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Fair Value
 12 Months Ended
Jan. 31, 2013
Fair Value

4. Fair Value

The Company utilizes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach that relate to its financial assets and financial liabilities). The levels of the hierarchy are described as follows:

 

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Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.

 

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Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

 

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Level 3: Unobservable inputs that reflect the Company’s own assumptions.

Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and liabilities and their placement within the fair value hierarchy. The Company’s financial assets that are accounted for at fair value on a recurring basis are presented in the table below:

 

     Marketable Securities Fair Value as of
January 31, 2013		  
   Level 1      Level 2      Level 3      Total  

Assets:

            

Corporate bonds

    $ 152,775       $ —        $ —        $ 152,775   

Municipal and pre-refunded municipal bonds

      —          116,364         —          116,364   

Certificates of deposit

      —          43,235         —          43,235   

Treasury bills

      41,105         —          —          41,105   

Commercial paper

      —          10,781         —          10,781   

Federal government agencies

      9,481         —          —          9,481   

Auction rate securities

      —          —          4,330         4,330   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 203,361       $ 170,380       $ 4,330       $ 378,071   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     Marketable Securities Fair Value as of
January 31, 2012		  
     Level 1         Level 2         Level 3         Total   

Assets:

            

Corporate bonds

    $ 95,935       $ —        $ —        $ 95,935   

Municipal and pre-refunded municipal bonds

      —          60,234         —          60,234   

Certificates of deposit

      —          12,194         —          12,194   

Treasury bills

      14,988         —          —          14,988   

Commercial paper

      —          3,592         —          3,592   

Federal government agencies

      9,627         —          —          9,627   

Auction rate securities

      —          —          20,197         20,197   
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 120,550       $ 76,020       $ 20,197       $ 216,767   
  

 

 

     

 

 

     

 

 

     

 

 

  

Level 2 assets consist of financial instruments whose value has been based on quoted prices for similar assets and liabilities in active markets as well as quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3 consists of financial instruments where there was no active market as of January 31, 2013 and 2012. As of January 31, 2013 and 2012, all of the Company’s level 3 financial instruments consisted of failed ARS of which there was insufficient observable market information to determine fair value. The Company estimated the fair values for these securities by incorporating assumptions that market participants would use in their estimates of fair value. Some of these assumptions included credit quality, collateralization, final stated maturity, estimates of the probability of being called or becoming liquid prior to final maturity, redemptions of similar ARS, previous market activity for the same investment security, impact due to extended periods of maximum auction rates and valuation models. As a result of this review, the Company determined its ARS to have a temporary impairment of $595 and $2,778 as of January 31, 2013 and January 31, 2012, respectively. The estimated fair values could change significantly based on future market conditions. A hypothetical 100 basis point decline in fair value of ARS at January 31, 2013 would have resulted in a temporary impairment of $645. The Company will continue to assess the fair value of its ARS for substantive changes in relevant market conditions, changes in its financial condition or other changes that may alter its estimates described above.

 

Below is a reconciliation of the beginning and ending ARS securities balances that the Company valued using a Level 3 valuation for the fiscal years ended January 31, 2013 and 2012.

 

     Fiscal Year Ended
January 31, 2013		     Fiscal Year Ended
January 31, 2012		  

Balance at beginning of period

    $ 20,197      $ 29,462   

Total gains realized/unrealized:

     

Included in earnings

      —         —    

Included in other comprehensive income

      2,183        1,010   

Settlements

      (18,050 )      (10,275 ) 

Transfers in and/or out of Level 3

      —         —    
  

 

 

    

 

 

  

Balance at end of period

    $ 4,330      $ 20,197   
  

 

 

    

 

 

  

Unrealized losses included in accumulated other comprehensive loss related to assets still held at reporting date

    $ (595 )    $ (2,778 ) 

Total gains for the period included in earnings attributable to the change in unrealized gains or losses related to assets still held at reporting date

    $ —       $ —