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 tables below:


	Marketable Securities Fair Value as of October 31, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Corporate bonds	$	234,041	$	—	$	—	$	234,041
Municipal and pre-refunded municipal bonds		—		207,397		—		207,397
Certificates of deposit		—		28,752		—		28,752
Commercial paper		—		28,167		—		28,167
Treasury bills		22,274		—		—		22,274
Federal government agencies		8,788		—		—		8,788
Mutual funds, held in rabbi trust		1,328		—		—		1,328

	$	266,431	$	264,316	$	—	$	530,747


	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
Commercial paper		—		10,781		—		10,781
Treasury bills		41,105		—		—		41,105
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 October 31, 2012
	Level 1		Level 2		Level 3		Total
Assets:
Corporate bonds	$	111,662	$	—	$	—	$	111,662
Municipal and pre-refunded municipal bonds		—		51,505		—		51,505
Certificates of deposit		—		30,630		—		30,630
Commercial paper		—		8,189		—		8,189
Treasury bills		28,803		—		—		28,803
Federal government agencies		4,713		—		—		4,713
Auction rate securities		—		—		4,330		4,330

	$	145,178	$	90,324	$	4,330	$	239,832

Level 1 assets consist of financial instruments whose value has been based on inputs that use, as their basis, readily observable market data that are actively quoted and are validated through external sources, including third-party pricing services and brokers.

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

Level 3 consists of financial instruments where there was no active market as of January 31, 2013 and October 31, 2012. During April 2013, we sold all of our remaining ARS for approximately $4.6 million in cash. As a result, there were no Level 3 investments at October 31, 2013. The Company’s ARS had a par value and a recorded fair value of $4.9 million and $4.3 million, respectively, prior to the sale in April 2013 and as of January 31, 2013 and October 31, 2012.

Below is a reconciliation of the beginning and ending ARS balances that the Company valued using a Level 3 valuation for the periods shown.


	Three Months Ended October 31, 2013		Fiscal Year Ended January 31, 2013			Three Months Ended October 31, 2012
Balance at beginning of period	$	—	$	20,197		$	4,330
Total gains realized/unrealized:
Included in earnings		—		—			—
Included in other comprehensive income		—		2,183			—
Settlements		—		(18,050	)		—
Transfers in and/or out of Level 3		—		—			—

Balance at end of period	$	—	$	4,330		$	4,330

Unrealized losses included in accumulated other comprehensive loss related to assets still held at reporting date	$	—	$	(595	)	$	(595	)

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	$	—	$	—		$	—


	Nine Months Ended October 31, 2013			Nine Months Ended October 31, 2012
Balance at beginning of period	$	4,330		$	20,197
Total (losses)/gains realized/unrealized:
Included in earnings		(345	)		—
Included in other comprehensive income		595			2,183
Settlements		(4,580	)		(18,050	)
Transfers in and/or out of Level 3		—			—

Balance at end of period	$	—		$	4,330

Unrealized losses included in accumulated other comprehensive loss related to assets still held at reporting date	$	—		$	(595	)

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	$	—		$	—

The fair value of cash and cash equivalents (Level 1) approximate carrying value since cash and cash equivalents consist of short-term highly liquid investments with maturities of three months or less. As of October 31, 2013, cash and cash equivalents included cash on hand, cash in banks and money market accounts.