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Note 4 - Fair Value Measurements
 12 Months Ended
Jan. 31, 2017
Notes to Financial Statements  
Fair Value Disclosures [Text Block]
Note
4
– Fair Value Measurements
 
ASC Topic
820
“Fair Value Measurements and Disclosures” (Topic
820)
defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value, in this context, should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including our own credit risk.
 
Topic
820
establishes a fair value hierarchy which prioritizes the inputs used in the valuation methodologies in measuring fair value into
three
levels:
• Level
1—inputs
are based upon unadjusted quoted prices for identical instruments traded in active markets.
• Level
2—inputs
are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
• Level
3—inputs
are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
 
During the period ended
January
31,
2017,
the Company sold its portfolio of marketable securities. The Company did
not
hold any marketable securities as of
January
31,
2017.
 
The following table shows the Company’s marketable securities investment portfolio measured at fair value on a recurring basis as of
January
31,
2016:
 
     
Cost
      
Gross Unrealized Gains
      
Gross Unrealized (Losses)
      
Estimated Fair Value
  
Level 1                                
Short-Term Marketable Securities    
4,667
      
-
      
(28
 )    
4,639
  
 
The Company’s marketable securities have been classified and accounted for as available-for-sale. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the designations at each balance sheet date. The Company classifies its marketable securities as either short-term or long-term based on the nature of each security and its availability for use in current operations. The Company’s marketable securities are carried at fair value, with the unrealized gains and losses, net of taxes, reported as a separate component of accumulated other comprehensive loss. The cost of securities sold is based upon the specific identification method.
 
The carrying amounts of the Company’s cash, accounts receivable (net), accounts payable, accrued liabilities and income taxes payable approximate their fair value (a Level
2
measurement) due to their short maturities.
 
The Company enters into equity derivative contracts including floating-rate equity forwards to partially offset the potential fluctuations of certain future share-based compensation expenses. The Company does not hold derivatives for speculative purposes. As at
January
31,
2017,
we had equity derivatives for
238,000
Descartes common shares with a weighted average price of
$19.63.
The following table shows the Company’s derivative instruments measured at fair value on a recurring basis as of
January
31,
2017:
 
     
Fair Value of Derivatives Designated as Hedge Instruments
      
Fair Value of Derivatives Not Designated As Hedge Instruments
      
Fair Value
  
Derivative assets:                        
Equity contracts    
-
      
497
      
497
  
 
The fair value of equity contract derivatives is determined utilizing a valuation model based on the quoted market value of
our common shares at the balance sheet date
(Level
2
fair value inputs). The fair value of equity contract derivatives is recorded as other current assets and gains and losses are recorded in general and administrative expenses in the consolidated financial statements. For the years ended
January
31,
2017,
2016
and
2015,
we recognized a fair value gain in general and administrative expenses of
$0.5
million,
nil
and
nil
, respectively.