Fair Value Measurements

12 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

13.  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 management contracts 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 12, Financial Instruments, for a description of derivative instruments, including details on the balance sheet line item 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, payables and accrued liabilities on the consolidated balance sheet included $51.0 for the obligation to purchase 25% of the remaining shares of Cryoservice Limited (CSL) in December 2011. CSL was 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. Refer to Note 19, Noncontrolling Interests, for additional information.

The carrying values and fair values of financial instruments were as follows:
30 September			2012				2011
			Carrying Value		Fair Value		Carrying Value		Fair Value
	Assets
	Derivatives
		Forward exchange contracts	$	77.9	$	77.9	$	70.0	$	70.0
		Interest rate management contracts		49.7		49.7		48.2		48.2
	Liabilities
	Derivatives
		Forward exchange contracts	$	21.7	$	21.7	$	37.8	$	37.8
		Interest rate management contracts		25.1		25.1		6.0		6.0
	Long-term debt, including current portion			4,658.5		5,005.9		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:
			30 September 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	$	77.9	$	-	$	77.9	$	-	$	70.0	$	-	$	70.0	$	-
		Interest rate management contracts		49.7		-		49.7		-		48.2		-		48.2		-
	Total Assets at Fair Value		$	127.6	$	-	$	127.6	$	-	$	118.2	$	-	$	118.2	$	-
	Liabilities at Fair Value
	Derivatives
		Forward exchange contracts	$	21.7	$	-	$	21.7	$	-	$	37.8	$	-	$	37.8	$	-
		Interest rate management contracts		25.1		-		25.1		-		6.0		-		6.0		-
	Other liabilities			-		-		-		-		51.0		-		-		51.0
	Total Liabilities at Fair Value		$	46.8	$	-	$	46.8	$	-	$	94.8	$	-	$	43.8	$	51.0

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 30 September 2012	$	-

The following is a tabular presentation of nonrecurring fair value measurements along with the level within the fair value hierarchy in
which the fair value measurement in its entirety falls:
		30 September 2012						Total
			Total	Level 1		Level 2	Level 3	2012 Loss
Long-lived assets - Cost reduction plan (A)		$	2.2	0.0	$	0.0	2.2	6.0
Long-lived assets - Discontinued operations (B)			27.2	0.0		0.0	27.2	33.5
(A)During the second quarter ended 31 March 2012, long-lived assets held for sale were written down to fair value and the loss was included in the
	cost reduction plan charge. For additional information, see Note 4, Business Restructuring and Cost Reduction Plans. We quantified the fair value
	of the 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.
(B)During the third quarter ended 30 June 2012, the remaining assets of the Homecare business were written down to estimated net realizable value.
	For additional information, see Note 3, Discontinued Operations. We utilized a market approach to determine the fair value based on our
	current assessment of the markets for these assets.