NOTE 13 – PENSION AND PROFIT SHARING PLANS AND ARRANGEMENTS

Defined Benefit Plans

The Company provides substantially all domestic and foreign employees with retirement benefits. Funding policy for domestic plans, which is primarily comprised of a cash balance pension plan, is in accordance with the Employee Retirement Income Security Act of 1974 (“ERISA”); for foreign plans, funding is determined primarily by local tax laws and other regulations. Pension costs charged to operations totaled $37,133, $28,541 and $23,240 in fiscal years 2011, 2010 and 2009, respectively.

Pension Plan Results for Defined Benefit Plans

The following table reflects the change in benefit obligations, change in plan assets and funded status for these plans:

	U.S. Plans						Foreign Plans						Total
	2011			2010			2011			2010			2011			2010
Change in benefit obligation:
Benefit obligation - beginning of year	$	238,809		$	210,575		$	365,680		$	332,489		$	604,489		$	543,064
Curtailments and settlements		–			–			(8,832	)		(93	)		(8,832	)		(93	)
Service cost		8,058			7,954			5,260			4,868			13,318			12,822
Interest cost		12,264			12,213			18,495			17,684			30,759			29,897
Plan participant contributions		–			–			25			25			25			25
Plan amendments		4			4,053			(2,806	)		–			(2,802	)		4,053
Actuarial loss		14,425			14,462			3,492			39,936			17,917			54,398
Total benefits paid		(12,069	)		(10,448	)		(14,506	)		(11,657	)		(26,575	)		(22,105	)
Effect of exchange rates		–			–			23,811			(17,572	)		23,811			(17,572	)
Benefit obligation – end of year		261,491			238,809			390,619			365,680			652,110			604,489
Change in plan assets (a):
Fair value of plan assets – beginning of year		114,588			95,773			241,883			211,436			356,471			307,209
Curtailments and settlements		–			–			(8,832	)		–			(8,832	)		–
Actual return on plan assets		14,131			8,845			28,213			24,477			42,344			33,322
Company contributions		24,688			20,418			25,888			26,835			50,576			47,253
Plan participant contributions		–			–			25			25			25			25
Benefits paid from plan assets		(12,069	)		(10,448	)		(14,506	)		(11,657	)		(26,575	)		(22,105	)
Effect of exchange rates		–			–			14,758			(9,233	)		14,758			(9,233	)
Fair value of plan assets - end of year		141,338			114,588			287,429			241,883			428,767			356,471

Funded status (a)	$	(120,153	)	$	(124,221	)	$	(103,190	)	$	(123,797	)	$	(223,343	)	$	(248,018	)

Accumulated benefit obligation	$	240,430		$	215,548		$	377,910		$	355,109		$	618,340		$	570,657

Plans with accumulated benefit obligations in excess
of plan assets consist of the following:
Accumulated benefit obligation	$	240,430		$	215,548		$	375,368		$	354,183		$	615,798		$	569,731
Projected benefit obligation		261,491			238,809			387,542			364,754			649,033			603,563
Plan assets at fair value		141,338			114,588			284,667			240,774			426,005			355,362

(a)

The Company has certain supplemental defined benefit plans, which provide benefits to eligible executives in the U.S. and employees abroad for which the above tables do not include certain Company assets relating to these plans of $75,012 and $61,685 for the U.S. plans and $20,992 and $19,753 for the foreign plans as of July 31, 2011 and July 31, 2010, respectively. Liabilities, included in the tables above, related to these plans were $99,169 and $85,361 for the U.S. plans and $55,859 and $52,063 for the foreign plans as of July 31, 2011 and July 31, 2010, respectively.

