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INVESTMENTS | 12 Months Ended
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Jun. 30, 2016
Disclosure Text Block Supplement [Abstract] |
Investments and Other Noncurrent Assets [Text Block] | NOTE 4. INVESTMENTS As of June 30, 2016, the Company held investments with a fair value of $13.6 million and a cost basis of $14.5 million. The market value of these investments is approximately 51.6 percent of the Company’s total assets. In addition, the Company owned other investments of $1.9 million accounted for under the cost method of accounting. Investments in securities classified as trading are reflected as current assets on the Consolidated Balance Sheets at their fair market value. Unrealized gains and losses on trading securities are included in earnings in the Consolidated Statements of Operations. Investments in securities classified as available-for-sale, which may not be readily marketable but have readily determinable fair values, are reflected as non-current assets on the Consolidated Balance Sheets at their fair value. Unrealized gains and losses on available-for-sale securities are excluded from earnings and reported in other comprehensive income (loss) as a separate component of shareholders’ equity until realized. Other investments consist of equity investments in entities over which the Company is unable to exercise significant influence and which do not have readily determinable fair values. These equity investments are accounted for under the cost method of accounting and evaluated for impairment. The Company considers many factors in determining impairment, including the severity and duration of the decline in value below cost, the Company’s interest and ability to hold the security for a period of time sufficient for an anticipated recovery in value, and the financial condition and specific events related to the issuer. When an impairment of an equity security is determined to be other-than-temporary, the impairment is recognized in earnings. The following details the components of the Company’s investments recorded at fair value as of June 30, 2016, and 2015:
|  | June 30, 2016 |
(dollars in thousands) |  | Cost |  |  | Gains |  |  | (Losses) |  |  | Fair Value |
Trading securities1 |  |  |  |  |  |  |  |  |  |  |  |
Offshore fund |  | $ | 1,184 |  |  | $ | - |  |  | $ | (826 | ) |  | $ | 358 |
Mutual funds - Fixed income |  |  | 9,284 |  |  |  | 124 |  |  |  | - |  |  |  | 9,408 |
Mutual funds - Domestic equity |  |  | 535 |  |  |  | - |  |  |  | (197 | ) |  |  | 338 |
Other |  |  | 45 |  |  |  | - |  |  |  | (45 | ) |  |  | - |
Total trading securities |  | $ | 11,048 |  |  | $ | 124 |  |  | $ | (1,068 | ) |  | $ | 10,104 |
Available-for-sale securities2 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock - Domestic |  | $ | 109 |  |  | $ | 21 |  |  | $ | - |  |  | $ | 130 |
Common stock - International |  |  | 613 |  |  |  | 16 |  |  |  | (83 | ) |  |  | 546 |
Corporate debt |  |  | 1,038 |  |  |  | 86 |  |  |  | - |  |  |  | 1,124 |
Mutual funds - Fixed income |  |  | 1,226 |  |  |  | 18 |  |  |  | (23 | ) |  |  | 1,221 |
Mutual funds - Domestic equity |  |  | 394 |  |  |  | 2 |  |  |  | - |  |  |  | 396 |
Other |  |  | 56 |  |  |  | 8 |  |  |  | - |  |  |  | 64 |
Total available-for-sale securities3 |  | $ | 3,436 |  |  | $ | 151 |  |  | $ | (106 | ) |  | $ | 3,481 |
|  | June 30, 2015 |
(dollars in thousands) |  | Cost |  |  | Gains |  |  | (Losses) |  |  | Fair Value |
Trading securities1 |  |  |  |  |  |  |  |  |  |  |  |
Offshore fund |  | $ | 1,184 |  |  | $ | - |  |  | $ | (703 | ) |  | $ | 481 |
Mutual funds - Fixed income |  |  | 14,691 |  |  |  | 68 |  |  |  | (5 | ) |  |  | 14,754 |
Mutual funds - Domestic equity |  |  | 535 |  |  |  | - |  |  |  | (130 | ) |  |  | 405 |
Other |  |  | 81 |  |  |  | - |  |  |  | (81 | ) |  |  | - |
Total trading securities |  | $ | 16,491 |  |  | $ | 68 |  |  | $ | (919 | ) |  | $ | 15,640 |
Available-for-sale securities2 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock - Domestic |  | $ | 535 |  |  | $ | 316 |  |  | $ | (9 | ) |  | $ | 842 |
Common stock - International |  |  | 695 |  |  |  | 309 |  |  |  | (39 | ) |  |  | 965 |
Corporate debt |  |  | 1,433 |  |  |  | - |  |  |  | (817 | ) |  |  | 616 |
Mutual funds - Fixed income |  |  | 1,227 |  |  |  | 9 |  |  |  | (22 | ) |  |  | 1,214 |
Mutual funds - Domestic equity |  |  | 543 |  |  |  | - |  |  |  | (80 | ) |  |  | 463 |
Other |  |  | 169 |  |  |  | 1 |  |  |  | (7 | ) |  |  | 163 |
Total available-for-sale securities3 |  | $ | 4,602 |  |  | $ | 635 |  |  | $ | (974 | ) |  | $ | 4,263 |
1 | Unrealized and realized gains and losses on trading securities are included in earnings in the statement of operations.
