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The functional currency of each of our foreign subsidiaries is
their local currency. Accordingly, for the periods presented,
assets and liabilities have been translated using exchange rates
at year end, while income and expense for the periods have
been translated using a weighted-average exchange rate.
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The resulting translation adjustments have been recorded in
accumulated other comprehensive income (loss), a component
of stockholders’ equity, and will be included in net earnings
only upon the sale or liquidation of the underlying foreign
investment, neither of which is contemplated at this time.
Transaction gains and losses have been immaterial during the
past three fiscal years.
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Accumulated other comprehensive income (loss), which is shown net of taxes, consists of the following components:
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For purposes of the statement of cash flows, we consider all
highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents. We do not believe
we are exposed to any significant credit risk on cash and
short-term investments. The carrying amounts of cash and
short-term investments approximate fair value.
Marketable securities, included in other current assets, are
considered available for sale and are reported at fair value,
based on quoted market prices. Changes in unrealized gains
and losses, net of applicable taxes, are recorded in
accumulated other comprehensive income (loss) within
Stockholders’ Equity. When we experience other-thantemporary
declines in market value from original cost, those
amounts are reflected in operating income in the period in
which the losses occur. In order to determine whether an
other-than-temporary decline in market value has occurred,
the duration of the decline
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in value and our ability to hold the
investment to recovery are considered in conjunction with an
evaluation of the strength of the underlying collateral and
the extent to which the investment’s carrying value exceeds
its related market value. Marketable securities, primarily
consisting of equity securities, totaled $85.8 million and
$59.5 million at May 31, 2007 and 2007, respectively. The
unrealized gain on securities amounted to approximately
$10.1 million in 2007, which related primarily to the impact of
the stock market improvement over the last year, in addition
to the significant growth of our minority investment in
Kemrock Industries in September, 2007.
Financial instruments recorded on the balance sheet include
cash and short-term investments, accounts receivable, notes
and accounts payable, and debt. The carrying amount of cash
and short-term investments, accounts receivable and notes and
accounts payable approximates fair value because of their
short-term maturity.
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