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Fair Value | 9 Months Ended
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Oct. 28, 2017
Fair Value Disclosures [Abstract] |
Fair Value | (17) Fair Value We measure our financial and nonfinancial assets at fair value on a recurring basis in accordance with the guidance provided in ASC 820, “Fair Value Measurement and Disclosures” which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). In addition, ASC 820 establishes a three-tiered hierarchy for inputs used in management’s determination of fair value of financial instruments that emphasizes the use of observable inputs over the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that reflect management’s belief about the assumptions market participants would use in pricing a financial instrument based on the best information available in the circumstances. The fair value hierarchy is summarized as follows:
| • |  | Level 1—Quoted prices in active markets for identical assets or liabilities;
| • |  | Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
| • |  | Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Cash and cash equivalents, accounts receivable, accounts payable, line of credit receivable, accrued compensation, other liabilities and accrued expenses and income tax payable are reflected in the condensed consolidated balance sheet at carrying value, which approximates fair value due to the short term nature of the these instruments. Assets and Liabilities Recorded at Fair Value on a Recurring Basis Fair value is applied to our financial assets and liabilities including money market funds, available for sale securities, derivative instruments consisting of a cross-currency interest rate swap and a contingent consideration liability relating to an earnout payment on future TrojanLabel operating results. The following tables provide a summary of the financial assets and liabilities that are measured at fair value as of October 28, 2017 and January 31, 2017:
Assets measured at fair value: |  | Fair value measurement at October 28, 2017 |  |  | Fair value measurement at January 31, 2017 |
(in thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Money Market Funds (included in Cash and Cash Equivalents) |  | $ | 10 |  |  | $ | — |  |  | $ | — |  |  | $ | 10 |  |  | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |
State and Municipal Obligations (included in Securities Available for Sale) |  |  | — |  |  |  | 3,284 |  |  |  | — |  |  |  | 3,284 |  |  |  | — |  |  |  | 6,723 |  |  |  | — |  |  |  | 6,723 |
Total assets |  | $ | 10 |  |  | $ | 3,284 |  |  | $ | — |  |  | $ | 3,294 |  |  | $ | 2 |  |  | $ | 6,723 |  |  | $ | — |  |  | $ | 6,725 |
Liabilities measured at fair value: |  | Fair value measurement at October 28, 2017 |  |  | Fair value measurement at January 31, 2017 |
(in thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Swap Contracts (included in Other Liabilities) |  | $ | — |  |  | $ | 915 |  |  | $ | — |  |  | $ | 915 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Earnout Liability (included in Other Liabilities) |  |  | — |  |  |  | — |  |  |  | 916 |  |  |  | 916 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total liabilities |  | $ | — |  |  | $ | 915 |  |  | $ | 916 |  |  | $ | 1,831 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
For our money market funds and municipal obligations, we utilize the market approach to measure fair value. The market approach is based on using quoted prices for identical or similar assets. We also use the market approach to measure fair value of our derivative instruments. Our derivative liability is comprised of a cross-currency interest rate swap. This derivative instrument was measured at fair value using readily observable market inputs, such as quotations on interest rates and foreign exchange rates, and is classified as Level 2 because it is an over-the-counter contract with a bank counterparty that is not traded in an active market. The fair value of the earnout liability incurred in connection with the Company’s acquisition of TrojanLabel was determined using the option approach methodology which includes using significant inputs that are not observable in the market and therefore classified as Level 3. Key assumptions in estimating the fair value of the contingent consideration liability included (1) the estimated earnout targets over the next seven years of $0.4 million-$1.4 million, (2) the probability of success (achievement of the various contingent events) from 0.0%-46.8% and (3) a risk-adjusted discount rate of approximately 1.58%-2.76% used to adjust the probability-weighted earnout payments to their present value. At each reporting period, the contingent consideration liability is recorded at its fair value with changes reflected in other income in the condensed consolidated statements of operations. Assets and Liabilities Not Recorded at Fair Value on the Consolidated Balance Sheet As of October 28, 2017, the Company’s long-term debt, including the current portion of long-term debt not reflected in the financial statements at fair value, is reflected in the table below:
|  | Fair Value Measurement at October 28, 2017 |  |  |  |
(In thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Carrying Value |
Long-Term debt and related current maturities |  | $ | — |  |  | $ | — |  |  | $ | 9,751 |  |  | $ | 9,751 |  |  | $ | 8,648 |
On February 28, 2017, the Company entered into a term loan in the amount of $9.2 million with the Bank of America. The fair value of the Company’s long-term debt, including the current portion of long-term debt is estimated by discounting the future cash flows using current interest rates at which similar borrowings with the same maturities would be made to borrowers with similar credit ratings and is classified as Level 3.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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