Note 3 - Fair Value Measurements

6 Months Ended

Dec. 31, 2015

(3)	Fair Value Measurements

A fair value hierarchy has been established that requires the Company to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy describes three levels of inputs that may be used to measure fair value:


	Level 1	Quoted prices in active markets for identical assets or liabilities.
	Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
	Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table sets forth the financial assets and liabilities that were measured at fair value on a recurring basis at December 31 and June 30, 2015, by level within the fair value hierarchy. The assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Notes to the Condensed Consolidated Financial Statements (unaudited)

The Company’s long-term investments have been classified as Level 1 and 2, which have been initially valued at the transaction price and subsequently revalued, at the end of each reporting period, utilizing a third party pricing service. The pricing service utilizes industry standard valuation models and observable market inputs to determine value that include surveying the bond dealer community, obtaining benchmark quotes, incorporating relevant trade data, and updating spreads daily. There have been no transfers of assets or liabilities between the fair value measurement classifications.

(in millions) December 31 , 2015	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Cash equivalents	$	9.0	$	9.0	$	—	$	—
Short-term investments available-for-sale		13.0		7.9		5.1		—
Long-term investments available-for-sale		5.2		3.0		2.2		—

Total	$	27.2	$	19.9	$	7.3	$	—

(in millions) June 30, 2015	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Cash equivalents	$	6.3	$	6.3	$	—	$	—
Short-term investments available-for-sale		12.9		12.9		—		—
Long-term investments available-for-sale		7.9		—		7.9		—

Total	$	27.1	$	19.2	$	7.9	$	—

Cash equivalents consist primarily of money market funds. Short and long investments consist of U.S. agency securities, certificates of deposit, corporate securities and U.S. Treasury securities, classified as available-for-sale and have maturities greater than 365 days from the date of acquisition.

The following table shows the unrealized gains and losses and fair values for those investments as of December 31 and June 30, 2015 aggregated by major security type:

(in millions) December 31 , 2015	At Cost		Unrealized Gains		Unrealized (Losses)		At Fair Value

Money market funds	$	9.0	$	—	$	—	$	9.0
Debt securities of U.S. government agencies		2.0		—		—		2.0
U.S. Treasury securities		7.0		—		—		7.0
Corporate notes		3.9		—		—		3.9
Certificates of deposit		5.3		—		—		5.3

Total	$	27.2	$	—	$	—	$	27.2

(in millions) June 30, 2015	At Cost		Unrealized Gains		Unrealized (Losses)			At Fair Value

Money market funds	$	6.3	$	—	$	—		$	6.3
Debt securities of U.S. government agencies		6.5		—		—			6.5
U.S. Treasury securities		9.6		—		(0.1	)		9.5
Corporate notes		2.9		—		—			2.9
Certificates of deposit		1.9		—		—			1.9

Total	$	27.2	$	—	$	(0.1	)	$	27.1

As of December 31 and June 30, 2015, the Company had investments in an unrealized loss position below material disclosure thresholds in the table above. The Company has determined that the unrealized losses on these investments are temporary in nature and expects the security to mature at its stated maturity principal. All available-for-sale securities held at December 31, 2015, will mature within a two year period.

The fair value of cash, accounts receivable, accounts payable and accrued liabilities approximate their carrying value because of the short-term nature of these financial instruments respectively, at December 31

and June 30, 2015

. The fair value of the Company’s short and long term note payable, which is measured using Level 2 inputs, approximates book value, at December 31

and June 30, 2015.

- 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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