Fair Value Measurements

9 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS

7. FAIR VALUE MEASUREMENTS

The accounting standard for fair value measurements defines fair value 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. The standard establishes a framework for measuring fair value focused on exit price and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements as follows:

• Level 1 – Quoted market prices in active markets for identical assets or liabilities

• Level 2 – Observable market-based inputs or inputs that are corroborated by observable market data

• Level 3 – Unobservable inputs that are not corroborated by market data

At June 30, 2012 and September 30, 2011, the Company had cash equivalents of $28,353,000 and $11,976,000, respectively. The Company’s cash equivalents consist of investments in money market accounts for which the carrying value approximates fair value (based on Level 1 inputs) due to the short-term nature of those instruments.

The carrying values of trade receivables and accounts payable approximate fair value due to the short-term nature of those instruments. The Company’s long-term debt bears interest at variable rates, which adjust based on market conditions and the carrying value of the long-term debt approximates fair value. The fair value of the Company’s debt was determined using a discounted cash flow analysis based on interest rates currently available to the Company, or for similar instruments available to companies with comparable credit quality, which the Company considers to be Level 2 inputs.

A portion of the Company’s floating rate interest risk on variable rate long-term debt was mitigated through an interest rate swap agreement, which expired on April 18, 2012. The Company’s interest rate swap was required to be measured at fair value on a recurring basis. At September 30, 2011, the interest rate swap was a liability with a fair value of $145,000, included in “deferred rent and other non-current liabilities” in the accompanying consolidated balance sheet. The fair value of the interest rate swap was derived from a discounted cash flow analysis utilizing an interest rate yield curve that was readily available to the public, which the Company considered to be Level 2 inputs.