XML 98 R11.htm IDEA: XBRL DOCUMENT
v3.19.3

DERIVATIVES AND HEDGING | 12 Months Ended
--- | ---
Jul. 31, 2019
Investments, All Other Investments [Abstract] |
DERIVATIVES AND HEDGING | 4. DERIVATIVES AND HEDGING The Company uses interest rate swap agreements, foreign currency forward contracts and certain non-derivative financial instruments to manage its risks associated with foreign currency exchange rates and interest rates. The Company does not hold derivative financial instruments of a speculative nature or for trading purposes. The Company records derivatives as assets and liabilities on the balance sheet at fair value. Changes in the fair value of derivative instruments are recognized in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the Consolidated Statements of Cash Flows in the same category as the cash flows from the items subject to designated hedge or undesignated (economic) hedge relationships. The Company evaluates hedge effectiveness at inception and on an ongoing basis. If a derivative is no longer expected to be effective, hedge accounting is discontinued. Certain of the Company’s derivative transactions are subject to master netting arrangements that allow the Company to net settle contracts with the same counter parties. These arrangements generally do not call for collateral and as of the applicable dates presented below, no cash collateral had been received or pledged related to the underlying derivatives. The fair value of our derivative instruments and the associated notional amounts, presented on a pre-tax basis, were as follows:
|  | July 31, 2019 |
|  |  |  |  | Fair Value in |
|  |  |  |  | Other Current |
Cash Flow Hedges |  | Notional |  |  | Liabilities |
Interest rate swap agreements |  |  | 849,550 |  |  |  | 12,463 |
Total derivative financial instruments |  | $ | 849,550 |  |  | $ | 12,463 |
See Note 10 to the Consolidated Financial Statements for additional fair value disclosures related to our derivative instruments. The Company did not have any designated hedge instruments prior to February 1, 2019. Cash Flow Hedges The Company has used foreign currency forward contracts to hedge the effect of certain foreign currency exchange rate fluctuations on forecasted foreign currency transactions, including foreign currency denominated sales. These forward contracts are designated as cash flow hedges. The changes in fair value of these contracts are recorded in accumulated other comprehensive income (“AOCI”) until the hedged items affect earnings, at which time the gain or loss is reclassified into the same line item in the determination of net income as the underlying exposure being hedged. As of July 31, 2019, the Company did not have any foreign currency forward contracts outstanding. The Company has entered into interest rate swap agreements to manage certain of its interest rate exposures. During fiscal 2019, the Company entered into pay-fixed, receive-floating interest rate swap agreements, totaling $900,000 in initial value, in order to hedge against interest rate risk relating to the Company’s floating rate debt agreements. The $900,000 in initial value declines quarterly over the initial 4.5 year term of the swaps. The interest rate swaps are designated as cash flow hedges of the expected interest payments related to the Company’s LIBOR-based floating rate debt. Amounts initially recorded in AOCI will be reclassified to interest expense over the remaining life of the debt as the forecasted interest transactions occur. Net Investment Hedges The Company designates a portion of its outstanding Euro-denominated term loan tranche as a hedge of foreign currency exposures related to investments the Company has in certain Euro-denominated functional currency subsidiaries. The foreign currency transaction gains and losses on the Euro-denominated portion of the term loan, which is designated and determined to be effective as a hedge of the Company’s net investment in its Euro-denominated functional currency subsidiaries, are included as a component of the foreign currency translation adjustment. Gains included in the foreign currency translation adjustment for the fiscal year ended July 31, 2019 were $7,780, net of tax . There were no amounts reclassified out of AOCI pertaining to the net investment hedge during the fiscal year ended July 31, 2019. Derivatives Not Designated as Hedging Instruments As described in more detail in Note 2 to the Consolidated Financial Statements, on September 18, 2018, the Company entered into a definitive agreement to acquire EHG, which closed on February 1, 2019. The cash portion of the purchase price was denominated in Euro, and therefore the Company’s cash flows were exposed to changes in the Euro/USD exchange rate between the September 18, 2018 agreement date and the closing date. To reduce its exposure, the Company entered into a deal-contingent, foreign currency forward contract on the September 18, 2018 agreement date in the amount of 1.625 billion Euro. Hedge accounting was not applied to this instrument, and therefore all changes in fair value were recorded in earnings. The contract was settled in connection with the close of the EHG acquisition on February 1, 2019 in the amount of $70,777, resulting in a loss of the same amount which is included in Acquisition-related costs in the Consolidated Statements of Income and Comprehensive Income. The Company also has certain other derivative instruments, with a notional amount totaling approximately $35,700 and a fair value of $1,226 included in Other current liabilities as of July 31, 2019, which have not been designated as hedges and therefore hedge accounting is not applied. For these derivative instruments, changes in fair value are recognized in earnings. The total amounts presented in the Consolidated Statements of Income and Comprehensive Income due to changes in the fair value of the following derivative instruments for the fiscal years ended July 31, 2019, 2018 and 2017 are as follows:
|  | 2019 |  |  | 2018 |  |  | 2017 |
Gain (Loss) on Derivatives |  |  |  |  |  |  |  |  |
Designated as Cash Flow Hedges |  |  |  |  |  |  |  |  |
Gain (Loss) recognized in Other Comprehensive Income, net of tax |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts |  | $ | 129 |  |  | $ | – |  |  | $ | – |
Interest rate swap agreements |  |  | (9,396 | ) |  |  | – |  |  |  | – |
Total gain (loss) |  | $ | (9,267 | ) |  | $ | – |  |  | $ | – |
|  | 2019 |
|  |  |  |  | Acquisition- |  |  | Interest |
|  | Sales |  |  | Related Costs |  |  | Expense |
Gain (Loss) Reclassified from AOCI, Net of Tax |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts |  | $ | 129 |  |  | $ | – |  |  | $ | – |
Interest rate swap agreements |  |  | – |  |  |  | – |  |  |  | 76 |
Gain (Loss) on Derivatives Not Designated as Hedging Instruments |  |  |  |  |  |  |  |  |  |  |  |
Amount of gain (loss) recognized in income, net of tax |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts |  |  | – |  |  |  | (70,777 | ) |  |  | – |
Interest rate swap agreements |  |  | – |  |  |  | – |  |  |  | (438 | )
Total gain (loss) |  | $ | 129 |  |  | $ | (70,777 | ) |  | $ | (362 | )
There were no derivative or non-derivative instruments used in hedging strategies during the fiscal years ended July 31, 2018 or 2017.

X
- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
Name: | us-gaap_FinancialInstrumentsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

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