Financial instruments

6 Months Ended

Apr. 30, 2011

15.		Financial instruments. We operate internationally and enter into intercompany transactions denominated in foreign currencies. Consequently, we are subject to market risk arising from exchange rate movements between the dates foreign currencies are recorded and the dates they are settled. We regularly use foreign currency forward contracts to reduce our risks related to most of these transactions. These contracts usually have maturities of 90 days or less and generally require us to exchange foreign currencies for U.S. dollars at maturity, at rates stated in the contracts. These contracts are not designated as hedging instruments.

		Gains and losses on foreign exchange contracts are recorded in “Other — net” on the Consolidated Statement of Income together with the transaction gain or loss from the hedged balance sheet position. For the three months ended April 30, 2011, we recognized gains of $6,239 on foreign exchange contracts and losses of $5,086 from the change in fair value of balance sheet positions. For the six months ended April 30, 2011, we recognized losses of $4,551 on foreign exchange contracts and gains of $6,340 from the change in fair value of balance sheet positions. We do not use financial instruments for trading or speculative purposes.

		We had the following outstanding foreign currency forward contracts at April 30, 2011:


	Sell				Buy
	Notional		Fair Market		Notional		Fair Market
	Amounts		Value		Amounts		Value

Euro	$	8,772	$	9,219	$	81,838	$	86,827
British pound		1,632		1,675		28,687		29,448
Japanese yen		5,920		5,906		16,126		16,010
Others		5,768		6,025		30,623		32,824

Total	$	22,092	$	22,825	$	157,274	$	165,109

The following table shows the fair value of foreign currency forward contracts in the consolidated balance sheet at April 30, 2011.


Asset Derivatives			Liability Derivatives
Balance sheet location	Fair value		Balance sheet location	Fair value

Receivables	$	7,720	Accrued liabilities	$	618

The carrying amounts and fair values of financial instruments at April 30, 2011, other than receivables and accounts payable, are shown in the table below. The carrying values of receivables and accounts payable approximate fair value due to the short-term nature of these instruments.


	Carrying
	Amount		Fair Value


Cash and cash equivalents	$	66,785	$	66,785
Notes payable		717		717
Long-term debt		66,242		68,686
Foreign exchange contracts (net)		7,102		7,102

We used the following methods and assumptions in estimating the fair value of financial instruments:

	•		Cash, cash equivalents and notes payable are valued at their carrying amounts due to the relatively short period to maturity of the instruments.

	•		Long-term debt is valued by discounting future cash flows at currently available rates for borrowing arrangements with similar terms and conditions.

	•		Foreign exchange contracts are estimated using quoted exchange rates.