908)
Additions		(554)
Total (gains) or losses
Included in interest and other income (or changes in net assets)		(929)
Included in other comprehensive income		-
Ending Balance at February 1, 2020	$	(10,391)