Fair Value Measurements

9 Months Ended

Mar. 31, 2018

Note 7. Fair Value Measurements

Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels of inputs that may be used to measure fair value, as follows:

Level 1— Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.

Level 2— Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:

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Quoted prices for similar assets or liabilities in active markets;

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Quoted prices for identical or similar assets in non-active markets;

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Inputs other than quoted prices that are observable for the asset or liability; and

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Inputs that are derived principally from or corroborated by other observable market data.

Level 3— Unobservable inputs that cannot be corroborated by observable market data and require the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

The Company’s Level 1 assets include institutional money-market funds that are classified as cash equivalents, which are valued primarily using quoted market prices in active markets for identical assets. The Company’s Level 2 assets include its U.S. government agency securities and its corporate securities as the market inputs used to value these instruments consist of market yields, reported trades and broker/dealer quotes, which are corroborated with observable market data. The tables below set forth, by level, the Company’s financial assets that were accounted for at fair value (in thousands):

	March 31, 2018
							Estimated Fair Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Cash and Cash Equivalents		Short-term Investments
Cash	$	70,392	$	—	$	—	$	70,392	$	—
Level 2
Corporate securities		533		355						888
Total	$	70,925	$	355	$	—	$	70,392	$	888

	June 30, 2017
								Estimated Fair Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Cash and Cash Equivalents		Short-term Investments
Cash	$	70,515	$	—	$	—		$	70,515	$	—
Level 1
Money market funds		1,569		—		—			1,569		—
Level 2
U.S. government agency securities		23,998		—		(89	)		—		23,909
Total	$	96,082	$	—	$	(89	)	$	72,084	$	23,909

Liabilities That Are Measured at Fair Value on a Nonrecurring Basis

The Company’s debt is measured on a non-recurring basis using Level 2 inputs based upon observable inputs of the Company’s underlying stock price and the time value of the conversion option, since an observable quoted price of the 3.50% Convertible Notes (as defined below), the 3.50% Series A Convertible Notes (as defined below) and the 3.75% Convertible Notes (as defined below) (collectively the “Notes”) are not readily available. The carrying value of the Revolving Credit Facility (as defined below) and the Term Loan (as defined below) (collectively the “Credit Facilities”, together with the Notes, “Debt”) approximate its estimated fair value as these borrowings have a variable rate structure that is based on a market observable interest rate that resets periodically. The Credit Facilities are classified as Level 2 within the fair value hierarchy.

The following table summarizes the carrying value and estimated fair value of all Debt (in thousands):

	March 31, 2018				June 30, 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value
3.50% Convertible Notes	$	—	$	—	$	44,099	$	48,146
3.50% Series A Convertible Notes		—		—		68,924		74,982
3.75% Convertible Notes		68,598		96,900		—		—
Revolving Credit Facility		28,007		28,007		51,548		51,548
Term Loan		37,716		37,716		—		—
Total	$	134,321	$	162,623	$	164,571	$	174,676

- 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.

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