XML 30 R18.htm IDEA: XBRL DOCUMENT
v3.6.0.2

DERIVATIVES AND RISK MANAGEMENT | 3 Months Ended
--- | ---
Nov. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and risk management | NOTE 9. DERIVATIVES AND RISK MANAGEMENT The Company's global operations and product lines expose it to risks from fluctuations in metal commodity prices, foreign currency exchange rates, natural gas prices and interest rates. One objective of the Company's risk management program is to mitigate these risks using derivative instruments. The Company enters into (i) metal commodity futures and forward contracts to mitigate the risk of unanticipated changes in gross margin due to the volatility of the commodities' prices, (ii) foreign currency forward contracts that match the expected settlements for purchases and sales denominated in foreign currencies and (iii) natural gas forward contracts to mitigate the risk of unanticipated changes in operating cost due to the volatility of natural gas prices. When sales commitments to customers include a fixed price freight component, the Company occasionally enters into freight forward contracts to reduce the effects of the volatility of ocean freight rates. At November 30, 2016, the notional values of the Company's foreign currency contract commitments and its commodity contract commitments were $265.8 million and $31.2 million, respectively. At November 30, 2015, the notional values of the Company's foreign currency contract commitments and its commodity contract commitments were $306.3 million and $33.5 million, respectively. The following table provides information regarding the Company's commodity contract commitments as of November 30, 2016:
Commodity |  | Long/Short |  | Total
Aluminum |  | Long |  | 1,822 |  | MT
Copper |  | Long |  | 237 |  | MT
Copper |  | Short |  | 5,160 |  | MT
Zinc |  | Long |  | 22 |  | MT
_________________ MT = Metric Ton The Company designates only those contracts which closely match the terms of the underlying transaction as hedges for accounting purposes. These hedges resulted in substantially no ineffectiveness in the Company's condensed consolidated statements of earnings, and there were no components excluded from the assessment of hedge effectiveness for the three months ended November 30, 2016 and 2015. Certain foreign currency and commodity contracts were not designated as hedges for accounting purposes, although management believes they are essential economic hedges. The following tables summarize activities related to the Company's derivative instruments and hedged items recognized in the condensed consolidated statements of earnings:
|  |  |  | Three Months Ended November 30,
Derivatives Not Designated as Hedging Instruments (in thousands) |  | Location |  | 2016 |  | 2015
Commodity |  | Cost of goods sold |  | $ | (4,629 | ) |  | $ | 2,172 |
Foreign exchange |  | Cost of goods sold |  | (8 | ) |  | 50 |
Foreign exchange |  | SG&A expenses |  | 4,049 |  |  | 5,219 |
Gain (loss) before income taxes |  |  |  | $ | (588 | ) |  | $ | 7,441 |
The Company's fair value hedges are designated for accounting purposes with the gains or losses on the hedged items offsetting the gains or losses on the related derivative transactions. Hedged items relate to firm commitments on commercial sales and purchases and capital expenditures.
Derivatives Designated as Fair Value Hedging Instruments (in thousands) |  |  |  | Three Months Ended November 30,
| Location |  | 2016 |  | 2015
Foreign exchange |  | Net sales |  | $ | (22 | ) |  | $ | 144 |
Foreign exchange |  | Cost of goods sold |  | 1,086 |  |  | (994 | )
Gain (loss) before income taxes |  |  |  | $ | 1,064 |  |  | $ | (850 | )
Hedged Items Designated as Fair Value Hedging Instruments (in thousands) |  |  |  | Three Months Ended November 30,
| Location |  | 2016 |  | 2015
Foreign exchange |  | Net sales |  | $ | 22 |  |  | $ | (145 | )
Foreign exchange |  | Cost of goods sold |  | (1,086 | ) |  | 994 |
Gain (loss) before income taxes |  |  |  | $ | (1,064 | ) |  | $ | 849 |
Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Income (Loss) (in thousands) |  | Three Months Ended November 30,
| 2016 |  | 2015
Commodity |  | $ | 99 |  |  | $ | (477 | )
Foreign exchange |  | 33 |  |  | 468 |
Gain (loss), net of income taxes |  | $ | 132 |  |  | $ | (9 | )
Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Reclassified from Accumulated Other Comprehensive Income (Loss) (in thousands) |  |  |  | Three Months Ended November 30,
| Location |  | 2016 |  | 2015
Commodity |  | Cost of goods sold |  | $ | (92 | ) |  | $ | (51 | )
Foreign exchange |  | Net sales |  | (85 | ) |  | 57 |
Foreign exchange |  | Cost of goods sold |  | 128 |  |  | (8 | )
Foreign exchange |  | SG&A expenses |  | 152 |  |  | 35 |
Interest rate |  | Interest expense |  | 134 |  |  | 134 |
Gain before income taxes |  |  |  | 237 |  |  | 167 |
Income taxes |  | Income taxes |  | (47 | ) |  | (49 | )
Gain, net of income taxes |  |  |  | $ | 190 |  |  | $ | 118 |
The Company enters into derivative agreements that include provisions to allow the set-off of certain amounts. Derivative instruments are presented on a gross basis on the Company's condensed consolidated balance sheets. The asset and liability balances in the tables below reflect the gross amounts of derivative instruments at November 30, 2016 and August 31, 2016. The fair value of the Company's derivative instruments on the condensed consolidated balance sheets was as follows:
Derivative Assets (in thousands) |  | November 30, 2016 |  | August 31, 2016
Commodity — designated for hedge accounting |  | $ | 89 |  |  | $ | 4 |
Commodity — not designated for hedge accounting |  | 108 |  |  | 584 |
Foreign exchange — designated for hedge accounting |  | 1,595 |  |  | 1,398 |
Foreign exchange — not designated for hedge accounting |  | 3,055 |  |  | 750 |
Derivative assets (other current assets)* |  | $ | 4,847 |  |  | $ | 2,736 |
Derivative Liabilities (in thousands) |  | November 30, 2016 |  | August 31, 2016
Commodity — designated for hedge accounting |  | $ | — |  |  | $ | 5 |
Commodity — not designated for hedge accounting |  | 3,211 |  |  | 117 |
Foreign exchange — designated for hedge accounting |  | 360 |  |  | 902 |
Foreign exchange — not designated for hedge accounting |  | 1,498 |  |  | 1,161 |
Derivative liabilities (accrued expenses and other payables)* |  | $ | 5,069 |  |  | $ | 2,185 |
_________________ * Derivative assets and liabilities do not include the hedged items designated as fair value hedges. As of November 30, 2016, substantially all of the Company's derivative instruments designated to hedge exposure to the variability in future cash flows of the forecasted transactions will mature within twelve months. All of the instruments are highly liquid and were not entered into for trading purposes.

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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624171-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41620-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624163-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5579240-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624177-113959 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80784-113994 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41641-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5579245-113959 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624258-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80748-113994 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5708775-113959 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5708773-113959 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5618551-113959 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5580258-113959 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624181-113959 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41638-113959 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration