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DERIVATIVES AND RISK MANAGEMENT | 12 Months Ended
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Aug. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES AND RISK MANAGEMENT | NOTE 12. 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 price volatility in these commodities and (ii) foreign currency forward contracts that match the expected settlements for purchases and sales denominated in foreign currencies. The Company considers the total notional value of its futures and forward contracts as the best measure of the volume of derivative transactions. At August 31, 2018, the notional values of the Company's foreign currency contract commitments and its commodity contract commitments were $119.5 million and $55.2 million, respectively. At August 31, 2017, the notional values of the Company's foreign currency contract commitments and its commodity contract commitments were $300.4 million and $59.3 million, respectively. The following table provides information regarding the Company's commodity contract commitments as of August 31, 2018:
Commodity |  | Long/Short |  | Total
Aluminum |  | Long |  | 3,975 |  | MT
Aluminum |  | Short |  | 550 |  | MT
Copper |  | Long |  | 1,633 |  | MT
Copper |  | Short |  | 5,817 |  | 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 consolidated statements of earnings, and there were no components excluded from the assessment of hedge effectiveness for the years ended August 31, 2018 and 2017. 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 consolidated statements of earnings:
|  |  |  | Year Ended August 31,
Derivatives Not Designated as Hedging Instruments (in thousands) |  | Location |  | 2018 |  | 2017 |  | 2016
Commodity |  | Cost of goods sold |  | $ | 7,043 |  |  | $ | (9,095 | ) |  | $ | 2,675 |
Foreign exchange |  | Cost of goods sold |  | (50 | ) |  | (47 | ) |  | 19 |
Foreign exchange |  | SG&A expenses |  | 110 |  |  | (5,400 | ) |  | 11,732 |
Gain (loss) from continuing operations before income taxes |  |  |  | $ | 7,103 |  |  | $ | (14,542 | ) |  | $ | 14,426 |
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.
|  | Amount of Gain (Loss) Recognized in Income on Derivatives for the Year Ended August 31, |  |  | Amount of Gain (Loss) Recognized in Income on Related Hedge Items for the Year Ended August 31,
| Location of Gain (Loss) Recognized in Income on Derivatives | 2018 |  | 2017 |  | 2016 |  | Location of Gain (Loss) Recognized in Income on Related Hedged Items | 2018 |  | 2017 |  | 2016
Foreign exchange | Net sales | $ | (66 | ) |  | $ | 25 |  |  | $ | (38 | ) |  | Net sales | $ | 66 |  |  | $ | (25 | ) |  | $ | 38 |
Foreign exchange | Cost of goods sold | 1,596 |  |  | (1,436 | ) |  | (1,075 | ) |  | Cost of goods sold | (1,596 | ) |  | 1,436 |  |  | 1,075 |
Gain (loss) from continuing operations before income taxes |  | $ | 1,530 |  |  | $ | (1,411 | ) |  | $ | (1,113 | ) |  |  | $ | (1,530 | ) |  | $ | 1,411 |  |  | $ | 1,113 |
Effective Portion of Derivatives Designated as Cash Flow Hedging Instruments Recognized in Accumulated Other Comprehensive Income (Loss) (in thousands) |  | August 31,
| 2018 |  | 2017 |  | 2016
Commodity |  | $ | — |  |  | $ | 210 |  |  | $ | (204 | )
Foreign exchange |  | 48 |  |  | 546 |  |  | 1,822 |
Gain (loss), net of income taxes |  | $ | 48 |  |  | $ | 756 |  |  | $ | 1,618 |
Refer to Note 4, Accumulated Other Comprehensive Income (Loss), for the effective portion of derivatives designated as cash flow hedging instruments reclassified from AOCI. 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 consolidated balance sheets. The asset and liability balances in the tables below reflect the gross amounts of derivative instruments at August 31, 2018 and 2017. The fair value of the Company's derivative instruments on the consolidated balance sheets was as follows:
Derivative Assets (in thousands) |  | August 31,
| 2018 |  | 2017
Commodity — not designated for hedge accounting |  | $ | 1,881 |  |  | $ | 767 |
Foreign exchange — designated for hedge accounting |  | — |  |  | 81 |
Foreign exchange — not designated for hedge accounting |  | 407 |  |  | 1,286 |
Derivative assets (other current assets)* |  | $ | 2,288 |  |  | $ | 2,134 |
Derivative Liabilities (in thousands) |  | August 31,
| 2018 |  | 2017
Commodity — not designated for hedge accounting |  | 301 |  |  | 3,251 |
Foreign exchange — designated for hedge accounting |  | — |  |  | 1,549 |
Foreign exchange — not designated for hedge accounting |  | 1,095 |  |  | 3,710 |
Derivative liabilities (accrued expenses and other payables)* |  | $ | 1,396 |  |  | $ | 8,510 |
_________________________ * Derivative assets and liabilities do not include the hedged items designated as fair value hedges. As of August 31, 2018 and 2017, 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.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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