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FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Mar. 31, 2021

Pursuant to the accounting guidance for fair value measurements and its subsequent updates, fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The accounting guidance establishes a three-tier fair value hierarchy that requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1—Quoted prices in active markets for identical assets or liabilities;

Level 2—Inputs other than the quoted prices in active markets, that are observable either directly or indirectly;

Level 3—Unobservable inputs based on the Company’s own assumption.

The Company records securities available-for-sale at fair value on a recurring basis. The Company classifies its investments within Level 1 or 2 because they are valued using either quoted market prices or inputs other than quoted prices which are directly or indirectly observable in the market, including readily-available pricing sources for the identical underlying security which may not be actively traded.

The Company’s fixed income available-for-sale securities consist of high-quality investment grade securities from diverse issuers. The valuation techniques used to measure the fair value of the Company’s marketable securities incorporate bond terms and conditions, current performance data, proprietary pricing models, real time quotes from contributing dealers, trade prices and other market data.

The Company held no Level 3 financial instruments as of March 31, 2021 and June 30, 2020.

The following tables summarize the Company’s financial instruments’ adjusted cost, gross unrealized gains and losses, and fair value by significant investment category as of March 31, 2021 and June 30, 2020 (in thousands):


	March 31, 2021
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents (1)		Short-Term Investments		Long-Term Investments
Level 1
Money market funds	$	724	$	—	$	—	$	724	$	724	$	—	$	—
Subtotal	$	724	$	—	$	—	$	724	$	724	$	—	$	—

Level 2

Corporate securities	$	1,736	$	4	$	(1)	$	1,739	$	—	$	1,013	$	726


Subtotal	$	1,736	$	4	$	(1)	$	1,739	$	—	$	1,013	$	726

Total	$	2,460	$	4	$	(1)	$	2,463	$	724	$	1,013	$	726

(1) Cash and cash equivalents on the consolidated balance sheets includes securities that have a maturity of three months or less at the date of purchase. The carrying amount approximates fair value, primarily due to the short maturity of cash equivalent instruments.


	June 30, 2020
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents (1)		Short-Term Investments		Long-Term Investments
Level 1
Money market funds	$	1,055	$	—	$	—	$	1,055	$	1,055	$	—	$	—
Subtotal	$	1,055	$	—	$	—	$	1,055	$	1,055	$	—	$	—

Level 2

Corporate securities	$	1,429	$	9	$	—	$	1,438	$	—	$	925	$	513


Subtotal	$	1,429	$	9	$	—	$	1,438	$	—	$	925	$	513

Total	$	2,484	$	9	$	—	$	2,493	$	1,055	$	925	$	513

For the three and nine months ended March 31, 2021 the Company did not recognize any net gains or losses from accumulated other comprehensive income related to unrealized gains or losses. For the three months ended March 31, 2020, the Company's reclassified realized net loss to earnings from accumulated other comprehensive income related to unrealized gains or losses, was immaterial.

For the nine months ended March 31, 2020, the Company reclassified realized net gain of $0.4 million to earnings from accumulated other comprehensive income related to unrealized gains or losses.

During the three and nine months ended March 31, 2021, interest income on the Company’s investment securities was immaterial.

During the three and nine months ended March 31, 2020, the Company had $0.2 million and $1.0 million interest income on the Company's investment securities.

The following table represents the Company's marketable securities that had been in continuous unrealized loss position for less than 12 months and for 12 months or greater as of March 31, 2021 (in thousands):


	Continuous Unrealized Loss
	Less than 12 Months		12 Months or Greater		Total
Fair Value of marketable securities	$	1,133	$	—	$	1,133
Unrealized Loss	(1)		—		(1)

The Company had no continuous unrealized loss position from marketable securities as of June 30, 2020.

The following table represents the adjusted costs and fair value of cash equivalents and investments by contractual maturity as of March 31, 2021 (in thousands):


	Available-For-Sale
	Adjusted Cost		Fair Value
Due within 1 year and money market funds	$	1,734	$	1,737
Due after 1 year through 5 years	726		726
Total	$	2,460	$	2,463

For certain of the Company’s financial instruments, other than those presented in the disclosures above, including cash, accounts receivable, accounts payable and other current liabilities, the carrying amounts approximate fair value due to their short maturities.

As of March 31, 2021 and June 30, 2020, the Company had outstanding loans associated with its credit facilities, which are carried at historical cost. The fair value of the Company’s debt disclosed below was estimated based on the current rates offered to the Company for debt with similar terms and remaining maturities and was a Level 2 measurement. As of March 31, 2021 and June 30, 2020, the fair value of the Company’s debt, which is carried at historical cost was $575.0 million and $655.0 million, respectively.

- 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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