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Fair Value of Financial Instruments
 9 Months Ended
Jan. 31, 2014
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments
9. FAIR VALUE OF FINANCIAL INSTRUMENTS

We use a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. These tiers include: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; and Level 3, defined as unobservable inputs that are not corroborated by market data.

We use valuation techniques that maximize the use of market prices and observable inputs and minimize the use of unobservable inputs. In measuring the fair value of our financial assets and liabilities, we rely on market data or assumptions which we believe market participants would use in pricing an asset or a liability.

Assets and Liabilities Accounted for at Fair Value

Our financial instruments include cash and cash equivalents, trade receivables, restricted trust and escrow accounts, interest rate derivatives, contingent consideration associated with an acquisition, trade payables and long-term debt. The carrying values of cash and cash equivalents, trade receivables and trade payables approximate their respective fair values due to their short-term nature. The fair value of the restricted trust and escrow accounts are included as restricted assets in the Level 1 tier below. The fair values of the interest rate derivatives, included in the Level 2 tier below, are calculated based on the three month LIBOR yield curve that is observable at commonly quoted intervals for the full term of the swaps, adjusted by the credit risk of our counter-parties and us based on observable credit default swap rates. We recognize all derivatives on the balance sheet at fair value. The fair value of contingent consideration associated with an acquisition, included in the Level 3 tier below as it is based on significant unobservable inputs, is calculated using a probability weighted estimated annualized gross margin for prospective customers that are contracted within the twelve month period after closing. The significant unobservable inputs include assumptions as to the likelihood of success with each prospective customer, along with each prospective customer’s sales revenues and direct costs. There have been no changes to these assumptions or the value of the contingent consideration from the acquisition date in the second quarter of fiscal year 2014 through January 31, 2014.

 

As of January 31, 2014 our assets and liabilities that are measured at fair value on a recurring basis included the following:

 

     Fair Value Measurement at January 31, 2014 Using:  
     Quoted Prices in
Active Markets
(Level 1)		      Significant Other
Observable Inputs
(Level 2)		      Significant
Unobservable Inputs
(Level 3)		  

Assets:

         

Restricted assets

    $ 675       $ —         $ —     
  

 

 

     

 

 

     

 

 

  

Liabilities:

         

Interest rate derivatives

    $ —         $ 3,137       $ —     
  

 

 

     

 

 

     

 

 

  

Contingent consideration - acquisition

    $ —         $ —         $ 844   
  

 

 

     

 

 

     

 

 

  

As of April 30, 2013 our assets and liabilities that are measured at fair value on a recurring basis included the following:

 

     Fair Value Measurement at April 30, 2013 Using:  
     Quoted Prices in
Active Markets
(Level 1)		      Significant Other
Observable Inputs
(Level 2)		      Significant
Unobservable Inputs
(Level 3)		  

Assets:

         

Restricted assets

    $ 545       $ —         $ —     
  

 

 

     

 

 

     

 

 

  

Liabilities:

         

Interest rate derivatives

    $ —         $ 4,229       $ —     
  

 

 

     

 

 

     

 

 

  

Fair Value of Debt

As of January 31, 2014, the fair value of our fixed rate debt, including our 7.75% senior subordinated notes due 2019 (“2019 Notes”), the Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2005R-2 (“FAME Bonds 2005R-2”) and the Vermont Economic Development Authority Solid Waste Disposal Long-Term Revenue Bonds Series 2013 (“Vermont Bonds”), was approximately 368,494 and the carrying value was $362,400. The fair value of the 2019 Notes is considered to be Level 1 within the fair value hierarchy as the fair value is based off of a quoted market price in an active market. The fair value of the FAME Bonds 2005R-2 is considered to be Level 2 within the fair value hierarchy as the fair value is determined using market approach pricing that utilizes pricing models and pricing systems, mathematical tools and judgment to determine the evaluated price for the security based on the market information of the FAME Bonds 2005R-2 or securities with similar characteristics. The fair value of the Vermont Bonds is considered to be Level 2 within the fair value hierarchy as the fair value is determined based on changes in the pricing of an observable five year municipal bond index. As of January 31, 2014, the fair value of our 2011 senior secured revolving credit facility (“2011 Revolver”) approximated its carrying value of $137,300 based on current borrowing rates for similar types of borrowing arrangements.