ELECTRO RENT CORP | 2013 | FY | 3


Note 2: Fair Value Measurements

We measure certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, supplemental executive retirement plan assets and liabilities, and foreign currency derivatives. The fair value of financial assets and liabilities can be determined based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, as follows:

Level 1 – Observable inputs, such as quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or through corroboration with observable market data; and

Level 3 – Unobservable inputs, for which there is little or no market data for the assets or liabilities, such as internally-developed valuation models.

 

Our assets and liabilities measured at fair value on a recurring basis were determined as follows:

 

     At May 31, 2013  
     Quoted
Prices in
Active
Markets for
Identical
Instruments

(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
     Total
Balance
 

Assets

           

Money market funds

   $ 14       $ —         $ —         $ 14   

Supplemental executive retirement plan

           

Money market fund

     113         —           —           113   

Mutual funds

     2,834         —           —           2,834   

Foreign exchange forward contracts

     —           114         —           114   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets measured at fair value

   $ 2,961       $ 114       $ —         $ 3,075   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     At May 31, 2012  
     Quoted
Prices in
Active
Markets for
Identical
Instruments

(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
     Total
Balance
 

Assets

           

Money market funds

   $ 2,507       $ —         $ —         $ 2,507   

Supplemental executive retirement plan

           

Money market fund

     80         —           —           80   

Mutual funds

     2,290         —           —           2,290   

Foreign exchange forward contracts

     —           179         —           179   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets measured at fair value

   $ 4,877       $ 179       $ —         $ 5,056   
  

 

 

    

 

 

    

 

 

    

 

 

 

The fair value measures for our money market funds and supplemental executive retirement plan asset (see Note 9 for further discussion our our supplemental executive retirement plan asset) were derived from quoted market prices in active markets and are included in Level 1 inputs. Foreign currency forward contracts were valued based on observable market spot and forward rates as of our reporting date and are included in Level 2 inputs.


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