Fair Value Measurements

3 Months Ended

Dec. 31, 2013

11. FAIR VALUE MEASUREMENTS

Fair Value Measurement Accounting

Fair value is considered the price to sell an asset, or transfer a liability, between market participants on the measurement date. Fair value measurements assume that the asset or liability is (1) exchanged in an orderly manner, (2) the exchange is in the principal market for that asset or liability, and (3) the market participants are independent, knowledgeable, able and willing to transact an exchange. Fair value accounting and reporting establishes a framework for measuring fair value by creating a hierarchy for observable independent market inputs and unobservable market assumptions and expands disclosures about fair value measurements. Considerable judgment is required to interpret the market data used to develop fair value estimates. As such, the estimates presented herein are not necessarily indicative of the amounts that could be realized in a current exchange. The use of different market assumptions and/or estimation methods could have a material effect on the estimated fair value.

We estimate the fair value of our interest rate swap agreement with Wells Fargo to be $12 at December 31, 2013, using Level 2 inputs, including an estimated market valuation from Wells Fargo Bank. For additional information, please see Note 15, “Derivative Instruments.”

We estimate the fair value of the contingent consideration related to the acquisition of certain assets from the Acro Group to be $30 at December 31, 2013, using Level 3 inputs, including a discounted revenue projection. The fair value of this contingent liability will vary depending on actual revenues earned. For additional information, please see Note 16, “Business Combinations – Acquisition of certain assets from the Acro Group.”

We estimate the fair value of our unfavorable MISCOR leases to be $(461), using Level 2 inputs, including estimated market valuation including market rates from comparable properties. For additional information, please see Note 16, “Business Combinations – Acquisition of MISCOR.”

Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2013, are summarized in the following table by the type of inputs applicable to the fair value measurements:

		Total Fair Value		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable (Level 3)
Executive savings plan assets	$	619	$	619	$	-	$	-
Executive savings plan liabilities		(506)		(506)		-		-
Interest rate swap agreement		12		-		12		-
Contingent consideration agreement		(30)		-		-		(30)
Unfavorable acquired leases		(461)		-		(461)		-
Total	$	(366)	$	113	$	(449)	$	(30)

The table below presents a reconciliation of the fair value of our contingent consideration obligation, which uses significant unobservable inputs (Level 3).




		Contingent Consideration Agreement

Fair Value at September 30, 2013	$	95
Issuances		-
Settlements		-
Adjustments to Fair Value		(65)
Fair Value at December 31, 2013	$	30

Below is a description of the inputs used to value the assets summarized in the preceding table:

Level 1 — Inputs represent unadjusted quoted prices for identical assets exchanged in active markets.

Level 2 — Inputs include directly or indirectly observable inputs other than Level 1 inputs such as quoted prices for similar assets exchanged in active or inactive markets; quoted prices for identical assets exchanged in inactive markets; and other inputs that are considered in fair value determinations of the assets.

Level 3 — Inputs include unobservable inputs used in the measurement of assets. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or related observable inputs that can be corroborated at the measurement date.

- 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.

+ References+ Details