Annual report pursuant to Section 13 and 15(d)

Financial Instruments

v3.7.0.1
Financial Instruments
12 Months Ended
Apr. 30, 2017
Financial Instruments

5. Financial Instruments

The following tables show the Company’s financial instruments and balance sheet classification as of April 30, 2017 and 2016:

 

    April 30, 2017  
    Fair Value Measurement     Balance Sheet Classification  
    Cost     Unrealized
Gains
    Unrealized
Losses
    Fair Value     Cash and
Cash
Equivalents
    Marketable
Securities,
Current
    Marketable
Securities,
Non-current
    Other
Accrued
Liabilities
 
    (in thousands)  

Level 1:

               

Cash

  $ 409,824     $     $     $ 409,824     $ 409,824     $     $     $  

Money market funds

    1,058                   1,058       1,058                    

Mutual funds (1)

    113,818       6,697       (578     119,937             4,363       115,574        
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 524,700     $ 6,697     $ (578   $ 530,819     $ 410,882     $ 4,363     $ 115,574     $  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Level 2:

               

Foreign currency forward contracts

  $     $ 129     $ (846   $ (717   $     $     $     $ (717

Interest rate swap

  $     $     $ (947   $ (947   $     $     $     $ (947

 

    April 30, 2016  
    Fair Value Measurement     Balance Sheet Classification  
    Cost     Unrealized
Gains
    Unrealized
Losses
    Fair Value     Cash and
Cash
Equivalents
    Marketable
Securities,
Current
    Marketable
Securities,
Non-current
    Other
Accrued
Liabilities
 
    (in thousands)  

Level 1:

               

Cash

  $ 269,558     $     $     $ 269,558     $ 269,558     $     $     $  

Money market funds

    3,694                   3,694       3,694                    

Mutual funds (1)

    142,588       1,395       (2,553     141,430             11,338       130,092        
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $     415,840     $ 1,395     $ (2,553   $     414,682     $ 273,252     $ 11,338     $ 130,092     $  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Level 2:

               

Foreign currency forward contracts

  $     $ 324     $ (1,041   $ (717   $     $     $     $ (717

Interest rate swap

  $     $     $     $     $     $     $     $  

 

(1) These investments are held in trust for settlement of the Company’s vested and unvested obligations of $137.1 million and $138.8 million as of April 30, 2017 and 2016, respectively, under the ECAP (see Note 6 — Deferred Compensation and Retirement Plans). During fiscal 2017 and 2015, the fair value of the investments increased; therefore, the Company recognized income of $10.8 million and $8.8 million, respectively which was recorded in other income (loss), net. During fiscal 2016, the fair value of the investments decreased; therefore, the Company recognized a loss of $3.3 million, which was recorded in other income (loss), net.

Investments in marketable securities classified as trading are based upon investment selections the employee elects from a pre-determined set of securities in the ECAP and the Company invests in marketable securities to mirror these elections. As of April 30, 2017 and 2016, the Company’s investments in marketable securities classified as trading consist of mutual funds for which market prices are readily available. Investments in marketable securities classified as available-for-sale securities are made based on the Company’s investment policy, which restricts the types of investments that can be made. As of April 30, 2017 and April 30, 2016, the Company does not hold marketable securities classified as available-for-sale. During fiscal 2016 and 2015, the Company received $13.1 million and $5.0 million, respectively, in proceeds from maturities of available-for-sale marketable securities.

Designated Derivatives - Interest Rate Swap Agreement

In March 2017, the Company entered into an interest rate swap contract with a notional amount $129.8 million, designated as a cash flow hedge, to hedge the variability to changes in cash flows attributable to interest rate risks caused by changes in interest rates related to its variable rate debt. The notional amount will be amortized so that the amount is always half of the principal balance of the debt outstanding. The interest rate swap agreement matures on June 15, 2021 and locks the interest rates on half the debt outstanding at 1.919%, exclusive of the credit spread on the debt.

The fair value of the derivative designated as a cash flow hedge instrument is as follows:

 

       April 30,  
2017
 
     (in thousands)  

Derivative liability:

  

Interest rate swap contract

   $ 947  

 

During fiscal 2017, the Company recognized the following losses on the interest rate swap:

 

     April 30,
2017
 
     (in thousands)  

Losses recognized in OCI (net of tax effects of $406)

   $ 635  

Losses reclassified from AOCI into interest income (expense), net

     (94

As the critical terms of the hedging instrument and the hedged forecasted transaction are the same, the Company has concluded the changes in the fair value or cash flows attributable to the risk being hedged are expected to completely offset at inception and on an ongoing basis.

We estimate that $0.8 million of derivative losses included in AOCI as of April 30, 2017 will be reclassified into other expense within the following 12 months. The cash flows related to interest rate swap contracts are included in net cash provided by operating activities.

Non-Designated Derivatives

The fair value of derivatives not designated as hedge instruments are as follows:

 

     April 30,  
     2017      2016  
     (in thousands)  

Derivative assets:

     

Foreign currency forward contracts

   $ 129      $ 324  

Derivative liabilities:

     

Foreign currency forward contracts

     846        1,041  

As of April 30, 2017, the total notional amounts of the forward contracts purchased and sold were $19.4 million and $70.0 million, respectively. As of April 30, 2016, the total notional amounts of the forward contracts purchased and sold were $14.5 million and $44.3 million, respectively. The Company recognizes forward contracts as a net asset or net liability on the consolidated balance sheets as such contracts are covered by master netting agreements. During fiscal 2017, the Company incurred gains of $0.6 million related to forward contracts while in fiscal 2016 it incurred losses of $1.8 million which is recorded in general and administrative expenses in the accompanying consolidated statements of income. The cash flows related to foreign currency forward contracts are included in cash flows from operating activities in the accompanying statements of cash flow.