Fair Value of Financial Instruments

6 Months Ended

Jul. 31, 2013

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal market for the asset or liability in an orderly transaction between market participants on the measurement date. U.S. GAAP establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. U.S. GAAP prescribes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 1 inputs are considered to carry the most weight within the fair value hierarchy due to the low levels of judgment required in determining fair values.

Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3 – Unobservable inputs reflecting the reporting entity’s own assumptions. Level 3 inputs are considered to carry the least weight within the fair value hierarchy due to substantial levels of judgment required in determining fair values.

The Company uses the market approach to measure fair value for its mutual funds, time deposits and derivative instruments. The Company’s interest rate swaps were primarily valued using the 3-month LIBOR rate. The Company’s put option contracts, as well as its foreign exchange forward contracts, are primarily valued using the appropriate foreign exchange spot rates. The Company’s precious metal forward contracts are primarily valued using the relevant precious metal spot rate. For further information on the Company’s hedging instruments and program, see “Note 7. Hedging Instruments.”

Financial assets and liabilities carried at fair value at July 31, 2013 are classified in the table below in one of the three categories described above:



	Carrying Value		Estimated Fair Value						Total Fair Value
(in thousands)	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Marketable securities ^a	$	49,343	$	49,343	$	—	$	—	$	49,343
Derivatives designated as hedging instruments:
Precious metal forward contracts ^b	212		—		212		—		212
Foreign exchange forward contracts ^b	18,744		—		18,744		—		18,744
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts ^b	172		—		172		—		172
Total financial assets	$	68,471	$	49,343	$	19,128	$	—	$	68,471



	Carrying Value		Estimated Fair Value						Total Fair Value
(in thousands)	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Derivatives designated as hedging instruments:
Precious metal forward contracts ^c	$	3,470	$	—	$	3,470	$	—	$	3,470
Foreign exchange forward contracts ^c	617		—		617		—		617
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts ^c	25		—		25		—		25
Total financial liabilities	$	4,112	$	—	$	4,112	$	—	$	4,112

Financial assets and liabilities carried at fair value at July 31, 2012 are classified in the table below in one of the three categories described above:



	Carrying Value		Estimated Fair Value						Total Fair Value
(in thousands)	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Marketable securities ^a	$	41,155	$	41,155	$	—	$	—	$	41,155
Time deposits^b	1,357		1,357		—		—		1,357
Derivatives designated as hedging instruments:
Precious metal forward contracts ^b	23		—		23		—		23
Put option contracts ^b	152		—		152		—		152
Foreign exchange forward contracts ^b	1,414		—		1,414		—		1,414
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts ^b	423		—		423		—		423
Total financial assets	$	44,524	$	42,512	$	2,012	$	—	$	44,524



	Carrying Value		Estimated Fair Value						Total Fair Value
(in thousands)	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Derivatives designated as hedging instruments:
Precious metal forward contracts ^c	$	3,946	$	—	$	3,946	$	—	$	3,946
Foreign exchange forward contracts ^c	382		—		382		—		382
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts ^c	77		—		77		—		77
Total financial liabilities	$	4,405	$	—	$	4,405	$	—	$	4,405


^a	Included within Other assets, net.


^b	Included within Prepaid expenses and other current assets.


^c	Included within Accounts payable and accrued liabilities.

The fair value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates carrying value due to the short-term maturities of these assets and liabilities and would be measured using Level 1 inputs. The fair value of debt with variable interest rates approximates carrying value and is measured using Level 2 inputs. The fair value of debt with fixed interest rates was determined using the quoted market prices of debt instruments with similar terms and maturities, which are considered Level 2 inputs. The total carrying value of short-term borrowings and long-term debt was $964,219,000 and $939,546,000 and the corresponding fair value was approximately $1,100,000,000 at both July 31, 2013 and 2012.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15A

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15C, 15D

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 3, 10, 14, 15

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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Reference 5: http://www.xbrl.org/2003/role/presentationRef

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-Name Accounting Standards Codification

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Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

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-Number 133

-Paragraph 44A, 44B

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef

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Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15B

-Subparagraph a, b

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 13: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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