Fair Value Measurement

3 Months Ended

Apr. 30, 2011

Fair Value Measurement

(3) Fair Value Measurement—We measure financial instruments at fair value on a quarterly basis. The Financial Accounting Standards Board established a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources. Unobservable inputs reflect our market assumptions. The fair value hierarchy consists of the following three levels:

• Level 1—Quoted prices for identical instruments in active markets;

• Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose significant inputs are observable; and

• Level 3—One or more significant inputs to the valuation model are unobservable.

The following table presents information about financial assets and liabilities required to be carried at fair value on a recurring basis as of April 30, 2011:

	Fair Value			Level 1		Level 2		Level 3
Foreign currency exchange contracts	$	1,851		$	—	$	1,851	$	—
Contingent consideration		(6,475	)		—		—		(6,475	)
Total	$	(4,624	)	$	—	$	1,851	$	(6,475	)

The following table presents information about financial assets and liabilities required to be carried at fair value on a recurring basis as of January 31, 2011:

	Fair Value			Level 1		Level 2		Level 3
Foreign currency exchange contracts	$	826		$	—	$	826	$	—
Contingent consideration		(5,342	)		—		—		(5,342	)
Total	$	(4,516	)	$	—	$	826	$	(5,342	)

In connection with certain acquisitions, payment of a portion of the purchase price is contingent upon the acquired business’ achievement of certain revenue goals. We have estimated the fair value of this contingent consideration as the present value of the expected contingent payments over the term of the arrangements and have included $795 of the balance in accrued liabilities and the remaining $5,680 in other long-term liabilities on our condensed consolidated balance sheet.

The following table summarizes Level 3 activity:

Balance as of January 31, 2011	$	5,342
Additions		1,090
Payments		(8	)
Interest accretion		51
Balance as of April 30, 2011	$	6,475

The following table summarizes the fair value and carrying value of notes payable:

As of	April 30, 2011		January 31, 2011
Fair value of notes payable	$	263,484	$	222,591
Carrying value of notes payable	$	210,787	$	209,348

We based the fair value of notes payable on the quoted market price or rates available to us for instruments with similar terms and maturities. Of the total carrying value of notes payable, $2,000 as of January 31, 2011 was classified as current on our condensed consolidated balance sheets. The carrying amount of short-term borrowings of $9,055 as of April 30, 2011 and $15,544 as of January 31, 2011 approximates fair value because of the short-term nature of the instruments.