XML 25 R16.htm IDEA: XBRL DOCUMENT

Fair Value Measurements

6 Months Ended

Mar. 31, 2022

8. 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 transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. GAAP prescribes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. There are three levels of inputs that may be used to measure fair value:

•

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

•

Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in

markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

•

Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Time deposits and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

The principal market in which we execute our foreign currency derivatives is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants usually are large financial institutions. Our foreign currency derivatives’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.

Our significant financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and September 30, 2021 were as follows:

(in thousands)	March 31, 2022
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents ⁽¹⁾	$	108,064	$	—	$	—	$	108,064
Convertible note		—		—		2,000		2,000
Forward contracts		—		1,646		—		1,646
Options		—		2,322		—		2,322
	$	108,064	$	3,968	$	2,000	$	114,032
Financial liabilities:
Forward contracts		—		2,637		—		2,637
	$	—	$	2,637	$	—	$	2,637

(in thousands)	September 30, 2021
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents⁽¹⁾	$	114,375	$	—	$	—	$	114,375
Convertible note		—		—		2,000		2,000
Equity securities		—		—		77,540		77,540
Forward contracts		—		5,363		—		5,363
	$	114,375	$	5,363	$	79,540	$	199,278
Financial liabilities:
Forward contracts		—		3,318		—		3,318
	$	—	$	3,318	$	—	$	3,318

(1)

Money market funds and time deposits.

Level 3 Investments

Convertible Note

In the fourth quarter of 2021, we invested $2.0 million into a non-marketable convertible note. This debt security is classified as available-for-sale and is included in other assets on the Consolidated Balance Sheet. There were no changes in the fair value of this level 3 investment in the three and six months ended March 31, 2022.

Non-Marketable Equity Investments

The carrying value of our non-marketable equity investments is recorded in other assets on the Consolidated Balance Sheets and totaled $2.2 million for the periods ended March 31, 2022 and September 30, 2021, respectively.

Equity Securities

During the quarter ended March 31, 2022, PTC sold all shares held in a publicly-traded company, Matterport. The shares sold included those held as of September 30, 2021, as well as additional shares which PTC earned during the quarter based on contingent earn-outs achieved in January based on achievement of stock value milestones. Shares related to the original investment were restricted from sale until January 2022 (six months after Matterport, Inc. became a public company). At expiration of this lock-out we sold all shares held from the original investment for $39.1 million at an average price of $9.1 per share. In February 2022, we additionally sold $3.6 million of shares at an average share price of $7.6 per share. Due to the decline in the price per share during fiscal 2022, for the three and six months ended March 31, 2022 we recognized a loss of $44.6 million and $34.8 million respectively, in other expense, net on the Consolidated Statements of Operations. The aggregate realized gain from the original investment of $8.7 million was $34.0 million.

The following table provides a summary of changes in the fair value of our Level 3 investment in the Matterport, Inc. shares from October 1, 2021 to March 31, 2022:

(in thousands)	March 31, 2022
	Fair Values
Balance, October 1, 2021	$	77,540
Realized loss		(38,468	)
Sale of investment⁽¹⁾		(39,072	)
Balance, March 31, 2022	$	—

(1)

Equity securities sold upon expirations of the restriction in January 2022.

- 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 + Details