Fair Value of Financial Instruments

12 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS

Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1	Quoted market prices in active markets for identical assets and liabilities.
Level 2	Observable market-based inputs other than quoted prices in active markets for identical assets and liabilities.
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculates the fair value of its Level 1 and Level 2 instruments based on the exchange traded price of similar or identical instruments where available or based on other observable instruments. These calculations take into consideration the credit risk of both the Company and its counterparties. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period.

The Company holds available-for-sale securities issued by a non-public entity for which the lowest level of significant inputs is unobservable. On a recurring basis, the Company uses pricing models and similar techniques for which the determination of fair value requires significant judgment by management. Accordingly, the Company classifies the available-for-sale securities as Level 3 in the table below.

The fair value of the contingent consideration obligations are based on a probability weighted approach derived from the estimates of earn-out criteria and the probability assessment with respect to the likelihood of achieving those criteria. The measurement is based on significant inputs that are not observable in the market, therefore, the Company classifies this liability as Level 3 in the table below.

The following tables set forth the Company’s financial assets and liabilities at June 30, 2016 and 2015, respectively, that are measured at fair value on a recurring basis during the period, segregated by level within the fair value hierarchy:

	Level 1		Level 2		Level 3		Total
	(in millions)
Assets:
Cash and cash equivalents:
Money market funds(1)	$	121.0	$	—	$	—	$	121.0
Other current assets:
Available-for-sale securities	0.1		—		—		0.1
Other non-current assets:
Available-for-sale securities	34.4		—		1.1		35.5
Total assets as of June 30, 2016	$	155.5	$	—	$	1.1	$	156.6
Liabilities:
Contingent consideration obligations	$	—	$	—	$	5.5	$	5.5
Total liabilities as of June 30, 2016	$	—	$	—	$	5.5	$	5.5

	Level 1		Level 2		Level 3		Total
	(in millions)
Assets:
Cash and cash equivalents:
Money market funds(1)	$	65.5	$	—	$	—	$	65.5
Other current assets:
Available-for-sale securities	0.1		—		—		0.1
Other non-current assets:
Available-for-sale securities	24.5		—		1.1		25.6
Total assets as of June 30, 2015	$	90.1	$	—	$	1.1	$	91.2
Liabilities:
Contingent consideration obligations	$	—	$	—	$	15.7	$	15.7
Total liabilities as of June 30, 2015	$	—	$	—	$	15.7	$	15.7

(1) Money market funds include MMDA account balances of $91.0 million and $34.0 million as of June 30, 2016 and 2015, respectively.

The following table sets forth an analysis of changes during fiscal years 2016 and 2015 in Level 3 financial assets of the Company:

	2016		2015
	(in millions)
Beginning balance	$	1.1	$	1.1
Net realized/unrealized gains (losses)	—		—
Purchases	—		—
Transfers in (out) of Level 3	—		—
Ending balance	$	1.1	$	1.1

The following table sets forth an analysis of changes during fiscal years 2016 and 2015 in Level 3 financial liabilities of the Company:

	June 30,
	2016			2015
	(in millions)
Beginning balance	$	15.7		$	1.3
Additional contingent consideration incurred	3.6			14.5
Increase (decrease) in contingent consideration liability	(4.9		)	0.3
Payments	(8.9		)	(0.4		)
Ending balance	$	5.5		$	15.7

The Company did not incur any Level 3 fair value asset impairments during fiscal years 2016, 2015, and 2014. Changes in economic conditions or model based valuation techniques may require the transfer of financial instruments between levels. The Company’s policy is to record transfers between levels if any, as of the beginning of the fiscal year.