FAIR VALUE MEASUREMENTS

When determining fair value, the Company uses a

three

-tier value hierarchy which prioritizes the inputs used in measuring fair value. Whenever possible, the Company uses observable market data. The Company relies on unobservable inputs only when observable market data is

not

available. Classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.

• Level

- Money market mutual funds and short-term investments are recorded at fair value based upon quoted market prices.

• Level

- The asset or liability related to the interest rate swap is recorded at fair value based upon a valuation model that uses relevant observable market inputs at quoted intervals, such as forward yield curves.

The following table sets forth the financial assets and liability, measured at fair value, as of

July 31, 2019

and

January 31, 2019:

	Fair value measurement at reporting date using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(in thousands)
Money market mutual funds as of July 31, 2019	$	106,774
Money market mutual funds as of January 31, 2019	$	107,855
Short-term investments as of July 31, 2019	$	1,200
Short-term investments as of January 31, 2019	$	1,200
Liability related to the interest rate swap as of July 31, 2019			$	(115	)
Asset related to the interest rate swap as of January 31, 2019			$	136

Money market mutual funds are classified as part of “Cash and equivalents” in the accompanying Condensed Consolidated Balance Sheets. The amount of cash and equivalents deposited with commercial banks was

$35.0

million and

$31.6

million at

July 31, 2019

and

January 31, 2019,

respectively.

The Company’s note payable bears a variable market interest rate commensurate with the Company’s credit standing. Therefore, the carrying amount outstanding under the note payable reasonably approximates fair value based on Level

inputs.

There have been

transfers between fair value measurements levels during the

six

months ended

July 31, 2019.

Derivative Instruments

The Company entered into an interest rate swap in

May 2012

to mitigate the exposure to the variability of

one

month LIBOR for its floating rate debt described in Note

“Debt” within these Notes to Condensed Consolidated Financial Statements. The fair value of the interest rate swap is reflected as an asset or liability in the Condensed Consolidated Balance Sheets and the change in fair value is reported in “Other (income) expense, net” in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. The fair value of the interest rate swap is estimated as the net present value of projected cash flows based upon forward interest rates at the balance sheet date.

The fair values of the derivative instrument at

July 31, 2019

and

January 31, 2019

were as follows (in thousands):

	Liability / Asset
		Fair Value
	Balance Sheet Location	July 31 , 2019			January 31, 2019
Derivative instrument:
Interest rate swap	Other liabilities / Other assets, net	$	(115	)	$	136
Total		$	(115	)	$	136

The change in fair value of the interest rate swap recognized in the Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income was $(

160,000

) and $(

251,000

) for the

three

and

six

months ended

July 31, 2019,

respectively; compared to

$35,000

and

$152,000

for the

three

and

six

months ended

July 31, 2018,

respectively.