Derivative Financial Instruments

9 Months Ended

Jul. 31, 2013

Derivative Financial Instruments Disclosure [Abstract]

Derivative Financial Instruments

7. Derivative Financial Instruments

Derivative financial instruments designated as cash flow hedges

On June 25, 2013, the Company issued $325 million in aggregate principal amount of 3.625 percent ten-year Senior Notes due in June 2023 (the “2023 Senior Notes”). In anticipation of the offering, the Company entered into a forward-starting interest rate swap intended to hedge changes in the benchmark interest rate between the time at which the decision was made to issue the debt and the pricing of the securities. The benchmark interest rate increased during this time and the Company received payment to settle the hedge for a gain of $2.0 million. At termination, the hedge was determined to be an effective cash flow hedge and the $2.0 million gain was recorded in other comprehensive (loss) income, net of taxes of $0.8 million. The gain recorded in other comprehensive (loss) income will be reclassified to earnings as a component of interest expense over the term of the debt. During the three months ended July 31, 2013, approximately $25,000 of this deferred gain was reclassified into interest expense. During the next twelve months, the Company expects to reclassify approximately $0.2 million of the gain into interest expense.

Duringthe nine months ended July 31, 2013 and 2012, the Company reclassified into interest expense $0.3million of the loss on a Treasury lock transaction in connection with the Company's 2007 issuance of ten-year Senior notes due in October 2017 (the “2017 Senior Notes”). The Company also recognized an additional $0.9 million in interest expense to accelerate the amortization of the treasury lock tied to the portion of the 2017 Senior Notes retired on June 28, 2013. At July 31, 2013, the remaining unamortized loss on the Treasury lock was $0.9 million. During the next twelve months, the Company expects to reclassify approximately $0.2 million of the loss on the Treasury lock transaction into interest expense.

Other derivative financial instruments not designated for hedge accounting

In June 2013, the Company entered into a reverse treasury lock in conjunction with the Company's tender offer to purchase up to $250 million of its outstanding 6.5 percent Senior Notes due in October 2017 (the “2017 Senior Notes”).The transaction effectively locked in the benchmark interest rate to be used in determining the premium above par to be paid to note holders in conjunction with the repurchase of the 2017 Senior Notes tendered. The reference U.S. Treasury rate increased during the time the reverse treasury lock was outstanding and the Company recognized a $3.1 million loss upon termination in June. This loss was included in (losses) gains and other investment income, net in the Company's Consolidated Statement of Income.

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

At July 31, 2013, the Company had 36 foreign exchange contracts outstanding with one counterparty with an aggregate notional value of $53.6million; 2,824stock index futures contracts outstanding with one counterparty with an aggregate notional value of $192.2 million; and 245commodity futures contracts outstanding with one counterparty with an aggregate notional value of $12.6 million.

The following tables present the fair value of derivative instruments not designated as hedging instruments as of July 31, 2013 and October 31, 2012:

July 31, 2013
	Assets			Liabilities
(in thousands)	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
Foreign exchange contracts	Other assets	$	767	Other liabilities	$	90
Stock index futures contracts	Other assets		202	Other liabilities		6,407
Commodity futures contracts	Other assets		333	Other liabilities		171
Total		$	1,302		$	6,668

October 31, 2012
	Assets			Liabilities
(in thousands)	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
Foreign exchange contracts	Other assets	$	226	Other liabilities	$	300
Stock index futures contracts	Other assets		1,505	Other liabilities		367
Commodity futures contracts	Other assets		498	Other liabilities		121
Total		$	2,229		$	788

The following is a summary of the net (losses) gains recognized in income for the three and ninemonthsendedJuly 31,2013 and 2012:

	Income Statement		Three Months Ended July 31,				Nine Months Ended July 31,
(in thousands)	Location		2013		2012		2013		2012
Foreign exchange contracts	(Losses) gains and other investment income, net	$	1,212	$	299	$	2,406	$	727
Stock index futures contracts	(Losses) gains and other investment income, net		(3,028)		616		(21,939)		(9,285)
Commodity futures contracts	(Losses) gains and other investment income, net		483		56		1,177		1,069
Interest rate contracts	(Losses) gains and other investment income, net		(3,075)		-		(3,075)		-
Total		$	(4,408)	$	971	$	(21,431)	$	(7,489)