Fair Value of Financial Instruments

3 Months Ended

Jan. 31, 2013

Fair Value of Financial Instruments

5. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the fair value hierarchy, carrying amounts, and fair values of the Company’s financial instruments measured on a recurring basis and other select significant financial instruments as of January 31, 2013 and October 31, 2012:

	Fair Value	January 31, 2013				October 31, 2012
(in thousands)	Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets measured at fair value on a recurring basis
Assets held in funded deferred compensation plan (1)	1	$	5,038	$	5,038	$	5,029	$	5,029
Investments in auction rate securities (2)	3		17,832		17,832		17,780		17,780
			22,870		22,870		22,809		22,809
Other select financial asset
Cash and cash equivalents (3)	1		36,426		36,426		43,459		43,459
Total		$	59,296	$	59,296	$	66,268	$	66,268
Financial liability measured at fair value on a recurring basis
Interest rate swap (4)	2	$	175	$	175	$	214	$	214
Other select financial liability
Line of credit (5)	2		423,000		423,000		215,000		215,000
Total		$	423,175	$	423,175	$	215,214	$	215,214

(1) Represents investments held in a Rabbi Trust associated with our OneSource Deferred Compensation Plan, which we include in “Other assets” on the accompanying unaudited condensed consolidated balance sheets. The fair value of the assets held in the funded deferred compensation plan is based on quoted market prices.

(2) As of January 31, 2013, the Company held investments in auction rate securities from four different issuers having an original principal amount of $5.0 million each (aggregating to $20.0 million). For investments in auction rate securities that were not redeemed or had no market activity indicative of value, the fair value was based on discounted cash flow valuation models, primarily utilizing unobservable inputs. See Note 6, “Auction Rate Securities,” for the roll-forwards of assets measured at fair value using significant unobservable Level 3 inputs and the sensitivity analysis of significant inputs. Subsequently, on February 8, 2013, one of the auction rate securities was redeemed by the issuer at its par value of $5.0 million. For that particular security, the fair value as of January 31, 2013 was determined to be the same as its par value.

(3) Cash and cash equivalents are stated at nominal value, which equals fair value.

(4) Includes derivatives designated as hedging instruments. The fair value of the interest rate swap is estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rates and the expected cash flows at current market interest rates using observable benchmarks for London Interbank Offered Rate (“LIBOR”) forward rates at the end of the period. The fair value is then compared to a valuation received from an independent third-party. See Note 8, “Line of Credit,” for more information.

(5) Represents the Company’s $650.0 million five-year syndicated line of credit. Due to variable interest rates, the carrying value of outstanding borrowings under the Company’s line of credit approximates its fair value. See Note 8, “Line of Credit,” for more information.

The Company’s non-financial assets, which include goodwill and long lived assets held and used, are not required to be measured at fair value on a recurring basis. However, if certain trigger events occur, or if an annual impairment test is required, the Company would evaluate the non-financial assets for impairment. If an impairment was to occur, the asset or liability would be recorded at the estimated fair value.

During the three months ended January 31, 2013, the Company had no transfers of assets or liabilities between any of the above hierarchy levels.