	U.S. Plans						Foreign Plans
	2011			2010			2011			2010
Amounts recognized in the balance sheet consists of:
Non-current assets	$	–		$	–		$	177		$	183
Current liabilities		(3,746	)		(3,328	)		(1,379	)		(1,309	)
Non-current liabilities		(116,407	)		(120,893	)		(101,988	)		(122,671	)
Net amount recognized	$	(120,153	)	$	(124,221	)	$	(103,190	)	$	(123,797	)

Net periodic benefit cost for the Company’s defined benefit pension plans includes the following components:

	U.S. Plans									Foreign Plans
	2011			2010			2009			2011			2010			2009
Service cost	$	8,058		$	7,954		$	8,132		$	5,260		$	4,868		$	4,723
Interest cost		12,264			12,213			12,426			18,495			17,684			16,025
Expected return on plan assets		(8,381	)		(8,092	)		(8,455	)		(14,319	)		(13,309	)		(13,132	)
Amortization of prior service cost		2,142			1,813			1,538			310			256			235
Amortization of actuarial loss		5,826			2,432			1,056			5,702			2,765			701
Gain due to curtailments and
settlements		–			–			–			1,776			(43	)		(9	)
Net periodic benefit cost	$	19,909		$	16,320		$	14,697		$	17,224		$	12,221		$	8,543

Other changes in plan assets and benefit obligations recognized in other comprehensive income for the year ending July 31, 2011 are as follows:

	U.S. Plans			Foreign Plans
Net actuarial loss/(gain)	$	8,675		$	(10,402	)
Recognized actuarial loss (including impact of curtailments and settlements)		(5,826	)		(7,478	)
Prior service cost/(credit)		4			(2,806	)
Recognized prior service cost		(2,142	)		(310	)
Effect of exchange rates on amounts included in accumulated other
comprehensive income		–			5,725
Total recognized in other comprehensive (income)/loss, before tax effects	$	711		$	(15,271	)
Total recognized in other comprehensive (income)/loss, net of tax effects	$	455		$	(11,201	)
Total recognized in net periodic benefit cost and other comprehensive
(income)/loss, before tax effects	$	20,620		$	1,953
Total recognized in net periodic benefit cost and other comprehensive
(income)/loss, net of tax effects	$	13,197		$	362

Amounts recognized in accumulated other comprehensive income (before tax effects) as of July 31, 2011 are as follows:

			Foreign
	U.S. Plans		Plans			Total
Prior service cost/(credit)	$	9,513	$	(1,716	)	$	7,797
Net loss		76,451		99,337			175,788
Total amounts recognized in accumulated other
comprehensive income	$	85,964	$	97,621		$	183,585

Amounts recognized in accumulated other comprehensive income (before tax effects) as of July 31, 2010 are as follows:

			Foreign
	U.S. Plans		Plans		Total
Prior service cost	$	11,651	$	1,256	$	12,907
Net loss		73,602		111,636		185,238
Total amounts recognized in accumulated other
comprehensive income	$	85,253	$	112,892	$	198,145

Amounts in accumulated other comprehensive income expected to be amortized as components of net periodic benefit cost during fiscal year 2012 are as follows:

			Foreign
	U.S. Plans		Plans			Total
Prior service cost/(credit)	$	1,779	$	(134	)	$	1,645
Net actuarial loss	$	7,733	$	5,438		$	13,171

Plan Assumptions

The following table provides the weighted-average assumptions used to determine benefit obligations and net periodic benefit cost:

	U.S. Plans						Foreign Plans
	2011		2010		2009		2011		2010		2009
Assumptions used to determine
benefit obligations
Discount rate	5.00	%	5.25	%	6.00	%	4.90	%	5.00	%	5.66	%
Rate of compensation increase	4.61	%	4.63	%	4.66	%	3.18	%	3.00	%	3.01	%

Assumptions used to determine
net periodic benefit cost
Discount rate	5.25	%	6.00	%	6.75	%	5.00	%	5.66	%	5.92	%
Expected long-term rate of return on
plan assets	7.00	%	7.00	%	7.00	%	5.71	%	5.92	%	6.33	%
Rate of compensation increase	4.63	%	4.66	%	4.69	%	3.00	%	3.01	%	3.15	%

The Company determines its actuarial assumptions on an annual basis. To develop the expected long-term rate of return on plan assets assumption, the Company considers the current level of expected returns on risk free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class was then weighted based upon the target asset allocation to develop the expected long-term rate of return on plan assets assumption for the portfolio.

