Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, we consider the most advantageous market in which it would transact and assumptions that market participants would use when pricing the asset or liability.

The Accounting Standards Codification requires certain disclosures around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

·	Level 1	Quoted prices (unadjusted) in active markets for identical assets or liabilities;
·	Level 2	Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
·	Level 3	Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates.

Our investment portfolio consists of money market funds, domestic and international commercial paper, equity securities and corporate debt. All highly liquid investments with an original maturity of three months or less when purchased are considered to be cash equivalents. All cash equivalents are carried at cost less any unamortized premium or discount, which approximates fair value. All investments with original maturities of more than three months are classified as available-for-sale investments. Our marketable securities are classified as available-for-sale and are reported at fair value with unrealized gains and losses, net of tax, reported in stockholders’ equity as a component of accumulated other comprehensive income or loss. Interest on securities is recorded in interest income. Any realized gains or losses would be shown in the accompanying consolidated statements of operations in other income or expense. We provide fair value measurements disclosures of our available-for-sale securities in accordance with one of the three levels of fair value measurement. We have no financial assets that are measured on a recurring basis that fall within Level 3 of the fair value hierarchy.

Assets measured at fair value on a recurring basis are summarized below:

March 31, 2018	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)

Cash	$	20,321	$	20,321	$	-	$	-
Money market funds		22,563		22,563		-		-
Commercial paper		1,997		-		1,997		-
Cash and cash equivalents		44,881		42,884		1,997		-

Commercial paper		7,824		-		7,824		-
Corporate debt		5,476				5,476
Common stock		2,943		2,943
Available-for-sale investments		16,243		2,943		13,300		-
	$	61,124	$	45,827	$	15,297	$	-

June 30, 2017	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)

Cash	$	5,227	$	5,227	$	-	$	-
Money market funds		26,051		26,051		-		-
Commercial paper		4,196		-		4,196		-
Cash and cash equivalents		35,474		31,278		4,196		-

Commercial paper		6,870		-		6,870		-
Short-term investments		6,870		-		6,870		-
	$	42,344	$	31,278	$	11,066	$	-

The methods and assumptions we use to estimate the fair value of assets and liabilities measured at fair value on a recurring basis are summarized below:

Fixed Maturity Securities. The fair values of the Company’s publicly-traded fixed maturity securities are generally based on prices obtained from independent pricing services. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. If we ultimately conclude that pricing information received from the independent pricing service is not reflective of market activity, non-binding broker quotes are used, if available.

The inputs used in the valuation of corporate and government securities include, but are not limited to, standard market observable inputs which are derived from, or corroborated by, market observable data including market yield curve, duration, call provisions, observable prices and spreads for similar publicly traded or privately traded issues that incorporate the credit quality and industry sector of the issuer.

For structured securities, valuation is determined using standard market inputs including spreads for actively traded securities, spreads off benchmark yields, expected prepayment timing and volumes, current and forecasted loss severity, rating, weighted average coupon, weighted average maturity, average delinquency rates, geographic region, debt-service coverage ratios and issuance-specific information including, but not limited to: collateral type, payment terms of the underlying assets, payment priority within the tranche, structure of the security, deal performance and vintage of loans.

Equity Securities. The balance consists of common stock of publicly traded companies. The fair values of publicly traded equity securities are based on quoted market prices in active markets and are classified within Level 1 in the fair value hierarchy.