XML 66 R14.htm IDEA: XBRL DOCUMENT
v2.4.0.8

FAIR VALUE MEASUREMENTS | 3 Months Ended
--- | ---
Aug. 31, 2012
FAIR VALUE MEASUREMENTS | NOTE 7 — FAIR VALUE MEASUREMENTS Financial instruments recorded on the balance sheet include cash and cash equivalents, trade accounts receivable, marketable securities, notes and accounts payable, and debt. An allowance for anticipated uncollectible trade receivable amounts is established using a combination of specifically identified accounts to be reserved, and a reserve covering trends in collectibility. These estimates are based on an analysis of trends in collectibility, past experience, and individual account balances identified as doubtful based on specific facts and conditions. Receivable losses are charged against the allowance when we confirm uncollectibility. All derivative instruments are recognized on our Consolidated Balance Sheet and measured at fair value. Changes in the fair values of derivative instruments that do not qualify as hedges and/or any ineffective portion of hedges are recognized as a gain or (loss) in our Consolidated Statement of Income in the current period. Changes in the fair value of derivative instruments used effectively as cash flow hedges are recognized in other comprehensive income (loss), along with the change in the value of the hedged item. We do not hold or issue derivative instruments for speculative purposes. The valuation techniques utilized for establishing the fair values of assets and liabilities are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect management’s market assumptions. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value, as follows: Level 1 Inputs — Quoted prices for identical instruments in active markets. Level 2 Inputs — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 Inputs — Instruments with primarily unobservable value drivers. The following tables present our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.
(In thousands) |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Fair Value at August 31, 2012 |
U.S. Treasury and other government |  | $ | — |  |  | $ | 21,108 |  |  | $ | — |  |  | $ | 21,108 |
Foreign bonds |  |  |  |  |  |  | 41 |  |  |  |  |  |  |  | 41 |
Mortgage-backed securities |  |  |  |  |  |  | 244 |  |  |  |  |  |  |  | 244 |
Corporate bonds |  |  |  |  |  |  | 2,100 |  |  |  |  |  |  |  | 2,100 |
Stocks — foreign |  |  | 1,554 |  |  |  |  |  |  |  |  |  |  |  | 1,554 |
Stocks — domestic |  |  | 27,612 |  |  |  |  |  |  |  |  |  |  |  | 27,612 |
Mutual funds — foreign |  |  |  |  |  |  | 20,215 |  |  |  |  |  |  |  | 20,215 |
Mutual funds — domestic |  |  |  |  |  |  | 39,810 |  |  |  |  |  |  |  | 39,810 |
Cross-currency swap |  |  | — |  |  |  | (4,503 | ) |  |  | — |  |  |  | (4,503 | )
Conversion option, Kemrock 5.5% bonds |  |  |  |  |  |  |  |  |  |  | 847 |  |  |  | 847 |
Investment in Kemrock convertible debt |  |  |  |  |  |  | 14,273 |  |  |  |  |  |  |  | 14,273 |
Total |  | $ | 29,166 |  |  | $ | 93,288 |  |  | $ | 847 |  |  | $ | 123,301 |
(In thousands) |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Fair Value at May 31, 2012 |
U.S. Treasury and other government |  | $ | — |  |  | $ | 19,865 |  |  | $ | — |  |  | $ | 19,865 |
Foreign bonds |  |  |  |  |  |  | 39 |  |  |  |  |  |  |  | 39 |
Mortgage-backed securities |  |  |  |  |  |  | 344 |  |  |  |  |  |  |  | 344 |
Corporate bonds |  |  |  |  |  |  | 2,649 |  |  |  |  |  |  |  | 2,649 |
Stocks — foreign |  |  | 1,095 |  |  |  |  |  |  |  |  |  |  |  | 1,095 |
Stocks — domestic |  |  | 26,110 |  |  |  |  |  |  |  |  |  |  |  | 26,110 |
Mutual funds — foreign |  |  |  |  |  |  | 17,074 |  |  |  |  |  |  |  | 17,074 |
Mutual funds — domestic |  |  |  |  |  |  | 39,283 |  |  |  |  |  |  |  | 39,283 |
Foreign currency forward contract |  |  |  |  |  |  | (1,356 | ) |  |  |  |  |  |  | (1,356 | )
Cross-currency swap |  |  |  |  |  |  | (2,159 | ) |  |  |  |  |  |  | (2,159 | )
Conversion option, Kemrock 5.5% bonds |  |  |  |  |  |  |  |  |  |  | 9,031 |  |  |  | 9,031 |
