Fair Value Measurements

9 Months Ended

Jun. 30, 2013

Fair Value Measurements

Fair Value Measurements

11. Fair Value Measurements

Derivative Instruments.  In fiscal 2009, we entered into an intercompany promissory note with a wholly-owned Canadian subsidiary in connection with the acquisition of Wardrop Engineering, Inc.  The intercompany note receivable is denominated in Canadian dollars (“CAD”) and has a fixed rate of interest payable in CAD.  In the second quarter of fiscal 2010, we entered into a forward contract for CAD $4.2 million (equivalent to U.S. $3.9 million at the date of inception) that matured on January 28, 2013.  In the third quarter of fiscal 2011, we entered into a forward contract for CAD $4.2 million (equivalent to U.S. $4.2 million at the date of inception) with a maturity date of January 27, 2014. Our objective was to eliminate variability of our cash flows on the amount of interest income we receive on the promissory note from changes in foreign currency exchange rates.  These contracts were designated as cash flow hedges.  Accordingly, changes in the fair value of the contracts were recorded in “Other comprehensive (loss) income”. In the second quarter of fiscal 2013, we settled one of the foreign currency forward contracts for U.S. $3.9 million and terminated the remaining forward contract. As a result, we recognized an immaterial gain in our condensed consolidated statements of operations for the period.

Contingent Consideration.  We measure our contingent earn-out liabilities at fair value on a recurring basis (see Note 4, “Mergers and Acquisitions” for further discussion).

Debt.  The fair value of long-term debt was determined using the present value of future cash flows based on the borrowing rates currently available for debt with similar terms and maturities (Level 2 measurement, as described in “Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012).  The carrying value of our long-term debt approximated fair value at June 30, 2013 and September 30, 2012.  For the first nine months of fiscal 2013, we had a net borrowing of $130.8 million under our amended credit agreement to fund our business acquisitions, working capital needs and contingent earn-outs (see Note 13, “Credit Facility” for more information).