2 | Unrealized gains and losses on available-for-sale securities are excluded from earnings and recorded in other comprehensive income (loss) as a separate component of shareholders’ equity until realized.
3 | Net unrealized gains (losses) on available-for-sale securities gross and net of tax as of June 30, 2016, are $45 and $45, respectively, and as of June 30, 2015, are $(339) and $(339), respectively.
The following summarizes investment income (loss) reflected in earnings for the periods presented.
(dollars in thousands) |  | Year Ended June 30, |
Investment Income |  | 2016 |  |  | 2015 |  |  | 2014 |
Realized gains on sales of available-for-sale securities |  | $ | 532 |  |  | $ | 591 |  |  | $ | 1,044 |
Realized losses on sales of trading securities |  |  | (25 | ) |  |  | (1 | ) |  |  | (163 | )
Realized gains (losses) on sales of securities classified as other investments |  |  | 3 |  |  |  | (30 | ) |  |  | - |
Unrealized gains (losses) on trading securities |  |  | (93 | ) |  |  | (601 | ) |  |  | 450 |
Realized gain on Galileo acquisition |  |  | - |  |  |  | - |  |  |  | 290 |
Realized foreign currency gains |  |  | 43 |  |  |  | 71 |  |  |  | 1 |
Other-than-temporary declines in available-for-sale securities |  |  | (259 | ) |  |  | (247 | ) |  |  | (3 | )
Other-than-temporary declines in securities held at cost |  |  | (258 | ) |  |  | - |  |  |  | - |
Dividend and interest income |  |  | 542 |  |  |  | 651 |  |  |  | 526 |
Total Investment Income |  | $ | 485 |  |  | $ | 434 |  |  | $ | 2,145 |
Included in investment income were other-than temporary declines in value on available-for-sale securities of approximately $259,000; $247,000; and $3,000 in fiscal years 2016, 2015, and 2014, respectively. The impairment losses resulted from fair values of certain equity securities being lower than book value and from proposed changes to debt securities. For the year ending June 30, 2016, there were eight securities with a combined cost basis of $702,000 that were written down to a combined fair value of $466,000. Also during the year ending June 30, 2016, another security with a cost basis of $970,000 was written down to $947,000 based on the net present value of estimated future cash flows. The impairment losses in the 2015 fiscal year resulted from issuers defaulting on scheduled payments. One security with a cost basis of $44,000 was written down to its fair value of $5,000. Two other securities, for which the common issuer has resumed interest payments, were written down to the net present value of estimated future cash flows. These securities had a cost basis of $310,000 and $1.1 million, respectively, and were written down to $234,000 and $970,000, respectively. Also included in investment income for the year ended June 30, 2016, were approximately $258,000 in other-than-temporary declines in value on securities held at cost. The impairment loss resulted from the estimated values of certain securities being lower than cost. Three securities held at cost with a combined cost basis of $1.1 million were written down to a combined adjusted cost basis of $867,000. In making these determinations, the Company considered the length of time and extent to which the fair value has been less than the cost basis, financial condition and prospects of the issuers, and the Company's ability to hold the investment until recovery. Unrealized Losses The following tables show the gross unrealized losses and fair values of available-for-sale investment securities with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position. The Company reviewed the gross unrealized losses shown as of June 30, 2016, and determined that the losses were not other-than-temporary based on consideration of the nature of the investment and the cause, severity and duration of the loss.
