Financial Instruments and Fair Value Measurements

6 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Financial Instruments and Fair Value Measurements

Note 13 – Financial Instruments and Fair Value Measurements

The fair values of financial instruments, including those not recognized on the statement of financial position at fair value, carried at March 31, 2013 and September 30, 2012 are classified in accordance with the fair value hierarchy in the tables below:

			Basis of Fair Value Measurement
	March 31, 2013 Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Institutional money market investments	$	1,165,990	$	1,165,990	$	—	$	—
Forward exchange contracts		20,175		—		20,175		—
Interest rate swap		193		—		193		—
Commodity forward contracts		1,312		—		1,312		—
Total Assets	$	1,187,670	$	1,165,990	$	21,680	$	—
Liabilities
Forward exchange contracts	$	15,955	$	—	$	15,955	$	—
Contingent consideration liabilities		29,414		—		—		29,414
Total Liabilities	$	45,369	$	—	$	15,955	$	29,414

			Basis of Fair Value Measurement
	September 30, 2012 Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Institutional money market investments	$	1,065,629	$	1,065,629	$	—	$	—
Forward exchange contracts		17,197		—		17,197		—
Interest rate swap		2,353		—		2,353		—
Total Assets	$	1,085,179	$	1,065,629	$	19,550	$	—
Liabilities
Forward exchange contracts	$	16,563	$	—	$	16,563	$	—
Commodity forward contracts		1,666		—		1,666		—
Contingent consideration liabilities		20,261		—		—		20,261
Total Liabilities	$	38,490	$	—	$	18,229	$	20,261

The Company’s institutional money market accounts permit daily redemption and the fair values of these investments are based upon the quoted prices in active markets provided by the holding financial institutions. The Company’s remaining cash equivalents were $857,870 and $605,536 at March 31, 2013 and September 30, 2012, respectively. Short-term investments are held to their maturities and are carried at cost, which approximates fair value. The cash equivalents consist of liquid investments with a maturity of three months or less and the short-term investments consist of instruments with maturities greater than three months and less than one year.

The Company measures the fair value of forward exchange contracts and currency options using an income approach with significant observable inputs, specifically spot currency rates, market designated forward currency prices and a discount rate. The fair value of interest rate swaps is provided by the financial institutions that are counterparties to these arrangements.

Long-term debt is recorded at amortized cost. The fair value of long-term debt is measured based upon quoted prices in active markets for similar instruments, which are considered Level 2 inputs in the fair value hierarchy. The fair value of long-term debt was $4,228,699 and $4,317,059 at March 31, 2013 and September 30, 2012, respectively. The fair value of $200,000 of 4.55% notes due on April 15, 2013, that were reclassified from long-term debt to short-term debt during the third quarter of fiscal year 2012, was $200,282 and $206,452 at March 31, 2013 and September 30, 2012, respectively.

The contingent consideration liabilities were recognized as part of the consideration transferred in the Company’s acquisitions of the following: KIESTRA, which occurred in the second quarter of fiscal year 2012; Sirigen, which occurred in the fourth quarter of fiscal year 2012; and Cato, which occurred in the second quarter of fiscal year 2013. The fair values of the contingent consideration liabilities were estimated using probability-weighted discounted cash flow models that were based upon the probabilities assigned to the contingent events. The estimated fair values of the contingent consideration liabilities are remeasured at each reporting period based upon increases or decreases in the probability of the contingent payments. The change to the contingent consideration liabilities during the three and six months ended March 31, 2013 included an increase of approximately $388 resulting from the determination that payments relating to development milestones under the KIESTRA acquisition agreement will be paid in full. The Company recognized this increase of the contingent consideration liability in the Condensed Consolidated Statements of Income as Research and development. The contingent consideration liabilities relating to the KIESTRA and Cato acquisitions were additionally impacted by foreign currency translation during the three and six-month periods ended March 31, 2013.

The Company’s policy is to recognize any transfers into fair value measurement hierarchy levels and transfers out of levels at the beginning of each reporting period. There were no transfers in and out of Level 1, Level 2 or Level 3 measurements for the three and six months ended March 31, 2013 and 2012.