Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements - Thermon Holding Corp

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Fair Value Measurements - Thermon Holding Corp
 3 Months Ended
Jun. 30, 2012
Fair Value Measurements

2. Fair Value Measurements

 

Fair Value. We measure fair value based on authoritative accounting guidance, which defines fair value, establishes a framework for measuring fair value as well as expands on required disclosures regarding fair value measurements.

 

Inputs are referred to as assumptions that market participants would use in pricing the asset or liability. The uses of inputs in the valuation process are categorized into a three-level fair value hierarchy.

 

·                                          Level 1 — uses quoted prices in active markets for identical assets or liabilities we have the ability to access.

 

·                                          Level 2 — uses observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or 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 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment.

 

Financial assets and liabilities with carrying amounts approximating fair value include cash, trade accounts receivable, accounts payable, accrued expenses and other current liabilities. The carrying amount of these financial assets and liabilities approximates fair value because of their short maturities.  At June 30, 2012 and March 31, 2012, no assets or liabilities were valued using Level 3 criteria.

 

Information about our long-term debt that is not measured at fair value follows:

 

 

 

June 30, 2012

 

March 31, 2012

 

 

 

 

 

Carrying
Value

 

Fair Value

 

Carrying
Value

 

Fair Value

 

Valuation Technique

 

Financial Liabilities

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

$

118,145

 

$

130,107

 

$

139,145

 

$

153,755

 

Level 2 - Market Approach

 

 

Our senior secured notes trade on over the counter markets.  As the quoted price is only available through a dealer, the Company concluded the market is not active enough to be classified as a Level 1 valuation.  However, the pricing is indirectly observable through dealers and has been classified as Level 2.  Differences between carrying value and fair value are primarily due to instruments that provide fixed interest rates or contain fixed interest rate elements. Inherently, such instruments are subject to fluctuations in fair value due to subsequent movements in interest rates.
Thermon Holding Corp.
  
Fair Value Measurements

2. Fair Value Measurements

 

Fair Value. We measure fair value based on authoritative accounting guidance, which defines fair value, establishes a framework for measuring fair value as well as expands on required disclosures regarding fair value measurements.

 

Inputs are referred to as assumptions that market participants would use in pricing the asset or liability. The uses of inputs in the valuation process are categorized into a three-level fair value hierarchy.

 

·                                          Level 1 — uses quoted prices in active markets for identical assets or liabilities we have the ability to access.

·                                          Level 2 — uses observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or 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 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment.

 

Financial assets and liabilities with carrying amounts approximating fair value include cash, trade accounts receivable, accounts payable, accrued expenses and other current liabilities. The carrying amount of these financial assets and liabilities approximates fair value because of their short maturities.  At June 30, 2012 and March 31, 2012, no assets or liabilities were valued using Level 3 criteria.

 

Information about our long-term debt that is not measured at fair value follows:

 

 

 

June 30, 2012

 

March 31, 2012

 

 

 

 

 

Carrying
Value

 

Fair Value

 

Carrying
Value

 

Fair Value

 

Valuation Technique

 

Financial Liabilities

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

$

118,145

 

$

130,107

 

$

139,145

 

$

153,755

 

Level 2 - Market Approach

 

 

Our senior secured notes trade on over the counter markets.  As the quoted price is only available through a dealer, the Company concluded the market is not active enough to be classified as a Level 1 valuation.  However, the pricing is indirectly observable through dealers and has been classified as Level 2.  Differences between carrying value and fair value are primarily due to instruments that provide fixed interest rates or contain fixed interest rate elements. Inherently, such instruments are subject to fluctuations in fair value due to subsequent movements in interest rates.