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FAIR VALUE DISCLOSURES | 3 Months Ended
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Sep. 30, 2014
Fair Value Disclosures [Abstract] |
FAIR VALUE DISCLOSURES | F AIR V ALUE D ISCLOSURES Accounting Standards Codification (ASC) 820, Fair Value Measurement and Disclosures, 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. ASC 820 establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value and requires companies to disclose the fair value of their financial instruments according to a fair value hierarchy (i.e., Levels 1, 2, and 3 inputs, as defined below). The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories: Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities at the reporting date. Since valuations are based on quoted prices that are readily and regularly available in an active market, value of these products does not entail a significant degree of judgment. Level 2 – Valuations based on quoted prices in markets for which not all significant inputs are observable, directly or indirectly. Corporate debt securities valued in accordance with the evaluated price supplied by an independent service are categorized as Level 2 in the hierarchy. Other securities categorized as Level 2 include securities valued at the mean between the last reported bid and ask quotation. Level 3 – Valuations based on inputs that are unobservable and significant to the fair value measurement. 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 financial instrument. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with the investing in those securities. Because of the inherent uncertainties of valuation, the values reflected may materially differ from the values received upon actual sale of those investments. For actively traded securities, the Company values investments using the closing price of the securities on the exchange or market on which the securities principally trade. If the security is not traded on the last business day of the quarter, it is generally valued at the mean between the last bid and ask quotation. Mutual funds, which include open- and closed-end funds, exchange-traded funds, and offshore funds, are valued at net asset value or closing price, as applicable. Certain corporate debt securities are valued by an independent pricing service u sing an evaluated quote based on such factors as institutional-size trading in similar groups of securities, yield, quality maturity, coupon rate, type of issuance and individual trading characteristics and other market data. As part of its independent price verification process, the Company reviews the fair value provided by the pricing service using information such as transactions in these investments, broker quotes, market transactions in comparable investments, general market conditions and the issuer's financial condition. Debt securities that are not valued by an independent pricing service are valued based on review of similarly structured issuances in similar jurisdictions, when possible. The Company also takes into consideration numerous other factors that could affect valuation such as overall market conditions, liquidity of the security and bond structure. Securities for which market quotations are not readily available are valued at their fair value as determined by the portfolio management team. The portfolio management team includes representatives from the investment, accounting and legal/compliance departments. The portfolio management team meets periodically to consider a number of factors in determining a security’s fair value, including the security’s trading volume, market values of similar class issuances, investment personnel’s judgment regarding the market experience of the issuer, financial status of the issuer, the issuer’s management, and back testing, as appropriate. The fair values may differ from what may have been used had a broader market for these securities existed. The portfolio management team reviews inputs and assumptions and reports material items to the board of directors. Prior to March 31, 2014, the Company classified investments that were valued using the mean between the last reported bid ask quotation as Level 1 investments. The Company has determined that it is reasonable to classify these securities as Level 2 investments. This reclassification does not affect balance sheet presentation, net income or earnings per share. The following presents fair value measurements, as of September 30, 2014, and June 30, 2014, for the major categories of U.S. Global’s investments measured at fair value on a recurring basis:
|  | Fair Value Measurement using
|  | September 30, 2014
(dollars in thousands) |  | Quoted Prices (Level 1) |  | Significant Other Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
Trading securities |  |  |  |  |  |  |  |
Offshore fund |  | $ | — |  |  | $ | 794 |  |  | $ | — |  |  | $ | 794 |
