Fair Value of Financial Instruments

3 Months Ended

Apr. 30, 2011

Fair Value of Financial Instruments [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

7. 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 or most advantageous 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 swap agreements are primarily valued using the 3-month LIBOR rate. The Company’s put and call 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 collars and 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 6. Hedging Instruments.”

Financial assets and liabilities carried at fair value at April 30, 2011 are classified in the tables below in one of the three categories described above:

	Carrying		Estimated Fair Value						Total Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Mutual funds a	$	45,496	$	45,496	$	—	$	—	$	45,496
Time deposits b		17,901		17,901		—		—		17,901
Derivatives designated as hedging instruments:
Interest rate swap agreements a		6,130		—		6,130		—		6,130
Precious metal forward contracts c		2,794		—		2,794		—		2,794
Foreign exchange forward contracts c		469		—		469		—		469
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts c		185		—		185		—		185
Put option contracts c		25		—		25		—		25
Total financial assets	$	73,000	$	63,397	$	9,603	$	—	$	73,000

	Carrying		Estimated Fair Value						Total Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Derivatives designated as hedging instruments:
Foreign exchange forward contracts d	$	1,969	$	—	$	1,969	$	—	$	1,969
Derivatives not designated as hedging instruments:
Call option contracts d		25		—		25		—		25
Foreign exchange forward contracts d		72		—		72		—		72
Total financial liabilities	$	2,066	$	—	$	2,066	$	—	$	2,066

Financial assets and liabilities carried at fair value at April 30, 2010 are classified in the tables below in one of the three categories described above:

	Carrying		Estimated Fair Value						Total Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Mutual funds a	$	41,823	$	41,823	$	—	$	—	$	41,823
Derivatives designated as hedging instruments:
Interest rate swap agreements a		2,461		—		2,461		—		2,461
Put option contracts c		1,815		—		1,815		—		1,815
Precious metal forward contracts c		3,602		—		3,602		—		3,602
Precious metal collars c		277		—		277		—		277
Foreign exchange forward contracts c		1,683		—		1,683		—		1,683
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts c		24		—		24		—		24
Put option contracts c		80		—		80		—		80
Total financial assets	$	51,765	$	41,823	$	9,942	$	—	$	51,765

	Carrying		Estimated Fair Value						Total Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts d	$	86	$	—	$	86	$	—	$	86
Call option contracts d		80		—		80		—		80
Total financial liabilities	$	166	$	—	$	166	$	—	$	166

a	Included within Other assets, net on the Company’s Condensed Consolidated Balance Sheet.
b	Included within Short-term investments on the Company’s Condensed Consolidated Balance Sheet.

c	Included within Prepaid expenses and other current assets on the Company’s Condensed Consolidated Balance Sheet.
d	Included within Accounts payable and accrued liabilities on the Company’s Condensed Consolidated Balance Sheet.

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. The fair value of debt with variable interest rates approximates carrying value. The fair value of debt with fixed interest rates was determined using the quoted market prices of debt instruments with similar terms and maturities. The total carrying value of short-term borrowings and long-term debt was $686,887,000 and $759,755,000 and the corresponding fair value was approximately $750,000,000 and $800,000,000 at April 30, 2011 and 2010.