Interest rate hedging: The Company’s policy is to manage interest cost using a mix of fixed- and variable-rate debt. To manage this mix in a cost efficient manner, the Company may periodically enter into interest rate swaps in which the Company agrees to exchange, at specified intervals, the difference between fixed and variable interest amounts cal- culated by reference to an agreed-upon notional principal amount. The interest rate swap agreements effectively modify the Company’s exposure to interest risk by converting a portion of the Company’s fixed-rate debt to a floating rate. The interest rate swap and the instrument being hedged is marked to market in the balance sheet. The mark-to- market value of both the fair value hedging instruments and the underlying debt obligations are recorded as equal and offsetting gains or losses in other (expense) income. No other cash payments are made unless the contract is terminated prior to maturity, in which case the amount paid or received in settlement is established by agreement at the time of termination, and usually represents the net present value, at current rates of interest, of the remaining obligations to exchange payments under the terms of the contract. Any gains or losses upon the early termination of the interest rate swap contracts are deferred and recognized over the remaining life of the contract.  During fiscal 2003, the Company terminated its interest rate swap agreements prior to maturity. These agreements were originally entered in fiscal 2002 and then subsequently again in December 2002. As a result of the early terminations, the Company received $4,092,000 in cash and realized a corresponding gain, which has been deferred. This deferred gain will be recognized in earnings over the remaining lives of the original swap agreements as a reduction of future interest expense. At April 30, 2003, the balance of the deferred gains related to the terminated swaps was $3,640,000 and is included in other noncurrent liabilities.  Note M: Income Taxes Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and lia- bilities for financial reporting purposes and the amounts used for income tax reporting. Significant components of the Company’s deferred tax assets and liabilities are as follows: The Company has recorded a valuation allowance related to certain foreign deferred tax assets due to the uncertainty of their realization.  Domestic income and foreign withholding taxes have not been recorded on undistributed earnings of foreign sub- sidiaries since these amounts are considered to be permanently reinvested. Any additional taxes payable on the earn- ings of foreign subsidiaries, if remitted, would be partially offset by domestic tax credits and deductions for foreign taxes already paid.  37 April 30, (Dollars in thousands) 2003 2002 Deferred tax liabilities: Intangible assets  $118,925 $ 872 Depreciation 28,109 10,150 Software and other deferred expenses 6,408 4,898 Change in inventory accounting method — 1,769 Other (each less than five percent of total liabilities) 1,574 910 Total deferred tax liabilities $155,016 $18,599 Deferred tax assets: Postretirement benefits other than pensions $ 7,217 $ 6,136 Other employee benefits 7,267 5,091 Pensions 6,715 — Intangible assets 4,041 4,146 Marketing accruals 2,036 405 Other (each less than five percent of total assets) 3,915 2,825 Total deferred tax assets 31,191 18,603 Valuation allowance for deferred tax assets (1,755) (1,560) Total deferred tax assets less allowance $ 29,436 $17,043 Net deferred tax liability  $125,580 $ 1,556