Mutual funds - Fixed income |  | 16,319 |  |  | — |  |  | — |  |  | 16,319 |
Mutual funds - Domestic equity |  | 450 |  |  | — |  |  | — |  |  | 450 |
Other |  | 23 |  |  | — |  |  | — |  |  | 23 |
Total trading securities |  | 16,792 |  |  | 794 |  |  | — |  |  | 17,586 |
Available-for-sale securities |  |  |  |  |  |  |  |
Common stock - Domestic |  | 1,098 |  |  | — |  |  | — |  |  | 1,098 |
Common stock - International |  | 1,024 |  |  | 3 |  |  | — |  |  | 1,027 |
Corporate debt |  | 192 |  |  | 977 |  |  | 250 |  |  | 1,419 |
Mutual funds - Fixed income |  | 1,231 |  |  | — |  |  | — |  |  | 1,231 |
Mutual funds - Domestic equity |  | 548 |  |  | — |  |  | — |  |  | 548 |
Other |  | 229 |  |  | — |  |  | — |  |  | 229 |
Total available-for-sale securities |  | 4,322 |  |  | 980 |  |  | 250 |  |  | 5,552 |
Total Investments Measured at Fair Value on a Recurring Basis |  | $ | 21,114 |  |  | $ | 1,774 |  |  | $ | 250 |  |  | $ | 23,138 |
|  | Fair Value Measurement using
|  | June 30, 2014
(dollars in thousands) |  | Quoted Prices (Level 1) |  | Significant Other Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
Trading securities |  |  |  |  |  |  |  |
Offshore fund |  | $ | — |  |  | $ | 998 |  |  | $ | — |  |  | $ | 998 |
Mutual funds - Fixed income |  | 16,333 |  |  | — |  |  | — |  |  | 16,333 |
Mutual funds - Domestic equity |  | 459 |  |  | — |  |  | — |  |  | 459 |
Other |  | 27 |  |  | — |  |  | — |  |  | 27 |
Total trading securities |  | 16,819 |  |  | 998 |  |  | — |  |  | 17,817 |
Available-for-sale securities |  |  |  |  |  |  |  |
Common stock - Domestic |  | 1,118 |  |  | — |  |  | — |  |  | 1,118 |
Common stock - International |  | 1,406 |  |  | 3 |  |  | — |  |  | 1,409 |
Corporate debt |  | 292 |  |  | 1,090 |  |  | 250 |  |  | 1,632 |
Mutual funds - Fixed income |  | 1,247 |  |  | — |  |  | — |  |  | 1,247 |
Mutual funds - Domestic equity |  | 550 |  |  | — |  |  | — |  |  | 550 |
Other |  | 240 |  |  | — |  |  | — |  |  | 240 |
Total available-for-sale securities |  | 4,853 |  |  | 1,093 |  |  | 250 |  |  | 6,196 |
Total Investments Measured at Fair Value on a Recurring Basis |  | $ | 21,672 |  |  | $ | 2,091 |  |  | $ | 250 |  |  | $ | 24,013 |
As of September 30, 2014, approximately 91 percent of the Company’s financial assets measured at fair value are derived from Level 1 inputs, eight percent of the Company’s financial assets measured at fair value are derived from Level 2 inputs, and the remaining one percent are Level 3 inputs. As of June 30, 2014, approximately 90 percent of the Company’s financial assets measured at fair value are derived from Level 1 inputs, nine percent of the Company’s financial assets measured at fair value are derived from Level 2 inputs, and the remaining one percent are Level 3 inputs. The Company recognizes transfers between levels at the end of each quarter. In Level 2, the Company has an investment in an affiliated offshore fund, classified as trading, with a fair value of $794,000 as of September 30, 2014, based on the net asset value per share, which invests in companies in the energy and natural resources sectors. The Company may redeem this investment on the first business day of each month after providing a redemption notice at least forty-five days prior to the proposed redemption date. In addition, the Company has investments in corporate debt securities of $977,000 as of September 30, 2014, categorized as Level 2, which the Company valued in accordance with the evaluated price supplied by an independent pricing service. The corporate debt in Level 3 is valued based on review of similarly structured issuances in similar jurisdictions. At September 30, 2014, the Level 3 corporate debt is valued at cost, which approximates fair value as a result of the Company’s review of similar structured issuances in similar jurisdictions. The following table is a reconciliation of investments for which unobservable inputs (Level 3) were used in determining fair value during the three months ended September 30, 2014, and September 30, 2013:
|  | Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis
|  | September 30, 2014 |  | September 30, 2013
(dollars in thousands) |  | Corporate Debt |  | Common Stock - International |  | Other
Beginning Balance |  | $ | 250 |  |  | $ | 95 |  |  | $ | 163 |
Return of capital |  | (6 | ) |  | — |  |  | — |
Total gains or losses (realized/unrealized) |  |  |  |  |  |
Included in earnings (investment income) |  | — |  |  | — |  |  | — |
Included in other comprehensive income |  | 6 |  |  | 2 |  |  | — |
Purchases |  | — |  |  | — |  |  | — |
Sales |  | — |  |  | — |  |  | — |
Transfers into Level 3 |  | — |  |  | — |  |  | — |
Transfers out of Level 3 |  | — |  |  | — |  |  | — |
Ending Balance |  | $ | 250 |  |  | $ | 97 |  |  | $ | 163 |

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13504-108611 + Details
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