Fair Value Measurements

The following table summarizes our investments in marketable securities:



	September 30, 2016
	Amortized Cost Basis (2)		Unrealized gain		Estimated Fair Value
Available-for-sale securities
Plaza Create Co. Ltd. common shares (1)	$	4,748	$	2,564	$	7,312
Total investments in available-for-sale securities	$	4,748	$	2,564	$	7,312



	June 30, 2016
	Amortized Cost Basis (2)		Unrealized gain		Estimated Fair Value
Available-for-sale securities
Plaza Create Co. Ltd. common shares (1)	$	4,405	$	3,488	$	7,893
Total investments in available-for-sale securities	$	4,405	$	3,488	$	7,893

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(1) On February 28, 2014, we purchased shares in our publicly traded Japanese joint venture partner. Refer to Note 11 for further discussion of the separate joint business arrangement.

(2) Amortized cost basis represents our initial investment adjusted for currency translation.

We use a three-level valuation hierarchy for measuring fair value and include detailed financial statement disclosures about fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:


•	Level 1: Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.


•	Level 2: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.


•	Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:



	September 30, 2016
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets
Available-for-sale securities	$	7,312		$	7,312	$	—		$	—
Currency forward contracts	8,998			—		8,998			—
Total assets recorded at fair value	$	16,310		$	7,312	$	8,998		$	—

Liabilities
Interest rate swap contracts	$	(1,755	)	$	—	$	(1,755	)	$	—
Cross-currency swap contracts	(14,063		)	—		(14,063		)	—
Currency forward contracts	(1,790		)	—		(1,790		)	—
Contingent consideration	(2,339		)	—		—			(2,339		)
Total liabilities recorded at fair value	$	(19,947	)	$	—	$	(17,608	)	$	(2,339	)



	June 30, 2016
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets
Available-for-sale securities	$	7,893		$	7,893	$	—		$	—
Currency forward contracts	9,821			—		9,821			—
Total assets recorded at fair value	$	17,714		$	7,893	$	9,821		$	—

Liabilities
Interest rate swap contracts	$	(2,180	)	$	—	$	(2,180	)	$	—
Cross-currency swap contracts	(8,850		)	—		(8,850		)	—
Currency forward contracts	(315		)	—		(315		)	—
Contingent consideration	(1,212		)	—		—			(1,212		)
Total liabilities recorded at fair value	$	(12,557	)	$	—	$	(11,345	)	$	(1,212	)

During the quarter ended September 30, 2016 and year ended June 30, 2016, there were no significant transfers in or out of Level 1, Level 2 and Level 3 classifications.

The valuations of the derivatives intended to mitigate our interest rate and currency risk are determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each instrument. This analysis utilizes observable market-based inputs, including interest rate curves, interest rate volatility, or spot and forward exchange rates, and reflects the contractual terms of these instruments, including the period to maturity. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparties' nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to appropriately reflect both our own nonperformance risk and the respective counterparties' nonperformance risk in the fair value measurement. However, as of September 30, 2016, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 in the fair value hierarchy.

Contingent consideration obligations are measured at fair value and are based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions and estimates to forecast a range of outcomes and probabilities for the contingent consideration. Certain contingent consideration obligations are valued using a Monte Carlo simulation model. We assess these assumptions and estimates on a quarterly basis as additional data impacting the assumptions is obtained. Any changes in the fair value of contingent consideration related to updated assumptions and estimates will be recognized within general and administrative expenses in the consolidated statements of operations during the period in which the change occurs.

Related to the acquisition of WIRmachenDRUCK on February 1, 2016 we agreed to a contingent payment payable during the third quarter of fiscal 2018 based on the achievement of a cumulative gross profit target for calendar years 2016 and 2017. The fair value of this contingent liability is $19,206 as of September 30, 2016, of which $2,339 is considered contingent consideration and included in the table below. The remaining portion of the liability is classified as a compensation arrangement and is discussed in Note 8.

The following table represents the changes in fair value of Level 3 contingent consideration:



	Three Months Ended September 30,
	2016 (1)		2015 (2)
Balance at June 30	$	1,212	$	7,833
Fair value adjustment	1,112		—
Foreign currency impact	15		48
Balance at September 30 (3)	$	2,339	$	7,881

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(1) Classified as long-term liability on the consolidated balance sheet

(2) Classified as short-term liability on the consolidated balance sheet

(3) Contingent consideration balance as of September 30, 2015, which related to our Printdeal acquisition, was paid during the fourth quarter of fiscal 2016.

As of September 30, 2016 and June 30, 2016, the carrying amounts of our cash and cash equivalents, accounts receivables, accounts payable, and other current liabilities approximated their estimated fair values. As of September 30, 2016 and June 30, 2016 the carrying value of our debt, excluding debt issuance costs and debt discounts was $689,485 and $685,897, respectively, and the fair value was $704,793 and $686,409, respectively. Our debt at September 30, 2016 includes a variable rate debt instrument indexed to LIBOR that resets periodically and fixed rate debt instruments. The estimated fair value of our debt was determined using available market information based on recent trades or activity of debt instruments with substantially similar risks, terms and maturities, which fall within Level 2 under the fair value hierarchy. The estimated fair value of assets and liabilities disclosed above may not be representative of actual values that could have been or will be realized in the future.