Note 4 - Fair Value Measurements

9 Months Ended

Jun. 30, 2013

(4) FAIR VALUE MEASUREMENTS

We follow fair value measurement accounting with respect to (i) nonfinancial assets and liabilities that are recognized or disclosed at fair value in our financial statements on a recurring basis, and (ii) all financial assets and liabilities.

The fair value measurement guidance defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. Under the guidance, fair value is defined as the price that would be received to sell 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. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability, developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability, developed based upon the best information available under the circumstances. The fair value hierarchy prescribed by the guidance is broken down into three levels as follows:

Level 1 –	Unadjusted quoted prices in an active market for the identical assets or liabilities at the measurement date.

Level 2 –	Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including: · Quoted prices for similar assets or liabilities in active markets; · Quoted prices for identical or similar assets in nonactive markets; · Inputs other than quoted prices that are observable for the asset or liability; and · Inputs that are derived principally from or corroborated by other observable market data.

Level 3 –	Unobservable inputs that reflect the use of significant management judgment. These values are generally determined using pricing models for which assumptions utilize management’s estimates of market participant assumptions.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments purchased with a maturity of three months or less. The carrying value of these cash equivalents approximates fair value due to their short-term maturities.

Available-for-Sale Securities

Our available-for-sale securities are comprised of United States government debt securities. The fair value is based on quoted market prices in active markets.

The following table provides information by level for assets and liabilities that are measured at fair value on a recurring basis.

Fair Value Measurements at

June 30, 2013

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents

36,285

–

Available-for-sale securities

U.S. government debt securities

1,200

–

Total assets

37,485

–

Fair Value Measurements at

September 30, 2012

Level 1

Level 2

Level 3

Assets

Cash and cash equivalents

53,653

–

Available-for-sale securities

U.S. government debt securities

1,200

–

Total assets

54,853

–

Short- and Long-Term Debt

The fair values of our 3.25% Convertible Subordinated Notes due 2026 (the “3.25% Notes”) at September 30, 2012, our 8.50% Convertible Senior Notes due 2026 (the “8.50% Convertible Notes”), and our 8.50% Senior Secured Second Lien Notes due 2017 (the “8.50% Secured Notes”) were estimated based on the closing market price of the respective Notes as of the end of the fiscal quarter. The fair value of the 3.25% Notes and the 8.50% Convertible Notes were classified in Level 1 of the fair value hierarchy. In February 2013, we completed a redemption of all remaining 3.25% Notes.

Our 10.875% Senior Secured Second Lien Notes due 2017 (the “10.875% Notes”) had not experienced trading activity, therefore the estimate was based on the closing market prices of similar debt as of the end of the fiscal quarter. The fair value of the 10.875% Notes was classified in Level 2 of the fair value hierarchy.

The estimated fair values of our short- and long-term debt were as follows on each of the indicated dates:

	June 30, 2013				September 30, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
3.25% Notes	$	–	$	–	$	11,698	$	11,351
8.50% Convertible Notes		36,854		39,548		52,339		29,369
8.50% Secured Notes		73,760		72,222		72,893		81,299
10.875% Notes		11,644		12,688		–		–

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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