Fair Value of Financial Instruments

12 Months Ended

Sep. 30, 2018

5. Fair Value of Financial Instruments

At September 30, 2018, the Company’s financial instruments included cash and cash equivalents, short-term investments, a foreign currency forward contract, trade, notes and financing lease receivables and accounts payable. Due to the short-term maturities of cash and cash equivalents, trade and other receivables and accounts payable, the carrying amounts approximate fair value on the respective balance sheet dates. The fair value of the intangible assets acquired in the Quantum acquisition was determined using a discounted cash flow analysis. The valuation technique used to measure the fair value of the contingent earn-out liability was derived from models utilizing market observable inputs.

The Company measures short-term investments and derivatives at fair value on a recurring basis.

The following tables present the fair value of the Company’s short-term investments, contingent earn-out liability and foreign currency forward contracts by valuation hierarchy and input (in thousands):

	AS OF SEPTEMBER 30, 2018
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable (Level 2)			Significant Unobservable (Level 3)			Totals
Short-term investments
Corporate bonds	$	17,791	$	—		$	—		$	17,791
Government bonds		7,680		—			—			7,680
Contingent earn-out liability		—		—			(7,713	)		(7,713	)
Foreign currency forward contract		—		(270	)		—			(270	)
Total	$	25,471	$	(270	)	$	(7,713	)	$	17,488

	AS OF SEPTEMBER 30, 2017
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable (Level 2)		Significant Unobservable (Level 3)		Totals
Short-term investments
Corporate bonds	$	22,798	$	—	$	—	$	22,798
Government bonds		13,339		—		—		13,339
Total	$	36,137	$	—	$	—	$	36,137

Assets and liabilities measured on a nonrecurring basis

The measurements utilized to determine the implied fair value of the Company’s long-lived assets and contingent earn-out liability as of September 30, 2018 represented significant unobservable inputs (Level 3).

- 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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