FAIR VALUE MEASUREMENTS

Accounting Standards Codification ("ASC") Topic 820 provides a consistent definition of fair value, which focuses on exit price, prioritizes the use of market-based inputs over entity-specific inputs for measuring fair value and establishes a three-level hierarchy for fair value measurements. ASC Topic 820 requires fair value measurements to be classified and disclosed in one of the following three categories:


Level 1:	Quoted prices (unadjusted) in active markets for identical assets and liabilities.


Level 2:	Either direct or indirect inputs, other than quoted prices included within Level 1, which are observable for similar assets or liabilities.


Level 3:	Valuations derived from valuation techniques in which one or more significant inputs are unobservable.

The following tables summarize the valuation of the Company’s financial instruments by the above pricing categories as of December 28, 2013 and June 29, 2013 (in millions):



	Fair Value Measurements as of December 28, 2013 Using:
	Total		Quoted Prices In Active Markets (Level 1)		Prices With Other Observable Inputs (Level 2)		Prices With Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	109.6	$	109.6	$	—	$	—
Restricted cash	2.9		2.9		—		—
Investment securities	85.5		85.5		—		—
Foreign currency forward contracts	6.4		—		6.4		—
Funds associated with Israeli post-employment benefits	18.4		—		18.4		—
Total	$	222.8	$	198.0	$	24.8	$	—
Liabilities:
Contingent consideration	$	17.3	$	—	$	—	$	17.3
Foreign currency forward contracts	0.3		—		0.3		—
Interest rate swap agreements	9.8		—		9.8		—
Total	$	27.4	$	—	$	10.1	$	17.3



	Fair Value Measurements as of June 29, 2013 Using:
	Total		Quoted Prices In Active Markets (Level 1)		Prices With Other Observable Inputs (Level 2)		Prices With Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	697.7	$	697.7	$	—	$	—
Foreign currency forward contracts, net	7.6		—		7.6		—
Funds associated with Israeli post-employment benefits	16.1		—		16.1		—
Total	$	721.4	$	697.7	$	23.7	$	—
Liabilities:
Contingent consideration	$	22.2	$	—	$	—	$	22.2
Interest rate swap agreements	10.8		—		10.8		—
Total	$	33.0	$	—	$	10.8	$	22.2

The carrying amounts of the Company’s financial instruments, consisting of cash and cash equivalents, accounts receivable, accounts payable, short-term debt and variable rate long-term debt, approximate their fair value. As of December 28, 2013, the carrying value and fair value of the Company’s fixed rate long-term debt were $2.3 billion and $2.3 billion, respectively. As of June 29, 2013, the carrying value and fair value of the Company’s fixed rate long-term debt were $1.6 billion and $1.5 billion, respectively. At December 28, 2013 the fixed rate long-term debt consisted of private placement senior notes with registration rights. Their fair value was determined by discounting the future cash flows of the financial instruments to their present value, using interest rates currently offered for borrowings and deposits of similar nature and remaining maturities (Level 2). At June 29, 2013, the fixed rate long-term debt consisted of both of private placement senior notes and public bonds. The private placement senior notes' fair value was calculated similarly to the private placement senior notes with registration rights mentioned above, while the public bonds' fair value was determined by quoted market prices (Level 1). There were no transfers between Level 1 and Level 2 during the three and six months ended December 28, 2013. The Company’s policy regarding the recording of transfers between levels is to record any such transfers at the end of the reporting period.

As of December 28, 2013, the Company had $18.4 million deposited in funds managed by financial institutions that are designated by management to cover post-employment benefits for its Israeli employees. Israeli law generally requires payment of severance upon dismissal of an employee or upon termination of employment in certain other circumstances. These funds are included in the Company’s long-term investments reported in other non-current assets. The Company’s Level 2 securities values are determined using prices for recently traded financial instruments with similar underlying terms, as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

As a result of the acquisition of Fera completed on June 17, 2013, the Company recorded a contingent consideration liability of $22.2 million on the acquisition date based upon the estimated fair value of contingent payments to the seller. These estimates included $18.0 million associated with certain contingencies on one product within the portfolio acquired, along with $4.2 million related to a 15-month indemnification period. The fair value measurements for this liability were valued using Level 3 inputs, which included estimates around probability-weighted outcomes and discount rates. During the second quarter of fiscal 2014, the Company updated the estimated fair value of the contingent consideration related to the one product described above, resulting in a write-down of the original $18.0 million consideration to $13.1 million. The gain of $4.9 million was recorded in administration expenses for the three and six months ended December 28, 2013.

The following table presents a rollforward of the assets and liabilities measured at fair value using unobservable inputs (Level 3) at December 28, 2013 (in millions):



	Contingent Consideration (Level 3)
Balance as of June 29, 2013	$	22.2
Write-down of Fera contingent consideration	(4.9		)
Balance as of December 28, 2013	$	17.3