Fair Value Measurements

12 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

13.    Fair Value Measurements

Fair value is defined as the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. Financial assets and liabilities are measured at fair value using the three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally derived (unobservable). Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs based on a company’s own assumptions about market participant assumptions developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1—

Quoted prices in active markets for identical assets or liabilities.

Level 2—

Significant observable inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data.

Level 3—

Unobservable inputs for which there is little or no market data available, and that are significant to the overall fair value measurement, are employed that require the reporting entity to develop its own assumptions.

In assessing the fair value of financial instruments at June 30, 2018 and 2017, we used a variety of methods and assumptions that were based on estimates of market conditions and risks existing at the time.

Short-term investments

As of June 30, 2018, our short-term investments consist of cash deposits held at financial institutions. We consider the carrying amounts of these short-term investments to be representative of their fair value.

Current Assets and Liabilities

We consider the carrying amounts of current assets and current liabilities to be representative of their fair value because of the current nature of these items.

Letters of Credit

We obtain letters of credit in connection with certain regulatory and insurance obligations, inventory purchases and other contractual obligations. The carrying values of these letters of credit are considered to be representative of their fair values because of the nature of the instruments.

Debt

We record debt, including term loans and revolver balances, at book value in our consolidated financial statements. We believe the carrying value of the debt is approximately equal to its fair value, due to the variable nature of the instruments.

Contingent Consideration on Acquisitions

We determine the fair value of contingent consideration on acquisitions based on contractual terms, our current forecast of performance factors related to the acquired business and an applicable discount rate.

Derivatives

We determine the fair value of derivative instruments based upon pricing models using observable market inputs for these types of financial instruments, such as spot and forward currency translation rates.

As of June 30	2018									2017
	Level 1			Level 2			Level 3			Level 1			Level 2			Level 3
Short-term investments		$	50,000		$	—		$	—		$	—		$	—		$	—
Derivatives asset		$	—		$	71		$	—		$	—		$	2,686		$	—
Interest rate swap		$	—		$	5,078		$	—		$	—		$	—		$	—
Contingent consideration on acquisitions		$	—		$	—		$	—		$	—		$	—		$	(7,644)

Fair Value of Level 3 Assets (Liabilities)

The table below provides a summary of the changes in the fair value of Level 3 assets (liabilities):

	2018			2017
Balance, Beginning		$	(7,644)		$	(6,745)
Adjustment to contingent consideration			—			404
Acquisition-related accrued interest			—			(1,373)
Payment			—			70
Reclassification			7,644			—
Balance, Ending		$	—		$	(7,644)

The Company completed the purchase of intellectual property and certain other assets comprising the MJB business in July 2018. As a result, the contingent consideration associated with this purchase is no longer contingent and was reclassified out of Level 3 during the year ended June 30, 2018. See “Balance Sheets—Additional Information.”

For a detailed discussion on the fair value of our pension plan assets, see “—Employee Benefit Plans.”