XML 61 R20.htm IDEA: XBRL DOCUMENT
v3.19.3

Derivative Financial Instruments and Hedging Activities | 12 Months Ended
--- | ---
Aug. 31, 2019
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 $334.1 million and $293.4 million as of August 31, 2019 and 2018, 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 September 3, 2019 and August 31, 2020. 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 August 31, 2019 and 2018, was $2.5 billion and $2.3 billion, respectively.
Refer to Note 16 – “Fair Value Measurements” for the fair values and classification of the Company’s derivative instruments.
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. The following table presents the net losses from forward contracts recorded in the Consolidated Statements of Operations for the periods indicated (in thousands):
Derivatives Not Designated as Hedging Instruments Under ASC 815 |  | Location of Loss on Derivatives Recognized in Net Income |  | Amount of Loss Recognized in Net Income on Derivatives
|  |  |  | Fiscal Year Ended August 31
|  |  |  | 2019 |  | 2018 |  | 2017
Forward foreign exchange contracts(1) |  | Cost of revenue |  | $ | (29,557 | ) |  | $ | (27,774 | ) |  | $ | (95,665 | )
(1) | For the fiscal years ended August 31, 2019, 2018, and 2017, the Company recognized $14.9 million, $36.7 million, and $90.3 million, respectively, of foreign currency gains in cost of revenue, which are offset by the losses from the forward foreign exchange contracts.
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 The following table presents the interest rate swaps outstanding as of August 31, 2019, which have been designated as hedging instruments and accounted for as cash flow hedges:
Interest Rate Swap Summary | Hedged Interest Rate Payments |  | Aggregate Notional Amount (in millions) |  | Effective Date |  | Expiration Date (1) |
Forward Interest Rate Swap |  |  |  |  |  |  |  |
Anticipated Debt Issuance | Fixed |  | $ | 200.0 |  |  | October 22, 2018 |  | December 15, 2020 | (2)
Interest Rate Swaps(3) |  |  |  |  |  |  |  |
2017 Term Loan Facility | Variable |  | $ | 200.0 |  |  | October 11, 2018 |  | August 31, 2020 |
2018 Term Loan Facility | Variable |  | $ | 350.0 |  |  | August 24, 2018 |  | August 24, 2020 |
(1) | The contracts will be settled with the respective counterparties on a net basis at the expiration date for the forward interest rate swap and at each settlement date for the interest rate swaps.
(2) | If the anticipated debt issuance occurs before December 15, 2020, the contracts will be terminated simultaneously with the debt issuance.
(3) | 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 for the 2017 Term Loan Facility and the three-month LIBOR for the 2018 Term Loan Facility.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration