Fair Value Measurements

6 Months Ended

Jan. 31, 2013

Fair Value Measurements

7. FAIR VALUE MEASUREMENTS

The Company determines its fair value measurements for assets and liabilities based upon the provisions of Topic 820, Fair Value Measurements and Disclosures to the FASB ASC.

The Company holds short-term money market investments and certain other financial instruments which are carried at fair value. The Company determines fair value based upon quoted prices, when available, or through the use of alternative approaches when market quotes are not readily accessible or available.

Valuation techniques for fair value are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s best estimate, considering all relevant information. These valuation techniques involve some level of management estimation and judgment. The valuation process to determine fair value also includes making appropriate adjustments to the valuation model outputs to consider risk factors.

The fair value hierarchy of the Company’s inputs used in the determination of fair value for assets and liabilities during the current period consists of three levels. Level 1 inputs are composed of unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 inputs incorporate the Company’s own best estimate of what market participants would use in pricing the asset or liability at the measurement date where consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. If inputs used to measure an asset or liability fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the asset or liability. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following table presents financial assets and liabilities measured at fair value and their related valuation inputs as of January 31, 2013 and as of July 31, 2012:

			Fair Value Measurements at Reporting Date Using (in thousands)
January 31, 2013	Total Fair Value of  Asset or Liability		Quoted Prices in  Active Markets for Identical Assets (Level 1)		Significant Other Observable  Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Cash and cash equivalents (1)	$	32,358	$	32,358	$	—	$	—
Marketable securities (2)		89,528		9,335		80,193		—
Total assets	$	121,886	$	41,693	$	80,193	$	—

July 31, 2012	Total Fair Value of  Asset or Liability		Quoted Prices in  Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Cash and cash equivalents (1)	$	29,446	$	29,081	$	365	$	—
Marketable securities (2)		104,932		7,226		97,706		—
Total assets	$	134,378	$	36,307	$	98,071	$	—

(1) Cash and cash equivalents as of January 31, 2013 and July 31, 2012 includes cash held in operating accounts of approximately $29.4 million and $28.6 million, respectively, that are not subject to fair value measurements. For purposes of this disclosure they are included as having Level 1 inputs.

(2) Marketable securities as of January 31, 2013 and July 31, 2012 exclude approximately $5.9 million and $2.8 million, respectively, of commercial paper which is held to maturity and not subject to fair value measurements.

The carrying value of accounts receivable, prepaid expenses and accounts payable approximate fair value due to their short-term nature.

There were no assets or liabilities recorded at fair value on a non-recurring basis requiring valuation disclosures as of January 31, 2013 or as of July 31, 2012.