FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Fair value is defined as 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. Assets and liabilities recorded at fair value are classified based upon the level of judgment associated with the inputs used to measure their fair value. The hierarchical levels related to the subjectivity of the valuation inputs are defined as follows:


•	Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.


•	Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable, directly or indirectly through corroboration with observable market data at the measurement date.


•	Level 3 inputs are unobservable inputs that reflect management’s best estimate of the assumptions (including assumptions about risk) that market participants would use in pricing the asset or liability at the measurement date.

The carrying value of cash, trade receivables, other current receivables, trade payables and other current liabilities (e.g., deposit liabilities, cash overdrafts, etc.) approximates fair value based on the short-term maturity of these financial instruments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis at March 31, 2014 and 2013 are categorized in the tables below based on the lowest level of significant input to the valuation. During the periods presented, there were no transfers between fair value hierarchical levels.



	Balance at		Quoted prices in active markets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3
(In thousands)	March 31, 2014		Quoted prices in active markets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3
Assets:
Deferred compensation plan assets	$	16,387	$	16,387	$	—	$	—
Derivative assets - variable interest rate swap agreements	—		—		—		—
Total assets measured at fair value on a recurring basis	$	16,387	$	16,387	$	—	$	—

Liabilities:
Deferred compensation plan liabilities	$	16,387	$	16,387	$	—	$	—
Contingent consideration liabilities	323		—		—		323
Total liabilities measured at fair value on a recurring basis	$	16,710	$	16,387	$	—	$	323



	Balance at		Quoted prices in active markets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3
(In thousands)	March 31, 2013		Quoted prices in active markets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3
Assets:
Deferred compensation plan assets	$	13,631	$	13,631	$	—	$	—
Derivative assets - variable interest rate swap agreements	2,490		—		2,490		—
Total assets measured at fair value on a recurring basis	$	16,121	$	13,631	$	2,490	$	—

Liabilities:
Deferred compensation plan liabilities	$	13,631	$	13,631	$	—	$	—
Contingent consideration liabilities	3,632		—		—		3,632
Total liabilities measured at fair value on a recurring basis	$	17,263	$	13,631	$	—	$	3,632

The following is a general description of the valuation methodologies used for financial assets and liabilities measured at fair value:

Deferred compensation plan assets and corresponding liabilities — The Company’s deferred compensation plan assets consist of open-ended mutual funds (Level 1) and are included within other non-current assets on the consolidated balance sheets. The Company’s deferred compensation plan liabilities are equal to the plan’s assets and are included within other non-current liabilities on the consolidated balance sheets. Gains or losses on the deferred compensation plan assets are recognized as other income, net, while gains or losses on the deferred compensation plan liabilities are recognized as compensation expense in the consolidated statements of earnings.

Derivative assets — interest rate swap agreements — The Company’s variable interest rate swap agreements were with highly-rated counterparties, were designated as fair value hedges and effectively converted the Company’s fixed rate 2013 Notes to variable rate debt. The swap agreements were valued using an income approach that relies on observable market inputs such as interest rate yield curves and treasury spreads (Level 2). Expected future cash flows under the approach were converted to a present value amount based upon market expectations of the changes in these interest rate yield curves. The fair values of the interest rate swap derivative instruments were included in prepaid expenses and other current assets on the consolidated balance sheet at March 31, 2013. On October 1, 2013, the variable interest rate swaps matured, coinciding with the maturity date of the Company’s 2013 Notes. See Note 10 for additional derivatives disclosures.

Contingent consideration liabilities — As part of the consideration for certain acquisitions, the Company has arrangements in place whereby future consideration in the form of cash may be transferred to the sellers contingent upon the achievement of certain earnings targets. The fair values of the contingent consideration arrangements were estimated using the income approach with inputs that are not observable in the market. Key assumptions for each arrangement, as applicable, include a discount rate commensurate with the level of risk of achievement, time horizon and other risk factors, and probability adjusted earnings growth, all of which the Company believes are appropriate and representative of market participant assumptions. As of March 31, 2014, the contingent consideration liability is included within accrued expenses and other current liabilities on the consolidated balance sheet. The impact on the Company’s earnings as a result of the contingent consideration arrangements is recorded within selling, distribution and administrative expenses in the statement of earnings, and was $1.5 million for the year ended March 31, 2014. There was no material impact on the Company’s earnings as a result of the contingent consideration arrangements for the year ended March 31, 2013.

Changes in the fair value of recurring fair value measurements using significant unobservable inputs (Level 3) for the years ended March 31, 2014 and 2013 were as follows (in thousands):



Balance at March 31, 2012	$	2,512
Contingent consideration liabilities recorded	1,750
Settlements made during the period	(669		)
Adjustments to fair value measurement	39
Balance at March 31, 2013	$	3,632
Contingent consideration liabilities recorded	—
Settlements made during the period	(1,841		)
Adjustments to fair value measurement	(1,468		)
Balance at March 31, 2014	$	323

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis in periods subsequent to initial recognition. Assets measured at fair value on a nonrecurring basis during the years ended March 31, 2013 and 2012 are categorized in the tables below based on the lowest level of significant input to the valuation. There were no liabilities measured at fair value on a nonrecurring basis during the years ended March 31, 2013 and 2012.