Plan Assets and Investment Policies

The Company’s investment objective for defined benefit plan assets is to meet the plans’ benefit obligations, while preserving plan assets. The investment strategies focus on asset class diversification, liquidity to meet benefit payments and an appropriate balance of long-term return and risk. Plan assets are diversified across several investment managers and are generally invested in liquid funds that track broad market equity and bond indices. The target allocations for the plan assets (based on a weighted average) are 50% equity securities, 30% corporate and government securities, 20% to all other types of investments. Equity securities include investments in domestic and international companies. Fixed income securities include corporate bonds of companies from diversified industries and U.S. and foreign government treasury securities. Other types of investments include investments in a limited partnership, insurance contracts, commingled funds (which primarily represent investments in common collective trusts and fund of funds) and a longevity derivative which follow several different strategies. Plan fiduciaries oversee the investment allocation process, which includes selecting investment managers, commissioning periodic asset-liability studies, setting long-term strategic targets and monitoring asset allocations.

The following tables present, for each of the fair value hierarchy levels (as defined in Note 9, Fair Value Measurements) the Company’s U.S. and Foreign defined benefit net pension plan assets as of July 31, 2011 and July 31, 2010:

			Fair Value Measurements
	As of
	Jul. 31, 2011		Level 1		Level 2		Level 3
U.S. Plans
Assets
Investments
Equity securities	$	77,753	$	77,753	$	–	$	–
Debt securities:
Other U.S. government &
mortgage/asset-backed		19,070		–		19,070		–
Corporate		16,664		–		16,664		–
U.S. Treasury		6,846		–		6,846		–
Other investments:
Limited partnership		10,058		–		–		10,058
Commingled funds		13,168		–		13,168		–
Total investments		143,559		77,753		55,748		10,058
Other receivables		388		388		–		–
Total assets	$	143,947	$	78,141	$	55,748	$	10,058

Liabilities
Payables	$	2,609	$	2,609	$	–	$	–
Total liabilities		2,609		2,609		–		–
Net U.S. pension assets	$	141,338	$	75,532	$	55,748	$	10,058

Foreign Plans
Cash equivalents	$	455	$	455	$	–	$	–
Equity securities		126,137		126,137		–		–
Debt securities:
Corporate		41,544		–		41,544		–
Government bonds		46,414		–		46,414		–
Other investments:
Commingled funds		51,266		–		39,101		12,165
Insurance contracts		13,631		–		–		13,631
Real estate funds		8,617		–		–		8,617
Total foreign pension assets	$	288,064	$	126,592	$	127,059	$	34,413

Liabilities
Longevity derivative	$	635	$	–	$	–	$	635
Total liabilities		635		–		–		635
Net foreign pension assets	$	287,429	$	126,592	$	127,059	$	33,778

			Fair Value Measurements
	As of
	Jul. 31, 2010		Level 1		Level 2		Level 3
U.S. Plans
Assets
Investments
Equity securities	$	57,773	$	57,773	$	–	$	–
Debt securities:
Other U.S. government &
mortgage/asset-backed		16,167		–		16,167		–
Corporate		13,719		–		13,719		–
U.S. Treasury		10,269		–		10,269		–
Other investments:
Limited partnership		6,794		–		–		6,794
Commingled funds		14,602		–		14,602		–
Total investments		119,324		57,773		54,757		6,794
Other receivables		412		412		–		–
Total assets	$	119,736	$	58,185	$	54,757	$	6,794

Liabilities
Payables	$	5,148	$	5,148	$	–	$	–
Total liabilities		5,148		5,148		–		–
Net U.S. pension assets	$	114,588	$	53,037	$	54,757	$	6,794

Foreign Plans
Assets
Cash equivalents	$	8,260	$	8,260	$	–	$	–
Equity securities		103,745		103,745		–		–
Debt securities:
Corporate		40,577		–		40,577		–
Government bonds		28,258		–		28,258		–
Other investments:
Commingled funds		41,023		–		39,405		1,618
Insurance contracts		12,309		–		–		12,309
Real estate funds		7,711		–		–		7,711
Net foreign pension assets	$	241,883	$	112,005	$	108,240	$	21,638

