FAIR VALUE

The Company groups its financial assets and liabilities measured at fair value on a recurring basis in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:


•	Level 1 - Quoted prices in active markets for identical assets or liabilities.


•	Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-driven valuations in which all significant inputs are observable or can be derived principally from, or corroborated with, observable market data.


•	Level 3 - Fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including assumptions and judgments made by the Company.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The Company measures certain assets and liabilities at fair value on a recurring basis such as its financial instruments. There have been no transfers between Level 1, 2 or 3 assets or liabilities during the three and six months ended March 31, 2017.

During the six months ended March 31, 2017, the auction rate security that the Company carried as a Level 3 asset was redeemed at its par value. Upon receipt of the par value, the Company reversed the difference between the carrying value and par value of this security that it had previously temporarily impaired from accumulated other comprehensive income. There was no gain or loss recognized in earnings during the six months ended March 31, 2017, as a result of this transaction.

Contingent consideration related to business combinations is recorded as a Level 3 liability because management uses significant judgments and unobservable inputs to determine the fair value. The Company reassesses the fair value of its contingent consideration liabilities on a quarterly basis and records any fair value adjustments to earnings in the period that they are determined. The increases in Level 3 liabilities during the six months ended March 31, 2017, relate to the fair value of the contingent consideration associated with a business combination completed during the period, as detailed in Note 10 to Item 1 of this quarterly report on Form 10-Q. The fair value of the contingent consideration was determined using a weighted average probability of the expected revenue to be generated from the acquired business over a three-year period, with the contingent payments being made in each of the respective years. This increase to the Level 3 liabilities was offset by payments of contingent consideration liabilities for acquisitions made in prior periods.

Assets and liabilities recorded at fair value on a recurring basis consisted of the following (in millions):



	As of March 31, 2017								As of September 30, 2016
			Fair Value Measurements								Fair Value Measurements
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets
Money market funds	$	494.6	$	494.6	$	—	$	—	$	408.7	$	408.7	$	—	$	—
Auction rate security	—		—		—		—		2.3		—		—		2.3
Total	$	494.6	$	494.6	$	—	$	—	$	411.0	$	408.7	$	—	$	2.3
Liabilities
Contingent consideration liability recorded for business combinations	$	15.7	$	—	$	—	$	15.7	$	7.9	$	—	$	—	$	7.9
Total	$	15.7	$	—	$	—	$	15.7	$	7.9	$	—	$	—	$	7.9

The following table summarizes changes to the fair value of the Level 3 assets (in millions):



	Auction rate security
Balance as of September 30, 2016	$	2.3
Decreases in Level 3 assets	(2.3		)
Balance as of March 31, 2017	$	—

The following table summarizes changes to the fair value of the Level 3 liabilities (in millions):



	Contingent consideration
Balance as of September 30, 2016	$	7.9
Increases to Level 3 liabilities	10.7
Decreases to Level 3 liabilities	(2.9		)
Balance as of March 31, 2017	$	15.7

Assets Measured and Recorded at Fair Value on a Nonrecurring Basis

The Company’s non-financial assets and liabilities, such as goodwill, intangible assets, and other long-lived assets resulting from business combinations, are measured at fair value using income approach valuation methodologies at the date of acquisition and are subsequently re-measured if there are indicators of impairment. There were no indicators of impairment identified during the three and six months ended March 31, 2017.