The Company uses certain financial derivatives to mitigate its exposure to volatility in foreign currency exchange rates. The Company uses these derivative instruments to hedge exposures in the ordinary course of business and does not invest in derivative instruments for speculative purposes. The Company manages market and credit risks associated with its derivative instruments by establishing and monitoring limits as to the types and degree of risk that may be undertaken, and by entering into transactions with counterparties that have investment grade credit ratings. Fair values of derivative instruments are as follows:

($ in thousands)	Balance sheet location	May 31, 2020			May 31, 2019			August 31, 2019
Derivatives designated as hedging instruments:
Foreign currency forward contracts	Other current assets	$	—		$	533		$	1,073
Foreign currency forward contracts	Other current liabilities		—			—			—
Total derivatives designated as hedging instruments		$	—		$	533		$	1,073

Derivatives not designated as hedging instruments:
Foreign currency option contracts	Other current assets	$	909		$	1		$	39
Foreign currency forward contracts	Other current liabilities		(528	)		(22	)		—
Total derivatives not designated as hedging instruments		$	381		$	(21	)	$	39

Accumulated other comprehensive income included realized and unrealized after-tax gains of $7.3 million, $6.3 million, and $7.0 million at May 31, 2020, May 31, 2019, and August 31, 2019, respectively, related to derivative contracts designated as hedging instruments.

Three months ended

Nine months ended

($ in thousands)

May 31,

2020

May 31,

2019

May 31,

2020

May 31,

2019

Foreign currency forward contracts, net of tax

expense of $63, $182, $123 and $368, respectively

101

682

304

1,324

For the three months ended May 31, 2020 and 2019, the Company settled foreign currency forward contracts resulting in an after-tax net gain of $0.3 million and $0.6 million, respectively, which was included in other comprehensive income as part of a currency translation adjustment. For the nine months ended May 31, 2020 and May 31, 2019, the Company settled foreign currency forward contracts resulting in an after-tax net gain of $1.1 million and $1.5 million, respectively, which were included in other comprehensive income as part of a currency translation adjustment. There were no amounts recorded in the condensed consolidated statements of operations related to ineffectiveness of foreign currency forward contracts related to net investment hedges for the three and nine months ended May 31, 2020 and May 31, 2019.

At May 31, 2020, the Company had no foreign currency forward contracts qualifying as a hedge of a net investment in foreign operations. However, at May 31, 2019, and August 31, 2019, the Company had outstanding foreign currency forward contracts to sell a notional amount of 32.7 million Euro, on each date, at fixed prices to settle during the next fiscal quarter. Additionally, at May 31, 2019, the Company had an outstanding foreign currency forward contract to sell a notional amount of 43.0 million South African Rand at a fixed price settled during the next fiscal quarter. These foreign currency forward contracts qualify as hedges of a net investment in foreign operations.

The Company generally does not elect hedge accounting treatment for derivative contracts related to future settlements of foreign denominated intercompany receivables and payables. If the Company does not elect hedge accounting treatment for a derivative, the Company carries the derivative at its fair value in the condensed consolidated balance sheets and recognizes any subsequent changes in its fair value during a period through earnings in the condensed consolidated statements of operations. At May 31, 2020, May 31, 2019 and August 31, 2019, the Company had notional value of $8.5 million, $1.9 million, and $1.8 million, respectively, of U.S. dollar equivalent of foreign currency forward contracts outstanding that are not designated as hedging instruments.

Additionally, during the third quarter of fiscal 2020, the Company entered into a foreign exchange option contract with a notional amount of 15 million British Pounds to mitigate the risk related to a revenue contract and related costs denominated in British Pounds over an approximate six-month period. The contract is not speculative and was not designated as a hedging instrument. Gains and losses on this contract are recorded within cost of goods sold in the condensed consolidated statement of operations.