Fair Value Measurements

3 Months Ended

Sep. 26, 2015

The Company categorizes its assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. The three levels of the hierarchy are defined as follows:

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1. Level 2 inputs include quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for substantially the full term of the asset or liability.

Level 3 — Unobservable inputs reflecting management’s own assumptions about the input used in pricing the asset or liability.

The following table shows the fair value measurements of the Company’s financial assets and liabilities at September 26, 2015 and June 27, 2015 (in millions):



	Level 1				Level 2				Level 3
	September 26, 2015		June 27, 2015		September 26, 2015		June 27, 2015		September 26, 2015		June 27, 2015
Assets:
Cash equivalents⁽¹⁾	$	266.9	$	485.0	$	2.0	$	14.7	$	—	$	—
Short-term investments:
Commercial paper⁽²⁾	—		—		23.4		—		—		—
Government securities - U.S.⁽²⁾	62.1		42.8		1.7		—		—		—
Corporate debt securities - U.S.⁽²⁾	—		—		123.1		110.0		—		—
Corporate debt securities - non U.S.⁽²⁾	—		—		99.5		74.6		—		—
Long-term investments:
Government securities - U.S.⁽³⁾	9.3		9.3		—		—		—		—
Corporate debt securities - U.S.⁽³⁾	—		—		56.4		42.6		—		—
Corporate debt securities - non U.S.⁽³⁾	—		—		43.1		33.9		—		—
Derivative Assets:
Inventory-related instruments⁽⁴⁾	—		—		0.9		3.3		—		—
Intercompany loan hedges⁽⁴⁾	—		—		0.1		0.1		—		—
Liabilities:
Contingent earnout obligation⁽⁵⁾	$	—	$	—	$	—	$	—	$	21.6	$	19.4
Derivative liabilities:
Inventory-related instruments⁽⁴⁾	—		—		0.6		0.2		—		—


⁽¹⁾	Cash equivalents consist of money market funds and time deposits with maturities of three months or less at the date of purchase. Due to their short term maturity, management believes that their carrying value approximates fair value.


⁽²⁾	Short-term available-for-sale investments are recorded at fair value, which approximates their carrying value, and are primarily based upon quoted vendor or broker priced securities in active markets. Short-term held to maturity investments are recorded at amortized cost, which approximates fair value.


⁽³⁾	Fair value is primarily determined using vendor or broker priced securities in active markets. These securities have maturity dates between calendar years 2015 and 2017.


⁽⁴⁾	The fair value of these hedges is primarily based on the forward curves of the specific indices upon which settlement is based and includes an adjustment for the counterparty’s or Company’s credit risk.


⁽⁵⁾	Refer to Note 5, "Acquisitions," for further information.

Refer to Note 10, "Debt," for the fair value of the Company's outstanding debt instruments.

The following table presents a reconciliation of the liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 26, 2015 and June 27, 2015. Level 3 liabilities consisted of the contingent earnout obligation related to the Stuart Weitzman acquisition.



	September 26, 2015		June 27, 2015
	(millions)
Balance, beginning of period	$	19.4	$	—
Contingent earnout obligation recorded in purchase accounting	—		17.8
Increase to contingent earnout obligation	2.2		1.6
Balance, end of period	$	21.6	$	19.4

Non-Financial Assets and Liabilities

The Company’s non-financial instruments, which primarily consist of goodwill, intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial instruments are assessed for impairment and, if applicable, written-down to and recorded at fair value, considering market participant assumptions. Refer to Note 5, "Acquisitions," for further discussion of the approaches used in valuing acquired assets and assumed liabilities.

- 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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