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Fair Value of Financial Instruments | 6 Months Ended
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Dec. 31, 2024
Fair Value Disclosures [Abstract] |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Accounting guidance defines 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. Under this guidance, the Company classifies certain assets and liabilities based on the fair value hierarchy, which aggregates fair value measured assets and liabilities based upon the following levels of inputs: •Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; •Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and •Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The assets and liabilities maintained by the Company that are required to be measured at fair value on a recurring basis include deferred compensation plan investments, forward foreign currency exchange contracts, foreign currency hedge agreements, interest rate swap agreements and contingent consideration owed to the sellers of Advantix Solutions Group, Inc ("Advantix") and Secure Path Networks, LLC dba Resourcive ("Resourcive"). The carrying value of debt is considered to approximate fair value, as the Company’s debt instruments are indexed to a variable rate using the market approach (Level 2). The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis at December 31, 2024:
| Total |  | Quoted prices in active markets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
| (in thousands)
Assets: |  |  |  |  |  |  |
Deferred compensation plan investments, current and non-current | $ | 31,852 |  |  | $ | 31,852 |  |  | $ | — |  |  | $ | — |
Interest rate swap agreement | 1,658 |  |  | — |  |  | 1,658 |  |  | — |
Foreign currency hedge | 30 |  |  | — |  |  | 30 |  |  | — |
Total assets at fair value | $ | 33,540 |  |  | $ | 31,852 |  |  | $ | 1,688 |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |
Deferred compensation plan investments, current and non-current | $ | 31,793 |  |  | $ | 31,793 |  |  | $ | — |  |  | $ | — |
Forward foreign currency exchange contracts | 24 |  |  | — |  |  | 24 |  |  | — |
Liability for contingent consideration, current and non-current | 18,343 |  |  | — |  |  | — |  |  | 18,343 |
Total liabilities at fair value | $ | 50,160 |  |  | $ | 31,793 |  |  | $ | 24 |  |  | $ | 18,343 |
The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis at June 30, 2024:
| Total |  | Quoted prices in active markets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3)
| (in thousands)
Assets: |  |  |  |  |  |  |
Deferred compensation plan investments, current and non-current | $ | 31,014 |  |  | $ | 31,014 |  |  | $ | — |  |  | $ | — |
Foreign currency hedge | 345 |  |  | — |  |  | 345 |  |  | — |
Interest rate swap agreement | 2,698 |  |  | — |  |  | 2,698 |  |  | — |
Total assets at fair value | $ | 34,057 |  |  | $ | 31,014 |  |  | $ | 3,043 |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |
Deferred compensation plan investments, current and non-current | $ | 31,014 |  |  | $ | 31,014 |  |  | $ | — |  |  | $ | — |
Forward foreign currency exchange contracts | 12 |  |  | — |  |  | 12 |  |  | — |
Total liabilities at fair value | $ | 31,026 |  |  | $ | 31,014 |  |  | $ | 12 |  |  | $ | — |
The investments in the deferred compensation plan are held in a "rabbi trust" and include securities and cash equivalents for payment of non-qualified benefits for certain retired, terminated and active employees. These investments are recorded to prepaid expenses and other current assets or other non-current assets depending on their corresponding, anticipated distribution dates to recipients, which are reported in accrued expenses and other current liabilities or other long-term liabilities, respectively. Derivative instruments, such as foreign currency forward contracts, are measured using the market approach on a recurring basis considering foreign currency spot rates and forward rates quoted by banks or foreign currency dealers and interest rates quoted by banks (Level 2). Fair values of interest rate swaps are measured using standard valuation models with inputs that can be derived from observable market transactions, including SOFR spot and forward rates (Level 2). Foreign currency contracts and interest rate swap agreements are classified in the Condensed Consolidated Balance Sheets as prepaid expenses and other non-current assets or accrued expenses and other long-term liabilities, depending on the respective instruments' favorable or unfavorable positions. See Note 8 - Derivatives and Hedging Activities. The Company recorded a contingent consideration liability at the acquisition date of both Advantix and Resourcive. These liabilities represent the amounts payable to sellers, as outlined under the terms of the asset purchase agreements, based upon the achievement of a projected earnings before interest expense, taxes, depreciation and amortization, net of specific pro forma adjustments. The following tables represent the Company's contingent consideration liabilities at fair value at December 31, 2024:
