Financial instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, marketable securities and other investments, long-term investments, and accounts receivable as well as obligations under accounts payable, trade, notes payable and long-term debt. Due to their short-term nature, the carrying values for cash and cash equivalents, accounts receivable, accounts payable, trade and notes payable approximate fair value.

Marketable securities and other investments include deposits, which are recorded at cost, and investments classified as available-for-sale, which are recorded at fair value with unrealized gains and losses recorded in accumulated other comprehensive (loss). The amortized cost and fair value of available-for-sale investments at March 31, 2015 are as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Fixed income mutual funds	$	222,088	$	301	$	—	$	222,389
Government bonds	63,594		5		6		63,593
Corporate bonds	138,319		—		154		138,165
Asset-backed and mortgage-backed securities	10,753		2		17		10,738

At March 31, 2015, there were no facts or circumstances that indicated the unrealized losses were other than temporary. All available-for-sale investments in an unrealized loss position have been in that position for less than twelve months.

The contractual maturities of available-for-sale investments at March 31, 2015 are as follows:



	Amortized Cost		Fair Value
Less than one year	$	19,245	$	19,239
One to three years	179,575		179,434
Above three years	13,846		13,823

15. Financial instruments cont'd

Actual maturities of available-for-sale investments may differ from their contractual maturities as the Company has the ability to liquidate the available-for-sale investments after giving appropriate notice to the issuer.

The carrying value of long-term debt (excluding capital leases) and estimated fair value of long-term debt (excluding capital leases) are as follows:



	March 31, 2015		June 30, 2014
Carrying value of long-term debt (excluding capital leases)	$	2,939,620	$	1,508,420
Estimated fair value of long-term debt (excluding capital leases)	3,295,663		1,708,723

The fair value of long-term debt was determined based on observable market prices in the active market in which the security is traded and is classified within level 2 of the fair value hierarchy.

The Company utilizes derivative and non-derivative financial instruments, including forward exchange contracts, costless collar contracts, cross-currency swap contracts and certain foreign denominated debt designated as net investment hedges, to manage foreign currency transaction and translation risk. The derivative financial instrument contracts are with major investment grade financial institutions and the Company does not anticipate any material non-performance by any of the counterparties. The Company does not hold or issue derivative financial instruments for trading purposes.

The Company’s Euro bonds and Japanese Yen credit facility have each been designated as a hedge of the Company’s net investment in certain foreign subsidiaries. The translation of the Euro bonds and Japanese Yen credit facility into U.S. dollars is recorded in accumulated other comprehensive (loss) and remains there until the underlying net investment is sold or substantially liquidated.

Derivative financial instruments are recognized on the Consolidated Balance Sheet as either assets or liabilities and are measured at fair value.

The following summarizes the location and fair value of derivative financial instruments reported in the Consolidated Balance Sheet as of March 31, 2015 and June 30, 2014:



	Balance Sheet Caption	March 31, 2015		June 30, 2014
Net investment hedges
Cross-currency swap contracts	Other assets	$	26,747	$	—
Cross-currency swap contracts	Other liabilities	—		45,790
Cash flow hedges
Costless collar contracts	Non-trade and notes receivable	7,712		3,508
Forward exchange contracts	Non-trade and notes receivable	63		(41		)
Costless collar contracts	Other accrued liabilities	6,651		378

The cross-currency swap and costless collar contracts are reflected on a gross basis in the Consolidated Balance Sheet. The presentation of forward exchange contracts is on a net basis, the effect of which is immaterial to the Consolidated Balance Sheet. The Company has not entered into any master netting arrangements.

Gains or losses on derivatives that are not hedges are adjusted to fair value through the cost of sales caption in the Consolidated Statement of Income. Gains or losses on derivatives that are hedges are adjusted to fair value through accumulated other comprehensive (loss) in the Consolidated Balance Sheet until the hedged item is recognized in earnings.

The cross-currency swap contracts have been designated as hedging instruments. The costless collar contracts and forward exchange contracts have not been designated as hedging instruments and are considered to be economic hedges of forecasted transactions.

15. Financial instruments cont'd

Gains (losses) on derivative financial instruments that were recorded in the Consolidated Statement of Income are as follows:



	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2015			2014		2015			2014
Forward exchange contracts	$	(331	)	$	442	$	148		$	(182	)
Costless collar contracts	(424		)	766		(1,788		)	7,486

Gains (losses) on derivative and non-derivative financial instruments that were recorded in accumulated other comprehensive (loss) in the Consolidated Balance Sheet are as follows:



	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2015		2014			2015		2014
Cross-currency swap contracts	$	22,684	$	(2,393	)	$	44,813	$	(13,881	)
Foreign denominated debt	17,151		(1,013		)	42,296		(7,895		)

There was no ineffectiveness of the cross-currency swap contracts or foreign denominated debt, nor was any portion of these financial instruments excluded from the effectiveness testing, during the nine months ended March 31, 2015 and 2014.

A summary of financial assets and liabilities that were measured at fair value on a recurring basis at March 31, 2015 and June 30, 2014 are as follows:



			Quoted Prices		Significant Other		Significant
	Total		In Active		Observable		Unobservable
	Value at		Markets		Inputs		Inputs
	March 31, 2015		(Level 1)		(Level 2)		(Level 3)
Assets:
Fixed income mutual funds	$	222,389	$	59,450	$	162,939	$	—
Government bonds	63,593		63,593		—		—
Corporate bonds	138,165		138,165		—		—
Asset-backed and mortgage-backed securities	10,738		—		10,738		—
Derivatives	34,522		—		34,522		—
Liabilities:
Derivatives	6,651		—		6,651		—

Quoted Prices

Significant Other

Significant

Total

In Active

Observable

Unobservable

Value at

Markets

Inputs

June 30, 2014

(Level 1)

(Level 2)

(Level 3)

Assets:

Derivatives

3,508

—

3,508

—

Liabilities:

Derivatives

46,209

—

46,209

—

Fixed income mutual funds consist of investments in mutual funds with variable net asset values. The fair values of the fixed income mutual funds, government bonds, corporate bonds and asset-backed and mortgage-backed securities are determined using the closing market price reported in the active market in which the fund is traded or the market price for similar assets that are traded in an active market.

15. Financial instruments cont'd

Derivatives consist of forward exchange, costless collar and cross-currency swap contracts, the fair values of which are calculated using market observable inputs including both spot and forward prices for the same underlying currencies. The calculation of fair value of the cross-currency swap contracts also utilizes a present value cash flow model that has been adjusted to reflect the credit risk of either the Company or the counterparty.

There are no other financial assets or financial liabilities that are marked to market on a recurring basis. Fair values are transferred between levels of the fair value hierarchy when facts and circumstances indicate that a change in the method of estimating the fair value of a financial asset or financial liability is warranted.