Fair Value Measurements

3 Months Ended

Nov. 30, 2013

Assets and liabilities measured at fair value on a recurring basis consist of the following as of November 30, 2013:



			Fair Value Measurements at Reporting Date Using
	November 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
($ in thousands)	November 30, 2013				Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents (including restricted cash equivalents):
Money market funds	$	635,109	$	635,109	$	—	$	—
Marketable securities:
Auction-rate securities	5,946		—		—		5,946
Total assets at fair value on a recurring basis	$	641,055	$	635,109	$	—	$	5,946
Other long-term liabilities:
Contingent payment	$	5,743	$	—	$	—	$	5,743
Total liabilities at fair value on a recurring basis	$	5,743	$	—	$	—	$	5,743

Assets and liabilities measured at fair value on a recurring basis consist of the following as of August 31, 2013:



			Fair Value Measurements at Reporting Date Using
	August 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
($ in thousands)	August 31, 2013				Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents (including restricted cash equivalents):
Money market funds	$	732,530	$	732,530	$	—	$	—
Marketable securities:
Auction-rate securities	5,946		—		—		5,946
Total assets at fair value on a recurring basis	$	738,476	$	732,530	$	—	$	5,946
Other long-term liabilities:
Contingent payment	$	5,277	$	—	$	—	$	5,277
Total liabilities at fair value on a recurring basis	$	5,277	$	—	$	—	$	5,277

We measure the above items on a recurring basis at fair value as follows:

•

Money market funds - Classified within Level 1 and valued primarily using real-time quotes for transactions in active exchange markets involving identical assets. As of November 30, 2013 and August 31, 2013, our remaining cash and cash equivalents not disclosed in the above tables approximate fair value because of the short-term nature of the financial instruments. We determine the fair value of cash equivalents not included in the above table using a market approach principally consisting of Level 2 inputs. These inputs include quoted prices for similar assets in active markets, or quoted prices for identical or similar assets in markets that are not active.


•	Auction-rate securities - Classified within Level 3 due to the illiquidity of the market and valued using a discounted cash flow model encompassing significant unobservable inputs such as estimated interest rates, credit spreads, timing and amount of cash flows, credit quality of the underlying securities and illiquidity considerations.

•

Contingent payment - As a result of our purchase of the noncontrolling interest in Apollo Global during fiscal year 2013, we have a contingent payment based on a portion of Apollo Global’s operating results through the fiscal years ending August 31, 2017. This contingent payment is classified within Level 3 and valued using a discounted cash flow valuation method encompassing significant unobservable inputs. The inputs include estimated operating results scenarios for the applicable performance period, probability weightings assigned to operating results scenarios and the discount rate applied.

As of November 30, 2013 and August 31, 2013, the carrying value of our debt, excluding capital leases, was $33.9 million and $642.4 million, respectively. Based on the nature of our debt, including consideration of the portion that is variable-rate, the carrying value of our debt as of both dates approximates fair value.

We did not change our valuation techniques associated with recurring fair value measurements from prior periods. Additionally, there were no changes in the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended November 30, 2013. The following summarizes the changes in liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the respective periods:



	Three Months Ended November 30,
($ in thousands)	2013		2012
Beginning balance	$	5,277	$	—
Purchase of noncontrolling interest	—		6,000
Change in fair value included in net income	466		—
Ending balance	$	5,743	$	6,000

Liabilities measured at fair value on a nonrecurring basis during the three months ended November 30, 2013, all of which are included in other liabilities on our Condensed Consolidated Balance Sheets, consist of the following:



			Fair Value Measurements at Measurement Dates Using
($ in thousands)	Fair Value at Measurement Dates		Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Losses for Three Months Ended November 30, 2013
Initial lease obligations	$	9,951	$	—	$	—	$	9,951	$	9,951

During the three months ended November 30, 2013, we recorded $10.0 million of aggregate initial lease obligations at fair value associated with closing certain leased facilities as part of our restructuring activities. We recorded the lease obligation liabilities on the dates we ceased use of the facilities, and we measured the liabilities at fair value using Level 3 inputs included in the valuation method. Refer to Note 3, Restructuring and Other Charges.

- 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.

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