| Quarter ended December 31, 2024 |  |
| Specialty Technology Solutions |  | Intelisys & Advisory |  | Total |  |  |  |  |  |
| (in thousands)
Fair value at beginning of period | $ | 7,500 |  |  | $ | 9,700 |  |  | $ | 17,200 |  |  |  |  |  |  |
Change in fair value of contingent consideration | 473 |  |  | 670 |  |  | 1,143 |  |  |  |  |  |  |
Fair value at end of period | $ | 7,973 |  |  | $ | 10,370 |  |  | $ | 18,343 |  |  |  |  |  |  |
| Six months ended December 31, 2024 |  |  |  |  |  |
| Specialty Technology Solutions |  | Intelisys & Advisory |  | Total |  |  |  |  |  |
| (in thousands)
Fair value at beginning of period | $ | — |  |  | $ | — |  |  | $ | — |  |  |  |  |  |  |
Issuance of contingent consideration | 7,500 |  |  | 9,700 |  |  | 17,200 |  |  |  |  |  |  |
Change in fair value of contingent consideration | 473 |  |  | 670 |  |  | 1,143 |  |  |  |  |  |  |
Fair value at end of period | $ | 7,973 |  |  | $ | 10,370 |  |  | $ | 18,343 |  |  |  |  |  |  |
The fair values of amounts owed are recorded in current portion of contingent consideration and long-term portion of contingent consideration in the Company’s Condensed Consolidated Balance Sheets. In accordance with ASC 805, the Company will revalue the contingent consideration liability at each reporting date through the last payment, with changes in the fair value of the contingent consideration reflected in the change in fair value of contingent consideration line item on the Company’s Condensed Consolidated Income Statements that is included in the calculation of operating income. The fair value of the contingent consideration liability associated with future earnout payments is based on several factors, including but not limited to: •estimated future results, net of pro forma adjustments set forth in the purchase agreements; •a risk premium reflective of the Company’s creditworthiness and market risk premium associated with the United States markets. Advantix Advantix is part of the Specialty Technology Solutions segment. The fair value of the contingent consideration is determined using a static discounted cash flow model. The fair value of the liability for the contingent consideration related to Advantix recognized at December 31, 2024 was $8.0 million, of which $2.0 million is classified as current. The change in fair value for the quarter ended December 31, 2024 is primarily due to the recurring amortization of the unrecognized fair value discount. Earnout payments to the sellers of Advantix are payable based on results from fiscal year 2025 to fiscal year 2028. Resourcive Resourcive is part of the Intelisys & Advisory segment. The fair value of the contingent consideration for Resourcive is determined using a Monte Carlo simulation. The fair value of the liability for the contingent consideration related to Resourcive recognized at December 31, 2024 was $10.4 million, all of which is classified as non-current and is due to the sellers of Resourcive during fiscal year 2027. The change in fair value for the quarter ended December 31, 2024 is primarily due to the recurring amortization of the unrecognized fair value discount. Valuation techniques and significant observable inputs used in recurring Level 3 fair value measurements for the Company's contingent consideration liabilities related to Advantix and Resourcive at December 31, 2024 were as follows.
Acquisition |  | Reporting Period |  | Valuation Technique |  | Significant Unobservable Inputs |  | Weighted Average Rates
Advantix |  | December 31, 2024 |  | Discounted cash flow |  | Adjusted EBITDA risk premium |  | 15.7 | %
|  |  |  |  |  | Adjusted EBITDA growth rate |  | 19.8 | %
Resourcive |  | December 31, 2024 |  | Monte Carlo |  | Adjusted EBITDA risk premium |  | 13.7 | %
|  |  |  |  |  | Simulated commission growth percentage |  | 23.0 | %

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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