Fair Value Measures

3 Months Ended

Dec. 31, 2013

Fair value is defined as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Valuation techniques must maximize the use of observable inputs and minimize the use of unobservable inputs. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

ASC 820, Fair Value Measures and Disclosures, establishes a value hierarchy based on three levels of inputs, of which the first two are considered observable and the third is considered unobservable:


•	Level 1. Quoted prices for identical assets or liabilities in active markets which we can access.


•	Level 2. Observable inputs other than those described as Level 1.


•	Level 3. Unobservable inputs.

Items measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis at December 31, 2013 and September 30, 2013 consisted of (dollars in thousands):



	December 31, 2013
	Level 1		Level 2			Level 3			Total
Assets:
Money market funds(a)	$	617,061	$	—		$	—		$	617,061
US government agency securities(a)	1,000		—			—			1,000
Marketable securities, $40,440 at cost (b)	—		40,440			—			40,440
Foreign currency exchange contracts(b)	—		949			—			949
Total assets at fair value	$	618,061	$	41,389		$	—		$	659,450
Liabilities:
Security price guarantees(c)	$	—	$	(4,182	)	$	—		$	(4,182	)
Contingent earn-out(d)	—		—			(1,319		)	(1,319		)
Total liabilities at fair value	$	—	$	(4,182	)	$	(1,319	)	$	(5,501	)



	September 30, 2013
	Level 1		Level 2			Level 3			Total
Assets:
Money market funds(a)	$	684,697	$	—		$	—		$	684,697
US government agency securities(a)	1,000		—			—			1,000
Marketable securities, $38,728 at cost (b)	—		38,728			—			38,728
Foreign currency exchange contracts(b)	—		2,201			—			2,201
Total assets at fair value	$	685,697	$	40,929		$	—		$	726,626
Liabilities:
Security price guarantees(c)	$	—	$	(1,044	)	$	—		$	(1,044	)
Contingent earn-out(d)	—		—			(450		)	(450		)
Total liabilities at fair value	$	—	$	(1,044	)	$	(450	)	$	(1,494	)


(a)	Money market funds and U.S. government agency securities, included in cash and cash equivalents in the accompanying balance sheets, are valued at quoted market prices in active markets.


(b)	The fair values of our time deposits, marketable securities and foreign currency exchange contracts are based on the most recent observable inputs for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable.

(c)

The fair values of the security price guarantees are determined using a modified Black-Scholes model, derived from observable inputs such as U.S. treasury interest rates, our common stock price, and the volatility of our common stock. The valuation model values both the put and call components of the guarantees simultaneously, with the net value of those components representing the fair value of each instrument.


(d)	The fair value of our contingent consideration arrangements are determined based on our evaluation as to the probability and amount of any earn-out that will be achieved based on expected future performance by the acquired entity.

The changes in the fair value of contingent earn-out liabilities are as follows (dollars in thousands):



	Three Months Ended December 31,
	2013
Balance at beginning of period	$	450
Earn-out liability established at time of acquisition	869
Balance at end of period	$	1,319

Earn-out payments are payable based on achieving the specified performance criteria during defined post-acquisition time periods in accordance with the purchase and sale agreement for each acquisition.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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