Fair Value Measurements

3 Months Ended

Oct. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair Value Hierarchy

We apply the provisions of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” (“ASC 820”), for our financial assets and liabilities that are re-measured and reported at fair value each reporting period and our nonfinancial assets and liabilities that are re-measured and reported at fair value on a non-recurring basis. We define 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. ASC 820 establishes a three level fair value hierarchy to prioritize the inputs used in valuations, as defined below:

Level 1: Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

Our financial assets that are re-measured at fair value on a recurring basis include money market funds that are classified as cash and cash equivalents in the consolidated balance sheets. These money market funds are classified within Level 1 of the fair value hierarchy and are valued using quoted market prices for identical assets.

In connection with the Jet Prep Ltd. ("Jet Prep") acquisition in fiscal 2014, we assumed a contingent obligation payable to the Israeli Government based on future sales. This fair value measurement was based on significant inputs not observed in the market and thus represent Level 3 measurements. In November 2017, the Israeli Government formally notified us that they would forgive any future amounts payable due to our decision to exit the Jet Prep business and we reduced the fair value of this obligation to $0 as of October 31, 2017. See Note 10, "Commitments and Contingencies."

The fair values of the Company’s financial instruments measured on a recurring basis were categorized as follows:

	October 31, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents:
Money markets	$	102	$	—	$	—	$	102
Total assets	$	102	$	—	$	—	$	102
Liabilities:
Accrued expenses:
Assumed contingent obligation	—		—		—		—
Contingent guaranteed obligation	—		—		—		—
Total accrued expenses	—		—		—		—
Long-term debt(1)	—		168,000		—		168,000
Other long-term liabilities:
Assumed contingent obligation	—		—		—		—
Contingent guaranteed obligation	—		—		—		—
Total other long-term liabilities:	—		—		—		—
Total liabilities	$	—	$	168,000	$	—	$	168,000

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(1) Fair value estimated using Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active.

	July 31, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents:
Money markets	$	102	$	—	$	—	$	102
Total assets	$	102	$	—	$	—	$	102
Liabilities:
Accrued expenses:
Assumed contingent obligation	—		—		12		12
Contingent guaranteed obligation	—		—		—		—
Total accrued expenses	—		—		12		12
Long-term debt(1)	—		126,000		—		126,000
Other long-term liabilities:
Assumed contingent obligation	—		—		1,126		1,126
Contingent guaranteed obligation	—		—		—		—
Total other long-term liabilities:	—		—		1,126		1,126
Total liabilities	$	—	$	126,000	$	1,138	$	127,138

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(1) Fair value estimated using Level 2 inputs, which were quoted prices for identical or similar instruments in markets that are not active.

With the exception of the resolution of the Jet Prep obligation, there was no Level 3 activity during the three months ended October 31, 2017. The Level 3 activity during the three months ended October 31, 2016 was not material.

Disclosure of Fair Value of Financial Instruments

As of October 31, 2017 and July 31, 2017, the carrying amounts for cash and cash equivalents (excluding money markets), accounts receivable and accounts payable approximated fair value due to the short maturity of these instruments.