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 carried at fair value by the above pricing categories as of March 29, 2014 and June 29, 2013 (in millions):



	Fair Value Measurements as of March 29, 2014 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	$	284.5	$	284.5	$	—	$	—
Investment securities	25.6		25.6		—		—
Funds associated with Israeli post-employment benefits	18.4		—		18.4		—
Foreign currency forward contracts	3.5		—		3.5		—
Restricted cash	2.8		2.8		—		—
Total	$	334.8	$	312.9	$	21.9	$	—
Liabilities:
Contingent consideration	$	23.0	$	—	$	—	$	23.0
Interest rate swap agreements	8.9		—		8.9		—
Foreign currency forward contracts	1.2		—		1.2		—
Total	$	33.1	$	—	$	10.1	$	23.0



	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	$	—	$	—
Funds associated with Israeli post-employment benefits	16.1		—		16.1		—
Foreign currency forward contracts	8.0		—		8.0		—
Total	$	721.8	$	697.7	$	24.1	$	—
Liabilities:
Contingent consideration	$	22.2	$	—	$	—	$	22.2
Interest rate swap agreements	10.8		—		10.8		—
Foreign currency forward contracts	0.4		—		0.4		—
Total	$	33.4	$	—	$	11.2	$	22.2

The carrying amounts of the Company’s financial instruments, consisting of cash, accounts receivable, accounts payable, short-term debt and variable rate long-term debt, approximate their fair value. There were no transfers between Level 1, 2, and 3 during the three and nine months ended March 29, 2014. 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 March 29, 2014, the carrying value and fair value of the Company’s fixed rate long-term debt were both $2.3 billion. 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 March 29, 2014, the Company's 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 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).

As of March 29, 2014, 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 a product portfolio from 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. The Company updates the estimated fair value of the contingent consideration related to the one product described above quarterly. Due to changes in fair value assumptions during the third quarter of fiscal 2014, the fair value was written up to $18.8 million, from $13.1 million in the second quarter, resulting in an unfavorable adjustment of $5.7 million recorded in administration expense for the three months ended March 29, 2014. Year-to-date, the Company recorded net expense of $0.8 million due to a favorable adjustment of $4.9 million recorded in the second quarter, offset by the $5.7 million unfavorable adjustment recorded in the third quarter, both of which were due to changes in fair value assumptions related to probability weighted outcomes during the respective quarters.

The Company measures certain assets, including equity investments in privately-held companies, at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. The Company has not recognized any impairment charges related to these assets during fiscal 2014.