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FAIR VALUE
 12 Months Ended
Feb. 28, 2013
FAIR VALUE  
FAIR VALUE

NOTE 11 – FAIR VALUE

 

The following tables present the fair value hierarchy of our financial assets and liabilities carried at fair value and measured on a recurring basis as of the last day of February 2013 and 2012:

 

FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

(in thousands)

 

 

 

 

 

Quoted Prices in

 

Significant Other

 

 

 

 

 

Active Markets

 

Observable

 

 

 

Fair Values at

 

for Identical Assets

 

Market Inputs

 

Description

 

February 28, 2013

 

(Level 1)

 

(Level 2)

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

Money market accounts

 

$

1,091

 

$

1,091

 

$

-

 

Foreign currency contracts

 

496

 

-

 

496

 

Total assets

 

$

1,587

 

$

1,091

 

$

496

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Long-term debt - fixed rate (1)

 

$

105,725

 

$

-

 

$

105,725

 

Long-term debt - floating rate

 

75,000

 

-

 

75,000

 

Interest rate swaps

 

4,824

 

-

 

4,824

 

Total liabilities

 

$

185,549

 

$

-

 

$

185,549

 

 

 

 

 

 

 

 

 

 

 

 

 

Quoted Prices in

 

Significant Other

 

 

 

 

 

Active Markets

 

Observable

 

 

 

Fair Values at

 

for Identical Assets

 

Market Inputs

 

Description

 

February 29, 2012

 

(Level 1)

 

(Level 2)

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

Money market accounts

 

$

801

 

$

801

 

$

-

 

Note receivable (1)

 

737

 

-

 

737

 

Total assets

 

$

1,538

 

$

801

 

$

737

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Long-term debt - fixed rate (1)

 

$

104,450

 

$

-

 

$

104,450

 

Long-term debt - floating rate

 

75,000

 

-

 

75,000

 

Interest rate swaps

 

8,553

 

-

 

8,553

 

Foreign currency contracts

 

163

 

-

 

163

 

Total liabilities

 

$

188,166

 

$

-

 

$

188,166

 

 

(1)  Note receivable and debt values are reported at estimated fair value in this table but are recorded in the accompanying consolidated balance sheets at the undiscounted value of remaining principal payments due.

 

The carrying amounts of cash and cash equivalents, receivables and accounts payable approximate fair value because of the short maturity of these items.  Money market accounts are included in cash and cash equivalents in the accompanying consolidated balance sheets and are classified as Level 1 items.

 

We classify our note receivable, fixed and floating rate debt as Level 2 items because the estimation of the fair market value of these financial assets requires the use of a discount rate based upon current market rates of interest for obligations with comparable remaining terms.  Such comparable rates are considered significant other observable market inputs. The fair market value of the note receivable was computed using a discounted cash flow analysis and a discount rate of 6.95 percent at February 29, 2012.  The fair market value of the fixed rate debt was computed using a discounted cash flow analysis and a discount rate of 1.83 percent at February 28, 2013 (one Senior Note) and discount rates ranging from 0.54 to 3.54 percent at February 29, 2012 (multiple Senior Notes). All other long-term debt has floating interest rates, and its book value approximates its fair value as of the reporting date.

 

We use derivatives for hedging purposes and our derivatives are primarily foreign currency contracts, foreign currency swaps and interest rate swaps. We determine the fair value of our derivative instruments based on Level 2 inputs in the fair value hierarchy.  See Notes (1), (12) and (17) to these consolidated financial statements for more information on our hedging activities.

 

The Company’s other non-financial assets include goodwill and other intangible assets, which we classify as Level 3 items. These items are measured at fair value on a non-recurring basis as part of the Company’s impairment assessments and as circumstances require. The table below presents a reconciliation of our ARS measured and recorded at fair value on a recurring basis in fiscal year 2012 and other non-financial assets measured on a non-recurring basis using significant unobservable inputs (Level 3) for the fiscal years 2013 and 2012:

 

FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (Level 3)

 

(in thousands)

 

 

Fiscal Years Ended

 

 

 

2013

 

 

2012

 

 

 

Other

 

 

 

 

Other

 

 

 

Non-Financial

 

 

 

 

Non-Financial

 

 

 

Assets

 

 

ARS

 

Assets

 

 

 

 

 

 

 

 

 

 

Beginning balances

 

  $

829,500

 

 

  $

20,711

 

$

660,947

 

Total gains/income (losses/expense):

 

 

 

 

 

 

 

 

Included in net income - realized

 

(22,400

)

 

(626

)

(20,069

)

Included in other comprehensive income - unrealized

 

-

 

 

1,213

 

-

 

Acquired during the period

 

778

 

 

-

 

178,676

 

Acquisition adjustments during the period

 

991

 

 

-

 

9,946

 

Sales at par

 

-

 

 

(3,250

)

-

 

Sales at fair value

 

-

 

 

(18,048

)

-

 

Ending balances

 

  $

808,869

 

 

  $

-

 

$

829,500

 

 

 

 

 

 

 

 

 

 

Cumulative unrealized losses relating to assets still held at each reporting date, net of taxes

 

 

 

 

  $

-

 

 

 

 

On September 15, 2011, the Company entered into an agreement to sell its then-remaining portfolio of $18.80 million par value ARS for approximately 96 percent of par, or $18.05 million. The transaction settled in the fiscal quarter ended November 30, 2011. As a result of the agreement, a temporary impairment loss was reversed through other comprehensive income and an other-than-temporary, nonoperating pre-tax realized loss of $0.75 million, net of related tax effects of $0.26 million, was recognized in our consolidated statement of income for fiscal year 2012.  For the fiscal year ended February 2012, in addition to the transaction just described, we liquidated $3.25 million of these securities at par.