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Fair Value Measurements
9 Months Ended
Jun. 30, 2015
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
In accordance with the authoritative guidance on fair value measurements and disclosure under GAAP, the Company determines fair value using a fair value hierarchy that distinguishes between market participant assumptions developed based on market data obtained from sources independent of the reporting entity, and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances and expands disclosure about fair value measurements.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date, essentially the exit price.
The levels of fair value hierarchy are:
Level 1: Quoted prices in active markets for identical assets and liabilities at the measurement date that the Company has the ability to access.
Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Unobservable inputs for which there is little or no market data available. These inputs reflect management’s assumptions of what market participants would use in pricing the asset or liability.
Level 1 investments are valued based on quoted market prices in active markets and include the Company’s cash equivalent investments. Level 2 investments, which include investments that are valued based on quoted prices in markets that are not active, broker or dealer quotations, actual trade data, benchmark yields or alternative pricing sources with reasonable levels of price transparency, include the Company’s certificates of deposit, corporate bonds and notes, municipal bonds and notes, U.S. government securities, U.S. government agency securities and international government securities. Fair values for the Company’s level 2 investments are based on similar assets without applying significant judgments. In addition, all of the Company’s level 2 investments have a sufficient level of trading volume to demonstrate that the fair values used are appropriate for these investments.
A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company. The Company considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
The Company’s financial assets measured at fair value on a recurring basis subject to the disclosure requirements at June 30, 2015, were as follows (in thousands):
 
 
 
Fair Value Measurements at Reporting Date Using
 
 
 
 
Quoted Prices in
Active Markets for
Identical Securities
(Level 1)
 
Significant
Other Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Fair Value at June 30,
2015
Cash equivalents
 
$
243,272

 
$

 
$

 
$
243,272

Short-term investments
 
 
 
 
 
 
 
 
Available-for-sale securities — certificates of deposits
 

 
4,765

 

 
4,765

Available-for-sale securities — corporate bonds and notes
 

 
121,652

 

 
121,652

Available-for-sale securities — municipal bonds and notes
 

 
37,568

 

 
37,568

Available-for-sale securities — U.S. government securities
 

 
7,414

 

 
7,414

Available-for-sale securities — U.S. government agency securities
 

 
64,128

 

 
64,128

Long-term investments
 
 
 
 
 
 
 
 
Available-for-sale securities — corporate bonds and notes
 

 
253,252

 

 
253,252

Available-for-sale securities — municipal bonds and notes
 

 
66,192

 

 
66,192

Available-for-sale securities — U.S. government agency securities
 

 
39,405

 

 
39,405

Available-for-sale securities — international government securities
 

 
2,816

 

 
2,816

Total
 
$
243,272

 
$
597,192

 
$

 
$
840,464


The Company’s financial assets measured at fair value on a recurring basis subject to the disclosure requirements at September 30, 2014, were as follows (in thousands):
 
 
 
Fair Value Measurements at Reporting Date Using
 
 
 
 
Quoted Prices in
Active Markets for
Identical Securities
(Level 1)
 
Significant
Other Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Fair Value at
September 30,
2014
Cash equivalents
 
$
43,618

 
$

 
$

 
$
43,618

Short-term investments
 
 
 
 
 
 
 
 
Available-for-sale securities — corporate bonds and notes
 

 
205,698

 

 
205,698

Available-for-sale securities — municipal bonds and notes
 

 
43,430

 

 
43,430

Available-for-sale securities — U.S. government securities
 

 
5,006

 

 
5,006

Available-for-sale securities — U.S. government agency securities
 

 
109,743

 

 
109,743

Long-term investments
 
 
 
 
 
 
 
 
Available-for-sale securities — corporate bonds and notes
 

 
325,282

 

 
325,282

Available-for-sale securities — municipal bonds and notes
 

 
24,582

 

 
24,582

Available-for-sale securities — U.S. government securities
 

 
7,407

 

 
7,407

Available-for-sale securities — U.S. government agency securities
 

 
123,087

 

 
123,087

Available-for-sale securities — international government securities
 

 
2,559

 

 
2,559

Total
 
$
43,618

 
$
846,794

 
$

 
$
890,412


The following table provides a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis in the table above that used significant unobservable inputs (Level 3) (in thousands):
 
 
 
Three months ended
June 30,
 
Nine months ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
Balance, beginning of period
 
$

 
$

 
$

 
$
3,036

Total gains realized or unrealized:
 
 
 
 
 
 
 
 
Included in other comprehensive income
 

 

 

 
264

Settlements
 

 

 

 
(3,300
)
Balance, end of period
 
$

 
$

 
$

 
$

Unrealized losses attributable to assets still held as of end of period
 

 

 

 


Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable or there is limited market activity such that the determination of fair value requires significant judgment or estimation.
The Company uses the fair value hierarchy for financial assets and liabilities. The Company’s non-financial assets and liabilities, which include goodwill, intangible assets, and long-lived assets, are not required to be carried at fair value on a recurring basis. These non-financial assets and liabilities are measured at fair value on a non-recurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized. The Company reviews goodwill and intangible assets for impairment annually, during the second quarter of each fiscal year, or as circumstances indicate the possibility of impairment. The Company monitors the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate its carrying amount may not be recoverable. During the three months ended June 30, 2015, the Company did not recognize any impairment charges related to goodwill, intangible assets, or long-lived assets.