	Quoted prices in active markets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3		Total losses (year ended March 31, 2013
(In thousands)	Quoted prices in active markets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3		Total losses (year ended March 31, 2013
Assets:
Other intangible assets	$	—	$	—	$	535	$	1,729
Total assets measured at fair value on a non-recurring basis	$	—	$	—	$	535	$	1,729



	Quoted prices in active markets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3		Total losses (year ended March 31, 2012)
(In thousands)	Quoted prices in active markets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3		Total losses (year ended March 31, 2012)
Assets:
Long-lived assets held and used	$	—	$	—	$	9,165	$	4,250
Total assets measured at fair value on a non-recurring basis	$	—	$	—	$	9,165	$	4,250

In June 2012, the Company re-evaluated the economic viability of a small hospital piping construction business (see Note 7). As a result of an impairment analysis performed on the long-lived assets at this reporting unit, the Company recorded a charge of $1.7 million related to certain of the intangible assets associated with this business during the year ended March 31, 2013, which was reflected in the “Restructuring and other special charges, net” line item of the Company’s consolidated statement of earnings for the year ended March 31, 2013. The Company used a variation of the income approach, namely the excess earnings method, to estimate the fair value of the intangible assets associated with the business. Under this approach, an intangible asset’s fair value is estimated to be the present value of the incremental after-tax cash flows attributable solely to the intangible asset over its remaining useful life. Key inputs in this model include the cash flow forecast, discount rate, contributory asset charges and tax amortization benefits. As of the evaluation date, the remeasured other intangible assets related to this reporting unit totaled $0.5 million.

In September 2011, the Company performed an evaluation of the recoverability of the fixed assets related to one of its liquid carbon dioxide plants. This evaluation was based upon the receipt of notice in August 2011 that a supplier’s hydrogen plant, which generated carbon dioxide as a by-product that served as the feedstock for the Company’s co-located liquid carbon dioxide plant, would cease operations in calendar year 2013. In addition, in March 2012, the Company performed an evaluation of the recoverability of the fixed assets related to one of its smaller and less efficient air separation units. The evaluation was based on the re-evaluation of the plan for the operation of the air separation unit over the long-term. See Note 23 for additional details.

As a result of the analyses, the Company remeasured the fixed assets of its liquid carbon dioxide plant and recognized an impairment charge of $2.5 million, and remeasured the fixed assets related to the air separation unit and recognized an impairment charge of $1.8 million, both of which were reflected in the “Restructuring and other special charges, net” line item of the Company’s consolidated statement of earnings. The remeasured plant fixed assets totaled $8.8 million and the remeasured fixed assets related to the air separation unit totaled $0.4 million, at each respective date of evaluation. The Company used an income approach to estimate the fair values of the plant and air separation unit fixed assets based on significant unobservable inputs (Level 3). Factors such as expected future revenues and margins, the likelihood of asset redeployment and the length of the remaining operating term were considered in determining the future cash flows of the fixed assets at both the plant and air separation unit. The asset groups will not be remeasured at fair value on a recurring basis; however, they are still subject to fair value measurements to test for recoverability of the carrying amounts should future conditions warrant an evaluation.

Fair Value of Debt

The carrying value of debt, which is reported on the Company’s consolidated balance sheets, generally reflects the cash proceeds received upon its issuance, net of subsequent repayments, plus the impact of the Company’s fair value hedges as applicable. The fair values of the fixed rate notes disclosed in the following table were determined based on quoted prices from the broker/dealer market, observable market inputs for similarly termed treasury notes adjusted for the Company’s credit spread and inputs management believes a market participant would use in determining imputed interest for obligations without a stated interest rate (Level 2). The fair values of the revolving credit borrowings, securitized receivables and commercial paper approximate their carrying values.



	Carrying Value at		Fair Value at		Carrying Value at		Fair Value at
(In thousands)	March 31, 2014		March 31, 2014		March 31, 2013		March 31, 2013
Commercial paper	$	387,866	$	387,866	$	—	$	—
Trade receivables securitization	295,000		295,000		295,000		295,000
Revolving credit borrowings	62,286		62,286		44,077		44,077
2013 Notes	—		—		302,466		303,413
2014 Notes	399,952		407,092		399,856		421,582
2015 Notes	249,887		258,630		249,811		263,702
2016 Notes	249,848		259,257		249,778		262,954
2018 Notes	324,579		319,098		324,471		325,401
2020 Notes	274,748		265,600		274,706		274,432
2022 Notes	249,760		233,230		249,732		248,404
2018 Senior Subordinated Notes	—		—		215,446		229,381
Other long-term debt	1,036		1,136		2,475		2,603
Total debt	$	2,494,962	$	2,489,195	$	2,607,818	$	2,670,949