5. Financial Instruments

The Company considers all highly liquid investments held with various financial institutions, certificates of deposit and other securities with original maturities of three months or less to be cash equivalents.

The Company classifies all of its investments as available-for-sale at the time of purchase because it is management's intent that these investments are available for current operations and includes these investments on its balance sheets as short-term investments. Investments with original maturities longer than three months include commercial paper and investment- grade agency and corporate debt securities. Investments classified as available-for-sale are recorded at fair market value with the related unrealized gains and losses included in accumulated other comprehensive income (loss), a component of stockholders' equity. Realized gains and losses are recorded based on specific identification of each security's cost basis.

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels of inputs that may be used to measure fair value, as follows:


Level 1—Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.
Level 2—Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:
	•	Quoted prices for similar assets or liabilities in active markets;
	•	Quoted prices for identical or similar assets in non-active markets;
	•	Inputs other than quoted prices that are observable for the asset or liability; and
	•	Inputs that are derived principally from or corroborated by other observable market data.

Level 3—Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management's estimates of market participant assumptions.

The following tables summarize the amortized cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category for cash, cash equivalents and short-term investments (in thousands):

	June 30, 2017
								Estimated Fair Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Cash and Cash Equivalents		Short-term Investments
Cash	$	70,515	$	—	$	—		$	70,515	$	—

Level 1
Money market funds		1,569		—		—			1,569		—

Level 2
U.S. government agency securities		23,998		—		(89	)		—		23,909

Total	$	96,082	$	—	$	(89	)	$	72,084	$	23,909

	June 30, 2016
								Estimated Fair Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Cash and Cash Equivalents		Short-term Investments
Cash	$	95,906	$	—	$	—		$	95,906	$	—

Level 1
Money market funds		13,362		—		—			13,362		—

		13,362		—		—			13,362		—

Level 2
Commercial paper		14,704		—		—			8,938		5,766
U.S. government agency securities		28,000		7		(17	)		—		27,990
U. S. treasury securities		3,997		1		—			—		3,998
Municipal debt securities		1,565		—		—			1,565		—
Corporate debt securities		9,491		—		(6	)		—		9,485

		57,757		8		(23	)		10,503		47,239

Total	$	167,025	$	8	$	(23	)	$	119,771	$	47,239

The Company's Level 2 investments in the table above are classified as Level 2 items because quoted prices in an active market are not readily accessible for those specific financial assets, or the Company may have relied on alternative pricing methods that do not rely exclusively on quoted prices to determine the fair value of the investments.

Contractual maturities of available-for-sale securities at June 30, 2017 were as follows (in thousands):

	June 30, 2017
	Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	12,000	$	11,970
Due in 1 - 2 years		11,998		11,939

Total	$	23,998	$	23,909

The following table summarizes our available-for-sale debt securities that were in a continuous unrealized loss position, but were not deemed to be other-than-temporarily impaired (in thousands):

	Less Than 12 Months					12 Months or Greater					Total
	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
June 30, 2017
Debt Securities:
U. S. government agency securities	$	(31	)	$	11,970	$	(58	)	$	11,939	$	(89	)	$	23,909

Total	$	(31	)	$	11,970	$	(58	)	$	11,939	$	(89	)	$	23,909


June 30, 2016
Debt Securities:
Corporate debt securities	$	(3	)	$	6,325	$	(3	)	$	3,160	$	(6	)	$	9,485
U. S. government agency securities		—			—		(17	)		19,988		(17	)		19,988

Total	$	(3	)	$	6,325	$	(20	)	$	23,148	$	(23	)	$	29,473

The Company held a total of 8 positions as of June 30, 2017 and 11 positions as of June 30, 2016 that were in an unrealized loss position. Based on the Company's review of these securities, the Company believes it had no other-than-temporary impairments on these securities as of June 30, 2017 and 2016 because it does not intend to sell these securities and believes it is not more likely than not that it will be required to sell these securities before the recovery of their amortized cost basis. Gross realized gains and gross realized losses were insignificant for the years ended June 30, 2017, 2016 and 2015.

Assets and Liabilities That Are Measured at Fair Value on a Nonrecurring Basis

The Company's non-marketable equity investments and non-financial assets, such as goodwill, intangible assets, and property, plant, and equipment (measured at fair value if a write-down is recognized) are evaluated for impairment annually or when indicators of impairment exist. The fair value measurement of non-marketable equity investments is performed by a third-party analyst using Level 3 inputs. Non-financial assets such as identified intangible assets acquired in connection with an acquisition are measured at fair value using Level 3 inputs, which include discounted cash flow methodologies, or similar techniques, when there is limited market activity and the determination of fair value requires significant judgment and estimates. In addition, in evaluating the fair value of goodwill impairment, further corroboration is obtained using our market capitalization. The Company did not record any impairment charges for non-marketable equity investments and non-financial asset in the fiscal years ended June 30, 2017, 2016, and 2015.

The debt is measured on a non-recurring basis using Level 2 inputs based upon observable inputs of the Company's underlying stock price and the time value of the conversion option, since an observable quoted price of the Existing 3.50% Convertible Notes is not readily available. The Company's Revolver Credit Facility and its Secured Loan are valued at market interest rates, which it considers to be a level 2 fair value measurement. Therefore, the Company's carrying value of these financial instruments approximate their fair value.

The following table summarizes the carrying values and estimated fair values of the Company's Existing 3.50% Convertible Notes and other non-convertible debt (in thousands):

	June 30, 2017				June 30, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
3.75% Convertible Notes	$	—	$	—	$	36,400	$	36,487
3.50% Convertible Notes		44,099		48,146		43,195		51,450
3.50% Series A Convertible Notes		68,924		74,982		66,613		81,053
Secured Loan		—				64,204		64,204
Revolver Credit Facility		51,548		51,548		—		—

Total	$	164,571	$	174,676	$	210,412	$	233,194