Fair Value Measurements

6 Months Ended

Mar. 31, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

10. FAIR VALUE MEASUREMENTS

Fair value is defined as an exit price (i.e., the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date). The methods and assumptions used to measure the fair value of financial instruments are as follows:

Derivatives

The fair value of our interest rate swap agreements and forward exchange contracts are quantified using the income approach and are based on estimates using standard pricing models. These models take into account the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments. The computation of the fair values of these instruments is generally performed by the Company. These standard pricing models utilize inputs which are derived from or corroborated by observable market data such as interest rate yield curves and currency spot and forward rates. In addition, on an ongoing basis, we randomly test a subset of our valuations against valuations received from the transaction's counterparty to validate the accuracy of our standard pricing models. Counterparties to these derivative contracts are highly rated financial institutions.

Refer to Note 9, Financial Instruments, for a description of derivative instruments, including details on the balance sheet line classifications.

Long-term Debt

The fair value of our debt is based on estimates using standard pricing models that take into account the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments. These standard valuation models utilize observable market data such as interest rate yield curves and currency spot rates. Therefore, the fair value of our debt is classified as a level 2 measurement. We generally perform the computation of the fair value of these instruments.

Other Liabilities

As of 30 September 2011, other liabilities included the obligation to purchase 25% of the remaining shares of CryoService Limited (CSL). CSL is not publicly traded and therefore, no observable market existed for the shares. The fair value of the outstanding liability was determined using an internally developed valuation model that was based on a multiple of earnings formula. On 30 November 2011, payment was remitted for this obligation and 100% of the shares are now owned. Refer to Note 15, Noncontrolling Interests, for additional information.

The carrying values and fair values of financial instruments were as follows:

	31 March 2012						30 September 2011
	Carrying Value			Fair Value			Carrying Value			Fair Value
Assets
Derivatives
Forward exchange contracts		$	53.6		$	53.6		$	70.0		$	70.0
Interest rate swap contracts			48.0			48.0			48.2			48.2
Liabilities
Derivatives
Forward exchange contracts		$	52.2		$	52.2		$	37.8		$	37.8
Interest rate swap contracts			4.3			4.3			6.0			6.0
Long-term debt, including current portion			4,386.4			4,673.4			3,999.7			4,284.5
Other liabilities			—			—			51.0			51.0

The carrying amounts reported in the balance sheet for cash and cash items, trade receivables, payables and accrued liabilities, accrued income taxes, and short-term borrowings approximate fair value due to the short-term nature of these instruments. Accordingly, these items have been excluded from the above table.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:

Level 1	—	Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2	—	Inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability.
Level 3	—	Inputs that are unobservable for the asset or liability based on our own assumptions (about the assumptions market participants would use in pricing the asset or liability).

The following table summarizes assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets:

	31 March 2012												30 September 2011
	Total			Level 1			Level 2			Level 3			Total			Level 1			Level 2			Level 3
Assets at Fair Value
Derivatives
Forward exchange contracts		$	53.6		$	—		$	53.6		$	—		$	70.0		$	—		$	70.0		$	—
Interest rate swap contracts			48.0			—			48.0			—			48.2			—			48.2			—
Total Assets at Fair Value		$	101.6		$	—		$	101.6		$	—		$	118.2		$	—		$	118.2		$	—
Liabilities at Fair Value
Derivatives
Forward exchange contracts		$	52.2		$	—		$	52.2		$	—		$	37.8		$	—		$	37.8		$	—
Interest rate swap contracts			4.3			—			4.3			—			6.0			—			6.0			—
Other liabilities			—			—			—			—			51.0			—			—			51.0
Total Liabilities at Fair Value		$	56.5		$	—		$	56.5		$	—		$	94.8		$	—		$	43.8		$	51.0

Refer to Note 1, Major Accounting Policies, in our 2011 Form 10-K and Note 9, Financial Instruments, in this quarterly filing for additional information on our accounting and reporting of the fair value of financial instruments.

Changes in the fair value of other liabilities, valued using significant unobservable inputs (Level 3), are presented below:

Balance at 30 September 2011	$	51.0
Expense included in interest expense		.8
Payment to settle liability		(52.1	)
Currency translation adjustment		.3
Balance at 31 March 2012	$	—

The following is a tabular presentation of the nonrecurring fair value measurement along with the level within the fair value hierarchy in which the fair value measurement in its entirety falls:

	31 March 2012												Net Loss
	Total			Level 1			Level 2			Level 3
Long-lived assets held for sale		$	2.2		$	—		$	—		$	2.2		$	6.0

Long-lived assets held for sale with a carrying value of $8.2 were written down to fair value of $2.2, resulting in a loss of $6.0, which was included in the cost reduction plan charge. For additional information regarding this plan, see Note 4, Cost Reduction Plan, in this quarterly filing. We quantified the fair value of assets held for sale using a market approach, based on prices for other market transactions involving comparable assets and our assessment of value considering our knowledge of the markets.