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Deferred Compensation and Retirement Plans | 12 Months Ended
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Apr. 30, 2012
Deferred Compensation and Retirement Plans |
6. | Deferred Compensation and Retirement Plans
The Company has several deferred compensation and retirement plans for eligible consultants and vice-presidents that provide defined benefits to participants based on the deferral of current compensation or contributions made by the Company subject to vesting and retirement or termination provisions. The total benefit obligations for these plans were as follows:
|  | Year Ended April 30, |
|  | 2012 |  |  | 2011 |
|  | (in thousands) |
Deferred compensation plans |  | $ | 78,479 |  |  | $ | 70,319 |
Pension plan |  |  | 4,214 |  |  |  | 3,952 |
International retirement plans |  |  | 2,776 |  |  |  | 3,153 |
Executive Capital Accumulation Plan |  |  | 71,134 |  |  |  | 67,214 |
Total benefit obligations |  |  | 156,603 |  |  |  | 144,638 |
Less: current portion of benefit obligation |  |  | (7,614 | ) |  |  | (5,080 | )
Non-current benefit obligation |  | $ | 148,989 |  |  | $ | 139,558 |
Deferred Compensation Plans The Enhanced Wealth Accumulation Plan (“EWAP”) was established in fiscal 1994, which replaced the Wealth Accumulation Plan (“WAP”). Certain vice presidents elected to participate in a “deferral unit” that required the participant to contribute a portion of their compensation for an eight year period, or in some cases, make an after tax contribution, in return for defined benefit payments from the Company over a fifteen year period generally at retirement age of 65 or later. Participants were able to acquire additional “deferral units” every five years. Vice presidents who did not choose to roll over their WAP units into the EWAP continue to be covered under the earlier version in which participants generally vest and commence receipt of benefit payments at retirement age of 65. In June 2003, the Company amended the EWAP and WAP plans, so as not to allow new participants or the purchase of additional deferral units by existing participants. The Company also maintains a Senior Executive Incentive Plan (“SEIP”) for participants approved by the Board. Generally, to be eligible, the vice president must be participating in the EWAP. Participation in the SEIP required the participant to contribute a portion of their compensation during a four-year period, or in some cases make an after tax contribution, in return for a defined benefit paid by the Company generally over a fifteen year period after ten years of participation in the plan or such later date as elected by the participant. In June 2003, the Company amended the SEIP plan, so as not to allow new participants or the purchase of additional deferral units by existing participants. Pension Plan The Company has a defined benefit pension plan, referred to as the Worldwide Executive Benefit (“WEB”), covering certain executives in the U.S. and foreign countries. The WEB is designed to integrate with government sponsored and local benefits and provide a monthly benefit to vice presidents upon retirement from the Company. Each year a plan participant accrued and was fully vested in one-twentieth of the targeted benefits expressed as a percentage set by the Company for that year. Upon retirement, a participant receives a monthly benefit payment equal to the sum of the percentages accrued over such participant’s term of employment, up to a maximum of 20 years, multiplied by the participant’s highest average monthly salary during the 36 consecutive months in the final 72 months of active full-time employment through June 2003. In June 2003, the Company froze the WEB, so as to not allow new participants, future accruals and future salary increases. Accounting for Deferred Compensation and Pension Plans During fiscal 2012, due to the change in the discount rate from 4.94% to 3.79%, the Company recorded an increase in deferred compensation and pension plan liabilities of $8.8 million, a decrease in accumulated other comprehensive income of $5.6 million and a net increase of $3.2 million in deferred income tax assets. During fiscal 2011, due to the change in the discount rate from 5.61% to 4.94%, the Company recorded an increase in deferred compensation and pension plan liabilities of $6.7 million, a decrease in accumulated other comprehensive income of $4.1 million and a net increase of $2.6 million in deferred income tax assets. Deferred Compensation Plan The following tables reconcile the benefit obligation for the deferred compensation plans:
