Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

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Fair Value Measurements
 12 Months Ended
Aug. 31, 2011
Fair Value Measurements [Abstract]  
Fair Value Measurements

Note 9.    Fair Value Measurements

The Company assesses the inputs used to measure the fair value of financial assets and liabilities using a three-tier hierarchy. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management's own judgments about the assumptions market participants would use in pricing the asset or liability. The Company has no financial assets or liabilities that are recorded at fair value using significant unobservable inputs (Level 3). The fair value of financial assets and liabilities included in the consolidated balance sheet are as follows (in thousands):

 

     August 31,  
     2011     2010  

Level 1 Valuation:

     

Cash equivalents

    $ 1,958      $ 5,092   

Investments

      1,464        1,313   

Level 2 Valuation:

     

Foreign currency forward contracts

    $ (81 )    $ 207   

Interest rate swap contracts

      (4,552 )      —     

The fair value of the Company's cash, accounts receivable, accounts payable, short-term borrowings and its variable rate long-term debt approximated book value at August 31, 2011 and 2010 due to their short-term nature and the fact that the interest rates approximated year-end market rates of interest. The fair value of the Company's outstanding $117.8 million 2% Convertible Notes at August 31, 2011 and 2010 was $127.9 million and $126.4 million, respectively. The fair value of the Company's outstanding $250.0 million of Senior Notes was $252.5 million at August 31, 2011 and 2010. The fair values of the 2% Convertible Notes and Senior Notes were based on the quoted market prices.