(20) Fair Value Measurements

In determining the fair value measurements of our financial assets and liabilities, we consider the principal and most advantageous market in which we transact and consider assumptions that market participants would use when pricing the financial asset or liability. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The hierarchies of inputs are as follows:

• Level 1: Input prices quoted in an active market for identical financial assets or liabilities;

• Level 2: Inputs other than prices quoted in Level 1, such as prices quoted for similar financial assets and liabilities in active markets, prices for identical assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data; and

• Level 3: Input prices quoted that are significant to the fair value of the financial assets or liabilities which are not observable nor supported by an active market.

The following table summarizes our financial assets and liabilities, as at June 30, 2015 and June 30, 2014, using the valuation input hierarchy (in thousands):


	Level 1		Level 2		Level 3		Total
Balances at June 30, 2015
Foreign currency hedging instruments, net	$	-	$	1,038	$	-	$	1,038
Business acquisition contingent consideration	$	-	$	-	$	(1,584)	$	(1,584)
Balances at June 30, 2014
Foreign currency hedging instruments, net	$	-	$	(2,270)	$	-	$	(2,270)
Business acquisition contingent consideration	$	-	$	-	$	(480)	$	(480)

We determine the fair value of our financial assets and liabilities as follows:

Foreign currency options – These financial instruments are valued using third-party valuation models based on market observable inputs, including interest rate curves, on-market spot currency prices, volatilities and credit risk.

Contingent consideration – These liabilities include the fair value estimates of additional future payments that may be required for some of our previous business acquisitions based on the achievement of certain performance milestones. Each potential future payment is valued using the estimated probability of achieving each milestone, which is then discounted to present value.

The following is a reconciliation of changes in the fair value of contingent consideration during fiscal years ended June 30, 2015 and June 30, 2014 (in thousands):


	2015		2014
Balance at the beginning of the period	$	(480)	$	(7,779)
Acquisition date fair value of contingent consideration		(1,717)		-
Changes in fair value included in operating income		132		6,283
Payments		458		1,117
Foreign currency translation adjustments		23		(101)
Balance at the end of the period	$	(1,584)	$	(480)

We did not have any significant non-financial assets or liabilities measured at fair value on June 30, 2015 or June 30, 2014.