Financial Instruments

9 Months Ended

Mar. 31, 2015

Financial Instruments

Financial Instruments

4. Financial Instruments

The Company considers all highly liquid investments held at major banks, 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 sheet as short-term investments. Investments with original maturities longer than three months include commercial paper, U.S. agency securities, non-U.S. government securities and investment-grade 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):

	March 31, 2015
								Estimated Market Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Cash and Cash Equivalents		Short-term Investments
Cash	$	79,192	$	—	$	—		$	79,192	$	—
Level 1
Money market funds	8,258		—		—			8,258		—
	8,258		—		—			8,258		—
Level 2
Commercial paper	15,997		—		—			7,999		7,998
U.S. Agency securities	17,999		1		—			—		18,000
Non-U.S. government securities	1,507		—		(4		)	—		1,503
Corporate notes	26,749		—		(65		)	—		26,684
	62,252		—		(69		)	7,999		54,185
Total	$	149,702	$	1	$	(69	)	$	95,449	$	54,185

	June 30, 2014
								Estimated Market Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Cash and Cash Equivalents		Short-term Investments
Cash	$	91,797	$	—	$	—		$	91,797	$	—
Level 1
Money market funds	549		—		—			549		—
Level 2
Corporate notes	79,535		72		(54		)	—		79,553
Total	$	171,881	$	72	$	(54	)	$	92,346	$	79,553

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.

The Company had investments that were in an unrealized loss position as of March 31, 2015. The Company determined that (i) it does not have the intent to sell any of these investments and (ii) it is not likely that it will be required to sell any of these investments before recovery of the entire amortized cost basis. The Company reviews its investments quarterly to identify and evaluate investments that have an indication of possible impairment. As of March 31, 2015, the Company anticipates that it will recover the entire carrying value of such investments and has determined that no other-than-temporary impairments associated with credit losses were required to be recognized during the three and nine months ended March 31, 2015.

Contractual maturities of available-for-sale securities at March 31, 2015 were as follows (in thousands):

	March 31, 2015
	Amortized Cost		Fair Value
Due in 1 year or less	$	40,421	$	40,381
Due in 1-2 years	8,487		8,469
Due in 2-3 years	5,345		5,335
	$	54,253	$	54,185

The following table summarizes the carrying values and estimated fair values of our long-term debt (in thousands):

	March 31, 2015				June 30, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value
3.75% Convertible Notes	$	92,390	$	111,580	$	88,511	$	115,415
3.50% Convertible Notes	44,654		79,163		44,654		79,388
3.50% Series A Convertible Notes	63,945		124,709		62,447		125,065
Total	$	200,989	$	315,452	$	195,612	$	319,868

The long-term 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 Convertible Notes is not readily available.