Investment in Kemrock convertible debt |  |  |  |  |  |  | 13,670 |  |  |  |  |  |  |  | 13,670 |
Total |  | $ | 27,205 |  |  | $ | 89,409 |  |  | $ | 9,031 |  |  | $ | 125,645 |
Our marketable securities are composed of mainly available-for-sale securities, and are valued using a market approach based on quoted market prices for identical instruments. The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For most of our financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment. Our cross-currency swap is a liability that has a fair value of $4.5 million at August 31, 2012, that was originally designed to fix our interest and principal payments in euros for the life of our unsecured 6.70% senior notes due November 1, 2015, which resulted in an effective euro fixed-rate borrowing of 5.31%. The basis for determining the rates for this swap included three legs at the inception of the agreement: the U.S. dollar (USD) fixed rate to a USD floating rate; the euro floating to euro fixed rate; and the dollar to euro basis fixed rate at inception. Therefore, we essentially exchanged fixed payments denominated in USD for fixed payments denominated in euros, paying fixed euros at 5.31% and receiving fixed USD at 6.70%. The ultimate payments are based on the notional principal amounts of 150 million USD and approximately 125 million euros. There will be an exchange of the notional amounts at maturity. The rates included in this swap are based upon observable market data, but are not quoted market prices, and therefore, the cross-currency swap is considered a Level 2 liability on the fair value hierarchy. Additionally, this cross-currency swap has been designated as a hedging instrument, and is classified as other long-term liabilities in our Consolidated Balance Sheets. Our investment in Kemrock 5.5% convertible bonds includes the fair value of the conversion option feature as of the balance sheet date, and is classified in other long-term assets in our Consolidated Balance Sheet. During the quarter ended August 31, 2012, we recognized a loss of approximately $8.2 million resulting from the decline in the fair value of the conversion option feature associated with the bond, driven primarily from the decline in the market value of Kemrock common stock, from 531.0 rupees per share at May 31, 2012 to 116.6 rupees per share at August 31, 2012. The majority of the decline in the market value of Kemrock shares occurred during the Month of August. This amount is reflected in other expense (income) in the Consolidated Statements of Income. The carrying value of our current financial instruments, which include cash and cash equivalents, marketable securities, trade accounts receivable, accounts payable and short-term debt approximates fair value because of the short-term maturity of these financial instruments. At August 31, 2012 and May 31, 2012, the fair value of our long-term debt was estimated using active market quotes, based on our current incremental borrowing rates for similar types of borrowing arrangements, which are considered to be Level 2 inputs. Based on the analysis performed, the fair value and the carrying value of our financial instruments and long-term debt as of August 31, 2012 and May 31, 2012 are as follows:
|  | At August 31, 2012 |
(In thousands) |  | Carrying Value |  |  | Fair Value |
Cash and cash equivalents |  | $ | 257,382 |  |  | $ | 257,382 |
Marketable equity securities |  |  | 89,191 |  |  |  | 89,191 |
Marketable debt securities |  |  | 37,766 |  |  |  | 37,766 |
Long-term debt, including current portion |  |  | 1,202,610 |  |  |  | 1,484,689 |
|  | At May 31, 2012 |
(In thousands) |  | Carrying Value |  |  | Fair Value |
Cash and cash equivalents |  | $ | 315,968 |  |  | $ | 315,968 |
Marketable equity securities |  |  | 83,562 |  |  |  | 83,562 |
Marketable debt securities |  |  | 36,567 |  |  |  | 36,567 |
Long-term debt, including current portion |  |  | 1,115,536 |  |  |  | 1,232,180 |

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13504-108611 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration