FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Oct. 31, 2012

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 8 — FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s assets and liabilities carried or disclosed at fair value are classified in one of the following three categories: Level 1 — quoted market prices in active markets for identical assets and liabilities; Level 2 — inputs other than quoted market prices included in level 1 above that are observable for the asset or liability, either directly or indirectly, and Level 3 — unobservable inputs for the asset or liability. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company’s foreign currency forward contracts are measured on a recurring basis based on foreign currency spot rates and forward rates quoted by banks or foreign currency dealers (level 2 criteria) and are marked-to-market each period with gains and losses on these contracts recorded in the Company’s Consolidated Statement of Income on a basis consistent with the classification of the change in the fair value of the underlying transactions giving rise to these foreign currency exchange gains and losses in the period in which their value changes, with the offsetting amount for unsettled positions being included in either other current assets or other current liabilities in the Consolidated Balance Sheet. The fair value of the Company’s outstanding foreign currency forward contracts at October 31, 2012 and 2011 was an unrealized gain of $3.3 million and $8.6 million, respectively, included in other current assets and an unrealized loss of $4.4 million and $11.9 million, respectively, included in other current liabilities (see further discussion below in Note 9 — Derivative Instruments).

The Company utilizes life insurance policies to fund the Company’s nonqualified deferred compensation plan. The investments contained within the life insurance policies are marked-to-market each period by analyzing the change in the underlying value of the invested assets (level 2 criteria) and the gains and losses are recorded in the Company’s Consolidated Statement of Income. The related deferred compensation liability is also marked-to-market each period based upon the various investment return alternatives selected by the plan participants (level 2 criteria) and the gains and losses are recorded in the Company’s Consolidated Statement of Income. The fair value of the Company’s nonqualified deferred compensation plan investments and related liability at October 31, 2012 is $33.9 million and $31.6 million, respectively.

The $350 million of Senior Notes discussed in Note 4 are carried at cost, less unamortized debt discount. The estimated fair value of the Senior Notes was approximately $356.7 million at October 31, 2012, based upon quoted market information (level 1 criteria).

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of these items. The carrying amount of debt outstanding pursuant to revolving credit facilities and loans payable approximates fair value as the majority of these instruments have variable interest rates which approximate current market rates (level 2 criteria).