Fair Value Measurements

9 Months Ended

Mar. 28, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements [Text Block]

FAIR VALUE MEASUREMENTS

The FASB established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs that may be used to measure fair value are as follows:

Level 1 - Quoted (unadjusted) prices in active markets for identical assets or liabilities.

The Company’s Level 1 assets consist of money market funds.

Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

The Company’s Level 2 assets and liabilities consist of U.S. treasury bills and foreign currency forward contracts that are valued using quoted market prices or are determined using a yield curve model based on current market rates. As a result, the Company has classified these investments as Level 2 in the fair value hierarchy.

Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s Level 3 assets and liabilities consists of contingent consideration liability related to certain prior years’ acquisitions, long-lived assets, goodwill and intangibles when it is recorded at fair value due to an impairment charge.

Assets and liabilities measured at fair value on a recurring basis were as follows:

	As of March 28, 2015								As of June 28, 2014
	Fair Value  Measurements Using						Total Balance		Fair Value  Measurements Using						Total Balance
	Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
	(in thousands)
Assets
Money market funds (1)	$	1,003,200	$	—	$	—	$	1,003,200	$	971,868	$	—	$	—	$	971,868
U.S. treasury bills (2)	—		75,142		—		75,142		—		49,953		—		49,953
Foreign currency forward contracts (3)	—		432		—		432		—		316		—		316
Total Assets	$	1,003,200	$	75,574	$	—	$	1,078,774	$	971,868	$	50,269	$	—	$	1,022,137
Liabilities
Foreign currency forward contracts (4)	$	—	$	2,481	$	—	$	2,481	$	—	$	438	$	—	$	438
Contingent Consideration (4)	—		—		—		—		—		—		3,215		3,215
Total Liabilities	$	—	$	2,481	$	—	$	2,481	$	—	$	438	$	3,215	$	3,653

(1) Included in Cash and cash equivalents in the accompanying Condensed Consolidated Balance Sheets.

(2) Included in Short-term investments in the accompanying Condensed Consolidated Balance Sheets.

(3) Included in Other current assets in the accompanying Condensed Consolidated Balance Sheets.

(4) Included in Accrued expenses in the accompanying Condensed Consolidated Balance Sheets.

The tables below present reconciliations for liabilities measured and recorded at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended March 28, 2015 and March 29, 2014:

Fair Value Measured and Recorded Using Significant Unobservable Inputs (Level 3)
	March 28, 2015			March 29, 2014
Contingent Consideration	(in thousands)
Beginning balance	$	3,215		$	8,577
Total gains or losses (realized and unrealized):
Included in earnings	384			1,632
Payments	(3,599		)	(5,851		)
Ending balance	$	—		$	4,358
Changes in unrealized losses (gains) included in earnings related to liabilities still held as of period end	$	—		$	1,632

The valuation of contingent consideration is based on a probability weighted earnout model which relies primarily on estimates of milestone achievements and discount rates applicable for the period of the expected payout. The most significant unobservable input used in the determination of estimated fair value of contingent consideration is the estimates of the likelihood of milestone achievements, which directly correlates to the fair value recognized in the Condensed Consolidated Balance Sheets.

The fair value of this liability is estimated quarterly by management based on inputs received from the Company’s engineering and finance personnel. The determination of the milestone achievement is performed by the Company’s business units and reviewed by the accounting department. Potential valuation adjustments are made as the progress toward achieving milestones becomes determinable, with the impact of such adjustments being recorded to Other operating expenses (income), net in our Condensed Consolidated Statements of Income. 

During the nine months ended March 28, 2015 and the year ended June 28, 2014, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy.

There were no assets or liabilities measured at fair value on a non-recurring basis as of March 28, 2015 and June 28, 2014 other than impairments of Long-Lived assets. For details, please refer to Note 15: “Impairment of long-lived assets”.