|  | June 30, 2016 |
|  | Less Than 12 Months |  |  | 12 Months or Greater |  |  | Total |
|  |  |  |  | Gross |  |  |  |  |  | Gross |  |  |  |  |  | Gross |
|  |  |  |  | Unrealized |  |  |  |  |  | Unrealized |  |  |  |  |  | Unrealized |
(dollars in thousands) |  | Fair Value |  |  | Losses |  |  | Fair Value |  |  | Losses |  |  | Fair Value |  |  | Losses |
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock - Domestic |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Common stock - International |  |  | 246 |  |  |  | (60 | ) |  |  | 23 |  |  |  | (23 | ) |  |  | 269 |  |  |  | (83 | )
Corporate debt |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Mutual funds - Fixed income |  |  | 1 |  |  |  | - |  |  |  | 201 |  |  |  | (23 | ) |  |  | 202 |  |  |  | (23 | )
Mutual funds - Domestic equity |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total available-for-sale securities |  | $ | 247 |  |  | $ | (60 | ) |  | $ | 224 |  |  | $ | (46 | ) |  | $ | 471 |  |  | $ | (106 | )
|  | June 30, 2015 |
|  | Less Than 12 Months |  |  | 12 Months or Greater |  |  | Total |
|  |  |  |  | Gross |  |  |  |  |  | Gross |  |  |  |  |  | Gross |
|  |  |  |  | Unrealized |  |  |  |  |  | Unrealized |  |  |  |  |  | Unrealized |
(dollars in thousands) |  | Fair Value |  |  | Losses |  |  | Fair Value |  |  | Losses |  |  | Fair Value |  |  | Losses |
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock - Domestic |  | $ | 77 |  |  | $ | (7 | ) |  | $ | 107 |  |  | $ | (2 | ) |  | $ | 184 |  |  | $ | (9 | )
Common stock - International |  |  | 114 |  |  |  | (23 | ) |  |  | 39 |  |  |  | (16 | ) |  |  | 153 |  |  |  | (39 | )
Corporate debt |  |  | 386 |  |  |  | (817 | ) |  |  | - |  |  |  | - |  |  |  | 386 |  |  |  | (817 | )
Mutual funds - Fixed income |  |  | 67 |  |  |  | (7 | ) |  |  | 139 |  |  |  | (15 | ) |  |  | 206 |  |  |  | (22 | )
Mutual funds - Domestic equity |  |  | 463 |  |  |  | (80 | ) |  |  | - |  |  |  | - |  |  |  | 463 |  |  |  | (80 | )
Other |  |  | 112 |  |  |  | (7 | ) |  |  | - |  |  |  | - |  |  |  | 112 |  |  |  | (7 | )
Total available-for-sale securities |  | $ | 1,219 |  |  | $ | (941 | ) |  | $ | 285 |  |  | $ | (33 | ) |  | $ | 1,504 |  |  | $ | (974 | )
Fair Value Hierarchy 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. Additionally, companies are required to provide enhanced disclosures regarding instruments in the Level 3 category (which have inputs to the valuation techniques that are unobservable and require significant management judgment), including a reconciliation of the beginning and ending values separately for each major category of assets or liabilities. 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 included 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 using 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 periodically 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. The following presents fair value measurements, as of each balance sheet date, for the major categories of U.S. Global’s investments measured at fair value on a recurring basis:
|  | June 30, 2016 |
|  |  |  |  | Significant |  |  | Significant |  |  |  |
|  | Quoted Prices |  |  | Other Inputs |  |  | Unobservable Inputs |  |  |  |
(dollars in thousands) |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Total |
Trading securities |  |  |  |  |  |  |  |  |  |  |  |
Offshore fund |  | $ | - |  |  | $ | 358 |  |  | $ | - |  |  | $ | 358 |
Mutual funds - Fixed income |  |  | 9,408 |  |  |  | - |  |  |  | - |  |  |  | 9,408 |
Mutual funds - Domestic equity |  |  | 338 |  |  |  | - |  |  |  | - |  |  |  | 338 |
Other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total trading securities |  |  | 9,746 |  |  |  | 358 |  |  |  | - |  |  |  | 10,104 |
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock - Domestic |  |  | 130 |  |  |  | - |  |  |  | - |  |  |  | 130 |
Common stock - International |  |  | 546 |  |  |  | - |  |  |  | - |  |  |  | 546 |
Corporate debt |  |  | 1,124 |  |  |  | - |  |  |  | - |  |  |  | 1,124 |
Mutual funds - Fixed income |  |  | 1,221 |  |  |  | - |  |  |  | - |  |  |  | 1,221 |
Mutual funds - Domestic equity |  |  | 396 |  |  |  | - |  |  |  | - |  |  |  | 396 |
Other |  |  | 64 |  |  |  | - |  |  |  | - |  |  |  | 64 |
Total available-for-sale securities |  |  | 3,481 |  |  |  | - |  |  |  | - |  |  |  | 3,481 |
