Deferred Compensation and Retirement Plans

12 Months Ended

Apr. 30, 2013

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,
	2013			2012
	(in thousands)
Deferred compensation plans	$	85,562		$	78,479
Pension plan		4,536			4,214
International retirement plans		3,646			2,776
Executive Capital Accumulation Plan		75,913			71,134
Total benefit obligations		169,657			156,603
Less: current portion of benefit obligation		(9,951	)		(14,026	)
Non-current benefit obligation	$	159,706		$	142,577

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 2013, due to the change in the discount rate from 3.79% to 3.12%, the Company recorded an increase in deferred compensation and pension plan liabilities of $7.5 million, a decrease in accumulated other comprehensive income of $4.6 million and a net increase of $2.9 million in deferred income tax assets.

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.

Deferred Compensation Plan

The following tables reconcile the benefit obligation for the deferred compensation plans:

	Year Ended April 30,
	2013			2012			2011
	(in thousands)
Change in benefit obligation:
Benefit obligation, beginning of year	$	78,479		$	70,319		$	64,890
Service cost		—			—			137
Interest cost		2,868			3,346			3,495
Plan participants’ contributions with interest		—			—			65
Actuarial loss		9,420			9,885			6,764
Benefits paid		(5,205	)		(5,071	)		(5,032	)
Benefit obligation, end of year		85,562			78,479			70,319
Less: current portion of benefit obligation		(5,182	)		(4,959	)		(3,682	)
Non-current benefit obligation	$	80,380		$	73,520		$	66,637

The components of net periodic benefits costs are as follows:

	Year Ended April 30,
	2013		2012		2011
	(in thousands)
Service cost	$	—	$	—	$	137
Interest cost		2,868		3,346		3,495
Amortization of actuarial loss		2,357		1,374		422
Net periodic benefit cost	$	5,225	$	4,720	$	4,054

The weighted-average assumptions used in calculating the benefit obligations were as follows:

	Year Ended April 30,
	2013			2012			2011
Discount rate, beginning of year		3.79	%		4.94	%		5.61	%
Discount rate, end of year		3.12	%		3.79	%		4.94	%
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,
	2013			2012			2011
	(in thousands)
Change in benefit obligation:
Benefit obligation, beginning of year	$	4,214		$	3,952		$	3,630
Interest cost		154			189			197
Actuarial loss		426			289			307
Benefits paid		(258	)		(216	)		(182	)
Benefit obligation, end of year		4,536			4,214			3,952
Less: current portion of benefit obligation		(232	)		(212	)		(137	)
Non-current benefit obligation	$	4,304		$	4,002		$	3,815

The components of net periodic benefits costs are as follows:

	Year Ended April 30,
	2013		2012		2011
	(in thousands)
Interest cost	$	154	$	189	$	197
Amortization of actuarial loss (gain)		18		47		(2	)
Net periodic benefit cost	$	172	$	236	$	195

The weighted-average assumptions used in calculating the benefit obligations were as follows:

	Year Ended April 30,
	2013			2012			2011
Discount rate, beginning of year		3.79	%		4.94	%		5.61	%
Discount rate, end of year		3.12	%		3.79	%		4.94	%
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)
2014	$	6,602	$	313
2015		6,515		319
2016		6,789		320
2017		6,520		316
2018		6,184		274
2019-2023		30,853		1,335

International Retirement Plans

The Company also maintains various retirement plans and other miscellaneous deferred compensation arrangements in nine foreign jurisdictions. The aggregate of the long-term benefit obligation accrued at April 30, 2013 and 2012 is $3.6 million for 221 participants and $2.8 million for 188 participants, respectively. The Company’s contribution to these plans was $1.1 million in both fiscal 2013 and 2012.

Executive Capital Accumulation Plan

The Company’s Executive Capital Accumulation Plan and similar plans in Asia Pacific and Canada (collectively “ECAP”), are 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 may be granted to key employees annually based on the employee’s performance. Certain key management may also receive Company ECAP contributions upon commencement of employment. The Company amortizes these contributions on a straight-line basis as they vest, generally 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 ECAP amounts that are expected to be paid to employees over the next 12 months are classified as a current liability included in compensation and benefits payable on the accompanying balance sheet.

The Company made contributions to the ECAP during fiscal 2013, 2012 and 2011, of $20.0 million, $15.8 million and $0.4 million, respectively.

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 2013, 2012 and 2011, the deferred compensation liability increased; therefore, the Company recognized compensation expense of $6.3 million, $0.9 million and $6.7 million, respectively.

Changes in the ECAP liability were as follows:

	Year Ended April 30,
	2013			2012
	(in thousands)
Balance, beginning of year	$	71,134		$	67,214
Employee contributions		1,943			3,483
Amortization of employer contributions		9,010			7,423
Gain on investment		6,281			884
Employee distributions		(12,244	)		(7,661	)
Exchange rate translations		(211	)		(209	)
Balance, end of year		75,913			71,134
Less: current portion		(4,537	)		(8,855	)
Non-current portion, end of year	$	71,376		$	62,279

As of April 30, 2013 and 2012, the unamortized portion of the Company contributions to the ECAP was $23.3 million and $11.5 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 a matching contribution for fiscal 2013 and fiscal 2012 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 $159.2 million and $151.1 million is offset by outstanding policy loans of $73.3 million in the accompanying consolidated balance sheets as of April 30, 2013 and 2012, respectively. Total death benefits payable, net of loans under COLI contracts, were $212.7 million and $202.9 million at April 30, 2013 and 2012, 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 CSV value of the underlying COLI investments increased by $6.5 million and $6.3 million during the year ended April 30, 2013 and 2012, 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, 2013, COLI contracts with a net CSV of $64.4 million and death benefits payable, net of loans, of $123.9 million were held in trust for these purposes.