Fair value of financial instruments

9 Months Ended

Mar. 31, 2012

Fair value of financial instruments

4. Fair value of financial instruments

We measure certain financial instruments at fair value on a recurring basis. We have established a hierarchy, which consists of three levels, for disclosure of the inputs used to determine the fair value of our financial instruments.

Level 1 valuations are based on quoted prices in active markets for identical assets or liabilities.

Level 2 valuations are based on inputs that are observable, either directly or indirectly, other than quoted prices included within Level 1. Such inputs used in determining fair value for Level 2 valuations include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Where applicable, we use quoted prices in active markets for similar assets to determine fair value of Level 2 short-term investments. If quoted prices in active markets for similar assets are not available to determine fair value, we use quoted prices for similar assets and liabilities or inputs that are observable either directly or indirectly. If quoted prices for similar assets are not available, we use third party valuations utilizing underlying assets assumptions.

Level 3 valuations are based on information that is unobservable and significant to the overall fair value measurement. All of our cash equivalents and short-term investments are classified within Level 1 or Level 2. The fair values of these financial instruments were determined using the following inputs at March 31, 2012 (in thousands):

	Fair Value Measurements at March 31, 2012 Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Description
Cash equivalents:
Money market mutual funds	$	4,416	$	4,416	$	—	$	—
Commercial paper		6,899		—		6,899		—
Total cash equivalents		11,315		4,416		6,899		—
Short-term investments:
Asset-backed securities		1,010		—		1,010		—
Certificates of deposit		2,750		—		2,750		—
Municipal securities		142,611		—		142,611		—
Commercial paper		6,162		—		6,162		—
Corporate bonds		29,646		—		29,646		—
Total short-term investments		182,179		—		182,179		—
Cash equivalents and short-term investments	$	193,494	$	4,416	$	189,078	$	—

The fair values of our financial instruments were determined using the following inputs at June 30, 2011 (in thousands):

	Fair Value Measurements at June 30, 2011 Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Description
Cash equivalents:
Money market mutual funds	$	5,153	$	5,153	$	—	$	—
Total cash equivalents		5,153		5,153		—		—
Short-term investments:
Asset-backed securities		1,029		—		1,029		—
Certificates of deposit		2,751		—		2,751		—
Municipal securities		140,949		—		140,949		—
Commercial paper		11,095		—		11,095		—
Corporate bonds		23,433		—		23,433		—
Total short-term investments		179,257		—		179,257		—
Cash equivalents and short-term investments	$	184,410	$	5,153	$	179,257	$	—

We did not have any financial liabilities measured at fair value on a recurring basis as of March 31, 2012 or June 30, 2011.