Fair Value Measurements

9 Months Ended

Mar. 25, 2016

The Company's financial assets or liabilities are measured using inputs from the three levels of the fair value hierarchy. The classification of a financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are as follows:

Level 1 Inputs - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Generally, this includes debt and equity securities and derivative contracts that are traded on an active exchange market (e.g., the New York Stock Exchange) as well as certain U.S. Treasury and U.S. Government and agency mortgage-backed securities that are highly liquid and are actively traded in over-the-counter markets.

Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, credit risks) or can be corroborated by observable market data.

Level 3 Inputs - Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company's own assumptions about the assumptions that market participants would use.

The following tables present the level within the fair value hierarchy at which the Company's financial assets and certain liabilities were measured on a recurring basis as of March 25, 2016 and June 30, 2015:

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of March 25, 2016



	Level 1		Level 2		Level 3		Total

Restricted investments:
Mutual funds	$	68	$	—	$	—	$	68
Certificates of deposit	—		106		—		106
Municipal bonds	—		547		—		547
Corporate bonds	—		500		—		500
U.S. government bonds	—		218		—		218
Money market accounts and cash deposits	4,456		—		—		4,456
Total assets	$	4,524	$	1,371	$	—	$	5,895

Contingent consideration	$	—	$	—	$	283	$	283
Total liabilities	$	—	$	—	$	283	$	283

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of June 30, 2015



	Level 1		Level 2		Level 3		Total
Restricted investments:
Mutual funds	$	100	$	—	$	—	$	100
Certificates of deposit	—		106		—		106
Municipal bonds	—		548		—		548
Corporate bonds	—		228		—		228
U.S. government bonds	—		216		—		216
Money market accounts and cash deposits	4,896		—		—		4,896
Total assets	$	4,996	$	1,098	$	—	$	6,094

Contingent consideration	$	—	$	—	$	693	$	693
Total liabilities	$	—	$	—	$	693	$	693

A majority of the Company's investments are priced by pricing vendors and are generally Level 1 or Level 2 investments, as these vendors either provide a quoted market price in an active market or use observable input for their pricing without applying significant adjustments. Broker pricing is used mainly when a quoted price is not available, the investment is not priced by the pricing vendors, or when a broker price is more reflective of fair value in the market in which the investment trades. The Company's broker priced investments are classified as Level 2 investments because the broker prices the investment based on similar assets without applying significant adjustments. The Company's restricted investment financial assets as of March 25, 2016 and June 30, 2015 are included within current and long-term restricted investments on the condensed consolidated balance sheets.

The Company's long-term debt is not measured at fair value in the condensed consolidated balance sheets. The fair value of debt is the estimated amount the Company would have to pay to transfer its debt, including any premium or discount attributable to the difference between the stated interest rate and market rate of interest at the balance sheet date. Fair values are based on valuations of similar debt at the balance sheet date and supported by observable market transactions when available: Level 2 of the fair value hierarchy. At March 25, 2016 and June 30, 2015 the fair value of the Company's debt was not materially different than its carrying value.

Reclassification adjustments for realized gains or losses from available for sale restricted investment securities out of accumulated other comprehensive income are included in the condensed consolidated statements of operations within the insurance recoverables and other income line item.

The Company's contingent consideration liabilities, included in other accrued liabilities on the condensed consolidated balance sheets, are associated with the acquisitions made in the fiscal year ended June 30, 2015. The liabilities are measured at fair value using a probability weighted average of the potential payment outcomes that would occur should certain contract metrics be reached. There is no market data available to use in valuing the contingent consideration; therefore, the Company developed its own assumptions related to the achievement of the metrics to evaluate the fair value of these liabilities. As such, the contingent consideration is classified within Level 3 as described below.

Items classified as Level 3 within the valuation hierarchy, consisting of contingent consideration liabilities related to recent acquisitions, were valued based on various estimates, including probability of success, discount rates and amount of time until the conditions of the contingent payments are achieved. The table below presents a roll-forward of the contingent consideration liabilities valued using Level 3 inputs:



Contingent consideration balance at July 1, 2015	$	693
Reduction of liability for payments made	(806		)
Increase of liability related to re-measurement of fair value	396
Contingent consideration balance at March 25, 2016	$	283

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis as of March 25, 2016

Certain assets were measured at fair value on a non-recurring basis and are not included in the tables above. During the quarter ended March 25, 2016, the Company recorded an impairment charge of $24.5 million. In determining the fair value of goodwill, the Company utilized valuation methods, including the discounted cash flow method and the guideline company approach as the best evidence of fair value. These fair value methods are classified within Level 3 of the fair value hierarchy. See Note 8 - Business Acquisitions, Goodwill and Other Intangibles Assets for further information.

- 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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