Derivative Financial Instruments

12 Months Ended

Oct. 31, 2014

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 (“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 income (loss), net of taxes of $0.8 million. The Company is reclassifying the gain recorded in other comprehensiveincome (loss) to earnings as a component of interest expense over the term of the debt. During the fiscal years ended October 31, 2014 and 2013, approximately $0.2 million and $0.1 million, respectively, of this deferred gain was reclassified into interest expense. At October 31, 2014, the remaining unamortized gain was $1.7million.During the next twelve months, the Company expects to reclassify approximately $0.2 million of the gain into interest expense.

During the fiscal years ended October 31, 2014, 2013 and 2012,the Company reclassified into interest expense $0.2 million,$1.3 million and $0.4 million, respectively, of deferred losses related to a Treasury lock transaction entered into in connection with the issuance of its 6.5 percent unsecured senior notes due October 2, 2017 (“2017 Senior Notes”). Amounts for the year ended October 31, 2013 include $0.9 million in interest expense related to the accelerated amortization of the treasury lock tied to the portion of the 2017 Senior Notes retired on June 28, 2013. The Company is reclassifying theremaining unamortized loss on the Treasury lock transaction recorded in other comprehensive income (loss)to earnings as a component of interest expense over the term of the debt. At October 31, 2014, the remaining unamortized loss was $0.7 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 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 2013. This loss was included in gains (losses) 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, commodity futures contracts and interest rate futures contracts to hedge currency risk and market risk associated with its investments in certainsponsored funds and separately managed accounts seeded for new product development purposes. Certain of the consolidatedsponsored funds and separately managed accounts may utilize derivative financial instruments within their portfolios in pursuit of their stated investment objectives.

At October 31, 2014, 2013 and 2012,excluding derivative financial instruments held in certain consolidatedsponsored funds and separately managed accounts, the Company had 39, 42 and49foreign exchange contracts outstanding with four, five and eightcounterparties with an aggregate notional value of $16.8million, $59.1 million and $35.7 million, respectively; 2,091, 2,711 and 1,325stockindex futures contracts outstanding with onecounterparty with an aggregate notional value of $177.3 million, $200.7 million and $97.1 million, respectively; and 566, 217 and 200commodity futures contracts outstanding withone counterparty with an aggregate notional value of $32.3 million, $12.9 million and $11.8 million, respectively.At October 31, 2014, the Company had 122 interest rate futures contracts outstanding with one counterparty with an aggregate notional value of $12.4 million. As of October 31, 2013 and 2012, the Company did not have any interest rate futures contracts outstanding. The number of derivative contracts outstanding and the notional values they represent at October 31, 2014, 2013 and 2012 are indicative of derivative balances throughout each respective year.

The following tables present the fair value of derivative financial instruments, excluding derivative financial instruments held in certain consolidated sponsored funds and separately managed accounts, not designated as hedging instruments as of October 31, 2014 and 2013:

October 31, 2014
	Assets			Liabilities
(in thousands)	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
Foreign exchange contracts	Other assets	$	289	Other liabilities	$	290
Stock index futures contracts	Other assets		2,685	Other liabilities		1,614
Commodity futures contracts	Other assets		1,442	Other liabilities		631
Interest rate futures contracts	Other assets		-	Other liabilities		83
Total		$	4,416		$	2,618

October 31, 2013
	Assets			Liabilities
(in thousands)	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
Foreign exchange contracts	Other assets	$	34	Other liabilities	$	981
Stock index futures contracts	Other assets		81	Other liabilities		7,288
Commodity futures contracts	Other assets		219	Other liabilities		143
Total		$	334		$	8,412

The following is a summary of the net gains (losses) recognized in income for the years ended October 31,2014, 2013 and 2012:

	Income Statement
(in thousands)	Location		2014		2013		2012
	Gains (losses) and other
Foreign exchange contracts	investment income, net	$	15	$	1,293	$	288
	Gains (losses) and other
Stock index futures contracts	investment income, net		(12,902)		(31,861)		(11,361)
	Gains (losses) and other
Commodity futures contracts	investment income, net		720		842		693
	Gains (losses) and other
Interest rate futures contracts	investment income, net		(75)		-		-
	Gains (losses) and other
Interest rate contracts	investment income, net		-		(3,075)		-
Total		$	(12,242)	$	(32,801)	$	(10,380)