Fair Value Measurements

6 Months Ended

Jan. 31, 2015

Fair Value Measurements

9. 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 consideration of 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, 2015 and July 31, 2014:

			Fair Value Measurements at Reporting Date Using (in thousands)
January 31, 2015	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)	$	73,419	$	73,419	$	—	$	—
Marketable securities		56,890		5,826		51,064		—
Total assets	$	130,309	$	79,245	$	51,064	$	—
July 31, 2014	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)	$	59,269	$	59,269	$	—	$	—
Marketable securities		39,659		3,974		35,685		—
Total assets	$	98,928	$	63,243	$	35,685	$	—

(1) Cash and cash equivalents as of January 31, 2015 and July 31, 2014 included cash held in operating accounts of approximately $71.3 million and $56.0 million, respectively that are not subject to fair value measurements. For purposes of this disclosure, they are included as having level 1 inputs.

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

There were no assets or liabilities not measured at fair value but for which fair value is required to be disclosed, except for the Company’s long-term debt, which includes term loans (and seller-financed promissory notes for the period ended July 31, 2014). The fair value of the Company’s long-term debt at January 31, 2015 and July 31, 2014 was $27.5 million and $68.7 million, respectively, and was estimated using inputs derived principally from market observable data, including current rates offered to the Company for debt of the same or similar maturities. Within the hierarchy of fair value measurement, these are level 2 inputs.