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, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Corporate bonds	$	309,423	$	—	$	—	$	309,423
Municipal and pre-refunded municipal bonds		—		211,437		—		211,437
Treasury bills		46,455		—		—		46,455
Certificates deposit		—		39,854		—		39,854
Commercial paper		—		35,107		—		35,107
Federal government agencies		4,293		—		—		4,293
Mutual funds, held in rabbi trust		1,666		—		—		1,666

	$	361,837	$	286,398	$	—	$	648,235


	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
Treasury bills		41,105		—		—		41,105
Certificates of deposit		—		43,235		—		43,235
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

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 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, 2014 and 2013. During the first quarter of fiscal 2014, the Company sold all of its remaining ARS for $4,580 in cash. As a result, there were no Level 3 investments as of January 31, 2014. The Company’s ARS had a par value and a recorded fair value of $4,925 and $4,330, respectively, prior to the sale and as of January 31, 2013.

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, 2014 and 2013.


	Fiscal Year Ended January 31, 2014			Fiscal Year Ended January 31, 2013
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	$	—		$	—