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 July 31, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Corporate bonds	$	148,923	$	—	$	—	$	148,923
Municipal and pre-refunded municipal bonds		—		74,526		—		74,526
Certificates of deposit		—		16,850		—		16,850
Treasury bills		15,803		—		—		15,803
Mutual funds, held in rabbi trust		3,089		—		—		3,089
Commercial paper		—		2,896		—		2,896
Federal government agencies		1,780		—		—		1,780

	$	169,595	$	94,272	$	—	$	263,867


	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
Certificates of deposit		—		39,854		—		39,854
Treasury bills		46,455		—		—		46,455
Mutual funds, held in rabbi trust		1,666		—		—		1,666
Commercial paper		—		35,107		—		35,107
Federal government agencies		4,293		—		—		4,293

	$	361,837	$	286,398	$	—	$	648,235


	Marketable Securities Fair Value as of July 31, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Corporate bonds	$	175,229	$	—	$	—	$	175,229
Municipal and pre-refunded municipal bonds		—		192,361		—		192,361
Certificates of deposit		—		33,694		—		33,694
Treasury bills		24,344		—		—		24,344
Mutual funds, held in rabbi trust		852		—		—		852
Commercial paper		—		8,292		—		8,292
Federal government agencies		7,793		—		—		7,793

	$	208,218	$	234,347	$	—	$	442,565

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 assets consist of financial instruments where there has been no active market. During April 2013, the Company sold all of its remaining auction rate securities (“ARS”) for approximately $4,580 in cash. The Company’s ARS had a par value and recorded fair value of $4,925 and $4,330 respectively, prior to the sale in April 2013.

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 July 31, 2014, cash and cash equivalents included cash on hand, cash in banks, money market accounts and marketable securities with maturities of less than three months at the time of purchase.