Fair Value Measurements

9 Months Ended

Jun. 30, 2013

Fair Value Measurements

Fair Value Measurements

5. Fair Value Measurements

The Company’s financial instruments consist of cash equivalents, trade and other accounts receivable, accounts payable, foreign currency derivative instruments and debt. The carrying amounts of cash equivalents, trade and other accounts receivable and accounts payable approximate fair value due to the short-term nature of these financial instruments.

The Company measures on a recurring basis and discloses the fair value of its financial instruments under the provisions of ASC Topic 820, Fair Value Measurement, as amended (“ASC 820”). The Company defines “fair value” as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level hierarchy for measuring fair value and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels of that hierarchy are defined as follows:

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 - Unadjusted quoted prices in active markets for similar assets or liabilities; or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from or corroborated by observable market data; and

Level 3 - Unobservable inputs for the asset or liability.

Consistent with this hierarchy, the Company categorized certain of its financial assets and liabilities as follows at June 30, 2013 (in thousands):

	Total		Level 1		Level 2		Level 3
Assets
Cash equivalents (a)	$	—	$	—	$	—	—
Foreign currency forwards (b)	98		—		98		—
Total assets	$	98	$	—	$	98	—
Liabilities
Long-term debt (c)	$	1,745,273	$	1,663,125	$	82,148	—
Foreign currency forwards (b)	248		—		248		—
Total liabilities	$	1,745,521	$	1,663,125	$	82,396	—

Consistent with this hierarchy, the Company categorized certain of its financial assets and liabilities as follows at September 30, 2012 (in thousands):

	Total		Level 1		Level 2		Level 3
Assets
Cash equivalents (a)	$	155,000	$	155,000	$	—	—
Foreign currency forwards (b)	4		—		4		—
Total assets	$	155,004	$	155,000	$	4	—
Liabilities
Long-term debt (c)	$	1,739,547	$	1,731,625	$	7,922	—
Foreign currency forwards (b)	132		—		132		—
Total liabilities	$	1,739,679	$	1,731,625	$	8,054	—

(a) Cash equivalents, at September 30, 2012, consist of highly liquid investments which have no maturity and are valued using unadjusted quoted market prices for such securities. The Company may from time to time invest in securities with maturities of three months or less (consisting primarily of investment-grade corporate or government bonds), with the primary investment objective of minimizing the potential risk of loss of principal.

(b) Foreign currency forwards are valued for purposes of this disclosure using widely accepted valuation techniques, such as discounted cash flow analyses, and reasonable estimates, such as projected foreign currency exchange rates. Please see Note 11 for more information about the Company’s foreign exchange contracts (including foreign currency forwards).

(c) Long-term debt (including current maturities and borrowings under the ABL facility) is carried in the Company’s consolidated financial statements at amortized cost of $1,690.8 million at June 30, 2013 and $1,617.2 million at September 30, 2012. The senior notes due 2019 and senior notes due 2022 are valued for purposes of this disclosure using unadjusted quoted market prices for such debt securities. Other long-term debt (consisting primarily of borrowings under the ABL facility and capital lease obligations), is generally valued for purposes of this disclosure using widely accepted valuation techniques, such as discounted cash flow analyses, and observable inputs, such as market interest rates. Please see Note 10 for more information about the Company’s debt.