Fair value of financial instruments

12 Months Ended

Jun. 30, 2019

We measure certain financial instruments at fair value on a recurring basis. We have established a hierarchy, which consists of three levels, for disclosure of the inputs used to determine the fair value of our financial instruments.

All of our cash equivalents and short-term investments are classified within Level 1 or Level 2. The fair values of these financial instruments were determined using the following inputs at June 30, 2019 (in thousands):



	Fair Value Measurements at June 30, 2019 Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Description
Cash equivalents:
Money market mutual funds	$	790	$	790	$	—	$	—
Commercial paper	498		—		498		—
Total cash equivalents	1,288		790		498		—
Short-term investments:
U.S. treasury securities	3,572		3,572		—		—
U.S. agency securities	3,009		—		3,009		—
Asset-backed securities	12,413		—		12,413		—
Municipal securities	4,140		—		4,140		—
Commercial paper	1,986		—		1,986		—
Corporate bonds	45,734		—		45,734		—
Total debt securities	70,854		3,572		67,282		—
Marketable equity securities	1,349		1,349		—		—
Total short-term investments	72,203		4,921		67,282		—
Cash equivalents and short-term investments	$	73,491	$	5,711	$	67,780	$	—

The fair values of our financial instruments were determined using the following inputs at June 30, 2018 (in thousands):



	Fair Value Measurements at June 30, 2018 Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Description
Cash equivalents:
Money market mutual funds	$	3,751	$	3,751	$	—	$	—
Commercial paper	2,666		—		2,666		—
U.S. treasury securities	498		498		—		—
Total cash equivalents	6,915		4,249		2,666		—
Short-term investments:
U.S. treasury securities	4,703		4,703		—		—
U.S. agency securities	2,408		—		2,408		—
Asset-backed securities	7,969		—		7,969		—
Municipal securities	2,216		—		2,216		—
Commercial paper	1,249		—		1,249		—
Corporate bonds	49,284		—		49,284		—
Total short-term investments	67,829		4,703		63,126		—
Cash equivalents and short-term investments	$	74,744	$	8,952	$	65,792	$	—

Accretion of premium, net of discounts, on short-term investments totaled $(30,000) and $192,000 in fiscal 2019 and 2018, respectively.

Where applicable, we use quoted prices in active markets for identical assets to determine the fair value of short-term investments. If quoted prices in active markets for identical assets are not available to determine fair value, we use quoted prices for similar assets and liabilities or inputs that are observable either directly or indirectly. If quoted prices for identical or similar assets are not available, we use third party valuations utilizing underlying assets assumptions.

There were no transfers between Level 1 and Level 2 financial instruments in fiscal 2019 and 2018, respectively.

We did not have any financial liabilities measured at fair value on a recurring basis as of June 30, 2019 or 2018.

Non-marketable equity investments

Our non-marketable equity securities are investments in privately held companies without readily determinable market values.

Prior to July 1, 2018, we accounted for our non-marketable equity investments at cost less impairment. Realized gains and losses on non-marketable equity investments sold or impaired were recognized in other income (expense), net. As of June 30, 2018, non-marketable equity investments accounted for under the cost method had a carrying value of $708,000.

On July 1, 2018, we adopted ASU 2016-01, which changed the way we account for non-marketable equity securities. The carrying value of our non-marketable equity securities is measured at cost and adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment (referred to as the measurement alternative). All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in other income (expense), net. Because we adopted ASU 2016-01 prospectively for investments without readily determinable market values, we apply the measurement alternative commencing July 1, 2018. Non-marketable equity securities that are remeasured are classified within Level 3 in the fair value hierarchy because we estimate the value based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and obligations of the securities we hold.

As of June 30, 2019, we had recorded an unrealized gain of $1.1 million upon the May 2019 initial public offering of stock of a non-marketable equity investee on the Australian Stock Exchange. We reclassified this investment to marketable equity securities as of June 30, 2019.

We did not record any impairment losses during fiscal 2019, 2018 and 2017. As of June 30, 2019, the carrying value of our non-marketable equity securities was $458,000.

- 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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