|  | Year Ended April 30, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
|  | (in thousands) |
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation, beginning of year |  | $ | 70,319 |  |  | $ | 64,890 |  |  | $ | 52,149 |
Service cost |  |  | — |  |  |  | 137 |  |  |  | 339 |
Interest cost |  |  | 3,346 |  |  |  | 3,495 |  |  |  | 3,557 |
Plan participants’ contributions with interest |  |  | — |  |  |  | 65 |  |  |  | 194 |
Actuarial loss |  |  | 9,885 |  |  |  | 6,764 |  |  |  | 12,848 |
Benefits paid |  |  | (5,071 | ) |  |  | (5,032 | ) |  |  | (4,197 | )
Benefit obligation, end of year |  |  | 78,479 |  |  |  | 70,319 |  |  |  | 64,890 |
Less: current portion of benefit obligation |  |  | (4,959 | ) |  |  | (3,682 | ) |  |  | (4,000 | )
Non-current benefit obligation |  | $ | 73,520 |  |  | $ | 66,637 |  |  | $ | 60,890 |
The components of net periodic benefits costs are as follows:
|  | Year Ended April 30, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
|  | (in thousands) |
Service cost |  | $ | — |  |  | $ | 137 |  |  | $ | 339 |
Interest cost |  |  | 3,346 |  |  |  | 3,495 |  |  |  | 3,557 |
Amortization of actuarial loss |  |  | 1,374 |  |  |  | 422 |  |  |  | — |
Net periodic benefit cost |  | $ | 4,720 |  |  | $ | 4,054 |  |  | $ | 3,896 |
The weighted-average assumptions used in calculating the benefit obligations were as follows:
|  | Year Ended April 30, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Discount rate, beginning of year |  |  | 4.94 | % |  |  | 5.61 | % |  |  | 7.10 | %
Discount rate, end of year |  |  | 3.79 | % |  |  | 4.94 | % |  |  | 5.61 | %
Rate of compensation increase |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | %
Pension Plan The following tables reconcile the benefit obligation for the pension plan:
|  | Year Ended April 30, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
|  | (in thousands) |
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation, beginning of year |  | $ | 3,952 |  |  | $ | 3,630 |  |  | $ | 3,125 |
Interest cost |  |  | 189 |  |  |  | 197 |  |  |  | 214 |
Actuarial loss |  |  | 289 |  |  |  | 307 |  |  |  | 503 |
Benefits paid |  |  | (216 | ) |  |  | (182 | ) |  |  | (212 | )
Benefit obligation, end of year |  |  | 4,214 |  |  |  | 3,952 |  |  |  | 3,630 |
Less: current portion of benefit obligation |  |  | (212 | ) |  |  | (137 | ) |  |  | (147 | )
Non-current benefit obligation |  | $ | 4,002 |  |  | $ | 3,815 |  |  | $ | 3,483 |
The components of net periodic benefits costs are as follows:
|  | Year Ended April 30, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
|  | (in thousands) |
Interest cost |  | $ | 189 |  |  | $ | 197 |  |  | $ | 214 |
Amortization of actuarial loss (gain) |  |  | 47 |  |  |  | (2 | ) |  |  | (78 | )
Net periodic benefit cost |  | $ | 236 |  |  | $ | 195 |  |  | $ | 136 |
The weighted-average assumptions used in calculating the benefit obligations were as follows:
|  | Year Ended April 30, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Discount rate, beginning of year |  |  | 4.94 | % |  |  | 5.61 | % |  |  | 7.10 | %
Discount rate, end of year |  |  | 3.79 | % |  |  | 4.94 | % |  |  | 5.61 | %
Rate of compensation increase |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | %
Benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next ten years as follows:
Year Ending April 30, |  | Deferred Compensation Plans |  |  | Pension Benefits |
|  | (in thousands) |
2013 |  | $ | 5,601 |  |  | $ | 275 |
2014 |  |  | 6,134 |  |  |  | 308 |
2015 |  |  | 6,067 |  |  |  | 314 |
2016 |  |  | 6,075 |  |  |  | 310 |
2017 |  |  | 5,997 |  |  |  | 317 |
2018-2022 |  |  | 28,276 |  |  |  | 1,334 |
