Fair Value Measurements

12 Months Ended

Jun. 30, 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 June 30, 2016 and 2015.

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of June 30, 2016:



	Level 1		Level 2		Level 3		Total
Restricted investments:
Mutual funds	$	71	$	—	$	—	$	71
Certificates of deposit	—		107		—		107
Municipal bonds	—		547		—		547
Corporate bonds	—		439		—		439
U.S. Government bonds	—		219		—		219
U.S. Treasury Notes	2,009		—		—		2,009
Money market accounts and cash deposits	6,476		—		—		6,476
Total assets	$	8,556	$	1,312	$	—	$	9,868

Contingent consideration	$	—	$	—	$	233	$	233
Total liabilities	$	—	$	—	$	233	$	233

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 June 30, 2016 and 2015 are included within current and long-term restricted investments on the consolidated balance sheets.

The Company's long-term debt is not measured at fair value in the 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 June 30, 2016 and 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 were included in the consolidated statement of operations within the insurance recoverables and other income line item.

As of June 30, 2016 and 2015, $6,476 and $4,896, respectively, of the restricted investments represented deposits in money market accounts and U.S. Treasury Notes under escrow arrangements. Also included in restricted investments are mutual funds, bonds, certificates of deposit, asset backed securities and U.S. Treasury Notes under escrow arrangements with a cost of $1,304 and a fair value of $1,312, as of June 30, 2016, and a cost of $1,103 and a fair value of $1,098, as of June 30, 2015, respectively. These investments are recorded at fair value with changes in unrealized appreciation reported as a separate component of equity. During fiscal years 2016, 2015 and 2014, realized (losses)/gains of $(23), $(4) and $100 were reported, respectively. If the Company determines that any unrealized losses are other than temporary, they will be charged to earnings. Total losses for securities with net losses in accumulated other comprehensive income were $17, $38 and $102 in fiscal years 2016, 2015 and 2014, respectively. Total gains for securities with net gains in accumulated other comprehensive income were $44, $20 and $153 in fiscal years 2016, 2015 and 2014, respectively.

The restricted investments under escrow arrangements earned dividends and interest of $71, $62 and $98 during fiscal years 2016, 2015 and 2014, respectively, which are recorded as income and reflected as an operating activity in the consolidated statements of cash flows.

The Company's contingent consideration liabilities, included in other accrued liabilities on the 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 rollforward of the contingent consideration liabilities valued using Level 3 inputs:



		2016			2015			2014
Contingent consideration, beginning of year		$	693		$	352		$	1,365
	Additions for acquisitions	—			662			504
	Reduction of liability for payments made	(835		)	(346		)	(567		)
	Increase (reduction) of liability related to re-measurement of fair value	375			25			(950		)
Contingent consideration, end of year		$	233		$	693		$	352

- 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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