13.	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. We do not use financial instruments for trading or speculative purposes.

Gains and losses on foreign currency forward 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, 2018, we recognized losses of $1,607 on foreign currency forward contracts and gains of $2,584 from the change in fair value of balance sheet positions. For the three months ended April 30, 2017, we recognized losses of $1,687 on foreign currency forward contracts and gains of $702 from the change in fair value of balance sheet positions. For the six months ended April 30, 2018, we recognized losses of $2,571 on foreign currency forward contracts and gains of $1,602 from the change in fair value of balance sheet positions. For the six months ended April 30, 2017, we recognized losses of $1,900 on foreign currency forward contracts and gains of $906 from the change in fair value of balance sheet positions.

The following table summarizes, by currency, the foreign currency forward contracts outstanding at April 30, 2018:

	Sell				Buy
	Notional Amounts		Fair Value		Notional Amounts		Fair Value
Euro	$	152,436	$	149,658	$	82,687	$	80,189
British pound		43,914		42,617		58,981		57,370
Japanese yen		32,610		31,785		35,260		34,116
Australian dollar		194		188		8,137		7,774
Hong Kong dollar		2,170		2,166		110,723		111,005
Singapore dollar		616		608		13,143		12,967
Others		4,398		4,191		52,468		50,573
Total	$	236,338	$	231,213	$	361,399	$	353,994

The carrying amounts and fair values of financial instruments at April 30, 2018, other than cash and cash equivalents, receivables and accounts payable, are shown in the table below. The carrying values of cash and cash equivalents, receivables and accounts payable approximate fair value due to the short-term nature of these instruments.

Carrying

Amount

Fair

Value

Long-term debt, including current maturities

1,539,046

1,529,148

Foreign currency forward contracts (net)

(2,281

)

(2,281

)

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

•

Long-term debt is valued by discounting future cash flows at currently available rates for borrowing arrangements with similar terms and conditions, which are considered to be Level 2 inputs under the fair value hierarchy.

•

Foreign currency forward contracts are valued using observable market based inputs, which are considered to be Level 2 inputs under the fair value hierarchy.