Fair Value of Financial Instruments

6 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

10. Fair Value of Financial Instruments

With respect to financial assets and liabilities, fair value is defined as the exchange price that would be received for an asset, or paid to transfer a liability (an exit price), in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy has been established based on three levels of inputs, of which the first two are considered observable and the last unobservable.

•Level 1—Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.

•Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These are typically obtained from readily available pricing sources for comparable instruments.

•Level 3—Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own assumptions of the data that market participants would use in pricing the asset or liability based on the best information available in the circumstances.

The Company had interest rate swap contracts held with financial institutions as of March 31, 2022 and September 30, 2021, classified as Level 2 financial instruments, which are valued using observable underlying interest rates and market-determined risk premiums at the reporting date.

The Company had foreign currency forward contracts held with financial institutions as of September 30, 2021, classified as Level 2 financial instruments, which were valued using observable forward foreign exchange rates at the reporting date. There were no outstanding foreign currency forward contracts as of March 31, 2022.

The Company had commodity index contracts held with financial institutions as of March 31, 2022 and September 30, 2021, classified as Level 2 financial instruments, which are valued using observable commodity index rates at the reporting date.

The Company had a contingent consideration liability as of March 31, 2022 and September 30, 2021, classified as a Level 3 instrument, in conjunction with its acquisition of all aspects of the business related to iGrill and Kitchen Thermometer products from iDevices. The fair value of these estimated future cash payments was determined based on valuation methods and estimates of future cash flows. See Note 8 for further details.

The fair value of financial assets and liabilities measured on a recurring basis was as follows:

	March 31, 2022		Level 1		Level 2		Level 3
	(dollars in thousands)
Prepaid expenses and other current assets:
Commodity index contracts	$	1,468	—		1,468		—
Interest rate swap contracts	7,249		—		7,249		—
Total	$	8,717	$	—	$	8,717	$	—
Other long-term assets:
Interest rate swap contracts	34,821		$	—	$	34,821	$	—
Total	$	34,821	$	—	$	34,821	$	—
Accrued expenses:
Interest rate swap contracts	7,892		—		7,892		—
Total	$	7,892	$	—	$	7,892	$	—
Other long-term liabilities:
Interest rate swap contracts	$	22,136	$	—	$	22,136	$	—
Contingent consideration	404		—		—		404
Total	$	22,540	$	—	$	22,136	$	404

	September 30, 2021		Level 1		Level 2		Level 3
	(dollars in thousands)
Prepaid expenses and other current assets:
Foreign currency forward contracts	$	134	$	—	$	134	$	—
Commodity index contracts	3,378		—		3,378		—
Interest rate swap contracts	8,762		—		8,762		—
Total	$	12,274	$	—	$	12,274	$	—
Other long-term assets:
Interest rate swap contracts	$	27,267	$	—	$	27,267	$	—
Total	$	27,267	$	—	$	27,267	$	—
Accrued expenses:
Interest rate swap contracts	$	14,688	$	—	$	14,688	$	—
Total	$	14,688	$	—	$	14,688	$	—
Other long-term liabilities:
Interest rate swap contracts	$	40,392	$	—	$	40,392	$	—
Contingent consideration	503		—		—		503
Total	$	40,895	$	—	$	40,392	$	503

The carrying amounts reported in the Company’s condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, and trade accounts payable approximate their fair values due to the short-term nature of these instruments. The carrying amounts reported in the Company’s condensed consolidated balance sheets for the variable rate, revolving loan facility also approximate its fair value. The fair value of the fixed rate debt is not readily determinable, because the information is not available.