The following tables present an analysis of changes during fiscal year 2011 and fiscal year 2010 in Level 3 plan assets, by plan asset class, for U.S. and Foreign pension plans using significant unobservable inputs to measure fair value:

	Fair Value Measurements Using Significant Unobservable Inputs
	(Level 3)
	Limited		Commingled		Insurance			Real estate		Longevity
	partnership		funds		contracts			funds		derivative			Total
Beginning Balance at July 31, 2010	$	6,794	$	1,618	$	12,309		$	7,711	$	–		$	28,432
Actual return on plan assets:
Assets held, end of year		739		324		509			550		(619	)		1,503
Assets sold during the period		25		–		–			–		–			25
Purchases, sales, and
settlements, net		2,500		9,798		(725	)		6					11,579
Exchange rate changes		–		425		1,538			350		(16	)		2,297
Ending balance at July 31, 2011	$	10,058	$	12,165	$	13,631		$	8,617	$	(635	)	$	43,836

	Fair Value Measurements Using Significant Unobservable Inputs
	(Level 3)
	Limited		Commingled			Insurance			Real estate
	partnership		funds			contracts			funds			Total
Beginning Balance at July 31, 2009	$	6,184	$	1,698		$	13,210		$	7,320		$	28,412
Actual return on plan assets:
Assets held, end of year		610		38			431			839			1,918
Assets sold during the period		–		5			10			–			15
Purchases, sales, and
settlements, net		–		26			(209	)		–			(183	)
Exchange rate changes		–		(149	)		(1,133	)		(448	)		(1,730	)
Ending balance at July 31, 2010	$	6,794	$	1,618		$	12,309		$	7,711		$	28,432

The Plan’s investments in cash equivalents and equity securities are valued using quoted market prices and, as such, are classified within Level 1 of the fair value hierarchy.

The fair value of the Plan’s investments in debt securities, have been valued utilizing third party pricing services. The pricing services use inputs to determine fair value which are derived from observable market sources including reportable trades, benchmark curves, credit spreads, broker/dealer quotes, bids, offers, and other industry and economic events. These investments are included in Level 2 of the fair value hierarchy.

The fair value of the Plan’s other investments included in Level 2 of the fair value hierarchy have been reported primarily using the net asset value per share of the investment as the practical expedient for measuring fair value as permitted for these types of investments.

The fair value of the Plan’s other investments included in Level 3 of the fair value hierarchy have been valued using unobservable inputs and in some cases are subject to various redemption restrictions.

Other receivables and payables are valued at cost, which approximates fair value.

Cash Flows

Management’s estimate of the Company’s cash requirements for the defined benefit plans for the year ending July 31, 2012 is $20,643. This is comprised of expected benefit payments of $7,290, which will be paid directly to plan participants from Company assets, as well as expected Company contributions of $13,353. Expected contributions are dependent on many variables, including the variability of the market value of the assets as compared to the obligation and other market or regulatory conditions. Accordingly, actual funding may differ from current estimates.

The following table provides the pension benefits expected to be paid to participants in the next ten fiscal years, which include payments funded from the Company’s assets, as discussed above, as well as payments paid from plan assets:

Expected pension benefit payments
2012	$	24,097
2013		34,814
2014		27,007
2015		29,681
2016		32,328
2017-2021		188,186

Defined Contribution Plans

The Company’s 401(k) and profit sharing plan covers substantially all domestic employees of the Company and its participating subsidiaries, other than those employees covered by a union retirement plan. The Plan provides that participants may voluntarily contribute a percentage of their compensation and the Company will make a matching contribution equal to 100% of the first 3% of each participant’s contributions. The expense associated with the plan for fiscal years 2011, 2010, and 2009 was $5,964, $6,010 and $6,134, respectively.

The Company and its subsidiaries also participate in defined contribution pension plans primarily for the benefit of certain foreign employees. The expense associated with these plans was $14,764, $12,178 and $9,544 for fiscal years 2011, 2010 and 2009, respectively.