Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

v3.19.2
Fair Value Measurements
 12 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS
NOTE 3 — FAIR VALUE MEASUREMENTS
Our financial assets and liabilities are measured and recorded at fair value, except for our debt and certain equity investments in privately-held companies. Prior to July 1, 2018, the equity investments were generally accounted for under the cost method of accounting and were periodically assessed for other-than-temporary impairment when an event or circumstance indicated that an other-than-temporary decline in value may have occurred. Effective July 1, 2018, equity investments without a readily available fair value are accounted for using the measurement alternative. The measurement alternative is calculated as cost minus impairment, if any, plus or minus changes resulting from observable price changes.
Our non-financial assets, such as goodwill, intangible assets, and land, property and equipment, are assessed for impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred.
Fair Value of Financial Instruments. We have evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. The fair value of our cash equivalents, accounts receivable, accounts payable and other current assets and liabilities approximate their carrying amounts due to the relatively short maturity of these items.
Fair Value Hierarchy. The authoritative guidance for fair value measurements establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1
  
Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
 
 
 
Level 2
  
Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
 
 
 
Level 3
  
Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
As of June 30, 2019, the types of instruments valued based on quoted market prices in active markets included money market funds, certain U.S. Treasury securities and U.S. Government agency securities. Such instruments are generally classified within Level 1 of the fair value hierarchy.
The types of instruments valued based on other observable inputs included corporate debt securities, sovereign securities, municipal securities, certain U.S. Treasury securities and U.S. Government agency securities. The market inputs used to value these instruments generally consist of market yields, reported trades and broker/dealer quotes. Such instruments are generally classified within Level 2 of the fair value hierarchy.
The principal market in which we execute our foreign currency contracts is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants generally are large financial institutions. Our foreign currency contracts’ valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy.
The fair value of deferred payments and contingent consideration payable, the majority of which were recorded in connection with business combinations during the fiscal year ended June 30, 2019, were classified as Level 3 and estimated using significant inputs that were not observable in the market. See Note 6 “Business Combinations” for additional information.
Financial assets (excluding cash held in operating accounts and time deposits) and liabilities measured at fair value on a recurring basis as of the date indicated below were presented on our Consolidated Balance Sheets as follow
As of June 30, 2019 (In thousands)
Total
 
Quoted Prices
in Active Markets
for Identical
Assets (Level 1)
 
Significant 
Other
Observable 
Inputs
(Level 2)
 
Little or No
Market Activity Inputs (Level 3)
Assets
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
Corporate debt securities
$
10,988

 
$
—

 
$
10,988

 
$
—

Money market funds and other
352,708

 
352,708

 
—

 
—

U.S. Government agency securities
27,994

 
—

 
27,994

 
—

U.S. Treasury securities
55,858

 
—

 
55,858

 
—

Marketable securities:
 
 
 
 
 
 
 
Corporate debt securities
422,089

 
—

 
422,089

 
—

Municipal securities
1,913

 
—

 
1,913

 
 
Sovereign securities
5,994

 
—

 
5,994

 
—

U.S. Government agency securities
131,224

 
131,224

 
—

 
—

U.S. Treasury securities
151,838

 
151,838

 
—

 
—

Total cash equivalents and marketable securities(1)
1,160,606

 
635,770

 
524,836

 
—

Other current assets:
 
 
 
 
 
 
 
Derivative assets
2,557

 
—

 
2,557

 
—

Other non-current assets:
 
 
 
 
 
 
 
Executive Deferred Savings Plan
207,581

 
158,021

 
49,560

 
—

Total financial assets(1)
$
1,370,744

 
$
793,791

 
$
576,953

 
$
—

Liabilities
 
 
 
 
 
 
 
Derivative liabilities
$
(3,334
)
 
$
—

 
$
(3,334
)
 
$
—

Deferred payments
(8,800
)
 
—

 
—

 
(8,800
)
Contingent consideration payable
(14,005
)
 
—

 
—

 
(14,005
)
Total financial liabilities
$
(26,139
)
 
$
—

 
$
(3,334
)
 
$
(22,805
)
__________________ 
(1)
Excludes cash of $479.8 million held in operating accounts and time deposits of $99.0 million as of June 30, 2019.
Financial assets (excluding cash held in operating accounts and time deposits) and liabilities measured at fair value on a recurring basis as of the date indicated below were presented on our Consolidated Balance Sheets as follows: 
As of June 30, 2018 (In thousands)
Total
 
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
 
Significant Other
Observable Inputs
(Level 2)
Assets
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
Corporate debt securities
$
4,995

 
$
—

 
$
4,995

Money market funds and other
863,115

 
863,115

 
—

U.S. Government agency securities
7,675

 
—

 
7,675

U.S. Treasury securities
1,996

 
—

 
1,996

Marketable securities:
 
 
 
 
 
Corporate debt securities
735,408

 
—

 
735,408

Sovereign securities
17,142

 
—

 
17,142

U.S. Government agency securities
316,022

 
299,501

 
16,521

U.S. Treasury securities
405,654

 
364,574

 
41,080

Total cash equivalents and marketable securities(1)
2,352,007

 
1,527,190

 
824,817

Other current assets:
 
 
 
 
 
Derivative assets
5,385

 
—

 
5,385

Other non-current assets:
 
 
 
 
 
Executive Deferred Savings Plan
197,213

 
143,580

 
53,633

Total financial assets(1)
$
2,554,605

 
$
1,670,770

 
$
883,835

Liabilities
 
 
 
 
 
Derivative liabilities
$
(6,828
)
 
$
—

 
$
(6,828
)
Total financial liabilities
$
(6,828
)
 
$
—

 
$
(6,828
)
__________________ 
(1)
Excludes cash of $473.8 million held in operating accounts and time deposits of $54.5 million as of June 30, 2018. 
There were no transfers between Level 1 and Level 2 fair value measurements during the fiscal year ended June 30, 2019 or 2018. We did not have any assets or liabilities measured at fair value on a recurring basis within Level 3 fair value measurements as of June 30, 2018. See Note 8 “Debt” for disclosure of the fair value of our Senior Notes.