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 July 31, 2018, we recognized gains of $2,042 on foreign currency forward contracts and losses of $1,152 from the change in fair value of balance sheet positions. For the three months ended July 31, 2017, we recognized losses of $1,314 on foreign currency forward contracts and gains of $1,617 from the change in fair value of balance sheet positions. For the nine months ended July 31, 2018, we recognized losses of $529 on foreign currency forward contracts and gains of $451 from the change in fair value of balance sheet positions. For the nine months ended July 31, 2017, we recognized losses of $3,214 on foreign currency forward contracts and gains of $2,523 from the change in fair value of balance sheet positions.

The following table summarizes, by currency, the foreign currency forward contracts outstanding at July 31, 2018:

	Sell				Buy
	Notional Amounts		Fair Value		Notional Amounts		Fair Value
Euro	$	239,642	$	237,535	$	201,296	$	200,285
British pound		41,649		41,182		70,644		69,429
Japanese yen		22,872		22,641		43,591		43,113
Australian dollar		185		186		7,729		7,677
Hong Kong dollar		453		452		118,507		118,369
Singapore dollar		613		603		12,820		12,635
Others		3,759		3,751		53,868		53,836
Total	$	309,173	$	306,350	$	508,455	$	505,344

The carrying amounts and fair values of financial instruments at July 31, 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

1,555,122

1,539,911

Foreign currency forward contracts (net)

(239

)

(239

)

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.