Fair Value of Financial Instruments

12 Months Ended

Jan. 31, 2013

Fair Value of Financial Instruments

J. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value

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 I. Hedging Instruments.”

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

			Estimated Fair Value
(in thousands)	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Mutual funds a	$	44,114	$	44,114	$	—	$	—	$	44,114
Time deposits b		1,363		1,363		—		—		1,363
Derivatives designated as hedging instruments:
Precious metal forward contracts b		1,066		—		1,066		—		1,066
Put option contracts b		1,449		—		1,449		—		1,449
Foreign exchange forward contracts b		17,177		—		17,177		—		17,177
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts b		342		—		342		—		342
Total financial assets	$	65,511	$	45,477	$	20,034	$	—	$	65,511

			Estimated 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	$	704	$	—	$	704	$	—	$	704
Total financial liabilities	$	704	$	—	$	704	$	—	$	704

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

			Estimated Fair Value
(in thousands)	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Mutual funds a	$	39,542	$	39,542	$	—	$	—	$	39,542
Time deposits b		8,236		8,236		—		—		8,236
Derivatives designated as hedging instruments:
Interest rate swaps a		406		—		406		—		406
Precious metal forward contracts b		2,758		—		2,758		—		2,758
Foreign exchange forward contracts b		70		—		70		—		70
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts b		240		—		240		—		240
Total financial assets	$	51,252	$	47,778	$	3,474	$	—	$	51,252
			Estimated Fair Value
(in thousands)	Carrying Value		Level 1		Level 2		Level 3		Total Fair Value
Derivatives designated as hedging instruments:
Foreign exchange forward contracts c	$	3,855	$	—	$	3,855	$	—	$	3,855
Precious metal forward contracts c		3,071		—		3,071		—		3,071
Total financial liabilities	$	6,926	$	—	$	6,926	$	—	$	6,926

^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 $959,272,000 and $712,147,000 and the corresponding fair value was approximately $1,100,000,000 and $860,000,000 at January 31, 2013 and 2012.