Total |  | $ | 13,227 |  |  | $ | 358 |  |  | $ | - |  |  | $ | 13,585 |
|  | June 30, 2015 |
|  |  |  |  | Significant |  |  | Significant |  |  |  |
|  | Quoted Prices |  |  | Other Inputs |  |  | Unobservable Inputs |  |  |  |
(dollars in thousands) |  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Total |
Trading securities |  |  |  |  |  |  |  |  |  |  |  |
Offshore fund |  | $ | - |  |  | $ | 481 |  |  | $ | - |  |  | $ | 481 |
Mutual funds - Fixed income |  |  | 14,754 |  |  |  | - |  |  |  | - |  |  |  | 14,754 |
Mutual funds - Domestic equity |  |  | 405 |  |  |  | - |  |  |  | - |  |  |  | 405 |
Other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total trading securities |  |  | 15,159 |  |  |  | 481 |  |  |  | - |  |  |  | 15,640 |
Available-for-sale securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock - Domestic |  |  | 842 |  |  |  | - |  |  |  | - |  |  |  | 842 |
Common stock - International |  |  | 965 |  |  |  | - |  |  |  | - |  |  |  | 965 |
Corporate debt |  |  | - |  |  |  | 77 |  |  |  | 539 |  |  |  | 616 |
Mutual funds - Fixed income |  |  | 1,214 |  |  |  | - |  |  |  | - |  |  |  | 1,214 |
Mutual funds - Domestic equity |  |  | 463 |  |  |  | - |  |  |  | - |  |  |  | 463 |
Other |  |  | 163 |  |  |  | - |  |  |  | - |  |  |  | 163 |
Total available-for-sale securities |  |  | 3,647 |  |  |  | 77 |  |  |  | 539 |  |  |  | 4,263 |
Total |  | $ | 18,806 |  |  | $ | 558 |  |  | $ | 539 |  |  | $ | 19,903 |
As of June 30, 2016, approximately 97 percent of the Company’s financial assets measured at fair value are derived from Level 1 inputs, three percent are derived from Level 2 inputs and none from Level 3 inputs. As of June 30, 2015, approximately 94 percent of the Company’s financial assets measured at fair value are derived from Level 1 inputs, three percent are derived from Level 2 inputs and the remaining three 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 and which invests in companies in the energy and natural resources sectors, with a fair value of $358,000 and $481,000 as of June 30, 2016, and 2015, based on the net asset value per share. 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 had investments in corporate debt securities, classified as available-for-sale, of $77,000 as of June 30, 2015, categorized as Level 2 which the Company valued in accordance with the evaluated price supplied by an independent service or valued using the mean between the last reported bid ask quotation. These corporate debt securities were sold in the year ended June 30, 2016. At June 30, 2015, Level 3 corporate debt, classified as available-for-sale, consisted of debt from two issuers. Debt from one issuer was valued at June 30, 2015, at $314,000 based on other traded debt of the issuer. This corporate debt was transferred during the quarter ended March 31, 2016, at its then-current value of $1.0 million from Level 3 to Level 1, as it now also trades on a market. This corporate debt, which matures in 2020, was valued at $1.1 million at June 30, 2016, in Level 1. The other corporate debt classified as Level 3 at June 30, 2015, was valued at cost of $225,000, which approximated fair value as a result of the Company’s review of similar structured issuances in similar jurisdictions. This holding was transferred out of available-for-sale Level 3 assets and classified as a note receivable at its June 30, 2016, value of $212,000. The following table is a reconciliation of investments recorded at fair value for which unobservable inputs (Level 3) were used in determining fair value during the years ended June 30, 2016, and 2015:
Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis |
|  | June 30, 2016 |  |  | June 30, 2015 |
(dollars in thousands) |  | Corporate Debt |  |  | Corporate Debt |
Beginning Balance |  | $ | 539 |  |  | $ | 250 |
Return of capital |  |  | (13 | ) |  |  | (25 | )
Total gains or losses (realized/unrealized) |  |  |  |  |  |  |  |
Included in earnings (investment income) |  |  | (23 | ) |  |  | (133 | )
Included in other comprehensive income (loss) |  |  | 710 |  |  |  | 104 |
Purchases |  |  | - |  |  |  | - |
Sales |  |  | - |  |  |  | - |
Transfers into Level 3 |  |  | - |  |  |  | 343 |
Transfers out of Level 3 |  |  | (1,213 | ) |  |  | - |
Ending Balance |  | $ | - |  |  | $ | 539 |

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