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Derivative Financial Instruments and Hedging Activities | 9 Months Ended
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May 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments and Hedging Activities | Derivative Financial Instruments and Hedging Activities The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company’s financial performance and are referred to as market risks. The Company, where deemed appropriate, uses derivatives as risk management tools to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative instruments are foreign currency risk and interest rate risk. Foreign Currency Risk Management Forward contracts are put in place to manage the foreign currency risk associated with the anticipated foreign currency denominated revenues and expenses. A hedging relationship existed with an aggregate notional amount outstanding of $252.3 million and $314.6 million as of May 31, 2018 and August 31, 2017, respectively. The related forward foreign exchange contracts have been designated as hedging instruments and are accounted for as cash flow hedges. The forward foreign exchange contract transactions will effectively lock in the value of anticipated foreign currency denominated revenues and expenses against foreign currency fluctuations. The anticipated foreign currency denominated revenues and expenses being hedged are expected to occur between June 1, 2018 and February 28, 2019. In addition to derivatives that are designated as hedging instruments and qualify for hedge accounting, the Company also enters into forward contracts to economically hedge transactional exposure associated with commitments arising from trade accounts receivable, trade accounts payable, fixed purchase obligations and intercompany transactions denominated in a currency other than the functional currency of the respective operating entity. The aggregate notional amount of these outstanding contracts as of May 31, 2018 and August 31, 2017, was $2.2 billion and $2.1 billion, respectively. The following table presents the Company’s assets and liabilities related to forward foreign exchange contracts measured at fair value on a recurring basis as of May 31, 2018, aggregated by the level in the fair-value hierarchy in which those measurements are classified (in thousands):
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |
Forward foreign exchange contracts | $ | — |  |  | 13,662 |  |  | — |  |  | $ | 13,662 |
Liabilities: |  |  |  |  |  |  |
Forward foreign exchange contracts | — |  |  | (31,847 | ) |  | — |  |  | (31,847 | )
Total | $ | — |  |  | (18,185 | ) |  | — |  |  | $ | (18,185 | )
The Company’s forward foreign exchange contracts are measured on a recurring basis at fair value, based on foreign currency spot rates and forward rates quoted by banks or foreign currency dealers. The following table presents the fair values of the Company’s derivative instruments recorded in the Condensed Consolidated Balance Sheets as of May 31, 2018 and August 31, 2017 (in thousands):
| Fair Values of Derivative Instruments
| Asset Derivatives |  | Liability Derivatives
| Balance Sheet Location |  | Fair Value as of May 31, 2018 |  | Fair Value as of August 31, 2017 |  | Balance Sheet Location |  | Fair Value as of May 31, 2018 |  | Fair Value as of August 31, 2017
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts | Prepaid expenses and other current assets |  | $ | 7,022 |  |  | $ | 8,380 |  |  | Accrued expenses |  | $ | 9,607 |  |  | $ | 1,408 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |
Forward foreign exchange contracts | Prepaid expenses and other current assets |  | $ | 6,640 |  |  | $ | 31,280 |  |  | Accrued expenses |  | $ | 22,240 |  |  | $ | 9,131 |
The gains and losses recognized in earnings due to hedge ineffectiveness and the amount excluded from effectiveness testing were not material for all periods presented and are included as components of net revenue, cost of revenue and selling, general and administrative expense, which are the same line items in which the hedged items are recorded. During the three months and nine months ended May 31, 2018, the Company recognized $27.2 million and $59.8 million, respectively, in foreign currency losses, which were offset by $41.2 million and $92.2 million of gains, respectively, from related forward contracts. Both the foreign currency losses and gains from forward contracts were recognized in cost of revenue. For the three months and nine months ended May 31, 2017, the amounts were immaterial and were recognized as components of cost of revenue. Interest Rate Risk Management The Company periodically enters into interest rate swaps to manage interest rate risk associated with the Company’s borrowings. Cash Flow Hedges During the fourth quarter of fiscal year 2016, the Company entered into forward interest rate swap transactions to hedge the fixed interest rate payments for an anticipated debt issuance, which was the issuance of the 3.950% Senior Notes. The swaps were accounted for as a cash flow hedge and had a notional amount of $200.0 million. Concurrently with the pricing of the 3.950% Senior Notes, in the second quarter of fiscal year 2018 the Company settled the swaps. The fair value of the cash received for the swaps at settlement was $17.2 million. The effective portion of the swaps is recorded in the Company’s Consolidated Balance Sheets as a component of AOCI and is amortized as a reduction to interest expense in the Company’s Consolidated Statements of Operations through January 2028. The effective portions of the swaps amortized to interest expense during the three months and nine months ended May 31, 2018 was not material. During the fourth quarter of fiscal year 2016, the Company entered into interest rate swap transactions to hedge the variable interest rate payments for the Term Loan Facility. In connection with this transaction, the Company pays interest based upon a fixed rate as agreed upon with the respective counterparties and receives variable rate interest payments based on the one-month LIBOR. The interest rate swaps have an aggregate notional amount of $200.0 million and have been designated as hedging instruments and accounted for as cash flow hedges. The interest rate swaps were effective on September 30, 2016 and are scheduled to expire on June 30, 2019. The contracts will be settled with the respective counterparties on a net basis at each settlement date. Changes in the fair value of the interest rate swap transactions are recorded in the Company’s Condensed Consolidated Balance Sheets as a component of AOCI.

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- References No definition available. + Details
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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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