Fair Value Measurement

9 Months Ended

Nov. 02, 2013

Fair Value Measurement

Fair Value Measurement

5. Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market at the measurement date. Fair value is established according to a hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1:  Unadjusted quoted prices in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2:  Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3:  Unobservable inputs are used when little or no market data is available. Level 3 inputs are given the lowest priority in the fair value hierarchy.

As of November 2, 2013, the Company’s investment securities are classified as held-to-maturity since the Company has the intent and ability to hold the investments to maturity.  Such securities are carried at amortized cost plus accrued interest and consist of the following (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value
Short-term:
Obligations of states and municipalities (Level 2)	$	2,407	$	1	$	—		$	2,408
Obligations of the U. S. Treasury (Level 1)	4,999		8		—			5,007
Bank certificates of deposit (Level 2)	10,812		—		(1		)	10,811
	$	18,218	$	9	$	(1	)	$	18,226
Long-term:
Obligations of the U. S. Treasury (Level 1)	$	15,177	$	15	$	(1	)	$	15,191
Bank certificates of deposit (Level 2)	4,875		—		—			4,875
	$	20,052	$	15	$	(1	)	$	20,066

The amortized cost and fair market value of investment securities as of November 2, 2013 by contractual maturity are as follows (in thousands):

	Amortized Cost		Fair Market Value
Mature in one year or less	$	18,218	$	18,226
Mature after one year through five years	20,052		20,066
	$	38,270	$	38,292

As of February 2, 2013, the Company’s investment securities were classified as held-to-maturity and consisted of the following (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Short-term:
Obligations of the U. S. Treasury (Level 1)	$	4,993	$	39	$	—	$	5,032
Obligations of states and municipalities (Level 2)	1,731		9		—		1,740
Bank certificates of deposit (Level 2)	6,047		—		—		6,047
	$	12,771	$	48	$	—	$	12,819
Long-term:
Bank certificates of deposit (Level 2)	$	5,754	$	6	$	—	$	5,760

The amortized cost and fair market value of investment securities as of February 2, 2013 by contractual maturity were as follows (in thousands):

	Amortized Cost		Fair Market Value
Mature in one year or less	$	12,771	$	12,819
Mature after one year through five years	5,754		5,760
	$	18,525	$	18,579

There were no changes among the levels in the thirty-nine weeks ended November 2, 2013.

Fair market values of Level 2 investments are determined by management with the assistance of a third party pricing service.  Because quoted prices in active markets for identical assets are not available, these prices are determined by the third party pricing service using observable market information such as quotes from less active markets and quoted prices of similar securities.