Fair Value Measurements

12 Months Ended

Jun. 26, 2021

FAIR VALUE MEASUREMENTS

The FASB established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs that may be used to measure fair value are as follows:

Level 1 - Quoted (unadjusted) prices in active markets for identical assets or liabilities.

The Company's Level 1 assets consist of money market funds.

Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, 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 asset or liability.

The Company’s Level 2 assets and liabilities consist of corporate debt securities and foreign currency forward contracts that are valued using quoted market prices or are determined using a yield curve model based on current market rates.

Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company's Level 3 assets and liabilities consist of contingent consideration liabilities related to acquisitions.

Assets and liabilities measured at fair value on a recurring basis were as follows:


	As of June 26, 2021								As of June 27, 2020
	Fair Value								Fair Value
	Measurements Using						Total		Measurements Using						Total
	Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
	(in thousands)
Assets
Cash and cash equivalents
Money market funds	$	—	$	—	$	—	$	—	$	61,814	$	—	$	—	$	61,814
Short term investments
Corporate debt securities	—		—		—		—		—		35,536		—		35,536
Other current assets
Foreign currency forward contracts	—		226		—		226		—		1,151		—		1,151
Total	$	—	$	226	$	—	$	226	$	61,814	$	36,687	$	—	$	98,501

Liabilities
Accrued expenses
Foreign currency forward contracts	$	—	$	1,208	$	—	$	1,208	$	—	$	341	$	—	$	341
Contingent consideration	—		—		10,000		10,000		—		—		10,000		10,000
Other liabilities
Contingent consideration	—		—		—		—		—		—		4,165		4,165
Total	$	—	$	1,208	$	10,000	$	11,208	$	—	$	341	$	14,165	$	14,506

Changes in contingent consideration liability:


	(in thousands)
Balance, June 29, 2019	$	9,052
Addition	14,165
Payment	(8,000)
Adjustment	(1,052)
Balance, June 27, 2020	14,165
Addition	—
Payment	(10,000)
Adjustment	5,835
Balance, June 26, 2021	$	10,000

The $5.8 million adjustment to the contingent consideration liability for the fiscal year ended June 26, 2021, was recorded within Other operating expenses (income), net in the Consolidated Statements of Income.

During the fiscal years ended June 26, 2021 and June 27, 2020, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy.

There were no assets or liabilities measured at fair value on a non-recurring basis as of June 26, 2021 and June 27, 2020.

As of June 26, 2021 and June 27, 2020, private company investments amounted to $30.0 million and $20.6 million, respectively. The aggregate amount of unrealized gains (losses) recognized from these investments were $4.7 million and $(4.3) million, respectively, as of June 26, 2021 and June 27, 2020.

The Company recorded $8.1 million, $(1.3) million and $0.0 million of unrealized gains (losses) on private company investments, during the fiscal years ended June 26, 2021, June 27, 2020 and June 29, 2019, respectively. Unrealized gains (losses) on private company investments are recorded in Interest and other income (expense), net in the Company's Consolidated Statements of Income.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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