International Retirement Plans The Company also maintains various retirement plans and other miscellaneous deferred compensation arrangements in ten foreign jurisdictions. The aggregate of the long-term benefit obligation accrued at April 30, 2012 and 2011 is $2.8 million for 189 participants and $3.2 million for 155 participants, respectively. The Company’s contribution to these plans was $0.5 million and $0.9 million in fiscal 2012 and 2011, respectively. Executive Capital Accumulation Plan The Company has an ECAP, which is intended to provide certain employees an opportunity to defer salary and/or bonus on a pre-tax basis or make an after-tax contribution. In addition, the Company, under its incentive plans, makes discretionary contributions into the ECAP and such contributions are granted to key employees annually based on the employee’s performance. In addition, certain key management may receive Company ECAP contributions upon commencement of employment. Participants generally vest in Company contributions over a four year period. Participants have the ability to allocate their deferrals among a number of investment options and may receive their benefits at termination, retirement or “in service” either in a lump sum or in quarterly installments over five, ten or fifteen years. The Company operates two similar plans in Asia Pacific and Canada. The Company made contributions to the ECAP during fiscal 2012, 2011 and 2010, of $15.8 million, $0.4 million and $1.9 million, respectively. The Company may make additional ECAP contributions in fiscal 2013 if key employees are hired. The ECAP is accounted for whereby the changes in the fair value of the vested amounts owed to the participants are adjusted with a corresponding charge (or credit) to compensation and benefits costs. During fiscal 2012, 2011, and 2010, deferred compensation liability increased; therefore, the Company recognized compensation expenses of $0.9 million, $6.7 million and $8.9 million, respectively. Changes in the ECAP liability were as follows:
|  | Year Ended April 30, |
|  | 2012 |  |  | 2011 |
|  | (in thousands) |
Balance, beginning of year |  | $ | 67,214 |  |  | $ | 57,871 |
Employee contributions |  |  | 3,483 |  |  |  | 2,403 |
Amortization of employer contributions |  |  | 7,423 |  |  |  | 6,525 |
Gain on investment |  |  | 884 |  |  |  | 6,667 |
Employee distributions |  |  | (7,661 | ) |  |  | (6,567 | )
Exchange rate translations |  |  | (209 | ) |  |  | 315 |
Balance, end of year |  |  | 71,134 |  |  |  | 67,214 |
Less: current portion |  |  | (2,443 | ) |  |  | (1,261 | )
Non-current portion, end of year |  | $ | 68,691 |  |  | $ | 65,953 |
As of April 30, 2012 and 2011, the unamortized portion of the Company contributions to the ECAP was $11.5 million and $4.9 million, respectively. Defined Contribution Plan The Company has a defined contribution plan (“401(k) plan”) for eligible employees. Participants may contribute up to 50% of their base compensation as defined in the plan agreement. In addition, the Company has the option to make matching contributions. The Company did not make the matching contribution for fiscal 2012 and fiscal 2010 but did make a $1.2 million matching contribution for fiscal 2011. Company Owned Life Insurance The Company purchased COLI contracts insuring employees eligible to participate in the deferred compensation and pension plans as a means of funding benefits under such plans. The gross CSV of these contracts of $151.1 million and $143.9 million is offset by outstanding policy loans of $73.3 million and $72.9 million in the accompanying consolidated balance sheets as of April 30, 2012 and 2011, respectively. Total death benefits payable, net of loans under COLI contracts, were $202.9 million and $195.7 million at April 30, 2012 and 2011, respectively. Management intends to use the future death benefits from these insurance contracts to fund the deferred compensation and pension arrangements; however, there may not be a direct correlation between the timing of the future cash receipts and disbursements under these arrangements. The market value of the underlying COLI investments increased by $6.3 million and $7.2 million during the year ended April 30, 2012 and 2011, respectively, recorded as a decrease in compensation and benefits expense. In addition, certain policies are held in trusts to provide additional benefit security for the deferred compensation and pension plans, excluding the WEB. As of April 30, 2012, COLI contracts with a net CSV of $60.9 million and death benefits payable, net of loans, of $117.2 million were held in trust for these purposes.

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Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph q -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 106 -Paragraph 518 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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