Fair Value Measurement
 6 Months Ended
Aug. 04, 2018
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 August 4, 2018, 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):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Gross

    

Gross

    

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair Market

 

 

    

Cost

    

Gains

    

Losses

    

Value

 

Short-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of the U.S. Treasury and U.S. government agencies (Level 1)

 

$

20,263

 

$

 -

 

$

(107)

 

$

20,156

 

Obligations of states and municipalities (Level 2)

 

 

3,631

 

 

 1

 

 

 -

 

 

3,632

 

Bank certificates of deposit (Level 2)

 

 

12,115

 

 

 -

 

 

 -

 

 

12,115

 

 

 

$

36,009

 

$

 1

 

$

(107)

 

$

35,903

 

Long-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of the U. S. Treasury (Level 1)

 

$

4,935

 

$

 -

 

$

(28)

 

$

4,907

 

Bank certificates of deposit (Level 2)

 

 

8,085

 

 

 -

 

 

 -

 

 

8,085

 

 

 

$

13,020

 

$

 -

 

$

(28)

 

$

12,992

 

 

The amortized cost and fair market value of investment securities as of August 4, 2018 by contractual maturity are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Fair

 

 

 

Amortized

 

Market

 

 

    

Cost

    

Value

 

Mature in one year or less

 

$

36,009

 

$

35,903

 

Mature after one year through five years

 

 

13,020

 

 

12,992

 

 

 

$

49,029

 

$

48,895

 

 

As of February 3, 2018, the Company’s investment securities were classified as held-to-maturity and consisted of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Gross

    

Gross

    

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair Market

 

 

    

Cost

    

Gains

    

Losses

    

Value

 

Short-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of the U. S. Treasury (Level 1)

 

$

10,162

 

$

 -

 

$

(25)

 

$

10,137

 

Obligations of states and municipalities (Level 2)

 

 

8,111

 

 

 1

 

 

(2)

 

 

8,110

 

Bank certificates of deposit (Level 2)

 

 

13,227

 

 

 -

 

 

 -

 

 

13,227

 

 

 

$

31,500

 

$

 1

 

$

(27)

 

$

31,474

 

Long-term:

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of the U. S. Treasury (Level 1)

 

$

9,967

 

$

 -

 

$

(116)

 

$

9,851

 

Bank certificates of deposit (Level 2)

 

 

15,484

 

 

 -

 

 

 -

 

 

15,484

 

 

 

$

25,451

 

$

 -

 

$

(116)

 

$

25,335

 

 

The amortized cost and fair market value of investment securities as of February 3, 2018 by contractual maturity were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Fair

 

 

 

Amortized

 

Market

 

 

    

Cost

    

Value

 

Mature in one year or less

 

$

31,500

 

$

31,474

 

Mature after one year through five years

 

 

25,451

 

 

25,335

 

 

 

$

56,951

 

$

56,809

 

 

There were no changes among the levels in the twenty-six weeks ended August 4, 2018.

 

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.