Fair Value

12 Months Ended

Jun. 30, 2020

Fair Value of Assets and Liabilities

We measure fair value at 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. In determining fair value, the assumptions that market participants would use in pricing an asset or liability (the inputs) are based on a tiered fair value hierarchy consisting of three levels, as follows:

Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar instruments in active markets or for similar markets that are not active.

Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants would price the asset or liability.

Valuation techniques for assets and liabilities include methodologies such as the market approach, the income approach or the cost approach, and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are only utilized to the extent that observable inputs are not available or cost-effective to obtain.

At June 30, 2020 and June 30, 2019, our assets and liabilities measured at fair value on a recurring basis were as follows:


	June 30, 2020														June 30, 2019
	Fair Value Measurements Using Input Types												Fair Value Measurements Using Input Types
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Money market funds (cash and cash equivalents)	$	354	$	—	$	—	$	354	$	2,807	$	—	$	—	$	2,807
Available for sale securities - Debt

Government - U.S.	—		10,148		—		10,148		—		7,479		—		7,479
Total available for sale securities	$	—	$	10,148	$	—	$	10,148	$	—	$	7,479	$	—	$	7,479


Total assets	$	354	$	10,148	$	—	$	10,502	$	2,807	$	7,479	$	—	$	10,286

Liabilities
Short-term derivative interest rate swap	$	—	$	1,631	$	—	$	1,631	$	—	$	37	$	—	$	37
Long-term derivative interest rate swap	$	—	$	3,448	$	—	$	3,448	$	—	$	1,248	$	—	$	1,248
Total liabilities	$	—	$	5,079	$	—	$	5,079	$	—	$	1,285	$	—	$	1,285

Fair Value of Financial Instruments

We have certain financial instruments which consist of cash and cash equivalents, cash held for customers, marketable securities, accounts receivable, notes receivable, contract assets, accounts payable, customer account liabilities, derivative interest rate swaps and debt drawn on our Credit Facility. Fair value information for each of these instruments is as follows:

• Cash and cash equivalents, cash held for customers, accounts receivable, notes receivable, contract assets, accounts payable and customer account liabilities fair values approximate their carrying values, due to the expected duration of these instruments.

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

• Marketable securities classified as available for sale are recorded at fair value. Unrealized gains and losses are included as a component of other accumulated comprehensive 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 securities classified as available for sale.

• The fair value of our derivative interest rate swaps is based on the present value of projected cash flows that will occur over the life of the instruments, after considering certain contractual terms of the arrangements 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 June 30, 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 $0.5 million and $0.7 million at June 30, 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.

• 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 June 30, 2020, as the instrument carries a variable rate of interest which reflects current market rates.

- 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 + Details