Fair Values

At October 31, 2015 and July 31, 2015, the Company’s financial instruments included cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings, long-term debt, and derivative contracts. The fair values of cash and cash equivalents, accounts receivable, accounts payable, and short-term borrowings approximated carrying values because of the short-term nature of these instruments. As of October 31, 2015, the estimated fair value of long-term debt with fixed interest rates was $376.9 million compared to the carrying value of $375.0 million. The fair value is estimated by discounting projected cash flows using the rate that similar amounts of debt could currently be borrowed, which is classified as Level 2 in the fair value hierarchy.

Derivative contracts are reported at their fair values based on third-party quotes. The fair values of the Company’s financial assets and financial liabilities listed below reflect the amounts that would be received to sell the assets or paid to transfer the liabilities in an orderly transaction between market participants at the measurement date (exit price). The fair values are based on inputs other than quoted prices that are observable for the asset or liability. These inputs include foreign currency exchange rates and interest rates. The financial assets and financial liabilities are primarily valued using standard calculations and models that use as their basis readily observable market parameters. Industry standard data providers are the primary source for forward and spot rate information for both interest rates and currency rates.

The following summarizes the Company’s fair value of outstanding derivatives at October 31, 2015 and July 31, 2015, on the balance sheets (millions of dollars):



	Significant Other Observable Inputs (Level 2)*
	October 31, 2015			July 31, 2015
Asset derivatives recorded under the caption Prepaids and other current assets
Foreign exchange contracts	$	3.0		$	3.6

Liability derivatives recorded under the caption Other current liabilities
Foreign exchange contracts	(2.9		)	(2.2		)

Forward exchange contracts - net asset (liability) position	$	0.1		$	1.4

Inputs to the valuation methodology of Level 2 assets include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.