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FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS | 12 Months Ended
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Sep. 30, 2021
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS |
NOTE 13 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
We have certain assets and liabilities that are required to be measured and disclosed at fair value. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. We use the fair value hierarchy established in ASC 820-10 to measure fair value to prioritize the inputs: •Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. •Level 2 — Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. •Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. At September 30, 2021, our financial instruments measured at fair value utilizing Level 1 inputs include cash equivalents, U.S. agency issued debt securities, equity securities with active markets and money market funds. For these items, quoted current market prices are readily available. Our restricted assets consist of cash equivalents with the current portion included in prepaid expenses and other, and the noncurrent portion included in other assets. At September 30, 2021, assets measured at fair value using Level 2 inputs include corporate bonds measured using broker quotations that utilize observable market inputs. Our financial instruments measured using Level 3 unobservable inputs primarily consist of potential earnout payments associated with our business acquisitions in fiscal year 2019. Our non-financial assets, such as intangible assets and property, plant and equipment, are recorded at fair value when acquired in a business combination or when an impairment charge is recognized. If measured at fair value in the Consolidated Balance Sheets, these would generally be classified within Level 2 or 3 of the fair value hierarchy. Refer to Note 4—Property, Plant and Equipment for additional disclosure on the fair value of our assets classified as held-for-sale as of September 30, 2021. The carrying value of other current assets, accrued liabilities and other liabilities approximated fair value at September 30, 2021 and 2020. The following table summarizes our assets and liabilities measured at fair value presented in our Consolidated Balance Sheets:
| September 30, 2021
(in thousands) | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Recurring fair value measurements: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 917,534 |  |  | $ | 917,534 |  |  | $ | — |  |  | $ | — |
Short-term investments: |  |  |  |  |  |  |
Corporate debt securities | 192,950 |  |  | — |  |  | 192,950 |  |  | — |
U.S. government and federal agency securities | 5,750 |  |  | 5,750 |  |  | — |  |  | — |
Total short-term investments | 198,700 |  |  | 5,750 |  |  | 192,950 |  |  | — |
Other current assets | 18,350 |  |  | 18,350 |  |  | — |  |  | — |
Investments: |  |  |  |  |  |  |
Non-qualified supplemental savings plan | 18,221 |  |  | 18,221 |  |  | — |  |  | — |
Debt and equity securities | 17,223 |  |  | 13,858 |  |  | — |  |  | 3,365 |
Cornerstone investment in ADNOC Drilling | 100,000 |  |  | 100,000 |  |  | — |  |  | — |
Total investments | 135,444 |  |  | 132,079 |  |  | — |  |  | 3,365 |
Other assets | 832 |  |  | 832 |  |  | — |  |  | — |
Total assets measured at fair value | $ | 1,270,860 |  |  | $ | 1,074,545 |  |  | $ | 192,950 |  |  | $ | 3,365 |
Liabilities: |  |  |  |  |  |  |
Contingent consideration | $ | 2,996 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,996 |
| September 30, 2020
(in thousands) | Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Recurring fair value measurements: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 487,884 |  |  | $ | 487,884 |  |  | $ | — |  |  | $ | — |
Short-term investments: |  |  |  |  |  |  |
Certificates of deposit | 1,370 |  |  | — |  |  | 1,370 |  |  | — |
Corporate debt securities | 78,156 |  |  | — |  |  | 78,156 |  |  | — |
U.S. government and federal agency securities | 7,817 |  |  | 7,817 |  |  | — |  |  | — |
Other | 1,992 |  |  | 1,992 |  |  | — |  |  | — |
Total short-term investments | 89,335 |  |  | 9,809 |  |  | 79,526 |  |  | — |
Other current assets | 45,577 |  |  | 45,577 |  |  | — |  |  | — |
Investments: |  |  |  |  |  |  |
Non-qualified supplemental savings plan | 19,819 |  |  | 19,819 |  |  | — |  |  | — |
Debt and equity securities | 11,766 |  |  | 7,274 |  |  | 3,992 |  |  | 500 |
Total investments | 31,585 |  |  | 27,093 |  |  | 3,992 |  |  | 500 |
Other assets | 3,286 |  |  | 3,286 |  |  | — |  |  | — |
Total assets measured at fair value | $ | 657,667 |  |  | $ | 573,649 |  |  | $ | 83,518 |  |  | $ | 500 |
Liabilities: |  |  |  |  |  |  |
Contingent consideration | $ | 9,123 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,123 |
Cash Equivalents and Investments (Short and Long-Term) The majority of cash equivalents are invested in highly liquid money-market mutual funds invested primarily in direct or indirect obligations of the U.S. Government and in federally insured deposit accounts. The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those investments. Short-term investments include securities classified as trading securities. Both realized and unrealized gains and losses on trading securities are included in other income (expense) in the Consolidated Statements of Operations. The securities are recorded at fair value. Our long-term investments include equity securities and assets held in a Non-Qualified Supplemental Savings Plan ("Savings Plan"). Our assets that we hold in the Savings Plan are comprised of mutual funds that are measured using Level 1 inputs. Additionally, we hold equity securities in Schlumberger, Ltd., which is classified as Level 1 and based on the quoted stock price. We also hold various other equity securities without readily determinable fair values that are classified as Level 3. These equity securities are measured at cost, less any impairments. As a result of the change in the fair value of our long-term investments, we recorded a gain of $6.7 million for the year ended September 30, 2021. During September 2021, the Company made a $100.0 million cornerstone investment in ADNOC Drilling in advance of its announced IPO. ADNOC Drilling’s IPO completed on October 3, 2021 and our $100.0 million investment represents 159.7 million shares of ADNOC Drilling, equivalent to a one percent ownership stake. Our investment is subject to a three-year lockup period and is classified as a long-term investment within Investments in our Consolidated Balance Sheets. As of September 30, 2021, this investment was classified as a Level 1 investment. Contingent Consideration The following table presents a reconciliation of changes in the fair value of our financial liabilities classified as Level 3 fair value measurements in the fair value hierarchy for fiscal years 2021 and 2020:
(in thousands) | 2021 |  | 2020
Net liabilities at beginning of period | $ | 9,123 |  |  | $ | 18,373 |
Additions | — |  |  | 1,500 |
Total gains or losses: |  |  |
Included in earnings | 1,123 |  |  | (2,500) |
Settlements 1 | (7,250) |  |  | (8,250) |
Net liabilities at end of period | $ | 2,996 |  |  | $ | 9,123 |
(1)Settlements represent earnout payments that have been earned or paid during the period. Supplemental Fair Value Information The following information presents the supplemental fair value information about current and long-term fixed-rate debt at September 30, 2021 and 2020:
| September 30,
(in millions) | 2021 |  | 2020 1
Current portion of long-term debt |  |  |
Carrying value | $ | 483.5 |  |  | $ | — |
Fair value | $ | 541.6 |  |  | $ | — |
Long-term debt, net |  |  |
Carrying value | $ | 542.0 |  |  | $ | 480.7 |
Fair value | $ | 554.3 |  |  | $ | 534.5 |
(1)As of September 30, 2021 we reclassified the outstanding 2025 Notes to Current Portion of Long-Term Debt on our Consolidated Balance Sheets. On October 27, 2021, we redeemed these notes. See Note 7—Debt to our Consolidated Financial Statements. The fair value for the $541.6 million current portion of fixed-rate debt and the $554.3 million of long-term fixed-rate debt are based on broker quotes at September 30, 2021. The notes are classified within Level 2 of the fair value hierarchy as they are not actively traded in markets.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
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