Derivative Financial Instruments
 12 Months Ended
Oct. 31, 2011
Derivative Financial Instruments Disclosure [Abstract]  
Derivative Financial Instruments

6. Derivative Financial Instruments

 

Derivative financial instruments designated as cash flow hedges

 

In October 2007, the Company issued $500 million in aggregate principal amount of 6.5 percent senior notes due October 2017. In anticipation of the offering, the Company entered into an interest rate lock transaction with an aggregate notional amount of $200 million intended to hedge against movements in ten-year Treasury rates between the time at which the decision was made to issue the debt and the pricing of the securities. The prevailing Treasury rate had declined at the time of the pricing of the securities, and the interest rate lock was settled for a payment by the Company of $4.5 million. At termination, the interest rate lock was determined to be an effective cash flow hedge and the $4.5 million settlement cost was recorded as a loss in other comprehensive income (loss), net of tax. The loss recorded in other comprehensive income (loss) is being reclassified to earnings as a component of interest expense over the term of the debt. During the fiscal years ended October 31, 2011, 2010, and 2009, the Company each year reclassified $0.4 million of the loss on the Treasury lock transaction into interest expense. At October 31, 2011, the remaining unamortized loss on this transaction was $2.6 million. During fiscal 2012, the Company expects to reclassify approximately $0.4 million of the loss on the Treasury lock transaction into interest expense.

Other derivative financial instruments not designated for hedge accounting

 

The Company has entered into a series of foreign exchange contracts, stock index futures contracts and commodity futures contracts to structurally hedge currency risk exposure and market risk associated with its investments in separate accounts and consolidated funds seeded for new product development purposes.

 

At October 31, 2011, the Company had ten outstanding foreign exchange contracts with four counterparties with an aggregate notional value of $7.8 million. At October 31, 2011, the Company had ten outstanding stock index futures contracts with one counterparty with an aggregate notional value of $90.8 million. In addition, at October 31, 2011 the Company had twenty-three outstanding commodity futures contracts with one counterparty with an aggregate notional value of $23.4 million.

The following table presents the fair value as of October 31, 2011 of derivative instruments not designated as hedging instruments:

October 31, 2011         
   Assets  Liabilities
(in thousands) Balance Sheet Location Fair Value  Balance Sheet Location Fair Value
Foreign exchange contractsOther assets$ 24  Other liabilities$ 124
Stock index futures contractsOther assets  157  Other liabilities  6,363
Commodity futures contractsOther assets  879  Other liabilities  167
Total   $ 1,060   $ 6,654

The following table presents the fair value as of October 31, 2010 of derivative instruments not designated as hedging instruments:

 

October 31, 2010         
   Assets  Liabilities
(in thousands) Balance Sheet Location Fair Value  Balance Sheet Location Fair Value
Foreign exchange contractsOther assets$ 12  Other liabilities$ 1,187
Stock index futures contractsOther assets  489  Other liabilities  1,415
Commodity futures contractsOther assets  81  Other liabilities  917
Total   $ 582   $ 3,519

The following is a summary of the net gains (losses) recognized in income for the year ended October 31, 2011:

   Income Statement      
(in thousands) Location 2011 2010 2009
 Net gains on investments and       
Foreign exchange contractsderivatives$ (1,495)$ (810)$ -
          
 Net gains on investments and       
Stock index futures contractsderivatives  (2,658)  (1,923)  42
          
 Net gains on investments and       
Commodity futures contractsderivatives  305  (836)  -
Total   $ (3,848)$ (3,569)$ 42