Annual report pursuant to Section 13 and 15(d)

Financial Instruments

v3.20.2
Financial Instruments
12 Months Ended
Apr. 30, 2020
Investments All Other Investments [Abstract]  
Financial Instruments

5. Financial Instruments

The following tables show the Company’s financial instruments and balance sheet classification as of April 30, 2020 and 2019:

 

 

 

April 30, 2020

 

 

 

Fair Value Measurement

 

 

Balance Sheet Classification

 

 

 

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

Cash and

Cash

Equivalents

 

 

Marketable

Securities,

Current

 

 

Marketable

Securities,

Non-current

 

 

Income

Taxes &

Other

Receivables

 

 

 

(in thousands)

 

Changes in Fair Value Recorded in

 

Other Comprehensive Income

 

Level 2:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

$

19,132

 

 

$

39

 

 

$

 

 

$

19,171

 

 

$

4,785

 

 

$

14,386

 

 

$

 

 

$

 

Corporate notes/bonds

 

 

19,181

 

 

 

26

 

 

 

(19

)

 

 

19,188

 

 

 

901

 

 

 

18,287

 

 

 

 

 

 

 

Total debt investments

 

$

38,313

 

 

$

65

 

 

$

(19

)

 

$

38,359

 

 

$

5,686

 

 

$

32,673

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in Fair Value Recorded in

 

Net Income

 

Level 1:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

141,412

 

 

$

 

 

$

9,278

 

 

$

132,134

 

 

$

 

Total equity investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

141,412

 

 

$

 

 

$

9,278

 

 

$

132,134

 

 

$

 

Cash

 

 

 

 

 

 

 

 

 

 

 

 

 

$

611,795

 

 

$

611,795

 

 

$

 

 

$

 

 

$

 

Money market funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

71,763

 

 

 

71,763

 

 

 

 

 

 

 

 

 

 

Level 2:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,634

 

 

 

 

 

 

 

 

 

 

 

 

2,634

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

$

865,963

 

 

$

689,244

 

 

$

41,951

 

 

$

132,134

 

 

$

2,634

 

 

 

 

April 30, 2019

 

 

 

Fair Value Measurement

 

 

Balance Sheet Classification

 

 

 

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

Cash and

Cash

Equivalents

 

 

Marketable

Securities,

Current

 

 

Marketable

Securities,

Non-

current

 

 

Income

Taxes &

Other

Receivables

 

 

 

(in thousands)

 

Changes in Fair Value Recorded in

 

Other Comprehensive Income

 

Level 2:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap

 

$

 

 

$

619

 

 

$

 

 

$

619

 

 

$

 

 

$

 

 

$

 

 

$

619

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in Fair Value Recorded in

 

Net Income

 

Level 1:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

140,751

 

 

$

 

 

$

8,288

 

 

$

132,463

 

 

$

 

Total equity investments

 

 

 

 

 

 

 

 

 

 

 

 

 

$

140,751

 

 

$

 

 

$

8,288

 

 

$

132,463

 

 

$

 

Cash

 

 

 

 

 

 

 

 

 

 

 

 

 

$

579,998

 

 

$

579,998

 

 

$

 

 

$

 

 

$

 

Money market funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

46,362

 

 

 

46,362

 

 

 

 

 

 

 

 

 

 

Level 2:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

99

 

 

 

 

 

 

 

 

 

 

 

 

99

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

$

767,829

 

 

$

626,360

 

 

$

8,288

 

 

$

132,463

 

 

$

718

 

 

(1)

These investments are held in trust for settlement of the Company’s vested obligations of $124.6 million and $122.3 million as of April 30, 2020 and 2019, respectively, under the ECAP (see Note 6 — Deferred Compensation and Retirement Plans). Unvested obligations under the deferred compensation plans totaled $21.7 million and $24.6 million as of April 30, 2020 and 2019, respectively. During fiscal 2020, the fair value of the investments decreased; therefore, the Company recognized loss of $1.8 million, which was recorded in other (loss) income, net. During fiscal 2019 and 2018, the fair value of the investments increased; therefore, the Company recognized income of $8.1 million, and $10.3 million, respectively, which was recorded in other (loss) income, net.  

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, 2020, marketable securities classified as available-for-sale consisted of commercial paper and corporate notes/bonds for which market prices for similar assets are readily available. Investments that have an original maturity of 90 days or less and are considered highly liquid investments are classified as cash equivalents. As of April 30, 2020, available-for-sale marketable securities had remaining maturities ranging from one to twelve months. During fiscal 2020, there were $4.8 million in sales/maturities of available-for-sale marketable securities. Investments in marketable securities that are held in trust for settlement of the Company’s vested obligations under the ECAP are equity securities and are based upon the investment selections the employee elects from a pre-determined set of securities in the ECAP and the Company invests in equity securities to mirror these elections. As of April 30, 2020 and 2019, the Company’s investments in equity securities consisted of mutual funds for which market prices are readily available. Unrealized loss that relates to equity securities still held as of April 30, 2020 and 2019 was $8.2 million and $4.7 million, respectively. Unrealized gains that relates to equity securities still held as April 30, 2018 was $3.9 million.

Designated Derivatives - Interest Rate Swap Agreement

In March 2017, the Company entered into an interest rate swap contract with a notional amount of $129.8 million 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 interest rate swap agreement locked the interest rates on a portion of the debt outstanding at 1.919%, exclusive of the credit spread on the debt. The Company designated the swap as a cash flow hedge. On December 16, 2019, in conjunction with the payoff of the credit facility, the Company terminated the interest rate swap and recorded $0.5 million in interest expense, net.   

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

 

 

 

April 30,

 

 

 

2020

 

 

2019

 

 

 

(in thousands)

 

Derivative asset:

 

 

 

 

 

 

 

 

Interest rate swap contract

 

$

 

 

$

619

 

 

During fiscal 2020, 2019 and 2018, the Company recognized the following gains and losses on the interest rate swap:

 

 

 

Year Ended April 30,

 

 

 

2020

 

 

2019

 

 

2018

 

 

 

(in thousands)

 

(Losses) gains recognized in other comprehensive income (net of tax effects of $(238), $(281), and $828, respectively)

 

$

(678

)

 

$

(800

)

 

$

1,465

 

(Losses) gains reclassified from accumulated other comprehensive income into interest (expense) income, net

 

$

(297

)

 

$

376

 

 

$

(730

)

The cash flows related to interest rate swap contracts are included in net cash provided by operating activities.

Foreign Currency Forward Contracts Not Designated as Hedges

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

 

 

 

April 30,

 

 

 

2020

 

 

2019

 

 

 

(in thousands)

 

Derivative assets:

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 

$

3,034

 

 

$

821

 

Derivative liabilities:

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 

$

400

 

 

$

722

 

 

As of April 30, 2020, the total notional amounts of the forward contracts purchased and sold were $91.2 million and $41.8 million, respectively. As of April 30, 2019, the total notional amounts of the forward contracts purchased and sold were $51.4 million and $40.0 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 2020 and 2018, the Company incurred losses of $0.3 million and $3.7 million, respectively, related to forward contracts which is recorded in general and administrative expenses in the accompanying consolidated statements of income. These foreign currency losses offset foreign currency gains that result from transactions denominated in a currency other than the Company’s functional currency. During fiscal 2019, the Company incurred gains of $1.2 million, related to forward contracts which is recorded in general and administrative expenses in the accompanying consolidated statements of income. These foreign currency gains offset foreign currency losses that result from transactions denominated in a currency other than the Company’s functional currency. The cash flows related to foreign currency forward contracts are included in cash flows from operating activities.