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Financial Derivatives
 12 Months Ended
Aug. 31, 2016
Financial Derivatives [Abstract]  
Financial Derivatives

Note 12 – Financial Derivatives 



Fair values of derivative instruments are as follows:



 

 

 

 

 

 

 

 



 

 

 

August 31,

($ in thousands)

 

Balance sheet location

 

2016

 

2015

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

    Foreign currency forward contracts

 

Other current assets

 

$

 40 

 

$

 217 

    Foreign currency forward contracts

 

Other current liabilities

 

 

 (385)

 

 

 (352)

Total derivatives designated as hedging      instruments

 

 

 

$

 (345)

 

$

 (135)



 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

    Foreign currency forward contracts

 

Other current assets

 

$

 33 

 

$

 495 

    Foreign currency forward contracts

 

Other current liabilities

 

 

 (210)

 

 

 (61)

Total derivatives not designated as hedging instruments

 

 

 

$

 (177)

 

$

 434 



 

 

 

 

 

 

 

 

Accumulated other comprehensive income included realized and unrealized after-tax gains of $5.6 million, $5.4 million, and $2.0 million at August 31, 2016, 2015, and 2014, respectively, related to derivative contracts designated as hedging instruments.



Net Investment Hedging Relationships

The amount of loss recognized in OCI on derivatives is as follows:



 

 

 

 

 

 

 

 

 



 

 

For the years ended August 31,

($ in thousands)

 

 

2016

 

 

2015

 

 

2014

Foreign currency forward contracts, net of tax expense of $52,  $2,083, and $16

 

$

 (204)

 

$

 (3,420)

 

$

 (53)



 

 

 

 

 

 

 

 

 

During fiscal 2016,  2015, and 2014, the Company settled Euro foreign currency forward contracts resulting in after-tax net gains (losses) of $0.3 million, $3.8 million, and ($0.5 million), respectively, which were included in OCI as part of a currency translation adjustment.  There were no amounts recorded in the consolidated statement of operations related to ineffectiveness of Euro foreign currency forward contracts for the years ended August 31, 2016,  2015, and 2014. 

 

At August 31, 2016 and 2015, the Company had outstanding Euro foreign currency forward contracts to sell 32.6 million Euro and 29.1 million Euro, respectively, at fixed prices to settle during the next fiscal quarter. At August 31, 2016 and 2015, the Company also had an outstanding foreign currency forward contract to sell 43.0 million South African rand at fixed prices to settle during the next fiscal quarter. The Company’s foreign currency forward contracts qualify as hedges of a net investment in foreign operations.



Derivatives Not Designated as Hedging Instruments

In order to reduce exposures related to changes in foreign currency exchange rates, the Company, at times, may enter into forward exchange or option contracts for transactions denominated in a currency other than the functional currency for certain of the Company’s operations.  This activity primarily relates to economically hedging against foreign currency risk in purchasing inventory, sales of finished goods, and future settlement of foreign denominated assets and liabilities.  The Company may choose whether or not to designate these contracts as hedges.  For those contracts not designated, changes in fair value are recognized currently in the income statement.  At August 31, 2016 and 2015, the Company had $8.2 million and $9.5 million, respectively, of U.S. dollar equivalent of foreign currency forward contracts outstanding.