Recent Accounting Pronouncements (Policies)

9 Months Ended

Mar. 31, 2020

Recently Adopted Pronouncements and Accounting Pronouncements to be Adopted

Recently Adopted Pronouncements

Leases: In February 2016, the Financial Accounting Standards Board (FASB) issued an accounting standard update which requires balance sheet recognition of a lease liability and a corresponding right-of-use (ROU) asset for all leases unless, as a policy election, a lessee elects not to apply the standard to short-term leases. The pattern of recognition of lease related revenue and expenses are dependent on its classification. We adopted the standard on July 1, 2019 and elected the package of practical expedients which permitted us not to reassess prior conclusions regarding lease identification, lease classification and treatment of initial direct costs. For all asset classes, we adopted the lessee practical expedient to combine lease and non-lease components and made a policy election not to recognize a ROU asset or lease liability for leases with a term of less than twelve months. We also availed ourselves of the adoption expedient not to adjust our comparative period financial statements for the effects of the new standard or make additional disclosures for periods prior to the adoption date.

Upon adoption, we recognized operating ROU assets and operating lease liabilities of $26.7 million and $29.0 million, respectively, in our consolidated balance sheet. The difference between the ROU assets and lease liabilities is primarily related to the reclassification of deferred rent on our balance sheet at the date of adoption. The adoption of this standard did not have a material impact on our consolidated statements of comprehensive income (loss) or consolidated statements of cash flows.

Please refer to Note 10 Commitments and Contingencies for discussion of the adoption of this new standard.

Accounting Pronouncements to be Adopted

Financial Instruments - Credit Losses: In June 2016, the FASB issued an accounting standard update that replaces the incurred loss impairment model with an expected loss model for financial assets held at amortized cost, eliminates the concept of other-than-temporary impairment and requires credit losses associated with available-for-sale debt securities to be recorded through an allowance rather than a reduction in the amortized cost basis of the security. The changes are expected to result in earlier recognition of credit losses associated with financial assets. The estimate of expected credit losses will require entities to incorporate historical information, current information and reasonable and supportable forecasts. This standard also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. We will adopt this standard on July 1, 2020, on a modified retrospective basis, with the cumulative-effect recorded as an adjustment to the opening balance of accumulated deficit as of the effective date. We are currently evaluating the anticipated impact of this standard on our financial statements and do not currently expect the adoption of this standard to have a material impact on our financial statements.

Goodwill Impairment: In January 2017, the FASB issued an accounting standard update to simplify the test for goodwill impairment which removes the requirement to compare the carrying value of goodwill against its implied fair value. Under the revised standard, an entity will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss should not exceed the total amount of goodwill allocated to the reporting unit. We will adopt this standard on July 1, 2020 on a prospective basis and do not currently expect the adoption of this standard to have a material impact on our financial statements.

Income Taxes: In December 2019, the FASB issued an accounting standard update related to simplifying the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocations, basis differences for changes in ownership interest in equity method investments, and the calculation of interim period income tax. The standard also simplifies other aspects of accounting for taxes. The standard is effective for us on July 1, 2021, with early adoption permitted. We are currently in the process of evaluating the effects of this update on our financial statements, including potential early adoption.

Fair Value of Financial Instruments

We have certain financial instruments which consist of cash and cash equivalents, cash and cash equivalents held for customers, marketable securities, accounts receivable, accounts payable, customer account liabilities, derivative interest rate swaps, assets related to deposits made to fund future requirements associated with Israeli severance arrangements and debt drawn on our Credit Facility (see Note 11 Indebtedness). Fair value information for each of these instruments is as follows:


•	Cash and cash equivalents, cash and cash equivalents held for customers, accounts receivable, accounts payable and customer account liabilities fair values approximates their carrying values, due to the short-term nature of these instruments.


•	Marketable securities classified as held to maturity, all of which mature within one year, are recorded at amortized cost, which at March 31, 2020 and June 30, 2019, approximated fair value.


•	Marketable debt securities classified as available for sale are recorded at fair value. Unrealized gains and losses are included as a component of other accumulated comprehensive income (loss) in stockholders’ equity, net of tax. We use the specific identification method to determine any realized gains or losses from the sale of our marketable debt securities classified as available for sale.


•	The fair value of our derivative interest rate swaps are based on the present value of projected cash flows that will occur over the life of the instruments, after considering certain contractual terms and counterparty credit risk.


•	The carrying value of assets related to deposits we have made to fund future requirements associated with Israeli severance arrangements was $1.0 million and $1.2 million at March 31, 2020 and June 30, 2019, respectively, which approximated their fair value.


•	We have certain other investments for which there is no readily determinable fair value. The carrying value of these investments was $0.9 million and $0.7 million at March 31, 2020 and June 30, 2019, respectively, and they are reported as a component of our other assets. These investments are recorded at cost, less impairment (if any), plus or minus adjustments for observable price changes.

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We have borrowings of $180 million against our Credit Facility. The fair value of these borrowings, which are classified as Level 2, approximates their carrying value at March 31, 2020, as the instrument carries a variable rate of interest which reflects current market rates.