Fair Value Measurements

3 Months Ended

Jan. 31, 2012

Fair Value Measurements

3. Fair Value Measurements

As required by ASC 820, fair value is determined based on inputs or assumptions that market participants would use in pricing an asset or a liability. These assumptions consist of (1) observable inputs—market data obtained from independent sources, or (2) unobservable inputs—market data determined using the Company’s own assumptions about valuation. ASC 820 establishes a hierarchy to prioritize the inputs to valuation techniques, with the highest priority being given to Level 1 inputs and the lowest priority to Level 3 inputs, as described below:

Level 1 – Quoted prices for identical instruments in active markets;

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets; and

Level 3 – Unobservable inputs.

The following tables present the Company’s hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2012 and October 31, 2011:

		September 30,		September 30,		September 30,		September 30,
			Fair Value Measurements
	Fair Value at		Using Inputs Considered as
(in thousands)	January 31, 2012		Level 1		Level 2		Level 3
Assets
Assets held in funded deferred compensation plan	$	4,807	$	4,807	$	—	$	—
Investments in auction rate securities		18,147		—		—		18,147
Total assets	$	22,954	$	4,807	$	—	$	18,147
Liabilities
Interest rate swap	$	281	$	—	$	281	$	—
Total liabilities	$	281	$	—	$	281	$	—
	Fair Value at		Fair Value Measurements Using Inputs Considered as
(in thousands)	October 31, 2011		Level 1		Level 2		Level 3
Assets
Assets held in funded deferred compensation plan	$	4,717	$	4,717	$	—	$	—
Investments in auction rate securities		15,670		—		—		15,670
Total assets	$	20,387	$	4,717	$	—	$	15,670
Liabilities
Interest rate swaps	$	253	$	—	$	253	$	—
Total liabilities	$	253	$	—	$	253	$	—

The fair value of the assets held in the funded deferred compensation plan is based on quoted market prices. The assets are included in Other assets on the accompanying consolidated balance sheet.

For investments in auction rate securities that had no market activity indicative of fair market value, the fair value is based on discounted cash flow valuation models, primarily utilizing unobservable inputs. During the three months ended January 31, 2012, the Company had no transfers of assets or liabilities between any of the above hierarchy levels. See Note 4, “Auction Rate Securities,” for the roll-forwards of assets measured at fair value using significant unobservable Level 3 inputs.

The fair value of the interest rate swaps is estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rates and the expected cash flows at current market interest rates using observable benchmarks for London Interbank Offered Rate forward rates at the end of the period. The fair value is then compared to a valuation received from an independent third-party. See Note 7, “Line of Credit Facility.”

Other Financial Assets and Liabilities

Due to the short-term maturities of the Company’s cash, cash equivalents, receivables, payables, and current assets of discontinued operations, the carrying value of these financial instruments is estimated to approximate their fair market values. Due to variable interest rates, the fair value of outstanding borrowings under the Company’s line of credit approximates its carrying value of $293.0 million. The carrying value of the insurance deposits related to self-insurance claims of $31.7 million approximates fair market value.